...Moving right along with this morning's session, very pleased to have Truist Financial up next. From the company, Bill Rogers, Chairman and CEO, and I think Mike Maguire, CFO, is floating around here somewhere. There he is. Haven't seen him. But with that, let me, Bill's going to give a quick opening remarks. They did put out a slide deck last night, that's, you know, short, but has some new information in there, and then we'll take some Q&A.
Great, Jason, thanks. Great to be at the conference again this year. Before we start it, let's take note of the forward-looking statements on slide two. I'd like to begin by acknowledging all of our shareholders and thanking you for your investment in Truist. Jason, as you know, I was here last year, discussing some organizational realignment and a simplification plan, and it has been an impactful twelve months for Truist. We've had strong execution, improving performance, and we are extremely well positioned for growth. All right, so first, we always start with purpose. Our purpose is to inspire and build better lives and communities. It is the common thread among everything that we do, and it guides the decisions we make at Truist.
We've made meaningful impact on the lives of our clients, our teammates, our communities, and it reinforces our conviction that this grounding and purpose, and this foundation was absolutely the right thing to do. We can realize our goal of generating strong growth and profitability by living our purpose and fully leveraging the capabilities and markets, which I'll discuss a little bit later on slide four. Although much has changed in our company and the banking industry over the last five years, the strength of our markets and our opportunity has been constant. As shown on the map on the right-hand side of the page, we have a local presence in some of the best markets in the country, as our footprint has the highest projected rate of population growth versus our peers over the next five years.
More importantly, and as shown in the middle of the page, is the fact that Truist has tremendous scale and density in these markets. Specifically, we have a top five market share in 23 of our top 25 MSAs. We think the density of our franchise is an important differentiating factor for Truist, as it speaks to how our company is fully ingrained with consumers and businesses in our markets. In addition to our strong local presence in the Southeast and Mid-Atlantic, we also have national reach in areas like investment banking and trading, corporate lending, payments, wealth, and indirect consumer lending. Our comprehensive platform competes with the largest banks on a national basis, while our strong local presence gives us the ability to better address the needs of consumers and businesses, given our decades of experience in serving these markets. We don't have to experiment in new markets.
Our opportunity is quite clear: maximize Truist in order to achieve our strategic objectives, which I'll discuss more in detail on slide five. In order to achieve our strategic objectives and to drive shareholder value, we have been hard at work on the last twelve months, executing changes that we outlined on this stage a year ago, designed to simplify our business model, reduce costs, improve capital, and better position our company for the years to come. Last September, we formally announced an organizational realignment and simplification plan, which is devised to improve our efficiency and drive revenue opportunities in our two primary segments, consumer and small business, and wholesale. As part of this plan, we committed to holding expenses flat in 2024, which I can confidently say that we remain on track to deliver.
In October, we announced the retirement of certain directors from our board of directors, which streamlined the size of our board to a level that's more in line with peers. In November, we announced several key executive leadership changes, including appointing Dontá Wilson to head our consumer and small business segment, and the hiring of Kristin Lesher to run our wholesale banking segment. Dontá is responsible for all consumer loan and deposit products, small business banking, Premier and digital banking, as well as our national specialized consumer businesses. Under his leadership, we've seen an increase in consumer satisfaction scores, improvement in branch productivity, improvement in efficiency, strong momentum in digital banking commerce, and positive growth in net primacy and net new client accounts. Kristin Lesher officially joined Truist earlier this year and is off to a fantastic start.
She's overseeing corporate investment banking, commercial banking, commercial real estate, and wealth management, and her team has attracted a tremendous amount of talent to our platform in a short period of time. We're really excited to have her on the team. They, along with our skilled leadership team, have helped improve accountability, efficiency, and ultimately drive better growth across our platform, while controlling risk, all of which are the primary benefits of the simplification effort. The organizational and simplification work was largely completed in the second half of 2023, leaving us with a simpler and more efficient platform for our clients to do business with us, and a framework and clear line of sight on how to best deploy capital effectively across our businesses.
