Greetings, ladies and gentlemen, and welcome to Truist Financial Corporation's First Quarter 2022 Earnings Conference Call. Currently, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Ankur Vyas, Head of Investor Relations, Truist Financial Corporation.

Thank you, Katie, and good morning, everyone. Welcome to Truist's first quarter 2022 earnings call. With us today are our Chairman and CEO, Bill Rogers; and our CFO, Daryl Bible. During this morning's call, they will discuss Truist's forwarder results and share their perspectives on how we continue to activate Truist's purpose, our progress on the merger and current business conditions. Clarke Starnes, our Chief Risk Officer; Beau Cummins, our Vice Chair; and John Howard, our Chief Insurance Officer, are also in attendance and are available to participate in the Q&A portion of the call. The accompanying presentation as well as our earnings release and supplemental financial information are available on the Truist IR website, ir.truist.com. Our presentation today will include forward-looking statements and certain non-GAAP financial measures. Please review the disclosures on Slide 2 and 3 of the presentation regarding these statements and measures as well as the appendix for the appropriate reconciliations to GAAP. In addition, Truist is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized live and achieved webcasts are located on our website. With that, I'll now turn the call over to Bill.

Thanks, Ankur, and good morning, everybody, and thank you for joining our call today. We delivered solid first quarter results, representing the diversity and flexibility of Truist in a more volatile market and business environment. Net interest income declined sequentially due to lower day count, lower PPP revenue and purchase accounting. Net interest margin slightly exceeded our expectations, and more importantly, both NII and NIM appear to have bottomed and have good upside from here. Fee income was below expectations, primarily due to investment banking and mortgage both of which were negatively impacted by the market environment. These effects were partially offset by higher insurance income, which underscores the advantages of our diverse business mix. Expenses were lower than expected, reflecting strong expense discipline and lower incentive compensation associated with softer fee income. We experienced continued solid loan growth, albeit with headwinds in certain areas. Credit quality remains excellent, contributing to another provision benefit. We also completed our largest conversion event in February. There is a palpable level of excitement from our teammates to go to market as One Truist with an expanded toolkit to better fulfill our purpose. We'll share more details on these topics during the presentation. First and foremost, we are guided by our purpose, which is to inspire and build better lives and communities. We're convinced that our purpose reinstates the foundation for our success as a company. Our purpose defines how we do business every day, and it provides a framework for how we make decisions. On Slide 5, we highlight some of the ways we're bringing purpose to life. A key area of focus for Truist is financial inclusion. We're wholly committed to removing barriers and improving access to the financial system for all communities, which is why I'm pleased that the Truist foundation…

Thank you, Bill, and good morning, everyone. Turning to Slide 12. Net interest income decreased 2% sequentially as the impact of two fewer days and lower purchase accounting accretion offset the benefits of solid loan growth and higher securities yields. Reported net interest margin was flat and core net interest margin increased 2 basis points both exceeding our guidance by 2 basis points. The improvement in core net interest margin was primarily driven by lower premium amortization in the securities portfolio. Moving to Slide 13. Truist has intentionally maintained a balanced approach to managing interest rate risk, being well positioned to benefit from higher rates in the near-term while maintaining some level of downside protection if and when interest rates decline. We continue to be asset sensitive and estimate a 100 basis point ramp rate increase would increase NII by 4.3%, a 100 basis point shock would increase NII by 7.3%. Approximately 80% of our reported asset sensitivity is from the short end of the curve. While early, deposit betas thus far are tracking below modeled expectations. Moving to Slide 14. Adjusted revenue declined 4.4% linked quarter, which is below our guidance range of down 1% to 2% and driven almost entirely by weaker-than-expected fee income. Fees declined 8% sequentially and reflecting challenging market conditions and seasonality. Investment banking and trading income declined $116 million or 31% as more volatile market conditions impacted M&A, high yield, leverage finance and equity. Investment banking pipelines look healthy, but market conditions will determine both how much and when the pipeline is realized. Residential mortgage income declined $70 million or 44% as higher interest rates reduced refinance activity and pressured gain on sale margins on the production side. Servicing was not as large of an offset as expected since the benefits of slowing DK…

