Actually, if you could put the ARS question up. Next up, we're very pleased to have Truist Financial with us. I don't know if you saw, they did put a Slide deck out this morning with some new information. We're very pleased to have CEO Bill Rogers with us this morning. He's going to take us through some quick Slides before he comes here and joins me on the stage for some Q&A. Take it away.
Great. Thanks. Thanks, Jason. I think I just actually want to start with acknowledging the significance of today, of September 11. All of us in this room, on the webcast, were impacted in some way by this tragic event 22 years ago. Jason, with that said, it's actually great to be here at the conference. Looks like it's off to a great start. And I'd like to begin by how we always begin, is thanking our shareholders for your investment in Truist. As you know, Truist is the largest bank merger since the 2007, 2008 financial crisis, and the strategic and financial opportunities are compelling. Over the past three years, we've made great progress to inspire and build better lives and communities.
But as a shareholder, I'm, I'm highly aware that our financial performance has not met all of your expectations. It's not been mine either. I'm here today as a fellow shareholder to speak to you about our very intentional pivot to improve our financial performance and achieve the promise of Truist. This is very much a now event and not a later event moment for Truist. All right, so let's begin with Slide 3, how we always do with our purpose. Our purpose, as I said, is to inspire and build better lives and communities, and it's the common thread that guides our decision-making at Truist. In living out our purpose every day, we've made meaningful impact on the lives of our clients, our teammates, and our communities.
Our purpose also resonates because people just want to work for companies that stand for something, and people want to do business with companies that stand for something. I'm really proud of the successes we've had. I'm proud of what our teammates have achieved in this area, and it reinforces my conviction that grounding our company on purpose, making that a firm foundation was the right thing to do. Purpose is also foundational to our investment thesis, as you can see on Slide 4. Our investment thesis highlights the advantages we have at Truist and explains why we believe our company is such an attractive investment. The first element of our investment thesis is the purpose-driven culture, and that's what I previously discussed. That's what guides us. The second element is that we're an exceptional franchise.
Through the merger of equals, we've built a top ten commercial bank that operates and has strong market share in many of the fastest-growing markets in the country, and our diverse business mix extends our reach well beyond our core banking markets. In addition, our strong deposit base, our liquidity position, enabled us to withstand the industry volatility in March and April this year and demonstrate yet again the strength of this franchise. The third element of our investment thesis is the thoughtful investments that we're making today are going to position us well for the future. Although our Best of Both integration cost more and took longer than expected, it did provide Truist with a strong foundation for the future.
Many of our investments have been made with a view toward the future and will result in improved client experience, digital sales enablement, stronger payments capabilities, improved client relationships, and more efficient distribution. These will all benefit long-term revenue growth. At the same time, we're going to continue to invest in our risk management organization and capabilities to maintain our strong, sound asset quality metrics, strengthen the internal controls, and ensure a strong operating foundation for the future of Truist. Finally, we'll come to the culmination of our investment thesis, which is that by living our purpose, leveraging our capabilities and markets, and by investing in the future, we can realize our goal of generating strong growth and profitability with less volatility than our peers. This element of our investment thesis has not yet been fully realized.
While this is largely attributable to time and cost associated with our Best of Both integration, as well as the impact of low-yielding securities in our portfolio, we just simply can do better, and that's why our energy is focused on improving our results. Let's take a look at how we accomplish this on Slide 5. Our strategy to improve our financial performance is organized around five key initiatives that will allow us to reposition Truist to achieve this objective while maintaining our strong risk management culture. First, we're going to simplify the business. Simplify by realigning certain aspects of our leadership structure within three current operating segments: a consumer segment, a wholesale segment, and insurance. This will help increase efficiency and drive revenue opportunities. Structure alone does not drive performance. We understand that, but it does create this platform to realize more significant cost savings.
Secondly, we're also aggressively cutting costs. We expect to achieve at least $750 million of gross cost saves over the next 12 to 14 to 18 months, allowing us to reduce the rate of expense growth significantly in 2024, and maybe more importantly, beyond. While many of these cost saves will be achieved through near-term personnel-related reductions, they're also a manifestation of our organizational desire to achieve executional excellence, and we consistently look for ways to improve our efficiency over the longer term, including through automation and other investments in technology. Third, we have made significant investments, like investment banking and payments, that we believe will accelerate our franchise momentum, while our focus on Integrated Relationship Management will create opportunities for long-term revenue growth. Fourth, we're improving our capital position.