These changes were important, considering that in May of this year, we completed the sale of our remaining stake in Truist Insurance Holdings, which generated more than two hundred and 30 basis points of CET1 capital and increased our tangible book value share by 33%. We utilized a portion of the proceeds and capital generated from the sale to reposition our balance sheet, which offset the loss of the earnings, enhanced our liquidity and interest rate risk management profile, while still leaving us plenty of capital to pursue growth initiatives and return capital to shareholders in the form of dividends and buybacks. In June, we announced that our board approved the repurchase of up to $5 billion in shares of our common stock through the end of 2026. As we noted in our July earnings conference call, we expect-...
to repurchase approximately $500 million worth of our common stock in the third and fourth quarters of this year. Finally, in August, we announced the hiring of Steve Hagerman, our new Chief Information Officer. Steve brings 25 years of broad technology experience in the financial services industry to Truist and will be a key driver in our efforts going forward. So it's been a busy year for Truist, and I am confident the work completed over the last twelve months will improve our returns through better growth and profitability over time, which let me discuss a little bit in the next slide. As I mentioned, the sale of TIH greatly improved our relative capital position and accelerated our ability to comply with the widely, widely expected new industry standards for capital.
The sale also generated capacity for us to grow and execute a balance sheet repositioning, which served to offset the loss of TIH earnings. That being said, our increased level of capital and our new business mix also reset our ROTCE ratio. As I've said previously, that was the starting point following the sale of TIH, and exactly that, a starting point. We expect to improve this over time, which we'll outline. As you can see on slide six, our pace of improvement is differentiated, and we will improve this ratio to the mid-teens over the medium term through a combination of client and business growth and a more efficient balance sheet, all while maintaining our cost discipline. We see client and business growth as key drivers of improving our profitability, especially in the areas like middle market banking, treasury management, and our consumer and wealth businesses.
Many, if not most, of these opportunities involve more fully servicing existing satisfied clients, which gives me even greater confidence in our ability to succeed. Some of this improvement will also be driven with a more efficient balance sheet, which includes deploying capital into growth initiatives, repurchasing shares, and benefiting from ongoing fixed asset repricing. In addition, our recent expense initiatives and the sale of TIH have resulted in our efficiency ratio improving to near top of our peers, which is a level we're striving to maintain. The good news is that we see multiple paths and initiatives with proper execution will result in improved performance. Let me just discuss a few of these on slide seven.
The sale of Truist Insurance Holdings improved our relative capital position and accelerated our ability to comply with proposed Basel III capital rules, giving us significant capital flexibility today and over any potential phase-in period to grow our business and return capital to shareholders. As I previously noted, we think Truist is in a unique position to accomplish our strategic growth objectives and return more capital to shareholders than others, given our strong relative capital position, as shown in the first graph on the page. To be clear, we think this is a key differentiating factor for Truist, as we believe that investors in our common stock today have the opportunity to receive a relatively higher capital return from our strong common stock dividend and share repurchase over the next several years, while also continuing to own a franchise in attractive markets poised to deliver growth.
I can say that I'm encouraged that much of the growth and profitability improvement potential we are working towards is centered on deploying existing capital and further deepening of existing client relationships in markets, and verticals, and products at Truist. For example, our most recent earnings call, I noted we continued to add talent in the wholesale banking segment, with specific focus on further building out our middle market commercial lending segment, which represents one of the largest growth opportunities within our regional business. We're primarily focused on industries that support existing corporate investment banking coverage and expertise. As shown on this slide, our middle market corporate lending businesses, which focus on companies with revenues of $500 million-$2 billion in sales, approximately 50% of market share we have with companies with less than $500 million in revenue.
Over time, we think there's an opportunity to increase our share in middle market banking by leveraging our corporate investment banking expertise, where we've consistently gained market share across several capital market products due to investments in key talent and industry verticals. This is a strategy we know well at Truist. In addition, we also see opportunity to grow our existing strong share with commercial clients with less than five hundred million in revenue as we continue to seek a larger mind and wallet share, with better advice and significant focus on increasing our payments and treasury management penetration. As shown on the chart in the middle of the slide, the peer median for treasury management fees as a percentage of C&I loans is 50% higher than our current book of business, while top quartile performance is double our existing revenue base.
Much like we did with investment banking several years ago, same game plan, we've increased market share gains due to investments in people, products, and we're making those similar investments in payments by adding experienced teammates, investing in products to improve our market share, not only with existing clients, but also with new clients. Although the investment in our payments business will take time to mature, we believe that there is existing momentum and material runway for improved performance and market share gains. Similarly, in consumer and small business, we believe there's a compelling opportunity to further penetrate our existing client relationships by increasing primacy and capturing a larger share of their deposits.