Thanks, Daryl. Moving to Slide 22. The first quarter of 2022 was historic for Truist as we're now serving our clients as a true unified Truist across all dimensions. In addition, the first quarter is a strategic and financial turning point for Truist. Strategically, the completion of our core bank conversion positions us to fully shift our focused executional excellence, transformation and growth. Our businesses that went through earlier conversions in 2021 such as wealth and mortgage are beginning to see the benefits of this shift whether in the form of new adviser hiring in wealth or significantly improve client satisfaction scores and mortgage. Financially, the first quarter should be at the bottom for net interest income and net interest margin and fee performance should improve as market conditions normalize and we capitalize on the significant integrated relationship management and revenue synergy potential we have as a company. In addition, the completion of the integration means merger costs will decrease dramatically through the remainder of 2022 and we'll realize our remaining cost saves as data centers and systems are decommissioned in the back half of the year, all of which helped drive positive operating leverage. To conclude, I remain highly optimistic about the potential and opportunity for Truist, all of which are clearly summarized on Slide 23, our investment thesis. Our opportunity and priorities are clear: shift from an integration focus to execution focus, deliver better client experiences, capture the significant IRM and revenue synergy potential we have to shift the millions of hours of development training and effort from the integration to building better lives for our clients. This shift does not require any incremental risk appetite or capital. It only requires execution and focus. At the same time, while we believe the economy is on sound footing in the near term, the headwinds of geopolitical uncertainty, coupled with the inflationary environment and aggressive forecast for the tightening of monetary policy create a wide range of economic outlook as we move further into this year and next. Truist is well positioned across all of these environments, given our advice-oriented model for our clients, balanced approach to interest rate risk management, conservative credit culture, diverse business mix and strong and improving earnings profile. And with that, Ankur, let me turn it back over to you.

Thanks, Bill. Katie, at this time, will you explain to our participants how they can participate in the Q&A session? As you do that, I'd like to ask the participants to please limit yourself to one primary question and one follow-up, so that we can accommodate as many of you as possible today.

[Operator Instructions] We'll take our first question from Gerard Cassidy with RBC.

Bill, can you elaborate or Daryl as well, I guess, on the loan growth that you guys are seeing, I think, Bill, you touched on some very competitive forces in the commercial real estate markets. And what are you guys seeing in that area? And then on the residential mortgage business, Daryl, I think you referenced that the refinancing business was down. What percentage of originations are refinancing in the home mortgage business?

Gerard, let me start on the loan growth and maybe sort of cover a variety of different topics in your question. We're seeing interesting loan growth and I think the places that most highly correlate to performance, I think, is where we're performing well. So, I think C&I as an example. So in C&I, if you exclude PPP, where remember, we were over-indexed appropriately, you exclude the mortgage warehouse component, which has a lot of seasonal components to it, it sort of dissected to core C&I, it was up about a little over 5%. So we think that actually reflects the core component of where we see loan growth and the power and the execution of our franchise. That was particularly strong and literally across all of our business lines that was good across virtually all of our geographies areas like asset finance and ABL, sort of geared supply chain were particularly strong. You asked about CRE, and I'd say it's a couple of different stories. On the small CRE side, we have had some runoff. Some of that's been intentional in the focused areas. On the sort of higher-end institutional borrowers, we actually performed very well. We've been very competitive on the residential and industrial side, particularly think specialized areas like data centers and those types of those types of things. Clients are flying portfolios. But it is an aggressive market. So I think the places where we want to be competitive, we're really competitive in the areas that we've allowed a little runoff, we've allowed a little runoff to happen there. Daryl, do you want to talk specifically about -- I think there was a question about the refi?