In addition, our capital allocation will be more targeted and focused on our consumer, wholesale, and insurance segments, with less emphasis on complementary businesses that produce lower returns. And finally, we've aligned our incentive programs to key performance indicators that are highly correlated to total shareholder return and collectively represent a balanced scorecard of growth, profitability, and capital allocation. I think it's really important to explain why now is the right time to undertake these initiatives as opposed to earlier in the integration process. When the merger closed, we very intentionally took a do-no-harm approach. That meant that our top priority was to bring our companies together in ways that minimize disruption to our clients and our teammates. We were absolutely certain that client satisfaction had rebounded to pre-integration levels before launching further organizational change.
This is an area, quite frankly, I believe where other mergers have failed, and we just didn't want to make that same mistake. Having said that, though, now is the time to pivot, and pivot quick. So turning to Slide 6, let me give a couple more details about our first initiative, which is to simplify the businesses. In the interest of minimizing client disruption during integration, most of our businesses operated in a more siloed approach, as reflected in the leadership structure you see on the left. Throughout the integration, we gained more perspective into our businesses' operations, their interactions, their dependencies, and their relation to our long-term overall Truist strategy. Now that we've shifted from integrating to operating, we've leveraged those insights to simplify the organization and the leadership structure on the right, ground it, as I said, in consumer, wholesale, and insurance.
Simplification around these three primary areas will drive executional excellence and center our resources to be client-focused in support of our long-term strategy. It will drive efficiencies, achieve a more optimal allocation of expertise and resources, and drive results in differentiated products and services that better meet our clients' needs. Finally, it'll improve visibility into our activities and enhance our own accountability. As mentioned, our simplified leadership structure is also in the basis, the foundation, in which we can realize significant sustainable cost cuts, which you see on Slide 7. As part of our strategy to improve our financial performance, we've identified $750 million in gross cost saves that will be achieved over the next 12-18 months.
The overall cost savings will include $300 million from reduction in force, $250 million from organizational alignment and simplification, and $200 million from tech fixed expense reduction. As part of the cost savings program, we'll experience significant reductions in force over the next three quarters due to spans and layers, consolidation of redundant functions, restructuring select businesses, and geographic simplification. Other cost savings initiatives include aggressively managing third-party spend, further reducing our corporate real estate footprint, and rationalizing tech spend, among others. One-time costs associated with this cost savings programs are expected to range somewhere in the 25%-30% of gross cost savings. We've been hard at work developing this cost plan, and we're working with a leading consulting firm to help us execute and accelerate certain aspects of our work.
The effort is well underway, and we're committed to a sense of urgency and accountability. So moving to Slide 8, where we quantify the impacts of these initiatives on our rate of expense growth. Although September is appreciably earlier than we would typically discuss expense guidance for the following year, our cost savings program will help us manage adjusted expense growth of 0%-1% in 2024, which is net of our natural expense growth, driven by inflation and other investments that we've made. There's also substantial improvement from the rate of expense growth expected for the full year, this year, in 2023. Many of the savings will occur relatively quickly due to lower FTE count, while other areas of our plan will be achieved throughout the course of next year and beyond.
Going forward, our goal as a company is to offset natural expense growth and inflation in 2024 and beyond. Cost cutting is one of the several levers we have to improve financial performance, but there's also a revenue component. We have a number of fundamentally solid businesses in great markets that are continuing to gain momentum. So let's, let's take a look at a few of those on Slide 9. Our investment banking business continues to be well-positioned for growth once market conditions improve. Since 2019, we've increased our market share across multiple product categories. We've expanded into new focus verticals and also increased our relevancy and our presence in existing verticals, all of which will drive growth as market activity recovers.
In corporate and commercial banking, we're seeing solid year-over-year growth in CIB referral revenue from commercial banking as we continue to deliver value-added advice and capabilities to our clients. We're also very focused on this concept called Business Lifecycle Advisory, where teammates in our Commercial Community Bank, Truist Securities, Truist Wealth, are all working in partnership to meet the needs of our clients throughout their entire financial journey. This is supported by our upcoming rollout of a fully end-to-end digital lending experience for all CCB clients, which will further enhance their experience. I'm also pleased with the progress in the payments space, where most of the significant opportunity is further penetration of our existing client base. Over the past 18 months, we've increased our advisory specialized sales force by 10%, which has helped drive a 30% year-over-year improvement in our pipeline.
