Truist Financial Corporation (TFC) Earnings Call Transcript & Summary

I think we'll go ahead and get started. So next up, we have Mike Maguire, CFO of Truist Financial. Mike has been a busy man over the last couple of days or last week. So we appreciate you joining us and taking the time.

Yes. My pleasure. I know that it was about a year ago today that we had to miss this conference for a similar reason. So glad to be here. Thanks for having us.

Yes. Exactly. Thanks for making it. So I guess, we had a meticulously planned list of questions for you. I had to rip that out last night. So let's just talk about maybe to kick it off around the transaction that you announced with, not surprising. I think you talked about TIH and the insurance business and exiting that at some point. Maybe just very quickly for those -- everyone that's not in the weeds, remind us of the strategic rationale for monetizing TIH, why that structure no longer made sense.

Yes, no, certainly. It's funny. If you think about the minority stake transaction that we announced actually last February, so before a lot of the turmoil that impacted the industry, you'll recall that we headlined that transaction really on a number of points. It was initially that as we thought about the opportunity to continue to support and grow the insurance business given its capital demands, given the consolidation that was happening in the industry, creating more flexibility to support that business over time was important to us as well the opportunity to at the time, modestly improve our capital position as well. And then just as we thought about moving into the March, April sort of time period, I think a lot of change occurred in the industry. Just think about the capital regime, the rules that I recognize are still in flux, but seem relatively certain, at least along some lines that for us, as we experienced '23 and thought about 2024 and beyond and the flexibility and the opportunity that we have at Truist in our core franchise was to move from a position -- to a position of relative financial strength became more paramount in our mind. So if you think about how Bill talked about the transaction yesterday morning, it was really initially, a, improving and strengthening our financial conditioning broadly. But as you think about going forward, having the capacity to, a, not just have a stronger balance sheet, in terms of capital and liquidity and thinking about the duration of our balance sheet, but also having the opportunity to support the growth of our core banking franchise. That really is the primary thrust of the strategic rationale for the transaction. And if you think about where were we yesterday versus where are we today, again, we talked yesterday about an illustrative balance sheet repositioning. We talked about capacity for things like stock buybacks. We talked about capacity to grow in an environment where all things equal, there's a lot less supply in the market from financial services providers. So we just think all those factors are now options and good opportunities for the company moving forward as a result of this transaction.

Got it. Thanks for that. And I guess, as -- like we've spent time just talking to investors, I think there were 3 things that investors were looking for if and when you announced this transaction, one was tangible book growth, CET1 capital build and earnings accretion. So just talk to us in terms of -- when you think about the use of proceeds, and I know Bill and you talked about it during the call. But remind us what the sort of priorities are once this sale is complete?

Yes. No, you're right. I mean, just from a -- whether you look at the spot capital rules or an estimate of where the Basel III rules will be, this is a transformational sort of capital event for the company, increasing our CET1 ratio from today, 10.1% up to call it, 12.5%. Just if you account for the sale and then it's a touch even more accretive to our CET1, if you think about it from a fully phased-in perspective. And I think also the tangible book value per share accretion of 33% is, I think, notable. As we think about the proceeds, again, it's a very balanced approach. We've been having some conversations throughout the course of yesterday and today on this topic as well. Our objectives as we move forward are, again, one, to make sure that this capital advantage at least on a relative basis that we've seized we maintain, right? And that's on a spot basis, that's on a phased-in basis. As we think about our liquidity profile, that's incredibly important for a company like ours, too. We think expectations for liquidity management also continue to heighten. And so as we think about flexibility and liquidity, this transaction affords us progress there as well. We think about just the duration of our balance sheet as well. We've thought about how we're positioned, again, from a flexibility perspective and long-term rate management perspective. This transaction in a possible reposition, we think, affords us an opportunity to improve our profile there as well. But I think most importantly, as we think about the opportunity for Truist in our core markets, in our -- what will now be our wholesale and consumer segments going forward, having that capacity to lean into relationships, better serve more fully served clients, add, invite new clients to Truist, we think is going to be a real competitive advantage having access to that capital.

