Greetings, ladies and gentlemen, and welcome to the Truist Financial Corporation's Second 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, Jennifer, and good morning, everyone. Welcome to Truist's second 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 second quarter results and share their perspective on our efforts to transition from an integration focus to an operating focus, current business conditions and our continued activation of Truist's purpose. 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 Investor Relations 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 three 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 archived webcast are located on our website. With that, I'll now turn it over to Bill.

Thanks, Ankur. Good morning, everyone, and thank you for joining our call this morning. Trust delivered a good second quarter, reflecting our improving momentum after the integration and the resiliency of our diverse business mix in a volatile market environment. Our financial results modestly exceeded the guidance we provided in April with several puts and takes. Loan growth was strong and broad-based. Net interest margin expanded significantly due to higher interest rates in our strong deposit franchise. Credit quality remains excellent and we are pleased by our relative and absolute performance in the recent stress test. In light of these results, our Board will consider a resolution to increase the common dividend by 8% at its July meeting. This quarter's performance, combined with improving client experience trends and dramatically lower merger costs, reflects the initial benefits of our shift from integrating to operating. While there's still work to do, such as stemming elevated operational losses, closing out residual integration issues and completing our decommissioning process, I am very confident in Truist's trajectory and reaffirm our commitment to delivering positive operating leverage for the full year of 2022. I'm going to share some more details on those topics in a moment. Then going to Slide 4. As you all know, Truist is fundamentally a deep, purpose-led company dedicated to inspire and build better lives and communities. We know that our purpose-driven culture is the foundation for our success as a company. Our purpose drives performance and defines how we do business every day. It very intentionally begins with the word Inspire, and to be inspirational, it's often necessary to be bold and to be first. I'll highlight four examples that I think reflect that purpose on the next slide. First and foremost, we recently announced that we're making a significant investment…

Good morning, everyone. Turning to Slide 12. Net interest income increased 7% sequentially, driven by higher short-term interest rates alongside limited deposit betas in addition to strong loan growth. We also saw a positive asset mix shift with the investment portfolio shrinking and funding strong loan growth. As Bill indicated, the strong quality of our deposit franchise also limited deposit rate repricing. Reported net interest margin increased 13 basis points and core net interest margin increased 15 basis points. Net interest margin and net interest income increased for similar reasons and exceeded the high end of our April guidance, primarily due to our teammates delivering lower than modeled deposit betas. Overall, we continue to take a balanced approach to managing interest rate risk. We continue to be asset sensitive and that will decrease over time with the diminishing benefit associated with future rate increases and the disintermediation of funding sources. We forecasted an approximate 25% cumulative interest-bearing deposit beta through the second and third quarters. To protect against any potential downside in rates, we also added $16 billion of swaps, which are primarily forward starting. These swaps begin in 2023 and 2024 and will have laddered maturities that range from three to five years to minimize earnings volatility. Moving to Slide 13. Fee income increased $106 million or 4.9% sequentially. Insurance income increased $98 million due to the seasonality, strong organic growth and the full quarter of Kensington Vanguard acquisition. Car and payment-related fees increased $34 million, reflecting the prior quarter acquisition of merchant relationships and the increased activity. Residential mortgage income decreased $15 million or 17% as higher interest rates pressured volumes and gain-on-sale margins. Servicing income was essentially flat from the prior quarter as lower prepays were offset by increasing hedging costs. While this is a very challenging…

Thanks Daryl. And moving to Slide 17. On our previous earnings call in April, I expressed my belief that the first quarter marked a strategic and financial turning point for Truist. Our second quarter results are bearing out this thesis and we're beginning to deliver on the potential of Truist. For businesses that finished conversions in 2021, the increased momentum is palpable. Wealth continues to build momentum in hiring advisers who are attracted to Truist's purpose and broad set of capabilities, both within wealth and across the company through IRM. Wealth net adviser count grew in the second quarter for the first time in 10 quarters. With our recent entry into the Chicago market, Truist Wealth now serves nine of the 10 largest metropolitan areas in the United States. In addition, net organic asset flows have been positive for five straight quarters. In our mortgage business, client satisfaction scores for origination have improved every month since their conversion in August of 2021. The percentage of retail client applications completed digitally is now 97%. For the rest of the company where core bank conversions were completed in the first quarter of 2022, momentum is also building. Loan production in the second quarter was the highest it's been at Truist and up 41% compared to the first quarter. Pipelines also ended the quarter at the highest we've seen. Branch loan production, which is primarily home equity was up 24% relative to the first quarter and the highest it's been at Truist. Consumer deposit production, both in the branches and within digital was up 29% sequentially and 20% year-over-year. Retail Banking Net Promoter and client satisfaction scores have rebounded nicely from their March lows and still have more opportunity to improve. Deposit production within our commercial community bank is up 8% relative to…

Thanks, Bill. Jennifer, at this time, will you please explain how our listeners 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.