We continue to make investments in payments to enhance our capabilities, reliability, and enable a more integrated digital client experience. As you can also see, insurance continues to perform well. We expect to achieve high single-digit organic growth revenue for the full year of 2023. Lastly, in retail and small business banking, we've seen steady improvement in our client satisfaction scores, as well as strong net new checking account growth this year. We're also gaining momentum in wealth, where our net organic asset growth has been positive eight of the last nine quarters. The momentum in these attractive businesses will enhance our profitability profile over the long term. On Slide 10, we provide a closer look at our longer-term opportunities from Integrated Relationship Management.
Integrated relationship management is the concept that we help our clients achieve their financial goals by connecting them to partners across the enterprise who can seamlessly deliver Truist resources for their benefit. To me, Integrated Relationship Management is actually the manifestation of our purpose. It's actually the way we build better lives. As reflected in the table, there's significant potential to help our clients achieve financial success by delivering our payments, insurance, investment banking, and wealth capabilities to all of them. Each of the check marks you see represent a nine-figure opportunity. We believe our largest opportunities exist within the commercial community banking space and include the Business Lifecycle Advisory initiative I previously discussed. Now that we've shifted from integrating to operating, we've added more structure Integrated Relationship Management program by establishing long-term growth targets for almost all of our strategic partnerships.
During the first half of 2023, these partnerships had grown production by 29% year-over-year, which reflects what our teammates can do for our clients post-integration. Slipping to Slide 11. Truist is well capitalized and has significant momentum to generating capital to respond to the evolving economic and regulatory environment. We continue to build capital and expect to achieve a CET1 ratio of approximately 10% by year-end, through a combination of organic capital generation and disciplined management of risk-weighted assets. The anticipated trajectory for our CET1 ratio through the end of the year also incorporates headwinds from the pending FDIC assessment. At the same time that we're building capital, our balance sheet remains open to core clients who have broad and deep relationships with Truist.
Going forward, our capital allocation practices are just going to be more targeted as we focus on our core clients, de-emphasize businesses with lower return profiles, and allow some of our recent acquisitions to mature. As an example, during the second quarter, we sold our $5 billion student loan portfolio at a net carrying value. This business was non-core, was in run-off, and generated loan spreads that were less attractive than we can obtain in our core consumer and wholesale banking businesses. We also made the decision to discontinue certain trading and market-making activities in our fixed income sales and trading businesses that had unattractive ROE, and did all that with a minimal impact to PPNR. We think there's some more opportunities like those to further simplify our organization and drive efficiencies that will improve results.
As we look further into the future, based on our preliminary assessment of the proposed Basel III Endgame results, we feel confident about our ability to increase our capital. Lastly, Truist has more than 200 basis points of additional capital flexibility given the residual 80% ownership stake in Truist Insurance Holdings, which is a business that continues to perform extraordinarily well, evidenced by the 9% organic growth in the second quarter. We continue to evaluate our strategic options with respect to Truist Insurance Holdings with the objective of creating long-term shareholder value for Truist. Moving to Slide 12. I'd like to discuss how we incentivize and reinforce our improved financial performance through our new KPIs and redesigned executive compensation model.
Earlier this year, in March, we announced that going forward, we'll assess our long-term performance based on five key performance indicators or KPIs shown in the middle of Slide 12. We chose these metrics because they are the most highly correlated to total shareholder return and collectively represent a balanced scorecard of growth, profitability, and capital allocation. Our goal as a company is to be above peer median in all of these KPIs, except ROTCE , where we target to be in the top quartile given our business mix. Most importantly, we've incorporated these KPIs into our executive compensation plans in order to set a higher bar for all of us with regard to executive pay at Truist. Our revised plans are dynamic and more sensitive to performance and take into account growth, profitability, and shareholder returns.