Got it. So maybe, I guess, if you could double click on some of these things. You outlined about $22 billion or $23 billion in bonds that could be -- just talk to us in terms of the thought process and how quickly you could move on that. And then how are you thinking about just overall balance sheet positioning in what's still an uncertain rate backdrop here?

Yes. Well, the $23 billion and hopefully this came across in our presentation yesterday and in some of the questions. But we wanted to give an example and frankly more than anything provide a framework for how we would think about sizing or repositioning. And among our objectives and there are multiple, and I hit on a few of them, but among them are would be to replace the lost earnings from TIH. And so just to walk, if you recall, one of the slides in our deck yesterday sort of showed the overall on a full year impact that we think TIH would account for about $0.45 per share of EPS for -- in 2024 for Truist. And so if you took just merely the proceeds, which we gave you a walk to in the appendix of the deck, a little north of $10 billion, reinvested it, call it a forward cash curve of 4.5%. You sort of offset about $0.25 of that $0.45. And so that leaves the $0.20. And so one of our, again, objectives in a possible transaction moving forward would be to replace that full $0.20. And so that's the magic to the $23 billion. It's simply based again on some underlying assumptions, how much market value security reinvestment might you need to replace the $0.20, and then that's how we sized it.

Got it. And the way you started and it assumes this happened on Jan 1, there was a full year effect as opposed to the closing of the transaction is going to be in 2Q. So there going to be...

Yes, it was a 1/1 analysis full year, but we're using a forward view on the rate assumptions. Like so on the cash, it's June to June. And as we thought about securities that we might again might purchase, it was based on a forward view.

Got it. And the other question I got, just in terms of the securities that you identified or have identified into are these the sort of the longest duration securities in the -- just talk to us around why those and what's the complexion of the new securities you might buy in.

I mean I think we were intentionally a little roughed out on the math. We haven't sort of selected specific securities per se. But in an illustrative example, around '23, yes, I think we'd look for securities that were heavier from a capital perspective that maybe didn't have as favorable liquidity treatment, lower coupon longer-duration securities was how we thought about it and is what we assumed in the example that we gave yesterday.

And from an ALCO perspective, Mike, is the goal -- you come out of all this with a relatively neutral balance sheet? Or what's going to be -- or is the balance sheet going to become liability-sensitive?

Yes, well, adding the cash proceeds from the sale and then reinvesting a portion, we estimated roughly half of the -- any bond proceeds and cash. Does asset -- or does add some asset sensitivity to the balance sheet. One of the assumptions that I maybe didn't mention a moment ago when we were talking about some of the underlying assumptions is that we would, at the time, look at the NII positioning. And we've been pretty consistent about this, target a relatively neutral position. So in that case, very likely to add some received fixed swaps to manage that asset sensitivity and add -- attach more liability, sensitivity, even it out.

Got it. And I guess -- so there are a few other things that emerged in terms of what Truist can do coming out of this. I think Bill was fairly clear M&A is not a big priority at this point. It's an option. But I would love to hear in terms of how we should think about it.

Yes. I think Bill was pretty clear, right? I mean I think one of the mantras at Truist right now, and I think this was true, certainly, the second half of last year and coming into this year is like just a fanatical focus on execution and winning with what we have. And so the whole company has really done a great job of activating and focusing on and that goes on both sides of the equation, right? That's on the production side and serving clients but also on the cost management side. And so very much an execution mindset. And I think that's -- and that's appropriate at this moment in time for Truist. I mean I think from an M&A perspective, Bill, we've always said we sort of have a hierarchy of priorities when it comes to capital, first and foremost, investing in our clients in our core business; and second, protecting our common stock dividend. Typically, third, we talk about smart M&A and then last would be buybacks. Again, for where we are and where we're focused right now, I think M&A is just less of a priority. I think we're unavoidably like better positioned. If you think about like the company throughout the course of '23 and analyzing our relative capital position, especially with all the analysis that was being done around unrealized losses and adjustments and future rules, we certainly didn't feel like we were as well positioned as maybe others along those lines. And I think, again, Bill's words are the right words, and that's our focus. But it is nice to be in a position of relative strength and just -- and have that option value.