Thank you. [Operator Instructions] We'll go first to Betsy Graseck with Morgan Stanley.

Hi. Good morning.

Good morning.

Good morning.

A couple of questions just on how you're thinking about the funding mix. I know you had several comments in your prepared remarks around accessing some of the pools you have. Could you talk a little bit about what you're doing with deposit pricing for your core deposits, how you're thinking about utilizing brokered from here? And then if you could speak a little bit about the hedge that you put on for protecting earnings against future volatility and where we should expect that to show up in the NIM and how that's going to factor into your outlook for your rate sensitivity? Thanks.

Yes, Betsy. So I would first start with, we were really excited to have really strong broad-based loan growth this quarter, and we expect that to continue, as Bill said in his prepared remarks. To fund that, we're going to start with the runoff of our investment portfolio. We built the investment portfolio when we had all that excess liquidity. We're very comfortable letting that run off and have that -- have a positive mix change on the balance sheet. As far as brokered deposits, we did add some brokered deposits over the last several months. I would say, we're probably at where we want to be from that perspective, knowing that we still have a lot of capacity and other funding sources available in the marketplace. You look at Federal Home Loan Bank advances and negotiable CDs and other amounts, we paid all that off during COVID in 2020 and we have much amount of capacity there. The other thing from an investment portfolio perspective, we're about $145 billion, give or take. And we feel comfortable we could shrink that portfolio probably $20 billion to $25 billion easily and still stay within our liquidity and LCR guidelines that we have to for regulatory purposes. Though, as far as our strategies for pricing, we were really pleased, as Bill talked about, across our company, our deposit betas came in much better than modeled. We modeled 25 for the first 100. And if you look in the second quarter, we came at 15, and that includes brokered. When you back out the brokered, we were only at 8%, which is really, really low. I would say, we will continue to use that strategy. We're going to make sure that we take care of our clients and use the ability to do exception pricing. But I think overall, I think we will continue to hopefully continue to outperform our model expectations.

Betsy, one thing I'd add is that, I think, we'll be somewhat stable for deposits for the balance of the year. But remember, as Daryl pointed out, we had just under 2% growth in DDA. So I mean we're adding net new clients and expanding those relationships. And I think the beta really just reflects the benefits of the merger. We're sitting now with just under 20% market share in most of our markets. We've got a business that's highly diversified. Somewhere around 40-plus percent of our deposits are less than $250,000. So we've got a unique franchise here which I think, on the DDA side, continues to benefit and overall stable deposits for the balance of the year.

And the loan growth…

And your hedge question.

Oh, yeah, yeah.

I just – we are just gradually starting to add some receivers out in the forward markets for the most part out one to two years. Since we are steady on the way up on deposit rates, you won't have as much capacity on the way down. So we're just putting in these forward hedges and protect manages income as rates might potentially fall overall. But we still are asset sensitive though decreasing as rates continue to go up.

Got it. Okay. No, that's helpful. And then on your point on loan growth, yeah, loan growth was very strong. And I guess the follow-up question here is, what are you hearing from the field with regard to the pace of that loan growth? Is it poised to accelerate, continue at this pace for the foreseeable future? Just a little bit of a sensing color for how we should be thinking about that? Thanks so much.

Yeah, Betsy, and that's the question of long-term sustainability. But on the short-term basis and through the balance of this year, if we sort of look on a year-over-year basis, we were sort of in the mid-single figures. I think, we'll be in the higher end of the single figures in terms of loan growth. Our teams are excited. Our production numbers, which I highlighted, are up significantly. Our pipelines are up. So we're – I think we're seeing a little bit of maybe idiosyncratic to us, and our shift to integration in terms of prowess on the loan side. And the great news is that, it is extremely broad-based. So not only is it in the C&I side, but our core branch network, I mean, their applications are up, personal loans are up, HELOC’s are up. So similarly, they're starting to execute at a much higher level.