Yes. On the residential, Gerard, about two-thirds of our activity was in refinance activity. That has really come down significantly. As we move to the second quarter, it's more of a purchase market kind of plays to our strength from that perspective. So I think we're hopeful that, that will kind of maintain and hopefully build as the year goes on, but refi is definitely being impacted. The other impact on the residential mortgage is just the cost of hedging is just a lot higher right now. So, it's offsetting some of the servicing benefit that you would get out there.

Very good. And then as a follow-up, Bill, Truist has a unique franchise where you've got your regional precedence throughout your franchise, so you have a good pulse on what's going on in those markets. Can you give us an update on what your customers are telling you? Obviously, we're in a very uncertain time with the tragedy going on over in Ukraine. What are they feeling? And are they still pretty optimistic about their business outlook?

Yes. Maybe I'll do it in two ways, and maybe I'll do it in -- starting with the tangible side. If you look at production and pipeline specifically, they're really strong. Our pipelines particularly in that core commercial business, which you're talking about in the first quarter are equal to where they were in the fourth quarter in terms of strength. So in terms of the evidence of what we see in terms of pipelines and production, I'd say there still is a great deal of confidence. Virtually every client is in some inventory build capacity. I mean from a supply chain perspective, they're all wishing to increase their inventory to serve an increasing demand. Demand does not seem to be the particular challenge. So I'd say that's the tangible part. Now the intangible part in talking to clients, sort of where everybody is and what some of the anecdotal evidence, I don't think we're in a full risk-off mode, but there's a little bit of a wait and see. I mean, I think that's fair. Maybe a little bit of a blinking yellow light, not a red light, nobody's stopping. So I think the combination of this tangible part that we see in terms of pipeline production, need for inventory build is really solid and would be reasons to be really optimistic all with just a little bit of a cautionary note as people look forward into the next several quarters.

The only thing I would add to that, on the consumer side, it's fair to say in February during the conversion our branch people were really distracted just going through the integration and the efforts. I think we've come out of that strong now, and we're starting to see momentum in loan origination out of the branch areas. And if you look at our consumer convenience businesses that we have like LightStream and Sheffield and Service Finance, they're all starting off really strong and seeing really good volumes as we enter into the second quarter.

Yes. So I think to bump those comments, I mean, there's reason to have a lot of optimism with just a slight level of uncertainty, which sort of is the right balance.

We'll take our next question from Betsy Graseck with Morgan Stanley.

One question on just the outlook here for how we should be thinking about net interest margin. And part of the reason I ask is when I'm looking at the average balances where you show what the yields did Q-on-Q. We have some declines in consumer loans. So I'm just wondering, is that like swap related or is there something more intimate going on in the portfolio? I'm just wondering how quickly that should bounce back given the outlook for rates that you've got?

Yes, Betsy, I think what you're looking at, we can maybe check off the line, but I think it's just the runoff of purchase accounting. When you look at our new rates going on the books, our new volume rates are going on higher than what the existing portfolio is right now. So, we are averaging up in most cases across the board there. So, I think overall, yields will rise and when we have our projections throughout the year, I expect net interest margin to continue to rise throughout the year, NII to continue to grow just as the interest rates start to climb.

And then just to follow on there is. How do you think about your deposit strategy? How interested are you going to be in generating accelerating deposit growth? Or would you be more in the mode of allowing runoff? Just trying to understand the balance sheet size and how we should think through that.

If you look at what we've attracted from COVID, $80-plus billion of new deposit funding, the vast majority of that is noninterest-bearing. And when you look at it, we pay the lowest rates of anybody else in the industry. So almost all of it is non-rate sensitive. So we definitely feel that we have betas modeled in to protect what we want to protect out there. There could be a little bit of ebb and flow. But for the most part, we will be specific to make sure that we protect our good clients throughout the organization and do that. But right now, we've had rates just started to lift off and our deposit betas that we're seeing right now are coming in much less than what we modeled. It's very early into this. But I think right now, I think it's not a huge impact on what we've had to pay and we still have the deposits growing for us, so non-interest-bearing growth from us in this past quarter as well.