Got it. I guess 2 other areas of capital deployment. One would be buybacks means your stock, I think, on a pro forma basis, going to be trading at 1.2 tangible book. But -- and correct me if I'm wrong, it feels like you'd rather build more capital, have some dry power, but how are you thinking about just the urgency of wanting to buy back stock?

Yes. I mean I think the reality is, over the last couple of years, we have not been in the market buying stock. I think absent this sort of transformative capital event for Truist, we wouldn't have the capacity or frankly, I don't think you would have seen us active on the buyback scene. I think what Bill said, I think, again, very appropriate is like we've got to get the transaction done. We've got to see how the balance sheet settles out. I think it would be really useful to get a better sense for the final capital rules, how they'll be proposed and implemented, get through our capital planning scenarios and work. I think we'd like for buybacks to be a part of our regular way capital planning and be sort of consistent and I think Bill used the word durable yesterday, I thought that sounded great. I mean that's how we're thinking about it.

Understood. And I guess the last piece of the puzzle, as you said, investing in the client franchise, lending, I guess, it gives you a lot more breathing room in terms of lending market share. One, is that the right characterization? And second, is the demand out there?

That's the question, right? I think we can't just sort of create demand on the C&I side. There are things we can do on the consumer side. Maybe we can talk a little bit about that. But I think our attitude and our approach to the market will feel different. So for our teammates, who, over the last 3, 6, 9 months have been guided to be more cautious, to be more disciplined, to really place emphasis on our core relationships and perhaps to deemphasize other opportunities, that, broadly speaking, sort of just impacts sort of the culture of our offense. And I think what we're really excited about is even in today's market conditions where maybe demand is a little muted, us leaning into that market, we think, hopefully, that's our thesis is that's going to create more opportunity for us. Especially if you see an improvement in demand, we think leaning into that demand should give us an outsized opportunity to win. That's that like that relative, again, advantage is what we're really trying to create with this transaction, that's on the C&I side. On the consumer side, we've been talking about with many of you, the different tactics that we've leveraged over time to manage RWA and to preserve capital. That's what we would have been doing otherwise for the next couple of years, that's different now. We have more capacity. So just because of the relationship value of a certain business might be lower in one of our national consumer lending business, it doesn't mean it's not a good business. It doesn't mean it's not a profitable business. But as a result of sort of capital constraints, we've been a little bit more cautious around those businesses. Those are good examples of areas where we should be able to increase some production and manage balances a little bit more proactively. So we're really thinking about it across the whole franchise. Could -- obviously, you could use a little help from the market, maybe with some rate cuts, we'll see a little bit of improvement in demand, but that's how we're thinking about it.

Got it. I think we got everything on TIH. So maybe just switching gears to, I think the other sort of point of conversation with obviously longer-term investors has been around the merger and the execution around the merger. Just the prevailing sense, and again, correct me if I'm wrong, it's been rocky in the last 4 years. There's been some market share loss. Like give us a mark-to-market on you announced a big reorg and simplification. Like where things stand? How should we begin to measure management going forward?

Yes. Yes, look, I mean, it's -- these large MOE style transactions are -- they're hard. And I think they always start with a tremendous amount of enthusiasm and optimism and excitement and hard work. The hard work continues. But over time, you just recognize that they're tough, right, whether it be culturally, whether it be systems conversions, the planning, you name it. You've heard us talk about it for years and years and years. What I'm excited about, and I think what we're -- in the halls of Truist, what we're excited about is it really does feel like we're coalescing around a more sort of simplified streamlined, clear eye view of where we want to be, like back to the basics, core wholesale, core consumer banking. A lot of the work that Bill has done to streamline the leadership team to create accountability and the right incentives and a single kind of monolithic offense in both of these businesses, both on the consumer and wholesale side, we think, is going to translate to productivity. And by the way, it's also been a really nice catalyst around some of the efficiency work that we've been doing. It was important that we look at our cost structure and it's all coming together at once. So we've got a more efficient company all of a sudden. We've got, I think, a more productive, more accountability, again, better glued, sort of clear offense at the company. And now going forward, once we complete our transaction here, we're going to have a financial profile that across the board, capital, liquidity, ALM, capacity to grow is all significantly improved. So Bill said it yesterday, he's optimistic about the future, and we're ready to get after it.