As shown on the chart on the right side of the page, our Premier banking clients, which are defined as clients with more than $100,000 with Truist, keep approximately 60% of their deposit balances with us. We've identified three times as many existing clients that we believe would qualify as Premier clients, but hold significant assets at other companies. Within the same Premier potential cohort, we estimate that just 2% currently have a wealth management solution with Truist, and there's great opportunity to increase that revenue as well. We're making investments in teammates, performance marketing, digital product enhancements, and rewards programs to attract more of these existing clients, deposits, and wealth assets to Truist. These are just a few of the examples underway of the many ways we believe we can drive better growth and profitability over the medium term.
Given our multiple paths for growth and profitability improvement, I firmly believe that the strategic and financial opportunities at Truist have never been more compelling. Let me discuss those on slide nine. As I've said previously, we'll move with pace to deploy our capital and improve our returns, but we're not going to be in a rush to leverage capital to meet short-term expectations that do not have long-term positive impact on our company, our clients, and, of course, our shareholders. However, I hope that you can see we have a clear understanding of not only where we want to win, but where we want to win profitably. Specifically, we think there's a compelling opportunity to grow our existing business within certain verticals that already exist at Truist. We're not stretching for growth. We're not experimenting in new markets. Rather, we're focused on executing at Truist.
Our teammates clearly understand that our company is on offense and is seeking growth in a variety of ways, while also maintaining our strong risk discipline. In consumer and small business, I'm encouraged by our momentum. Our internal client satisfaction scores continue to improve, driving increased net new checking account production, increased primacy, and lower attrition rates. We're also seeing improved production in areas like small business lending and several of our specialty indirect consumer lending businesses. We are leaning in areas like indirect auto, which is a business that Truist has operated for multiple decades. In investment banking, we've increased market share across several capital market products due to significant investment in talent, industry verticals. These investments have resulted in a significant increase in the number of lead roles across several products, including equity capital markets, leveraged finance, asset securitization, and M&A.
Although commercial loan demand remains muted for the industry, we believe we're well positioned for a recovery, as we're adding experienced talent across wholesale platform, as I previously discussed. I'm confident we've got tremendous momentum within our company. We've got great momentum with our clients and our teammates, as our value proposition has never been stronger. First, we have an incredible franchise with leading share in high-growth markets, energized, purposeful teammates, and a fulsome set of specialized wholesale and consumer capabilities that our loyal clients value. Second, our relative capital advantage is a differentiating factor in that it gives us unique ability to grow our core banking businesses by serving existing and new clients, and return considerable amount of capital to our shareholders in the form of dividends and share repurchase over the next several years.
Third, as we execute our strategic growth and capital management priorities, we see a significant opportunity to improve our profitability over the medium term. We plan to accomplish all of this while maintaining our expense discipline and focus on generating positive long-term operating leverage. Finally, we'll never take for granted our strong track record on asset quality as we continue to focus on maintaining strong risk discipline and strong controls. I'm incredibly optimistic. I'm excited about operating our company in an increased position of financial strength, as I believe Truist is best positioned to return more capital to our shareholders and deliver improved results with better execution and focus on our fantastic franchise. I'd like to thank all of our teammates formally for their incredible, purposeful focus and productivity in moving the company forward, also for your interest and investment in Truist, and Jason, I'll come over and join you.
Thanks, Bill. Appreciate that. Maybe a couple of follow-up questions. Before I do that, maybe just pull up the first ARS question that we ask this for all the companies. But, Bill, you talked about this mid-teens ROTCE target in the medium term. Maybe help us define, you know, maybe what is medium term? And then, you know, is that kind of the next step? Can we go higher from there? Or is that kind of where you expect this company to run? I know when the BB&T and SunTrust merger was announced, and that merger, deck, had 22% in it. I'm not. I know that, granted, the world's changed since then.
It's a different business model.
Agreed. So just maybe talk to, you know-
Yeah
... time frame, and then is that step one, or how to think about that?