In sum, we believe these changes will reinforce the strategic shift from operating and incentivize actions that promote purposeful and profitable growth, prudent capital allocation, and ultimately higher TSR over the long term. So before I finish on Slide 13, I'd like to provide a brief update on the quarter. Our revenue and adjusted expenses for the third quarter and for full year 2023 are tracking in line with the outlook that we provided. So in closing, I am highly confident in the initiatives we discussed today will significantly improve our financial performance. First, as I mentioned, we're simplifying Truist. That'll help drive executional excellence, center our resources to be client-focused in support of our long-term strategy, and create a platform for realizing more significant cost savings.
Second, we've specifically identified $750 million of cost savings that will be achieved over the next 12-18 months and will reduce the rate of expense growth significantly in 2024 and beyond. Third, we've got short- and medium-term revenue opportunities, and most importantly, we have momentum in our business. Fourth, building capital, going forward, be more targeted in our capital allocation, and our undervalued ownership stake in Truist Insurance Holdings gives us strategic flexibility. Lastly, our new KPIs and redesigned executive compensation plans are aligned with you as shareholders. So again, thank you for your interest and your investment in Truist. And Jason, I'll come over and join you.
Thank you, Bill. A lot in there. I want to delve into it. I just want to clarify things at the end. I think you said, 3Q in 2023 revenue forecast, kind of unchanged?
Yeah. Yep.
Um, expenses?
Yep, same.
That guidance we were given at the.
Perfect.
In the quarter all, all unlocked. Just wanted to clarify that. And then, I guess maybe pull up for a second. You know, one of the things you said on the onset is, you know, on the merger, maybe everything didn't go according to plan. I guess if you can go back in time, what would you have done differently?
At this point, if you were the teenage you, what would you do?
Oh, I have a list.
Yeah, I think a couple of things. So, you know, in terms of the things that we wanted to achieve, you know, and creating, you know, a great culture, creating a one-team environment, you know, creating everybody sort of rowing in the same direction, all those things. I'm really proud of the work that our teammates have done. I mean, I'm really proud of what they've done and what they've achieved. We also wanted to make sure that we got through the, you know, change with regard to our clients. Think about this, our merger really is the only merger in the last 20 years within which every single teammate and every single client went through change.
So as opposed to an acquisition where you're one group learning something, every single person went through change. So it was really important for us to make sure that before we you know started putting this type of accelerator on, that we got back to the client experience, we got back to the teammate engagement. People were comfortable using the tools that we provided to them, client performance scores and all that. So all that was really good. If I had to do something differently, I think we thought about things too sequentially. And maybe it was because of the impact of COVID, maybe it was PPP, I don't know. But it was a little bit of let's do this, stop, and then let's do this, and let's do that.
If I had to do it differently, I would have done things more in parallel. You know, so, you know, this year, for example, you know, we had a lot of cost associated with, you know, some of the increases we've done in minimum wage. We had a lot of a lot more cost as a company and as an industry and sort of a, you know, regulatory response, getting ourselves prepared. So the Basel Endgame, all the things that are going to come along with that, and that was a little too sequential. And I think what we ended up seeing is spikes and valleys and things like expenses versus a more smooth, smooth, smooth.
And then going from 7% expense growth this year to 0%-1% next year.
Yeah.
Is a big shift. You also outlined kind of a lot of revenue opportunities.
Right.
I mean, how do you just balance that, you know, really kind of reining in expense growth? I know you have this $750 million program. How much of that falls way to the bottom line versus having to reinvest these programs? And then sometimes when we see companies come out with these programs, you know, we get a great expense growth in 2024, and in 2025, there's kind of a catch-up.
Yeah.
Because you kind of fall behind on the job. How do you kind of approach all that?
Yeah, I mean, so think about it also, so it's a, you know, it's a net expense growth for next year, but we also have great momentum. So think about our insurance business, for example, sort of growing single digit. Well, that has a real direct correlation to expense growth. That's a highly correlated, really efficient business, but has a, you know, direct sort of compensation components to go about. We're also anticipating, you know, a recovery in our investment banking business. Those have direct costs to that. So this is overcoming those costs, those costs that come with the, you know, other things that related to inflation, they come with the investments that we have to make to make sure that we're, you know, keeping up with a bank our size and the things that we have to do.
So it is, it is a net component. And, Jason, that sort of goes to the other part. So what we're doing is taking the chassis, you know, and sort of rationalizing the chassis to the business that we have. I think because we had all this, you know, technology done, teammate investment, you know, that's the one bulk already. So I don't see the bounce back in 2025, that we look back and say, "Oh, my gosh, you know, you sort of forgot all these things." This is part of creating that rationalization and infrastructure. And then these expenses, very intentionally, we want to talk about. These are tangible. These are not, you know, increase in automation, improvement in machine learning. All that's coming. We're doing all that.