Got it. And remind us just the time line of like when this reorg simplification process will be done? Is it mostly the heavy lifting behind us? Or is there...

Yes. I mean we -- the bulk of it is done. I mean you saw a lot of artifacts along the way. So we divested, were shuttered in certain businesses. We combined certain businesses. We moved our wealth unit over to wholesale where we thought it was better aligned around serving executives and business owners around sort of a more affluent, high net worth customer. With the efficiency work, you obviously, it's hard work, but we reduced headcount. We've identified a lot of cost avoidance in our technology investment portfolio. So you've seen a lot of artifacts along the way. I'd say that where we sit today, kind of Q1, again, we want to get this, the TIH divestiture complete and get the balance sheet settled. But yes, I think we're sort of looking forward now and moving ahead.

And also remind us, I guess the other component of the scale that the deal created from a tech investment standpoint, just the back office systems like where we are in terms of getting both these banks on the same systems, et cetera? Is it a multiyear process?

Well, I mean the actual conversion work, like the sort of foundational requirements to have sort of one version of the truth. That work is done. But it's a journey. As you know, you work for a big company, too. We're constantly evaluating infrastructure demand, regulatory demand, business demand. I think our newfound scale certainly creates the capacity to be smart and meet that demand. That's got to collate as well with our investors' expectations around cost management, too. So -- and again, that gets back to the sort of simplified business model and more, frankly, sort of a single sort of lens of leadership around these businesses is it helps us also prioritize investment, right? So -- and you heard me talk a little bit about this maybe late last year when I had the opportunity, but as you think about allocating, forget about capital for a second, but think about maybe more on a -- just as we manage our expense as well. The compromise, the first come first serve, that is -- which I think is a necessary compromise that comes with things like the MOE, early days, planning, that's out of our routine. So we have a great sense now for what the highest priorities are in our consumer business to support the growth, to meet the expectations the supervisors have, that all of our stakeholders have, same thing on the wholesale side of the business. And so again, feel like we're -- have a path forward that's much clearer.

Got it. And just in some of the fee revenue. So I think I would imagine the cross-sell opportunities or the scale for the capital markets business provides a lot more new things that you can do at scale that you could not when these are 2 separate banks. Just talk to us about where the most compelling fee growth opportunities are.

Yes. Obviously, the insurance company was a significant contributor to our fee revenue. And -- but we do have other businesses, as you say, that we're really fond of and that are performing really well. You mentioned the investment banking business for us. That has been a sort of a continuously improving business for us in terms of its quality, its size. All of the sort of health indicators that you would evaluate around whether it be market share in various products or the quality of the dialogue that we're having in our various industry verticals whether it be the product expertise or the breadth of products that we can deliver to our clients, the average economics on deals, the average number of lead deals, all those things that you'd be looking at to understand sort of the trajectory of the business, that's going really great. So we're going to continue to invest in that business and are very pleased with it. And by the way, also make sure that we're doing a good job leveraging those capabilities across the rest of our wholesale businesses. So whether that's in wealth, whether that's in our commercial corporate businesses, et cetera. Our wealth business as well is a really nice fee business, not -- hasn't been historically as high growth as, for example, what the Investment Bank has been able to achieve or even the insurance business, but we're pleased with how it's performing as well. We -- we've -- the net asset flows in that business, which is another good indicator of its health, have been positive, I think, 9 out of the 10 last quarters or so, some market dependency on how it performs, of course. But we're going to continue to hire advisers. We're going to continue to build on our products. We continue to drive collaboration with the other wholesale businesses there. But I think lastly, and I say, for last on purpose is, we're still really optimistic about what we can do to improve the penetration rates across our payments businesses, right? So if you think about in wholesale, again, across whether it be small business up to larger corporates, having that core money movement payments business, is really important to us. And so we've got a great leader in place who's been adding talent for us in our broader enterprise payments in our wholesale payments business. So we're really proud of the work that's being done there. That's a real opportunity for us just to do a better job developing the right products and experiences, putting the right sort of offense together to effectively more broadly serve those clients. That's to me one of the biggest opportunities we have at Truist.

