Truist (TFC) Q4 2025 Earnings Call Transcript

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Call participants

• Chairman and Chief Executive Officer — William Rogers Jr.
• Chief Financial Officer — Mike Maguire
• Chief Accounting Officer — Brad Bender
• Head of Investor Relations — Brad Milsaps

Takeaways

• Net Income — $1.3 billion for the fourth quarter and $5.0 billion for the full year, equating to $1.00 and $3.82 per diluted share, respectively.
• Shareholder Capital Return — $5.2 billion was returned in 2025, including a $2.5 billion share repurchase; this represented a 37% increase over 2024.
• 2025 Loan Growth — Average consumer and small business loans grew 5%, and average wholesale loans increased 3%, with fourth-quarter wholesale average loans up 8% compared to fourth quarter 2024.
• Deposit Metrics — Consumer and small business average deposits rose 1% in 2025; end-of-period wholesale deposit balances increased 6% versus the prior quarter; average deposits were stable linked quarter as higher-cost broker deposits fell, offset by growth in lower-cost client deposits.
• Digital Client Acquisition — 77,000 new-to-bank digital clients in 2025, up 10% from prior year quarter; digital production up 9%; digital chat engagement rose 97% due to expanded AI-powered features.
• Premier Banking 2025 Growth — Deposit production up 22%, lending up 32%, and financial plans up 12%, attributed to higher adviser productivity and branded mortgage/branch-led activity.
• Investment Banking and Trading Income — Decreased 6% for the full year due to first-half volatility, but fourth-quarter revenues rose 28% due to increased M&A, trading, and capital markets activity.
• Treasury Management and Payment Fees — Treasury management fees grew 13% in 2025, while wholesale payment fees increased 8%; payments pipeline up year over year.
• Average Loans Held for Investment — Increased $4.3 billion or 1.3% linked quarter to $325 billion at year-end; full year average was $316 billion (up 3.6%).
• Deposit Costs — Average interest-bearing deposit cost declined 27 basis points to 2.23% linked quarter; total deposit cost fell 20 basis points to 1.64% in the same period.
• Net Interest Income and Margin — Taxable equivalent NII increased 1.9% or $69 million linked quarter, with net interest margin up six basis points to 3.07%.
• Noninterest Income — Fell $12 million or 0.8% versus 2025, reflecting small declines in several fee categories; investment banking and trading income increased $12 million or 3.7% linked quarter.
• Noninterest Expense — Increased 5.2% linked quarter, driven by legal accrual and higher personnel costs; excluding legal and severance costs, noninterest expense declined 0.3% linked quarter; adjusted noninterest expense rose 1% in 2025.
• Asset Quality — Net charge-offs increased nine basis points linked quarter to 57 basis points; nonperforming loans held stable at 48 basis points of loans; full-year net charge-offs declined five basis points to 54 basis points.
• CET1 Ratios — CET1 fell 20 basis points to 10.8%; including AOCI, CET1 rose 10 basis points to 9.5% linked quarter.
• Share Repurchase Activity — $750 million in common stock was repurchased in the fourth quarter, with a new $10 billion authorization announced.
• 2026 Guidance: Loan Growth — 3%-4% average loan growth targeted, led by commercial and specialty consumer lending; residential mortgage and indirect auto expected to grow more slowly.
• 2026 Guidance: Revenue and Operating Leverage — Targeting 4%-5% revenue growth, with positive operating leverage of 275 basis points based on GAAP; noninterest expense expected to rise 1.25%-2.25% on a GAAP basis.
• 2026 Guidance: Net Interest Income — Projected to increase 3%-4%, with average NIM forecast to exceed 2025’s 3.03% average.
• 2026 Effective Tax Rate — Forecast at 16.5%, or 18.5% taxable equivalent, slightly higher than 2025 ranges.
• Share Repurchase Plan for 2026 — Targeting $4 billion in repurchases, representing a projected 60% increase over 2025 levels.
• Return on Tangible Common Equity (ROTCE) Target — Executives reaffirmed commitment to achieve 15% ROTCE in 2027, with interim target of 14% for 2026.

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Risks

• Noninterest expense increased 5.2% linked quarter due to elevated legal accrual and higher personnel costs, though these were partly offset by lower regulatory expenses.
• Full-year investment banking and trading income declined 6%, attributed to first-half market volatility.
• “Net charge-offs increased nine basis points on a linked quarter basis, reflecting normal seasonality in our consumer portfolio.”
• Management highlighted macroeconomic conditions, particularly employment trends and credit spreads, as potential external risks to continued growth.