We're making all that investments, but we want to be sort of just really clear and tangible about these type of cost saves that come into this year and next year.
I guess you talked about a sizable reduction in force over the next few quarters. Maybe just help us size that, and then with the program, is there any sort of kind of restructuring charges we should expect.
Yeah.
Long term, and kind of the capital impact of that?
Yeah, I talked about, you know, unlike the merger, where the restructuring costs, you know, restructuring charges were quite significant, this will be what I would say will be more traditional. So I, I said it's probably sort of 25%-30% kind of, kind of saves, you know, depending on some of the decisions we make and, and how we make them and the timeline, timeline we make them, but more in line with, with those, those type of items. And the reduction in force component is really important. This is what comes from the simplification. You know, if we think about. I'll, I'll give you a couple examples. So we're consolidating our geographies. So we had 21 separate geographies. We're consolidating those to 14.
In terms of like who's in front of clients and, you know, client relationships, all those things, no change in that. You know, this is really sort of the infrastructure of how we run those businesses. So think about the marketing support, finance support, leadership support, that's where the, that's where the reductions come in at. Similarly, we have CRE businesses in a lot of our different units. So we have an investment banking CRE business. We have a separate CRE company called Grandbridge. We have a Commercial Community Bank. Bringing all those together, again, no different in the relationships over the clients, but the infrastructure that goes along those type of consolidations. So the simplification, you know, I'm really quick to acknowledge that, you know, changing the structure doesn't achieve the cost savings.
It's what you have to do with it, and the simplification and the alignment allows us to do that. So this is really more a sense of leadership infrastructure, but not change to the, the people who are all in the same, handling our clients and, you know, getting the business that we've done, and, and continue that momentum, because that momentum has been critical.
And then you talked about, you know, insurance for a bit, and you talked about the desire to build capital. You know, are you still planning to do acquisitions with that business, and kind of just what's your, you know, general take in terms of, you know, what, h ow that fits into Truist going forward?
Yeah. You know, the decision, you know, which started last year to create strategic and financial flexibility with the insurance business. You know, so the premise was, let's do a couple of things. Let's do some price discovery. You know, so we've always sort of talked about this differentiation price. Let's do some price discovery. Let's create a partner that can help us grow that business. If we wanted to make acquisitions, if we wanted to grow significantly, do we have another funding source for that? Let's create currency for the people in the business, so we can retain and grow and have, you know, teammates in that business who can see the direct alignment with, you know, with their compensation and the growth of the business.
That just all became more important sort of post-March. You know, we knew it would be an important thing to do, but now to have that financial flexibility and that strategic flexibility. So the answer is yes, it's a business that's consolidating. So we want to make sure that we find ways to participate that in the best way for not only the insurance business, but also to create financial flexibility and capital flexibility for Truist long term. So there are lots of, you know, variables that go into all of those decisions, but what I'm most pleased about is that we've got the, you know, I would say, I would—I call it the athletic position.
You know, that we're in the athletic position, and we can make a lot of decisions related to what's going on environmentally for both insurance and both for Truist.
Yeah, because I think since you kind of came up with this plan, you know, the gap between, you know, insurance brokers and banks multiples have expanded even further.
Yep.
At the same time, we were talking about in kind of things, kind of weighing your performance. You mentioned low-yielding securities.
Right.
You know, any notion of, you know, maybe restructuring the bond portfolio? We had a company earlier today that sold $4 billion worth of securities. And, you know, maybe using some of these insurance proceeds to help fund that.
Yeah, I think, I think the most important thing to think through is it's not one thing. You know, it's, it's a lot of the variables. So securities portfolio is one of the variables. Basel III endgame capital, phase-in periods. Are they really phase-in periods, or does the investor community bring it current? Consolidation in the insurance business. So what is it, what is its requirements? Are there big, you know, dilutive capital needs that are there? So I, I never want to center it around one thing, because sometimes that decision can be maybe too easy or too hard. It's actually just a portfolio of all those considerations that, that, that come into that.
Wait and see?