And does the payments business require, I'm assuming a certain level of tech investments. Would you do like smaller like M&A? Is that required or no?

I don't think it's required. I mean as we think about that, it really is having the right products that create the right client experiences that are simple, that are easy, that are fast, right, the same things that we like as consumers when we stare at our phones, that's what business owners and finance professionals expect when they're managing the financial priorities of their company. So just having the right and that will require -- and that's a great example where our business leaders can come together and say, "Hey, this is a high business priority." So as we think about dollars which are scarce always, we should consider them scarce and valuable, we are going to focus more investment in that product portfolio.

Got it. I guess, maybe taking a step back, looking at the guidance you provided back in Jan and 2 things: one, the outlook for interest rates keeps changing. Like if I asked this question to your peers as well. Based on the balance sheet today or pro forma for this transaction, what's the best rate outlook for Truist? Is it a few rate cuts? No rate cuts? Like...

Yes. I mean, like, look, I think we were pretty clear when we released fourth quarter earnings that our expectations for rates was 5 cuts, the first in May, and then I think we were going to skip November with the election. So we had 5 of the last 6 meetings of the year resulting in a cut. We've said it again today and we've said it before, we do feel relatively neutral in terms of our positioning. So I think if the rate path was 3 cuts or 7 cuts, I don't think we -- that's going to be a big driver of change in our sort of outlook. I think scenarios where you significantly delay cuts or you don't get any cut at all, that's going to be -- would be a headwind for us. So.

And then -- and just on that, I'm just -- would love to hear the visibility you have on deposit customer behavior -- like does higher for longer lead to just the mix pricing pressures getting worse?

It's a good -- I mean, that's the question. The last hike was right, July. So quite a bit of distance since the last hike we have seen some of the remixing. Slow a touch, but the betas will keep grinding higher, right? We -- you saw that in the fourth quarter. We signaled that we actually thought that betas would actually accelerate a touch for us in the first quarter based on a couple of factors. But that's the question is every day, especially on the, I'll call it, the retail side of our business, where you've got a lot of interest checking DDA people who haven't moved, they will keep moving. And I think that also translates into even when you do see a cut. I think our outlook for how -- what will be sort of the reprice trajectory when you start to see cuts and that depends on a lot of factors. But I mean, if you're going to think about the first 25 or 50 or 75, what does that really look like? I think last year, a lot of us in the industry sort of had an expectation that maybe those betas were shorter, we're going to be a little higher. And I think that as we stare at a lot of these clients who haven't repriced there's sort of a recognition that there is going to be this lag effect. And so I think you probably have sensed that from people's outlook for 2024.

And what's the confidence level if we do get rate cuts in terms of the deposit betas on the downside? Do you have an x amount of contractual deposit for index deposits that are going to be priced?

We kind of look at it like on the stuff that must move, right? And so -- and that's a reasonable proportion of our deposits. But look, I mean, one of the benefits of having a really high-quality deposit franchise is you do have a lot, that's not must move money, and so you really are really trying to evaluate like the option and the behaviors. And so we'll see. I think again, the stuff that moved really fast on the way up is going to move really fast on the way down. We've been trying to position ourselves ahead of this. We've thought about how do we think about mix on money market versus CDs to kind of shorten guys to be able to think about how we manage that on the margin. And I think everybody is doing probably different versions of the same thing. But that's how we're thinking about that.

And I guess, I'm not sure if you laid out in terms of your outlook on branches and the number of the -- but you have a bunch of your competitors, opening branches in the Southeast and across these markets. And now you have to imagine those will become even more important in a higher rate backdrop as retention of deposits, growing deposits.