Yeah.

We'll go next to Ken Usdin with Jefferies.

Yes. Good morning. Sorry about that. Yeah, as a follow-up on the fee side, you had great insurance revenue this quarter, up 13%. We heard your comments about some of the challenges looking out on some of the other lines. So can you just kind of help us walk through just what you're expecting on the fee income side, inside that third quarter PPNR outlook that you gave, because I think you talked mostly just about higher NII and higher expenses. So any granularity on the fee side would be great? Thank you.

Yeah. Hey, Ken. Let me – let me maybe just do a walk through of the broad categories. I think sort of overall, I'd say, fee income stable relative to the first half, and maybe let me give you some puts and takes against that. Insurance, as you noted, solid organic growth that will offset some of that seasonality. So I feel really good about the momentum that we have there. And as we mentioned earlier, we're continuing to invest in the insurance business. So we feel good about the growth there. Mortgage, some puts and takes. Origination probably a little bit offset by servicing. Gain of sales, probably a little bit of a wildcard there in terms of whether we see some rebound on that side as some of the capacity comes out, but mortgage probably a little flat second half of the year to the first half of the year. Wealth probably be a little bit down in the third quarter, just sort of where markets are right now. But as I highlighted earlier, our – really solid production and asset flows and hiring net advisers, so if we get a little market tailwind that could change. Investment banking, I think we expect the second half to be better than the first. Pipelines continue to be really solid. And then we've got a bit of things that are unique to us. We've got this really good IRM momentum from our commercial community bank, that's probably a little bit less market dependent. I'd, sort of, call that more sort of bread and butter kind of investment banking business. And then we've added bankers there also and we're continuing to invest. So we're leaning in there. And then on the service charge side, with the decisions we've made with Truist One and overdraft decisions that will be down. So sort of net-net, that's, I think, a good walk through on the fee income side.

Great, okay. And then second question just on, you had talked about operating lower CET1 than your 9.75%. We saw a 9.2% this quarter. And just what you're thinking, you saw you did a little buyback, just in terms of capital allocation decisions and potential for more of those insurance deals that you guys have been biased towards over time? Thanks Bill.

Yeah. So I mean, the really great news is we're using capital exactly where we want to right now, so we're using it with growth. So we've been funding the loan growth. As we've talked about, our capital levels were driven by merger risk, CCAR results and economic uncertainty. I think merger risk is largely behind us. Very pleased with the CCAR results, our low risk profile, better PPNR profile. Economic uncertainty, it was really high during the pandemic, moderated and maybe increasing a little bit. So we've got to balance all of those. But we're comfortable where we are. We've had more organic growth. We do see more opportunity in some of the non-bank M&A, as you noted. So we're going to allow capacity and be opportunistic there as well. And then we generate -- post merger, we'll generate somewhere around 25 basis points of capital a quarter organically. If you say, okay, we will use about 15 basis points of that to fund the current growth that we have and anticipate, we've got about 10 basis points net. So I think that gives us the requisite flexibility to fund the growth that we anticipate; be flexible, as you noted, for potential non-bank M&A, particularly on the insurance side. And so if you add all that, share repurchase probably is not our top priority at this particular juncture.

Thanks for all that, Bill.

All right. Sure.

We'll go next to Gerard Cassidy with RBC.

Good morning, Bill. Good morning, Daryl.

Good morning.

Good morning.

Bill, can you share with us, you obviously put together a very good quarter this quarter and you put some very strong numbers in your comments at the very end of the prepared remarks about growth. But then you've cautioned it, of course, with what's going on at the macro scene, with monetary policy and such. Can you share with us what you're seeing from your customers because there seems to be a disconnect. A lot of investors are very concerned about credit deterioration. You certainly don't see it, nor do your peers. But is there something on the horizon other than the macro that you guys are seeing, or what are your early indicators you're looking at to see if there will be a crack in credit maybe in six or 12 months?