Summary

Truist Financial Corporation (TFC +1.99%) reported full-year net income of $5.0 billion with improving operating leverage and continued growth in both consumer and wholesale banking fueled by digital and branch investments. Management announced a new $10 billion share repurchase program and intends to repurchase $4 billion of stock in 2026, up 60% from the prior year. Treasury management, payments, and premier banking businesses demonstrated double-digit growth, contributing materially to improved profitability and affirming management’s ROTCE targets. Guidance indicates revenue and net interest income growth of 4%-5% and 3%-4%, respectively, and company leaders reiterated a pathway to achieving a 15% ROTCE by 2027.

• Executives revealed that “Average wholesale loans increased 3%” in 2025 with acceleration in the year’s second half, positioning the segment for continued strength.
• Chief Financial Officer Mike Maguire emphasized a shift in expense commentary to GAAP figures, discontinuing adjusted expense disclosures after this report.
• The company fully integrated its LightStream lending platform into digital and branch channels, enhancing efficiency and broadening distribution.
• The payments pipeline was described as “up significantly year over year,” underscoring ongoing momentum in noninterest income initiatives.
• William Rogers Jr. stated, “Our expectation is that our revenue growth will double in 2026,” pointing to an acceleration of strategic execution.
• Net new checking account quality improved in 2025, with higher average balances and better cross-sell rates, though the quantity of net new accounts declined from the prior year.

Industry glossary

• ROTCE (Return on Tangible Common Equity): A profitability ratio measuring net income attributable to common shareholders as a percentage of tangible common equity; used by banks to signal shareholder value creation.
• AOCI (Accumulated Other Comprehensive Income): An equity account reflecting unrealized gains and losses from certain investments not yet realized as capital, relevant for regulatory capital ratios.
• ALLL (Allowance for Loan and Lease Losses): A reserve set aside on bank balance sheets for potential credit losses in the loan and lease portfolio.
• Deposit Beta: Measures the sensitivity of a bank’s deposit rates to changes in market interest rates, indicating how much of a rate move is passed to depositors.
• Premier Banking: Truist’s specialized segment targeting high-net-worth consumer clients with tailored deposit, lending, and advisory products.

Full Conference Call Transcript

William Rogers Jr.: It drives our strategy and fuels our commitment to our clients and the communities we serve. Despite market volatility early in 2025, we stayed focused on supporting our clients and executing our growth and profitability agenda. This discipline drove higher earnings, stronger client relationships, and attracted new business. A key to delivering on our purpose and performance is the investment in our business, markets, and teammates.

Some of these significant investments include enhancing our tech and digital capabilities in areas like AI, improving the client experience, recruiting and developing talented teammates to advise and serve clients with more complex and industry-specific financial needs, announcing plans to open 100 new insight-driven branches in high-growth markets, as well as enhancements to more than 300 branch locations in all markets. These investments underscore our commitment to the communities we serve and position us to deliver more personalized advice and create opportunities for outsized growth. As we enter 2026, our purpose continues to guide our focus on growth, profitability, and deeper client relationships. We’re expanding our presence and delivering more differentiated advice-driven experiences.

I look forward to sharing more of these priorities during today’s call. Let’s turn to slide five. We closed 2025 with strong results and clear momentum heading into 2026. Delivered net income available to common shareholders of $1.3 billion or $1 per diluted share for the fourth quarter and $5 billion or $3.82 per diluted share for the full year 2025. These results include certain charges such as severance and an accrual related to a specific legal matter that was settled in 2026 which totaled $0.12 a share for the quarter and $0.18 per share for the year.

At the start of last year, we outlined five strategic priorities aimed at accelerating our performance and improving our profitability in 2025 and beyond. While there’s more to accomplish, I’m proud of the progress we made as a company in 2025, and excited about the momentum we have entering this year. First, we continue to generate strong broad-based loan growth in both wholesale banking and consumer and small business banking driven by new loan production and increased client acquisition. Second, strong loan growth, better second-half results in investment banking, trading, and wealth, along with continued expense discipline, drove 100 basis points of positive adjusted operating leverage in 2025.