And that's what I might add to that, we're operating now as a new Truist. So we're operating with a company that has about an 18% average market share. So in number one, two or three market share in most of our markets. So that's a new experience. Also this increased capacity and marketing expense. So our unaided brand awareness has really gone up actually fairly significantly since the rollout. And then we just have a lot more capabilities other than rate pay. I mean we just have a lot more tools and capabilities to offer our clients. So, we're operating in the kind of -- this is the kind of environment we built through Truist forward in fairness. We have company that's got that kind of prowess and capability to serve our clients in ways other than just rate paid.

We'll take our next question from Ken Usdin with Jefferies.

I wanted to ask about the securities portfolio and the repositioning you did this quarter. So can you just talk a little bit about just where do you want that portfolio size to sit? And is the changes that you made, the sales and the repurchases in the forward outlook for NII?

Yes. So I think the way we are managing the balance sheet, and we've talked about this before is, right now, we are targeting $15 billion to $20 billion of balances at the Fed. Since the war started in the first quarter, we're tilted a little bit towards the heavier side of that just for liquidity purposes. And you really look at the cash flows of the whole balance sheet in total. So we've had deposit growth come in, so that's a positive inflow. You have runoff of securities. That's a positive inflow. Our first priority is to lend it out to our clients and to basically do that. Once we've done what we can do from a lending perspective, then the residual piece would basically go into the securities portfolio. Now from a securities portfolio perspective, we're investing in the past in treasuries, MBS. So, those are very high-grade, very secure-type securities.

Okay. And then the repositioning that you did this quarter, I assume that, that's built into the outlook. And I guess, is that generally where you're purchasing now? You've mentioned in the slide deck 3.2, is that where the front book is from here?

So yes, the mix of what you're doing, if you go into treasuries, it isn't a forecast, Treasuries are in the 270s, 280s between the three- to five-year area. MBS are approaching 4%. So, it'll blend there. But I would say, we'd be on the shorter end of that on a duration perspective, but all that is incorporated with the guidance we gave you.

We'll take our next question from John McDonald with Autonomous Research.

I just want to follow up on Ken's question. Just more broadly, how are you guys thinking about managing capital? On the regulatory side, you're still well above your regulatory minimums with the 9.4% CET1, but a little bit below where you usually target how you're thinking about that? And then on the GAAP side, how are you thinking about managing against further OCI risks as keep going up potentially?

Hey, John, it's Bill. Why don't I maybe start on the capital side? I mean, I think we've been very consistent about thinking about where we wanted to establish capital, where we want to operate based on three primary factors. One was just where we were in the merger, how much risk do we have on the merger, do we need to allow additional capital for merger risk. That's obviously come down substantially. I mean, I would consider that sort of be in a normal mode right now, and we don't -- we've gotten through the big components of that really, really successfully. The second is how much economic risk do we have? And we probably have a little more economic risk in fairness than we had a year ago, but I think maybe on the marginal side. And then sort of where we fit from risk profile as evidenced by some of the CCAR results. And I think will be another confirmation of our lower risk profile, higher PPNR model as Truist. So, those are the three things that we put into the mixing bowl as it relates to capital. And we'll continue to reevaluate that. We feel very comfortable where we are right now. We'll reevaluate that in the mid part of this year and try to determine the appropriate place for Truist to operate. But I feel like we've got a lot of opportunity in the capital side based on the evaluation of those risks. And Daryl, would you answer the other part of that question.

Yes. So on the OCI, John, what I would tell you is Category 3 it's not in our regulatory capital numbers. 99% of our portfolio is guaranteed. So it's just a matter of timing. We're going to get the funding back. It's not a permanent impairment that you see. There are partial offsets once a year you mark your pension plan that Mark will obviously be against what the OCI is, which would be some benefit at 12/31. But the real hedge when you really look at this is the economic hedge with deposits. I mean deposits have increased in value. We don't mark to market these non-maturity deposits, but we really look at it. The value of that has well exceeded the adjustment than what you saw on the securities portfolio. So that's really, I think, the offset that you see there. If we wanted to, we could put more than 40% into held to maturity, I don't think we're there yet where we need to do that from that perspective. I think we feel good with what we've done today.