Yeah. I mean, sort of, going down the categories of that question, our clients still see a lot of good demand. I may be a little bit clouded by the fact the last two markets I was in were South Florida and Nashville and you know, there's -- they are blowing and going in virtually every direction. But our clients continue to see good demand. I think it's appropriate to put a cautious note just because I think you have to. And if we look at sort of what are the canaries in the coal mine, so to speak, what are the things that we're trying to look at, and while we don't see a deterioration, I think the things you look at are things like what's happening in the broadly syndicated sponsor-backed leverage deals. So we sort of look at that market, spreads gapped out pretty significantly. Things happening in CRE. We've seen some non-recourse construction loans and some things that you sort of pause a little bit on. Some potential FICO drift and willingness to repay given some of the stimulus. Will things happen in mortgage as some of the Care Act relief comes off? Now all those things that are there, we're not seeing in our results right now, but they are things that we're looking at and that we're stressing and trying to pay attention to. So I think just we're bankers, so we should be conservative. That's the world we live in and we try to manage for all outcomes. But sitting here today, looking at the hood of the car, demand looks pretty good and our business looks pretty good and our clients are extremely healthy.

No, that's very good. Thank you. And then as a follow-up, Daryl, you mentioned the deposit beta, it came in better than expected. I think you said without the brokered deposits, it came in around 8 basis points. I think you guys were modeling for something closer to 25. Can you share with us, what drove the better-than-expected number? And second, as the Fed goes another 75, assuming they do in July and then obviously further rate increases later this year, could the modeling work against you? Meaning could the betas actually go faster later in the year because rates are moving up so quickly?

Yes. So Gerard, I would just tell you that I think it was a lot of great work with our teammates. We're working with clients and giving what we thought was appropriate. Most of our clients aren't there just for rate because we have other products and services. They really like to bank with us for those reasons. So they aren't as rate-sensitive as other clients might be in other places. So I think that's really the benefit of our franchise. I do agree with you though, as interest rates go up, our deposit betas will continue to climb just because more and more people will get a little bit more asset-sensitive. In the prepared remarks, I did say that our cumulative beta would move from 15% to 25% in the second to third quarter on a cumulative basis. We would still expect it to go on if the Fed continues to raise interest rates that you continue to see Fed cumulative beta increasing. And probably if you look at from second quarter to fourth quarter, we may be in the low 30s, give or take a couple of percentage points there. So overall, if you go back to where we were during the Great Recession, much better overall performance than what we had a few of our banks were combined back then. So I think right now, I think we feel very good. And I think that you're going to see really positive growth in our net interest income because of that.

Thank you, gentlemen. Appreciate it.

We'll go next to Matt O'Connor with Deutsche Bank.

Good morning. I just want to follow up on the expense guide. Obviously, overall, the PPNR guide is higher, but the expenses have been an area of focus, I think, for the company since the merger. And I did just want to kind of follow up on what's driving the tweak up by roughly 1% on expenses, especially since the fees are coming in a little bit weaker and net interest income tends not to have a lot of fees or a lot of expenses related to it. And then just as we think about the follow-up with the confidence that you can control expenses kind of next year without the benefit of this kind of merger and other merger-related costs that will be done this year?

Yes. Matt, this is Bill. No eye off the ball on expenses, I can assure you that. So, the competencies that we've built through the merger to manage expenses, understand expenses, create continued improvements are all still there and will be a big part of our expense story for this year and for the years going forward. And a big part of our capability to deliver positive operating leverage and I think industry-leading efficiency ratio. So, no lack of focus on the expense side. And we have lots of things underway in terms of, how we would achieve those additional opportunities. But on the same side, we're going to -- we're investing in our business. And just like we've seen some of this momentum we've talked about, particularly coming from the first quarter into this quarter, we don't want to miss those opportunities. And those opportunities don't line up quarter-to-quarter. They – I think they line up well. We have confidence in the investments we've made in talent and insurance, wealth, investment banking, care centers, as an example, improved revenue potential, improve the client experience. And we have a pretty good formula for long-term paybacks on those investments. I mean, we've been at this and have a pretty good understanding of that. Also, the investments in our teammates for the minimum wage. So that was -- that's a clear step up. I think in fairness, that overtime others will be in that same position. But we just felt like, as I mentioned earlier, it was important for us to lead. This is a time when those teammates need us most. I think it will really help us long term in terms of retention and acquisition of key talent. So, it also has an immediate bump-up and a longer-term payback, which I feel really good about. And then the one that's just trickier and a little more quarter and year-end specific is just the increase in operating losses and they are up. They're up higher than we think they should be. We have a lot of things in place to do that. We made some decisions related to the client experience that I think increased some of those operating losses. But I'm confident that they'll normalize overtime given the investments we're making in that part. But that's the only part that I would say is the non-investment part of the increase in the expense side and I think we'll be more positive about that long term and normalizing those expenses.