Well, it's wait and see and, you know, being sensitive to what market conditions are and how people view time then. The good news is, if we consider sort of, you know, phase-in period, we consider our organic growth of capital, if we look at all that, we're in good shape.
Mm-hmm.
But that's all an element of time. If time compresses or changes or if other elements come in, or we have a, you know, an economic change or a global change in some perspective, then we've got the financial flexibility to move quickly and move appreciably.
Right. I guess you talked about the 0%-1% expense growth target for next year. You know, I, I gotta assume some of that is just driven by the fact that, you know, the revenue environment this year certainly turned out to be more.
Yeah.
Challenging than you thought. As you kind of think about the revenue environment next year, obviously, they kind of go hand in hand.
Yeah.
You know, you're out there talking to customers all the time. I guess kind of, you know, just what's your sense in terms of as you kind of enter the 2024 budget process for the top line?
Yeah, I mean, we don't, we don't want to give all that, you know, specific guidance right, right now, but I mean, I think if you sort of look. You know, let's look at, you know, NIM and NII as part of that. It's obviously going to be the big driver of that equation. That starts to, I think, flatten out toward the end of this year and probably is a little more stable as we think about next year. But that assumes that we don't see a big economic rebound. You know, that assumes that things don't, you know, change dramatically. We're sort of status quo.
And then back to the side on the fee-based businesses, I mean, I'm confident we'll see a, you know, rebound in the capital markets business, and we're sort of like a coiled spring in that business. I mean, we've made a lot of investments. Then you look at our insurance business, sort of has continued this single digit sort of, you know, organic growth and maybe some inorganic in that. So there are lots of puts and takes on that, but the NII is obviously, you know, for any bank is sort of the, you know, the big driver of that. And we'd like to see a, you know, pretty significant shift in terms of, you know, confidence and, you know, loan growth and, or, you know, RWA growth that went with that.
I guess just maybe on loan growth, just maybe talk about your kind of allocation. You talked about you had a—you sold some student loan portfolios. Any more stuff you're looking to do in terms of RWA management? And just how does that influence you in terms of, you know, growing the balance sheet?
Yeah, and I like the way you asked it, because that's what we're doing is RWA management. You know, so we're not on a diet, we're not on a—you know, we are managing RWA for its maximum effectiveness and maximum return. And the student loan example was a—it was a really good example of that. I think around the edges, Jason, there'll be more of those. Probably not maybe the same magnitude and maybe the most obvious around student loan. But back to this concept of—that I talked about at the podium of investing in our core businesses and, you know, letting our complementary businesses be, you know, be less strategic from an investment standpoint. So think about the correspondent mortgage business, think about indirect auto.
Things that don't really have, you know, these direct client experiences, that don't have the ability to generate full relationships, deposit relationships, long-term wealth relationships. Those are going to be more optimized. They'll be more optimized for return. They'll be more optimized for, you know, around the edges of relationships versus a equal investment in the core businesses, which are, you know, if we think about, you know, this incredible thing that's true as we think about these markets that we have. We've got to make sure that we've got an ability to disproportionately invest and invest in the core parts of, part of what we do. And then our, you know, I think overall, you know, loans will be moderately down. So, I mean, I think that'll be the result of all that.
But also just, you know, want to make sure, you know, our door is open. You know, so for really good opportunities, and as clients consolidate, and quite frankly, as the competitive environment changes from an RWA standpoint, we're also really well positioned. You know, we've got a great market share. We're in fantastic markets. Companies are moving into our markets, not out of our markets. People are moving into our markets, not out of our markets. So we also want to make sure that we're creating the financial RWA and flexibility to make sure that we take advantage of opportunities.
Got it. I guess on that, maybe just talk a little bit deposits in terms of.
Yeah.
Kind of what you're seeing this quarter. You know, any changes to your approach and kind of, you know, CD campaigns, money market promotions, and, maybe just more color there?
Yeah, I think if you put a bunch of different categories, if you use deposit beta maybe as a proxy for that type of answer. Deposit betas are cresting. You know, I don't know if they've crested, but they're cresting, and that rate of growth in deposit betas has sort of appreciably slowed. A lot of that has to do with the decisions that we're making, you know, as clients who, you know, we might have repriced thirty days ago, we're not repricing again. Some of the CD and, you know, money market, some of those promotional activities, you know, we're starting to, you know, diminish. We're looking more out-of-market versus in-market. Our clients are telling us they've got really good relationships with us.