Okay. And then one nitpick as a follow-up, Daryl, the duration of the AFS portfolio before the transfers, I think it was about $5 million, do you have the new number on what that looks like now after you've moved some to held to maturity?

About 6.5%, and our modeling, even with rates going up higher is basically capped out. So, we're really in the six handle, and that's where it's going to be until rates start to fall again.

6.5% now.

We'll take our next question from Matt O'Connor with Deutsche Bank.

Sorry if I missed that earlier, but did you say how much of the $1.6 billion of cost saves you're looking to achieve by year end in the 1Q run rate?

Yes. Matt, what I would say, it's pretty minimal. I mean we had a little bit more reduction in VSRP at the beginning of the quarter. Most of the branch closures were back-end loaded in the quarter. Some of the technology savings that's going to come through that's really all in the second half. We have a little bit more closures in corporate real estate. So, I would say, it's much more back-end loaded. We maybe got a little bit, but the vast majority of it would be in the second half of '22.

Okay. When you say a little bit, meaning a little bit more than last quarter, right? Because you already had at least a chunk of the 1.6 in the run rate at year-end, right?

That's right. Yes. So, we were two-thirds of the way through at the end of the year. We made a little bit of progress in the first quarter, and we got more to do in the second half of '22.

Yes. I'd say, Matt, I mean -- yes, Matt, we're on really good track on the cost saves. I mean, we're ahead in most of the categories where we want to be. And now we've got a couple of remaining big chunky ones and they're binary. You close the data center and you get the cost saves. I mean, so we feel really good about where we are in that trajectory.

Okay. And then more broadly speaking, like as we think about costs beyond this year, how do you think about -- how should we think about what Truist is trying to be? Like is this a kind of key growth low? Is it an operating leverage story? Because obviously, there's been lots of puts and takes with the merger. We also have inflation. We also have revenue benefiting from rates, which is usually a very good efficiency business. But what is Truist from an expense perspective looking out beyond this year?

Yes. I think, Matt, if we think about sort of overall for Truist, what we expect to be a low efficiency ratio company. So I think the construct of our business mix and our structure allows us to be a low-efficiency industry-leading low efficiency ratio company, sort of where that ends on an absolute basis will depend on a lot of market conditions, but we'll be at the low end of that. We will be a company with higher growth potential and less volatility. So I mean when we think about how expenses fit into that rather than sort of the absolute dollar amount in light of expenses that support a growing business and being able to do that with, I think, an industry-leading low efficiency ratio. And positive operating leverage. And maybe I showed you asked that I want to make sure I make that clear as well.

We'll take our next question from Mike Mayo with Wells Fargo Securities.

Just first, just a clarification. So you've guided revenue growth for this year from 2% to 4% up to 3% to 4%, and you expect $500 million of merger savings by year-end from this point forward. Is that correct?

Roughly, I would say $400 million to $500 million, Mike, because we got a little bit of savings in the first quarter.

Okay. And then more generally, Bill, you just talked about your terminal and state superior growth, superior efficiency, and I would -- from what you said before, you have superior geographies superior business mix, superior levers with the merger model. So superior, but then you look at the current loan growth and its average the current deposit growth, its average operating leverage this year looks average. So superior features, but average results, I know you're going from integration to kind of execution. But from our standpoint, it looks like you're in a corvette going 60 miles per hour. So when will this superior positioning lead to superior growth?