Yeah, I think, Jason, I think it's a journey, right? So I think one of the things that we felt from our shareholders is to outline the journey, sort of where are you going? What is the ROTCE? Where's the medium term? Medium term is three or so years, and sort of that kind of framework. A lot of that'll depend on sort of the economy and where things recover, and that might help define medium term. But I view this as an important next step. I mean, I think this is an achievable number in terms of return. When we get there, we'll evaluate where we are with the economy, we'll evaluate our company, we'll evaluate our business mix, and see where we go from there.
But I think this is, you know, our ability to have a high return for shareholders over the medium term, I think is a really distinguishing factor.
And then, you referenced it at the onset. At last year's conference, you unveiled a new expense optimization and just-
Yeah
organizational simplification plan. Maybe discuss, you know, kind of the outcomes from that, kind of what's gone better than what's been good, what's not been so good, and, you know, how are these changes, you know, maybe positioning you to get to the teens ROTCE?
Yeah, I mean, when we were here at the last meeting, you know, I said we needed to have a reset. You know, we said we came out of the merger. I'm very pleased with what our teammates were able to accomplish, we were able to accomplish with our clients. But we came out with a chassis that was too big. And I don't think that's an unusual outcome from a, you know, from a large, large MOE. And we could have taken that over a long burn. We could have. We had a really good plan on sort of, let's reduce expenses over time, let's increase return over time. But we made the decision, let's just do a reset. Let's actually take a more of a stairstep function. And in order to do that, we had to really simplify our businesses.
So we took, you know, what were a lot of businesses, competing priorities, put them under two umbrellas. That afforded the leaders of those businesses to have, you know, an instrument panel where they could touch a lot of different things. They could have a lot of different impacts in terms of, you know, things that you can do with scale, outsourcing, things you can do with offshoring, things you can do with consolidating layers of, you know, businesses, consolidating business units. So they all had really, really good plans against those objectives. But the simplification and the reset needed to come together, and I think it's really positioned us well. So, you know, now we have, you know, we're on this reset platform.
We agreed that we'd have a flat expense for this year, and we were, you know, growing at, you know, mid to high single digits, so that's a significant reset, significant commitment, but more importantly, we're really well positioned for the future, so the ability to, you know, achieve expenses is one important part, but also the ability to deploy capital now, so those business leaders are making the decisions about where we want to deploy capital for growth, where they want to hire, where they want to create efficiency, what are the left lanes, what are the right lanes for growth, so I think, you know, in addition to the reset on the expense side, it really is positioned as great for growth.
You're in the market talking to commercial clients pretty regularly. Can you just talk about what you're hearing, what their sentiment is on the economy, what they're focused on, just how that's impacting, you know, loan demand? I know you mentioned commercial muted, but maybe is that the case and kind of what to get that going?
Yeah. You know, I do spend a lot of time with clients. I was with a group of clients yesterday. We were having this exact discussion on, you know, what is it? You know, if things are a little bit slower, you know, what is it? I don't think that business owners arbitrage elections. So I actually don't think they think through that. There, you know, there's been these. There's lots of elections. But I do think the rates are coming back on. You know, probably six months ago, people probably capitulated to rates. You saw it in the capital market side. So people sort of started advancing, taking out long-term debt. Fortunately, we benefited that when it happened with our clients.
But today, I got a lot of a feeling of, "Hey, we need to start seeing something that'll spur the economy." And I think they're starting to put more chips on that's rates versus, you know, global uncertainty or election uncertainty. But they need to sort of see that path coming forward, which, you know, will increase their confidence to invest in the things they need to do, their clients' confidence in buying and securing their products. So I think we can get started.
Then maybe, maybe shifting gears to the consumer side, you have some unique lending businesses there. Maybe talk how those businesses are performing, your appetite for growth, overall consumer health. We did have a company that does retail auto lending.
Yeah.
Their credit was going worse than expected this quarter. Just maybe what are you seeing?
You know, overall consumer health is strong. You know, if you look at the savings rate of the consumer, sort of, you know, pre-COVID and then through COVID, you know, we're sort of not back to those levels, so they still have a good savings account. If we look at FICO scores and debt to income and those kind of things, consumer is still in pretty good shape. Do we see some softness on lower income consumers? Yes. You know, so, you know, the payment flows of incomes and outflows are starting to get, you know, a little out of bounds. That's showing up in a little bit of delinquencies. But we made a lot of credit changes sort of post-COVID, so we had some tightening of credit changes.