Yes. No doubt. I mean, look, the curse of being in like the fastest-growing markets in the country as everybody wants to be there. And so we've lived with that. Both of -- both BB&T, SunTrust have dealt with that for many years and Truist certainly deals with it now. So yes, look, we're fighting the fight every day, right? I mean we want to better serve clients. We think we've got teammates that love working for Truist. We've got clients who have been long time, dutiful clients. We've got all the products we need. So it's about execution. As you think about that's on a relative basis, broadly speaking on the deposit side, we still -- Fed balances still are declining with QT. I mean we do have an expectation that maybe we'll see some taper and maybe QT ceasing all together. But in the interim, and that's one of the factors, frankly, that I think we're really trying to think hard about in terms of the reprice opportunity is it's -- we are in competitive markets. QT is still on the backdrop. And what does that mean in terms of the strategies and tactics people are using to attract clients.

Got it. Maybe switching gears a little bit, talk to us in terms of the credit outlook, what you're assuming just across your loan portfolios around areas of stress, how that translates into reserves, the charge-offs?

I don't think we have new news on credit. It's -- we've -- you saw our expectations for the year from a charge-off perspective are a little higher than what we experienced, obviously, in 2023. That's driven primarily by -- and again, no secret, and a lot of the industry is talking about it, but the losses that we would expect in our CRE office portfolio I think the good news for Truist is that's very limited exposure, right? For us, I think it's a little more than 1.5%. I think 1.6%, 1.7% of our total loans held for investment is office. We think we've done a really good job evaluating those deals kind of on a deal-by-deal basis. We've got a loan loss reserve against that portfolio that's almost 9%. And as we're beginning to work through some of those deals, the loss experience is -- has been comparable to where we're reserved. So that's the primary driver. I think the area that has our attention. We've had a lot more questions lately about CRE multifamily. We don't see that as being sort of a similar situation, if you will. I mean, I don't think you have a sort of collateral asset value issue like you maybe have on the office side. And on the consumer side, we've seen -- that's trended a touch higher as well, then I think that's not just -- that's not a Truist thing. I think that's more broadly and you're starting to see a little bit of stress on guys, probably with just higher rates for longer, but very manageable. For us, the bulk of the focus has been on that CRE office portfolio. C&I has been great. We have not seen really any negative development there.

And when you look at the C&I customers, is it safe to assume at this point, they've absorbed the 500 basis points or 550 rate increase and business has moved without an issue.

Yes, I think that's right. I mean, I think we sort of get paid to worry. And so you wonder if every day that we stay high. I think that potentially puts a little more stress. But if you look across our portfolio, guys coverage ratios and all those sort of health factors are fine, they're holding in, they're making it.

You mentioned multifamily. So I agree, it's very different than office. But I think what you're hearing increasingly is there is an oversupply in the Sunbelt states that's coming on be it Austin, Raleigh, et cetera. Like how do you handicap that? Just like do you share that concern as well? Are you seeing that?

Yes. Yes. I mean, look, I think there's like some rents pressure, right? And you've also got guys probably could have underwritten some of these deals with a different expectation of rates do. So you've got some stress like on cash flow. But again, I think it's just more moderate in general and manageable for a lot of these guys. We just don't have an expectation that the ultimate like PD or LGD on these deals, there's going to be anywhere close to what we see in all of this. .

I'm assuming you expect maybe some of these go into a workout situation, so they show up in NPS, the losses might still be de minimis. Is that...

I think that's right.

Got it.

I mean if -- certainly, that's how we're thinking about it like from a reserve perspective. And I've spent a lot of time, obviously, with our risk team, and that certainly is how they're approaching it.

Got it. In -- just maybe taking a step back. So obviously, one of the thesis around Truist is you are in one of the best markets in the country across the Southeast. As you think about the top -- so we talked about customer sentiment, commercial consumer. But just talk about like the markets where you're really focused on where you're seeing some momentum and that could drive growth in the near term over the next year or two?