Okay. We're going to assume we're on the auto bot. We have no speed limits in terms of opportunity. And Mike, we're at that inflection point. I mean we talked about this. This is -- I think we're right at that pivot point. And I can feel it. I mean I can feel all the things if you categorize loan growth. But if we break it down to, I think, the things that are highly correlated to positive trajectory, I think those areas where actually we're doing well, things like sort of core C&I. Other decisions on loan growth are related to the decisions we've made about positioning our company, which I think will be really beneficial to us long term. And then I look at sort of the pivot points of, I mean, I'll pick several categories if I look at integrated relationship management. It wasn't at the level we needed it to be in sort of the fourth quarter, first quarter, we've made the pivot point, and we're starting to see significant increase, and you'll start to see that in some of our results. You see that a little bit in the insurance results in this quarter where we are in terms of positive asset flow and wealth, wealth teams and insurance teams net positive in terms of adding people. So we've reached sort of really good inflection points there. Investment banking, clearly, in terms of adding, retaining opportunities in those businesses, things like the core commercial pipelines, where we are in terms of more lead deals more on the left side, where we are positioned in terms of production in the places we want to be. So I can feel the inflection point. So maybe we're -- whatever it was 60 miles an hour, but the foot is on the accelerator, not the brake. And I totally feel that in the transition that we're making at this particular juncture, and I'm very confident about our positioning for the future.

Maybe just one follow-up. What percentage of your time was spent on the merger before and how much of it has been on continued integration now?

Jeff, I look at my personal calendar, I don't think I've been in Charlotte in the last five weeks or so. I mean, so I look at all of our leaders' time in terms of where they're spending time, and there's a significant difference. I've been much more in front of teammates, in front of clients and community. And just my own personal time, I can feel it. And in fairness, I'm just one symbol. More teammates have been in that mode for a longer period of time than I have, and we feel that power shift. I mean just thinking about it in a simple way and Daryl was talking about it in a simple way, we did about 0.5 million hours worth of training. So just maybe put that in context of which that 0.5 million hours of training, we now translate into 0.5 million hours of client-related activity just as like one symbol.

We'll take our next question from John Pancari with Evercore ISI.

On the efficiency, the medium-term efficiency goal of the low 50s, I just want to get a little bit more color from me in terms of what exactly would you say is needed to get there in terms of the rate backdrop? And then also in terms of timing that you see as reasonable to get to that low 50s range?

Yes, John, you kind of go back where we were when we announced this transaction back in '19. Rates were a couple of hundred basis points higher back then. And at that point, we thought if we got those cost saves, we would be able to come in at the low 50s at that point. We're definitely a different company. We continue to buy and add businesses and all that. But we definitely have at least a forecast from the Fed for it to go up a couple basis points this year and into 2023. So assuming you get the Fed up to 3%, 3.5% and we will execute on our cost saves, we should have really strong efficiency ratios coming in. Whether we get low 50s or not, I think there's a shot that that could happen just because of the asset sensitivity that we have in the Company and what we're seeing in the marketplace, our deposit beta is how they perform. So no guarantees from that perspective, but rates going up definitely helps on the net interest income side significantly, and it's back to kind of where we were back in '19.

Okay. And then also on the expense side, your expectation for the $492 million in incremental expenses related to the merger to roll off in 2023. What are the biggest drivers of that decline? I know you mentioned the consolidation of data centers. Like if you could just give us a little more granularity around what are the biggest components. And related to that, I know you indicated you completed your core conversion. Regarding the core deposit system, what was the upgrade there? What did you move to?

Yes. So from a cost save perspective, obviously, technology is the biggest chunk of where the cost savings would come in. So that would be the majority of the savings, both data centers, application systems, FTEs, all in that area would basically will be cost savings. We still have more to do on -- a little bit on the VSRP that will help benefit. You have more on corporate real estate reductions. So, we have other savings. So I would say overall, now that we've moved from the integration to now running and operating the Company, we will continue to look for more efficiencies as we operate the Company to give us more fuel to make more investments in the Company as we move forward from that perspective. And I'll put it back to Bill.

Yes. And then on the core conversion, I mean, we consolidated to our heritage core platform but that doesn't really sort of explain the next-gen opportunities we have within that. So you think about the use of cloud-based and API technologies to create, for example, the digital experience, which we've talked about. So this concept of a digital straddle, we were able to convert add flexibility and add products and capabilities to our clients digitally long before we converted them physically in the core conversion. So I think we've got a really good strong first second-gen core platform with third gen, fourth gen kind of capabilities that sit on top of that. And then as you know, we're also experimenting with a new core platform for LightStream. So, I think we've got our feet in the right place where we want to be in terms of maximum flexibility listing core and experimenting with a new core with LightStream and a product called FinSac, which we've talked about before. And this digital straddle agility I think will really, really pay strong dividends for us going forward.