They've got a really good digital experience, so we're focused on expanding those relationships. You know, during this whole component, we saw net new growth in checking accounts, and that's ultimately, you know, really good barometer of your overall health, is are you growing net new? Because deposits can come up and down, and you can, you know, pay up to get them, but are you getting net new? So are you retaining more, or you're acquiring more in that process? That's been really consistent with [audio distortion] through the last, you know, eight to nine months.
Got it. Maybe, you know, shift gears to, you know, credit quality.
Yeah.
Loan losses are going debt normalization process. You know, I think your ACL ratio is up about nine basis points over two quarters. So maybe just talk to, you know, how you're thinking about loan loss trends, you know, kind of back half of this year, into next. And maybe just talk about expectations for reserve ratio, you know, near term.
Yeah, I mean, I think they're normalizing. You know, probably there's certain components of our business where maybe it's more normalized, but, but they are normalizing. So I, I think you might see, you know, we'll do all the things, but you might see a sort of creep up as it relates to that, just to make sure that we're, you know, seeing that, seeing that slippage. You know, right now, we don't see, you know, sort of a cliff. Now, there are things that we're focused on and worried about and spend a lot of attention on, and they'd be the obvious things like, you know, office and leverage lending and subprime. All, all those things get a lot of our attention. And, you know, the good news, they're a smaller part of our component. We've got a highly diversified business.
I believe that the overall portfolio. We still see just the continued little click with normalization. Any sort of clips have been more idiosyncratic. You know, they've been about a, maybe a business model that didn't work as, rather than an industry or a market or a segmentation. And then, as we said, overall, in terms of our overall market, you know, we just continue to see, you know, a lot of, you know, relative strength in our, in the overall markets that we serve.
Got it. Maybe with the next ARS question, actually, if you pull up, if we could skip the next ARS question and go to the third ARS question.
Did we do the first one?
We did.
I did. I didn't see the results of the first one.
We're gonna publish them today.
Okay. All right.
What should Truist CET1 target be? Probably 9.6%. And I guess, Bill, as I asked you, you talked about wanting to get 10% by the end of this year.
Yeah.
You know, obviously, over time, that's gonna, AOCI opt-out will, you know, not be a factor anymore. Where do you see kind of the normalized CET1 target, kind of once we kinda get through everything?
Yeah, I think in fairness, we all need a couple more data points. And the view of everything you said is a time-dependent view, you know? So I think if that's true, phase-in periods are, you know, right in terms of market perception. I think we're north of 10, you know, so maybe sort of that as a starting point. That's why we sort of said we've got this organic capacity to get to 10 by the end of the year. I consider that probably a little more of a starting point right now, and then we'll evaluate all the relative positions, all the relative impacts, you know, market risk, credit, future looks, and all those type things to sort of see.
But I think 10's the starting point, and we, you know, build or manage from there.
I guess once we kind of shift to the new, new regime, you mentioned earlier, kind of these phase-in.
Right.
Do you think the market allow for phase-ins, or do you think it, it's gonna be more than you think it is?
Well, I think that's the question. I mean, that's the question that I, y ou know, in a normal phase-in period, yeah, we look great. I mean, we've got the capacity, organic capacity. If that gets accelerated, we have a lot of flexibility and we have a lot of strategic alternatives that we think that we could determine. And I think that's, if I think about the data points, that's another data point that we need to sort of internalize as a company and as a market. Is the phase-in really real, or is it really accelerated? I think the combination is probably some acceleration, and we just need to figure out sort of where that is on the spectrum.
Great. We have about 30 seconds on the clock. Any, you know, final concluding remarks you want to leave us with or anything I forgot to ask?
Well, thank you for having us today. Look, I just want to make the last point of just that I continue to exude my confidence in Truist. I mean, every day I turn the page, I feel better about what we've built here, and I feel better about the opportunities. And this shift, this pivot we're making to, you know, create a chassis that better reflects that and create a chassis that we build on for the future, I think it's the right time to do this. I think given where we are in our, you know, teammate adoption, our foundation and our client scores and client capability and our net new and the momentum, this is the, this is the time to make that shift and help improve our performance.
Great. With that, please join me in thanking Bill for his time today.