I think, you know, during COVID, you saw elevated FICO scores, elevated savings rates. Coming out, we said, "Okay, we've got to sort of need to get in front of that. Let's tighten up on some of the credit centers." So I think for us, what we see is consumer, normalizing or normalized, you know, somewhere in that zone. And then, as you mentioned, we've got some really good, you know, direct-to-consumer businesses. You know, we have a business called Service Finance, which is point of sale, using sponsors on the home improvement side. We have a business called Sheffield, which is point of sale, but sponsors, you know, on the, you know, motorsports and powersports, businesses. So these are generally smaller ticket items.
Think about on the powersports side, could be trailers and those type of things. Think on the home improvement side, could be HVAC. So these are things that people need. These aren't sort of, you know, differentiated parts. And then we have LightStream, which is a, you know, nationwide digital consumer business. So what's happened, you know, as we were more in a capital, you know, conservation mode, post TIH, we've been able to say to those businesses, "Now you can continue to grow." I mean, these are really good businesses. They have really good high return profiles. They have really good client relationships. Their client, you know, satisfaction scores are sort of through the ceiling. I mean, our teams do a really, really good job. So we've said, "Let's, let's grow those businesses.
Let's continue to allow capital to be invested in those businesses," and we're seeing that. On the LightStream side, we've taken an incredible platform. Again, super client satisfaction scores, and we said, "Look, instead of sort of a nationwide digital, you know, business, why don't we actually bring that inside? Let's make that more of a benefit for our existing client base," so back to my comments about our Premier client base, for example, we want to give them a really, really good credit experience as well, and reward them for bringing that. With those credit experiences, try to bring more deposits as part of that, so I think those are really key components and a place where even if we have some muted C&I side, we can put a little shoulder to the wheel against some of those consumer businesses.
Helpful. Maybe pause for a second. You know, you didn't talk about any kind of third quarter full year guidance. You mentioned-
Yeah.
Kind of flat expenses.
Yeah.
But, you know, any other kind of tweaks you want to kind of highlight?
No. I mean, we reaffirm our guidance on the third quarter and full year. I think we feel good about the trajectory where we're on. Will there be small, you know, takes and whatever, as it relates to that? Yes. But, we feel really good about the path that we're on now.
Great. Why don't I bring up the next ARS question? 'Cause, you know, clearly the rate environment is shifting before our eyes. Maybe just talk about your expectations for kind of deposit balances and betas. You know, Fed's gonna cut next week.
Yeah
Just how you see that playing out?
Yeah, I mean, I think there are several. You gotta, you have to dissect the question into a lot of different categories. As it relates to the, you know, the C&I side of that and the wealth side of that, the businesses that have high betas, we'll be really focused on high betas coming up and high betas coming down. And I think, and there'll be a lot of flexibility around that, and I think that'll be the expectation. If we look at history, I think is actually, you know, proven this out pretty consistently, there's a lag effect on the consumer side.
And so while we've done a lot of things to, you know, stagger CD maturities and, you know, not create cliffs, you know, waterfalls along the way and be really conscious about how we've, you know, managed the maturities, I do think there'll be a lag effect. And you know, that, that'll have a, you know, a slower burn.
Helpful, and maybe, on the fee income side, you know, obviously, with the sale of the TIH, you know, the TN contribution-
Right
Declined. You know, you certainly had some success in investment banking. Just maybe talk through kind of any issues there, you know, around, I guess, investment banking and capital markets, what you're doing there, and just maybe more broadly.
Yeah, we have really good fee-based businesses, and they've had good, consistent growth patterns. So investment banking, I think, is a, you know, perfect example. And we've been, you know, decades in this business, built it organically, which I think is really important. So a really, really strong culture. You know, in the last few years, we've, you know, sort of re-upped. You know, so every few years, we sort of re-up and recommit. We re-up with a lot of really good talent, product capabilities, investments, and we've had market share gains in almost every category in investment banking. But really importantly is using investment banking, using the verticals and the expertise that we have to drive that business in our commercial franchise and to build out our mid-corporate franchise.
