The company noted that adjusted expenses came in at the high end of the expected range, which could impact their ability to maintain positive operating leverage.

Truist Financial Corp ( NYSE:TFC ) experienced a small step down in the anticipated pace of share repurchases for the third quarter.

The company faced challenges with deposit growth, as average deposit balances were impacted by $10.9 billion of short-term client deposits that have since been withdrawn.

Truist Financial Corp ( NYSE:TFC ) saw a 17% year-over-year increase in digital account production, with 43% of new clients joining through digital channels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Story Continues

Q & A Highlights

Q: Bill, it was really nice to see the strong loan growth. Could you expand on your thoughts regarding overall sentiment among your customer base, especially on the commercial side? A: Our consumer business remains strong, with high credit quality. On the wholesale side, clients came in with strength, and there’s still some uncertainty, but we’re seeing new clients attracted to Truist’s purpose-driven focus and capabilities. This gives us confidence in both consumer and business growth.

Q: Mike, given the small step down in the anticipated pace of repurchase in the third quarter, could you explain the reasoning behind this and your broader capital management ambitions? A: The $750 million repurchase was opportunistic due to favorable pricing. We aim to maintain a 100% total payout, prioritizing our banking franchise first. The SCB results were consistent with expectations, and we aim to maintain a 10% CET1 ratio.

Q: Can you discuss the underlying deposit competition and your expectations for deposit costs moving forward? A: The deposit franchise is performing well, especially on the consumer side. We expect balances to be slightly lower in the third quarter but anticipate making up ground on pricing. We aim for a mid-40s beta by year-end, assuming two rate cuts.

Q: Regarding fee income, how should we understand the bounce back in investment banking and trading revenue? A: We saw weakness in April, but May improved, and June returned to normal levels. We expect third-quarter revenue to normalize, driven by a strong pipeline and improved activity.

Q: How do you plan to achieve positive operating leverage, given the current expense trends and investments? A: We have performance-sensitive incentive designs and keep several levers handy to adjust expenses if needed. We’re committed to generating positive operating leverage this year and beyond, with a focus on driving revenue growth.

Q: Can you provide more color on the low single-digit loan growth outlook, particularly for the commercial side? A: Loan growth is driven by strong production and new client acquisition. While line utilization and paydowns are flat, production remains high, and we expect continued momentum in the second half, supported by new clients and market expansion.

Q: What is your view on a normalized net interest margin (NIM), and how long might it take to achieve it? A: We expect the NIM to continue improving, potentially reaching the low teens over time, depending on the operating environment. Our focus remains on NII growth and profitability.

Q: How much of your time has been spent on the merger and regulation, and how will this change moving forward? A: The merger integration is behind us, allowing us to focus on growth initiatives. Regulatory matters are ongoing, but we aim to build a strong risk infrastructure for sustainable governance and future opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.