Third, we made significant investments across our business in talent and technology, laying the foundation for future growth, which we expect to accelerate in 2026. Fourth, we maintain strong asset quality metrics as net charge-offs declined versus 2024, and nonperforming loans remain relatively stable. Finally, we returned $5.2 billion of capital to shareholders through our common stock dividend and the repurchase of $2.5 billion of our common stock. Our total capital return in 2025 reflects a 37% increase over 2024. Looking ahead, our strategic priorities remain unchanged, and our focus is clear: accelerate revenue growth, drive greater positive operating leverage, continue to invest while maintaining our expense and risk discipline, and return capital to shareholders at an accelerated rate.

Executing on these strategic priorities is central to improving profitability and achieving our long-term goals, including our commitment to deliver a 15% return on tangible common equity in 2027. So in summary, we closed 2025 on a strong note and entered 2026 with significant momentum and confidence in our ability to deliver revenue growth at least twice the pace of 2025, greater positive operating leverage, higher levels of capital return, and improved profitability. Before I hand the call over to Mike to discuss our quarterly results, I want to spend some time discussing the positive momentum we’re seeing within our business segments with our digital strategy on slides six and seven.

First, let me start with consumer and small business banking. CSBB delivered consistent strong performance throughout 2025. As shown on the slide, we generated 5% growth in average consumer and small business loans and 1% growth in average deposits. This momentum was fueled by our market-leading consumer lending businesses, another year of net new checking account growth, and deeper relationships with our premier banking clients. Loan growth was broad-based across the portfolio with especially strong contributions from indirect auto and our specialty niche lending platforms Sheffield, Service Finance, and LightStream. These businesses continue to produce market-leading growth with attractive risk-adjusted returns.

As part of advancing our consumer lending strategy, we’ve fully integrated our digital end-to-end lending platform, LightStream, into our Truist mobile app experience and our branch banking account opening experience. This expanded scale is improving efficiency, broadening distribution, accelerating growth, and meaningfully enhancing the client lending experience. Beyond our national consumer lending platforms, Premier Banking also delivered strong results. With 2025 production up 22% in deposits, 32% in lending, and 12% in financial plans. This performance was driven by higher adviser productivity and strong branded mortgage and branch-led lending. We continue to see strong outcomes from our strategic investments in digital, delivering year-over-year growth across all core metrics.

In 2025, we added 77,000 digital new-to-bank clients, up 10% from the prior year quarter, capping a solid full-year performance with digital production up 9%. We also took meaningful steps to deepen self-service adoption, expanding capabilities within our AI-powered Truist Assist mobile experience. The launch of Ask Truist Assist universal search capability now delivers client quick intuitive access from any screen. This drove a 97% increase in digital chat engagement in 2025 and is helping us improve efficiency and strengthen client connectivity as more activity naturally shifts to digital. Let’s turn to wholesale on page seven.

In wholesale, we delivered a strong finish to 2025 driven by meaningful improvement in the second half of the year in both loan and deposit growth, investment banking and trading revenue, and continued progress in strategic focus areas, such as payment and wealth. We onboarded twice as many new corporate and commercial clients versus last year, spanning a diverse range of industries and markets. Building on these new client relationships and our focus on deepening existing ones, we saw our loan and deposit momentum strengthen as the year progressed. Average wholesale loans increased 3% in ’25 with momentum accelerating in the second half.

Fourth quarter average loans were up 8% compared to the fourth quarter of 2024, fueled by new client acquisition and supported by focused talent investments as our strategy continues to gain traction. End-of-period wholesale deposit balances rose 6% linked quarter. While seasonal public funds contributed to this growth, we saw growth from all of our industry banking teams and geographies. Full-year investment banking and trading income declined 6% versus 2024, due to first-half market volatility. However, activity rebounded strongly in the second half with fourth-quarter revenues up 28% versus ’24 driven by increased M&A, trading, equity, and debt capital markets activity.

In wealth, net asset flows remained positive supported by an 8.5% increase in new clients last year, with almost 30% being generated by CSPB. Wholesale payment fees, which include merchant services, commercial card, and treasury management fees rose 8% in 2025. Treasury management fees, a key strategic focus, grew 13% on the strength of new client acquisition and deeper relationships within our existing base. Importantly, our payments pipeline is up significantly year over year, positioning us for continued growth in 2026. So now let me turn over to Mike to discuss the financial results in a little more detail.

Mike Maguire: Thank you, Bill.