And what exactly are those operating losses? Maybe you can give an example or two? And is any of that related to the deal conversion and any follow-up from that, to be blunt? Thank you.

Yes. I mean there are decisions we made relative to client experience. I'll give you an example of. On the fraud side is, giving the client the benefit of the doubt upfront. So, if a client has an experience, we're going to get the money back from another bank and what we're doing is go ahead and funding that client now. That has a one-time increase. But over time, that normalizes, just as an example. And we think that's a good client experience and something, again, that will normalize over time. It's just one example.

You also asked for containment of expenses on a go-forward basis. As we look to rationalize and get back to business as usual, I think there's still opportunities in our corporate real estate portfolio. I think as we continue to rationalize our branch network on closure of some branches over time just as behaviors change with our clients. I think we've talked about this before, but we still have a lot of initiatives that our teammates came up with that would help us from both the cost savings as well as revenue and client experience perspective, and we're in the midst of implementing those over the next 12 to 18 months. We also are moving towards a new card platform over the next year or two, which would generate some savings once we both combine to that. From a technology perspective, we are starting to put more applications up into the cloud which, over time, we're also generating some savings. And last thing I just want to mention is, as you look at our operations, both front and back office, the digitization and artificial intelligence projects that are rolling out, all part and very important to how the company runs and operates. It gives us comfort that our expenses will be contained over the next year or two.

Thank you.

We'll go next to Mike Mayo with Wells Fargo Securities.

Hi. Well, Bill, you gave me the opening, you talked about the hood of the car, so I'll go with the Corvette analogy again. And it looks like -- on the positive, it looks like you're going from first to second gear, right? You said end-of-period loans are up 5%, that's accelerating. You're beating on deposit beta. Your NIM is up, you expect it to be up maybe in the range of 25 basis points next quarter. NII is going higher. And you still have the decommissioning of the data centers and all the apps later this year, so that should help. So, next second year, fantastic. But then I look at the speed that you're going and it doesn't seem to be a lot faster. Yes, PPNR guidance, a little bit higher. But you're guiding for 50 basis points plus operating leverage for this year, if you took the aero [ph] part of your bands. And some of your peers are 200, 300, 400 basis points. I think last quarter, that difference was 100 basis points. So, in a way, the operating leverage is a little bit less than I think what you were guiding in the first quarter. And I hear you, you're not taking your eye off the ball on expenses. You're investing in minimum wage. You have some operating losses. But still, it just seems like the power of the Corvette is still not being fully realized. So, where are you in that progression of translating the power of the engine to the power of the growth and the power of the operating leverage because your efficiency ratio is not really in the ZIP code of the initial figures you gave when you announced the merger three and a half years ago. Thank you.

Yes. A couple of things, Mike. So, I appreciate the acknowledgment of second gear at least. I don't know how many gears your Corvette has, but at least there's an acknowledgment of the second gear. And I think we are seeing that -- we are seeing that growth. And I feel really good about the migration from the first to the second quarter. If loan growth is one of those indicators, but I don't think it's always the indicator, but if I look at production and pipelines and just the things that we're doing, and it's broad-based, so it's not one thing, it's the whole engine operating at a faster pace. But if we're going to continue to just grind on the corvette thing, you got to put gas in it. And you got to put -- and gas is more expensive. We want to drive it faster. And we're really confident in the things that we're investing in and the capability of the company long-term. As it relates to the efficiency ratio from the first guidance, I mean, remember that was in an interest rate environment that was pretty different than where we are now. I still believe, and we're delivering and prospectively will deliver industry-leading efficiency ratio with growth. Whether it's at 55 or low 50s, I don't know, but I am confident that it will be industry-leading in any different -- in any rate environment. So I feel good about that. And then we've got market sensitive businesses that are sitting on the launching pad and really good capability to grow significantly if we get a little bit of tailwind. And that tailwind could come in the fourth quarter, it could come next year, but it's going to come, and we're better positioned than we've ever been to capitalize on those opportunities.

I guess what my question is getting to, perhaps some of the other questions, and I know I'm not going to get an answer, but you can give it qualitatively. Looking out at 2023, when you finally have all the merger savings in your numbers and when you finally have realized some of these -- some of the noisy financial items such as the operating losses and you finally are done with these one-off charges, which are going down, what sort of operating leverage we can expect next year? At least if you can answer that qualitatively or if you want to put numbers around it, we'd love it.