We'll take our next question from Ebrahim Poonawala with Bank of America.

Just wanted to touch base on credit. One, Bill, Daryl, if you can just talk to us about the consumer book be it Sheffield, LightStream, anything in particular that you are watching around consumer trends, just a fair amount of concern around credit quality. And I'm not sure, if you can give any breakdown in terms of FICO scores within that consumer book?

Yes. Clarke, do you mind you talk about...

Yes, Ebrahim, what I would say is that the area we're most focused on from the consumer standpoint around of more path to normalization or any potential stress out there with the inflationary pressures would be in our subprime auto book. Remember, that book is less than $5 billion to high return business. So, we are watching that really closely. And so, we're seeing the credit performance more normalized there. I would say, for the remaining consumer segments, we principally have a prime-based portfolio. So, less than 1% or so of our borrowers in those segments would be considered non-prime, so it's just not as big of an issue there, but I would say our expectations are that you'll continue to see as we go through the rest of the year. More normalization on the consumer side first and where we're watching most closely would be the lower income consumer in our subprime auto.

That's helpful. And just as a follow-up to that, when we look at the reserve ratio at 144, just give us a context of a day one CECL and where you expect to bottom out, given sort of the macro uncertainties Bill and Daryl talked about.

Sure. And just to remind you all, our day one CECL was at 154 and at Q2 level now is at 144. So it's down 9 bps from the first quarter. And so, the other point I would make to you is our reserve coverage is even at that level, are very strong to NCOs and NPAs. So, the way we think about CECL, we continue to incorporate multiple economic scenarios and the estimate, including maintaining a pretty healthy weighting on our downside case. We also, this quarter, considered qualitatively in precision and uncertainty with respect to inflationary pressures, rate increases in the war in Ukraine. But remind you, I'd also reflected the outstanding performance we had from a risk profile and a credit performance for the quarter. So all that being said, we still anticipate potentially additional reserves in '22, but probably at a decelerated pace compared to last year. And I would just say this, obviously, the number and the amount of the releases is really dependent upon how the economic situation unfolds. Katie, we have time for one more question.

We'll take our final question from Erika Najarian with UBS.

Just one clarification question for me. Underneath your revenue guide of 3% to 4%, is it fair for us to assume that given the outlook for Fed funds for the rest of the year, we should take that 7.2% in the up 200 ramp scenario from Slide 13 as sort of maybe the starter point for the NII growth for 2022. And maybe take 80% of that to up 5.8%, then later on how we're thinking about loan growth and the long end of the curve?

Yes. So a lot of moving parts there. What I would say is that in spirit, I think using a good gauge with a gradual over 200, I think is a good approximation. The deposit betas we talked about earlier, we have those being phased in and that's built into these numbers. So, we're expecting 25% the first 100, 35 and the next 150 after that. Right now, we're performing better than that. But we definitely have a pickup in trajectory. If this forward curve does play out as what's embedded in there you will see a big increase in both core net interest margins from where we are today, probably peers seen 3% maybe by the end of the year.

Got it. So the follow-up here is, given what you've baked into the deposit betas in the first 100, which could be very minimal. The 7.2% in the up 200 could be the floor in terms of this year?

I think we have good conservative estimates. So, there is a chance for outperformance, but it's still very early, Erika. So you don't really know. But I feel pretty good with these projections and feel good. Bill talked about earlier about our deposit base and our clients and density that we have. So, I think we're going to have really positive net interest income as this year plays out in the '23.

Okay. Thanks, everyone. This completes our earnings call. If you have any additional questions, please feel free to reach out to the Investor Relations team. Thank you for your interest in Truist. We hope you have a great day. Katie, you may now disconnect the call.

Thank you. That will conclude today's call. We appreciate your participation.