Sale of TIH creates a capital advantage and
capacity for growth
CHARLOTTE, N.C., May 7, 2024
/PRNewswire/ -- Truist Financial Corporation (NYSE: TFC) today
announced the completion of the previously announced sale of its
remaining stake in Truist Insurance Holdings, the fifth largest
insurance brokerage in the United
States, to an investor group led by private equity firms
Stone Point Capital, Clayton, Dubilier & Rice, Mubadala
Investment Company and other co-investors.
"We are pleased to have completed the sale of TIH, and we look
forward to maintaining a strong partnership with TIH into the
future," said Truist Chairman and Chief Executive Officer
Bill Rogers. "The sale of TIH
significantly enhances Truist's financial profile and positions
Truist to invest in and grow its core banking businesses."
At closing, Truist received after-tax cash proceeds of
approximately $10.1 billion. The
transaction resulted in an approximate after-tax gain of
$4.7 billion and increased CET1
capital by $9.4
billion1,2. On a pro-forma basis, Truist's
March 31, 2024, CET1 capital ratio
increased by 230 basis points to 12.4% and its tangible book value
per share increased by $7.16 or 33%
to $28.80. Truist's estimated
CET1 ratio under proposed fully phased-in Basel III capital rules
increased by 254 basis points to 8.4%3 at March 31, 2024.
Following the completion of the sale, Truist executed a
strategic balance sheet repositioning of a portion of its
available-for-sale investment securities portfolio by selling
$27.7 billion of lower-yielding
investment securities, resulting in an after-tax loss of
$5.1 billion in the second quarter of
2024. The investment securities that were sold had a book
value of $34.4 billion and a weighted
average book yield of 2.80% for the remainder of 2024 including the
impact of hedges and based on the Federal Funds futures
curve4. Including the tax benefit, the repositioning
generated $29.3 billion available for
reinvestment.
Truist invested approximately $18.7
billion of the $39.4 billion
available in shorter duration investment securities yielding
5.27%. The remaining $20.7
billion will be held in cash. The blended reinvestment
rate on the new investment securities purchased and cash is 5.22%
for the remainder of 2024 including the impact of hedges and based
on the Federal Funds futures curve4.
The balance sheet repositioning reduced Truist's pro-forma CET1
capital ratio at March 31, 2024, by
107 basis points to 11.4%2. Truist's estimated pro-forma
CET1 ratio at March 31, 2024, under
proposed fully phased-in Basel III capital rules increased from
8.4% to 8.9%5. There is no impact to pro-forma tangible
book value per share of $28.80.
Truist estimates that the proceeds from the sale of TIH and the
balance sheet repositioning will add $160
million to net interest income in the second quarter of 2024
and $710 million (inclusive of the
second quarter impact) to net interest income in 2024 based on the
Federal Funds futures curve4.
Truist previously provided an outlook for 2024 second-quarter
and full-year revenue, which excluded any benefit of interest
income earned on the proceeds from the sale of TIH or from a
balance sheet repositioning. Truist is adjusting its previous
outlook to reflect the interest income expected on the proceeds
from the sale of TIH and from the balance sheet repositioning.
Truist now expects second quarter 2024 revenue to increase by
approximately 1% over first quarter 2024 revenue of $4.9 billion compared to its previous outlook for
revenue to decline by approximately 2%. In addition, Truist now
expects full year 2024 revenue to decline by 0.5% to 1.5% over 2023
annual revenue of $20.2 billion
compared to its previous outlook for revenue to decline by 4% to
5%.
- $9.4 billion of capital comprised
of a $4.7 billion after-tax gain and
a $4.6 billion benefit from the
deconsolidation of TIH's intangibles net of deferred tax
liabilities.
- Numbers may not add due to rounding.
- CET1 impact greater under fully phased-in Basel III rules
primarily due to a reduction in threshold deductions.
- Federal Funds futures curve as of May 6,
2024.
- CET1 under fully phased-in proposed Basel III rules increases
following the balance sheet repositioning due to a reduction in
threshold deductions and a lower risk-weighting on the securities
purchased than the securities sold.
About Truist
Truist Financial Corporation is a
purpose-driven financial services company committed to inspiring
and building better lives and communities. As a leading U.S.
commercial bank, Truist has leading market share in many of the
high-growth markets across the country. Truist offers a wide range
of products and services through our wholesale and consumer
businesses, including consumer and small business banking,
commercial banking, corporate and investment banking, wealth
management, payments, and specialized lending businesses.
Headquartered in Charlotte, North
Carolina, Truist is a top-10 commercial bank with total
assets of $535 billion as of
March 31, 2024. Truist Bank, Member
FDIC. Learn more at Truist.com.
Forward-Looking Statements
This release contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements can be
identified by the fact that they do not relate strictly to
historical or current facts. Forward-looking statements often use
words such as "believe," "expect," "anticipate," "intend,"
"pursue," "seek," "continue," "estimate," "project," "outlook,"
"forecast," "potential," "target," "objective," "trend," "plan,"
"goal," "initiative," "priorities," or other words of comparable
meaning or future-tense or conditional verbs such as "may," "will,"
"should," "would," or "could." In particular, forward-looking
statements by Truist include statements Truist makes about (i) the
financial impact of the TIH sale and the balance sheet
repositioning on Truist, including to its CET1 ratio (as currently
calculated and as calculated under proposed fully phased-in Basel
III capital rules), tangible book value per share, net interest
income, and revenue, and (ii) the yield to be realized on the newly
purchased investment securities and cash balances arising from the
balance sheet repositioning. Forward-looking statements convey
Truist's expectations, intentions, or forecasts about future
events, circumstances, or results. All forward-looking statements,
by their nature, are subject to assumptions, risks, and
uncertainties, which may change over time and many of which are
beyond Truist's control. You should not rely on any forward-looking
statement as a prediction or guarantee about the future. Actual
future objectives, strategies, plans, prospects, performance,
conditions, and results may differ materially from those set forth
in any forward-looking statement. While no list of assumptions,
risks, and uncertainties could be complete, some of the factors
that may cause actual results or other future events or
circumstances to differ from those in Truist's forward-looking
statements include the risks and uncertainties more fully discussed
in Part I, Item 1A (Risk Factors) in Truist's most recently filed
Annual Report on Form 10-K and in Truist's subsequent filings with
the Securities and Exchange Commission. Any forward-looking
statement made by Truist or on its behalf speaks only as of the
date that it was made. Truist does not undertake to update any
forward-looking statement to reflect the impact of events,
circumstances, or results that arise after the date that the
statement was made, except as required by applicable securities
laws. You, however, should consult further disclosures (including
disclosures of a forward-looking nature) that Truist may make in
any subsequent Annual Report on Form 10-K, Quarterly Report on Form
10-Q, or Current Report on Form 8-K.
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SOURCE Truist Financial Corporation