Yes. Qualitatively, it's got to be qualitatively, we just don't know what the rate environment is going to be. So qualitatively, it will be positive. That's the angle that we're gaining towards and committed to. But similarly, and I think, again, you're seeing it this quarter, with revenue growth that reflects the power of this franchise and an efficient expense model that supports that.

All right. Thank you.

We'll go next to Erika Najarian with UBS.

Yes. Hi. I -- just to follow-up on the corvette analogy. You are driving this car and in theory the roads are getting worse, right? So maybe the first question I have is, in the last crisis, both companies did fairly well, relatively well from a credit perspective. And Daryl, as you think about the different scenarios for ACL buildup in a downturn, a lot of investors are comfortable thinking about where the banking industry could be in a charge-offs scenario, but none of us can limit the CECL process, right? So I guess the question is, in a mild recession scenario, how much more ACL build do you think would be ahead of you for what the charge-offs that you think your portfolio would produce?

Hey, Erika, I'll start and Clarke can help finish me off on this. But when we set the amounts, obviously, it's scenario-based. It's always forward-looking from that perspective. In the prepared remarks, we did say that there is potential that the scenarios can continue to deteriorate. If that is the case, then you would expect us to continue to add to our allowance. And that would add to our provision costs as that moves up from that perspective. But right now, we aren't seeing a whole lot. And there could be some deterioration from that perspective, but let me kick it back over to Clarke.

Yes, Erika, I would just say this, and Bill mentioned it and Daryl earlier, as we came through the quarter, we refreshed all of our scenarios. So our baseline, which is 40% of our estimate, is a more pessimistic outlook, slower economy. And then, we have a 30% weight on a recessionary, a more pessimistic scenario. So we feel like we've been pretty conservative in our estimate this quarter. And also this quarter, we had really good loan growth and very highly rated credits. So those carry a lower relative reserve rate. So that's why you didn't see a big build this quarter. You saw 6 basis points decline in our allowance. That was because of the growth. So we believe we've accounted for some of the recessionary risk right now. And so, as we look forward, the main driver of changing the allowance would be growth. Unless the scenarios get more severe, and then obviously, our reserve rate would have to change.

Got it. Thank you for taking my question.

Jennifer, we’ve got time for one more question.

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

Good morning. Just on the -- also on the credit front, can you just talk about, are you seeing any emerging signs of stress within the portfolio, particularly as you look at some of the lower-end consumer, maybe in your regional acceptance business on the non-prime side or the Sheffield business? If you can just talk about where, if any, that you're seeing some of the cracks form. Thanks.

Look, I mean, we are monitoring that very carefully. So I think what we're seeing probably a little bit of indication would be the low to moderate income consumer, think cohorts $50,000 incomes and below. We're seeing higher delinquent -- early delinquency in those areas. But it's not translated yet into higher late-stage delinquencies or losses. So, for example, in our subprime auto business, we had one of our lower loss rates this quarter seasonally and we're seeing things slightly because of the Manheim being up, consumers higher redemption rates even on repo. So it's not yet translated into any losses. We've also looked at our deposit levels or our consumer borrowers and they're not coming down rapidly, particularly for the moderate income and above. So while there's early signs we're watching, it's not translated into any significant concerns. And our outlook right now for the rest of the year does not assume any significant deterioration.

Got it. Okay. And then just separately on the loan growth side, I know you indicated that you did see some pressure there this quarter on commercial real estate, but you seem a bit more optimistic there in stabilization. How should we think about the growth in that portfolio? Is there the potential for incremental declines there, or do you think stabilization will happen beginning next quarter? Thanks.

Yes. I'm sure it's quarter-to-quarter, but I think we're stabilizing, is the way I would say it, and into more of a growth mode. And by the way, we feel really comfortable about it. We've made decisions through the cycle that create a really good portfolio. We've done a lot of things internally strategically to get really, really strong alignment around the type of CRE portfolio we want, the diversity that we want. So probably somewhere in the next couple of quarters, stabilizing with the -- bent for growth over time.

Got it. All right. Thanks, Bill.

Thanks, John, and thanks, everybody. That completes our earnings call. If you have any additional questions, please feel free to reach out to the IR team. Thank you for your interest in Truist. We hope you have a great day. Jennifer, you can now disconnect the call.

Thank you. This does conclude today's conference. We thank you for your participation.