I mean, I think that's really sort of a, you know, the really distinctive advantage for us is to build this out along industry expertise. And I think not only will that continue to be add to the growth side, because we focus internally on the franchise, it reduces the volatility. So we're not as market dependent, we're really franchise dependent. So what's going on with our clients and their capabilities and their desires, and we have a really good, you know, capacity and ability to understand that and get in front of that with advice. And it's really truly been fun to watch our commercial, you know, bankers to build their skill sets. We've asked a lot of them, so I'm unabashed about that.
We've asked them to build their skill sets, but to watch them get in that advice-oriented business, to bring their industry, you know, specialist partners, really offer unique advice to a client that they haven't maybe received before, not only related to their own company's, you know, balance sheet needs, but also to their industry, what's going on, and we've really seen that, you know, manifest itself in growth in that business, and then our Wealth business. Similarly, we have a really good Wealth business, a little more focused inside the franchise. The growth in the Premier, which I talked about, will really be dependent upon our Wealth partners and our consumer partners working sort of hand in hand to have comprehensive relationships with those clients. You know, good opportunity on that.
And as I highlighted, the payments business has got to be stronger for Truist. You know, if you think about a merger, it's hard to get a client to switch their treasury management business during a merger. You know, we're through that phase, and our client scores are really high, so they're really good satisfaction. Our clients have sort of been through the merger with us. During that time, we've invested in talent, we've invested in products, and we've invested in capabilities. So our, you know, hit rate and success rate in the payments business, you know, in the last, you know, quarters has really been dramatically improved and part of the emphasis of, you know, building a more scalable, durable, you know, higher return, better capital return, you know, business in our payments business.
It'll take a while. That's not the thing you do in, you know, two quarters, but it's also enduring, and it solidifies those relationships that we have.
... helpful. You talked about flat expenses for this year, although it sounds like positive operating leverage will be tough, but that's certainly something you talked about as being important to you. I guess maybe looking out to 2025, I'm sure you're starting to go through the budgeting process. You know, is that something you think you can accomplish? And then, you know, any other kind of cost reduction opportunities possible, or do you really need to see revenues come back?
Yeah, I want to start with two ways, Jason, is on the planning process, we ask everybody to plan positive operating leverage. So, you know, we've had a lot of initiatives in the last year, and we sort of don't want to, you know, lose that momentum, that continuous improvement, that efficiency mindset. So we'll ask people to plan on a positive operating leverage. So when they come to us, we'll have a good back and forth. We're obviously in the middle of that, sleeves rolled up right now, in planning that process. The achievement of that will a lot dependent on the economy. It's a lot dependent on growth and the opportunities that have that.
But our commitment to focus on positive operating leverage, certainly long term, and then the short term curve in achieving that has a lot of, you know, dependencies. We have a good line of sight to the expense side, so part of that simplification effort is our teams really understand where the next opportunities are on the expense side, where the efficiencies are, in addition to the investments that we need to make in products and capabilities. And they'll, you know, we'll sequence those in ways that we think will have the, you know, the highest, long-term return for our shareholders.
Got it. Maybe credit quality. We touched on consumer earlier, but maybe kind of focus on commercial, maybe CRE, commercial real estate, office, multifamily, obviously in the news, and, you know, we've seen kind of idiosyncratic issues with others kind of pop up around C&I. Just what are you seeing there?
Yeah, I think overall, C&I is pretty strong. I mean, our clients, you know, entered into this cycle with, you know, a lot more liquidity and a lot less leverage and a really good understanding of their balance sheets. I mean, you know, one of the reasons bank utilization is flattish is our clients really understand how to work their working capital. I mean, they learned a lot. You know, think about, you know, the auto dealer doesn't need to have as many cars on the lot as they used to. They, you know, clients are willing to come in and buy a car, and they can have it delivered. Those kind of examples, people are just working their working capital better. So I think the C&I side comes into this with a little strength.
We don't see a secular or a geography or you know, industry, you know, issue brewing. Let's take office out of this for a second. In the C&I side, I think as you mentioned, you know, an occasional idiosyncratic, you know, maybe not a strong management team or business model kind of thing. But we're not seeing that show up in our loss portfolio. On the CRE side, I think you mentioned both office and multifamily. I think the multifamily has probably surprised to the positive. You know, our exposure is primarily in our markets, so the high growth markets, but a lot of those markets were overbuilt from a multifamily side. And what we've seen there is sponsors are putting more equity in, and pretty consistently because they have a good belief system.