I mean, honestly, our geography broadly has great demographics, right? I mean -- and I can just sort of pick markets, but you think about the D.C. area, Atlanta, some of the Florida markets, I'd hate to list them off. A lot of these markets are -- have been net benefiting whether it was sort of migratory patterns through COVID or just broadly, just vibrant sort of commercial markets and companies moving into our market. So I think just generally broadly, like we're seeing, would expect to see a good backdrop in these markets.

And you mentioned, right, the curse of being in good markets is these are extremely competitive. Just how rational is competition today, both on the deposit side and lending?

It's rational. It's not a new phenomena that the Southeast is a competitive banking market. We -- a lot of our markets were top, sometimes 1, 2 often at least top 3 player in our markets. Oftentimes, there are other large banks that are in those markets too. And then they're often also served by a number of community banks and regional banks. And so I think everybody approaches the market a little bit differently. We lean into our value proposition. We're a full-service firm that we think offers all the capabilities that the biggest banks in the world offer and we do it in a local way and people appreciate that. And then I think there are -- there's a spectrum of where people sort of land and how they go to market. But for us, we feel like our message resonates. And again, Truist success generally, our playbook, and again, this was true for both of our predecessor companies, too, was never to be sort of the biggest bank in the country, but it was to be one of the biggest, if not the biggest bank in our market. The density of share in the right markets, we think is a long-term winning combination.

And how does the competitive landscape stack up when you translate that into retention of bankers? Like at this point, are you still seeing like smaller banks, others poach talent?

Sure. Again, same thing. We're -- I think we're a great company. We attract great talent, we've got great clients. I think we're a great place to work. But people -- sometimes that fits for people, sometimes it doesn't. I mean -- and I think there's no one reason why somebody might choose Truist or might choose to work on a platform that has a different value proposition. I will say this, I believe that yesterday's announcement is going to be a real shot of adrenaline in the arm for our teammates in terms of our ability to get people excited about coming to work and serving clients and growing their business and also letting people know who are eager to work for a company that wants to expand and do business and has the financial strength to go win. So look, one of the things we really focus on is making our company a great place to work and for people to have meaningful careers. We take that seriously. And so I feel like we're really well positioned there.

We have a couple of minutes. I just wanted to see if anyone in the room had a question. If you do, raise your hand right now.

Well, in the beginning, you briefly touched on your liquidity position or the strengthening of your liquidity position. Maybe in the context of QT and further regulation, could you just help us with what the possible outcomes may be of strengthened regulation and how you try to mitigate those?

Was the question about expectations around like liquidity and capital, et cetera?

About increased regulation in terms of...

Increased regulation in terms of liquidity, yes, I think to be determined, much like on the capital side, I mean, I think a lot of what we're -- something that we've been studying is historically, in many cases, I think people think about our LCR as sort of a binding constraint on liquidity. I think increasingly, as we think about bigger scenarios and different scenarios around internal liquidity stress testing, that's increasingly a binding constraint. So I think that's one area where you might see changes for companies like ours is just thinking about, again, the size and sort of creativity around different scenarios and then thinking about having a liquidity position that is appropriate given those standards.

Just last question for me. In terms of -- so obviously, it's been an active few months, weeks, years for you. As you talk to investors, is that an area where it comes your take is that there's aspects about the franchise that's underappreciated as investors think about the investment proposition in Truist?

One thing I'll say, this came out of a meeting yesterday, which I really actually appreciated the comment, but someone were to say, hey, there's sort of a lot going on and it was the MOE and then there was divest this business, divest that business, reorg, simplifies. Like it seems like is there -- what's the identity of Truist? And is it complex? . And I appreciated the comment because I actually believe the opposite. I believe that we've been coming to a funnel where our identity is much clearer, right, much simpler, which is core wholesale banking, core consumer banking, a focus and assertive management of cost, a desire to more fully serve our clients in both towers and now the financial strength to go execute. So I'd maybe leave people with that idea. And by the way, in the backdrop of, we think the -- some of the most exciting markets in the country. So a simple Truist that's ready to move forward.

Got it. On that note, thank you so much, Mike.

You got it. Thank you.