They look at those portfolios and, you know, maybe their returns will be elongated over time, but they see the inflow in the markets, they see the slowing down on the inventory, and they see the absorption coming. So multifamily is probably surprised to the positive as people are contributing, again, adding market. On the office side, you know, I'm probably a little more pessimistic. You know, I think there's more work to be done there. I think there are more shoes to drop, if you'll allow me. We have been very proactive. It's a small part of our portfolio, but we've been very proactive. We've been really active in appraisals.
We've been really active in, you know, not blending and extending, but, you know, departing when we have, because, you know, maybe unlike the compare and contrast to the multifamily, you're not seeing a lot of equity go into the existing sponsors of the office side. You're seeing some new equity come in, but at much more depressed appraisal values. So, I think that's got a couple more turns in it, and we're going to be out front on that one.
Great. Next ARS question. We have five minutes left. I have three questions on capital, so a minute each, and then I give you two minutes to wrap up.
Oh, wow.
So first on capital.
Okay.
What do you think, I mean, how much capital do you think you need to raise a company? The graph you showed earlier, 11.6 top quartile, you know, posted insurance transaction. You know, where should that number be over time when you think about that mid-teens ROTCE?
Yeah, you know, if you look sort of, you know, pre-capital planning, crisis in banking, all that, you know, you would have said a company with a risk profile like ours probably would have been in the, you know, something with a nine handle on it. I think if you throw, you know, now, you know, AOCI volatility against that or whatever, I just kind of believe it's in the ten, you know, kind of zone. And again, sort of maybe to the medium term kind of question, probably over the medium term. I think we then have to figure out from there. Maybe there's a chance to use more capital and have it reflect the risk profile a little bit differently.
But I think the ten zone is where we're going to be operating in the midterm to get to the ten zone. And that I'm netting out, phasing in, and all the other money.
Understood. And then, you know, you said $500 million of share repurchase, kind of 3Q, 4Q, but you have a six, or I'm sorry, a $5 billion, kind of authorization. You know, as we kind of move through 2025 , how do you kind of think about maybe potential step up or maybe the puts and takes there?
Yeah, I mean, we'll have to look at sort of where the world is and sort of where the opportunities are. I mean, again, first, second, and third priorities are invest in our franchise and invest in growth. So we're gonna be, like, hyper-focused on that. If we see that being muted over the medium term, you know, then that, that'll cause us to evaluate sort of where the share repurchases fit into that overall equation.
And I guess another use of capital could be, you know, another securities portfolio restructuring. I guess, how do you think about the sale of securities compared to kind of other capital redeployment opportunities?
Yeah, you know, we obviously made a big move on the share repurchase side, and I think we did a really good job of prioritizing the things that have, you know, better return characteristics and, you know, shorter paybacks. You know, if it were part of what we did, it'd be on the edge, because I think the growth in the business and the share repurchase return characteristics would overwhelm, you know, some of those opportunities in that. But it could be around the edges to maybe do some repositioning, but I don't see sort of a major, you know, another reposition of the portfolio.
Helpful. And then, you know, you know, you've made a lot of changes within the company from last year.
Yeah.
You know, some of you talked about when you were here a year ago, obviously, the sale of the insurance company. I guess, maybe, how should investors be thinking about the Truist story today?
Yeah. I think the way that investors should think about the Truist story is, one, we're just positioned for growth. We have no impediments to growth. We have a really diversified, you know, balance sheet, so we don't have to, you know, pick and choose where we can compete. We've got fantastic markets. Look, everybody's coming to our markets. There's a reason for that, 'cause they're really good markets. But our penetration and our density in those markets is just a superior competitive advantage. And, you know, as I outlined here, we're not stretching to go new things. You know, I think the way people should think about it is, as we always talk about Truist, it's an incredible franchise, incredible markets. We've got great product capability. We're through the merger.
We're on the launching pad, ready to go, and we're focused on growing and expanding within our franchise. I mean, that's gonna be, and all of those have the highest return characteristics because we already have capital expenses, and teammates deployed against those opportunities. So they're all marginally accretive to anything we want to do from a return perspective.
Great. On that note, please join me in thanking Bill for his time today.