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Truist Completes Sale of Truist Insurance Holdings and Executes Strategic Balance Sheet Repositioning
TIH sale creates capital advantage and growth capacity
CHARLOTTE, North Carolina, 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 a group of investors 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 look forward to a strong partnership with TIH in the future,” said Truist President and CEO Bill Rogers. “The sale of TIH significantly enhances Truist’s financial profile and positions Truist to invest in and expand 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 CET1 capital ratio as of March 31, 2024 increased 230 basis points to 12.4% and its tangible book value per share increased $7.16 or 33% to $28. 80. Truist’s estimated CET1 ratio under the proposed fully progressive Basel III capital rules increased 254 basis points to 8.4%3 as of March 31, 2024.
Following completion of the sale, Truist executed a strategic balance sheet repositioning of a portion of its available-for-sale investment securities portfolio, 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 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 US$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 US$20.7 billion will be held in cash. The combined reinvestment rate on newly purchased investment securities and cash is 5.22% for the remainder of 2024, including the impact of hedges and based on the Federal Funds4 futures curve.
The balance sheet repositioning reduced Truist’s pro forma CET1 capital ratio as of March 31, 2024, by 107 basis points to 11.4%2. Truist’s estimated pro forma CET1 ratio as of March 31, 2024, under the proposed fully progressive Basel III capital rules, increased from 8.4% to 8.9%5. There is no impact on the pro forma tangible book value per share of $28.80.
Truist estimates that the proceeds from the TIH sale and balance sheet repositioning will add $160 million to net interest income in the second quarter of 2024 and $710 million (including the second quarter impact) to net interest income in 2024 with Based on Federal Funds Future Curve4.
Truist previously provided an outlook for second-quarter and full-year 2024 revenue that excluded any interest income benefit earned on the proceeds from the sale of TIH or from a balance sheet repositioning. Truist is adjusting its prior outlook to reflect expected interest income on the proceeds from the TIH sale and balance sheet repositioning. Truist now expects Q2 2024 revenue to increase approximately 1% from Q1 2024 revenue of $4.9 billion, compared to its previous outlook of revenue declining approximately 2%. Additionally, Truist now expects full-year 2024 revenue to decline 0.5% to 1.5% from 2023 full-year revenue of $20.2 billion, compared to its previous outlook that revenue decreases 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 intangible assets, net of deferred tax liabilities.
- Numbers may not add up due to rounding.
- The impact of CET1 is greater under fully implemented Basel III rules, mainly due to a reduction in deduction limits.
- Federal Funds future curve on May 6, 2024.
- CET1 under the proposed fully integrated Basel III rules increases following balance sheet repositioning due to a reduction in threshold deductions and a lower risk weight on securities purchased than securities sold.
About Truist
Truist Financial Corporation is a purpose-driven financial services company committed to inspiring and building better lives and communities. As the leading commercial bank in the U.S., Truist holds leading market shares in many of the high-growth markets across the country. Truist offers a broad 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 specialty 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 verbs or conditionals such as “may”, “will”, “should”, “would” or “could”. In particular, Truist’s forward-looking statements include statements that Truist makes about (i) the financial impact of the sale of TIH and the repositioning of the balance sheet at Truist, including its CET1 ratio (as currently calculated and as calculated under the 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 newly acquired investment securities and cash balances arising from balance sheet repositioning. Forward-looking statements convey Truist’s expectations, intentions or predictions 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 statements as predictions or guarantees 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. Although no list of assumptions, risks and uncertainties can be exhaustive, some of the factors that could cause actual results or other future events or circumstances to differ from those in Truist’s forward-looking statements include the risks and uncertainties discussed in more detail 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 or on behalf of Truist speaks only as of the date on which it is made. Truist undertakes no obligation to update any forward-looking statement to reflect the impact of events, circumstances or results arising after the date the statement was made, except as required by applicable securities laws. You should, however, consult other 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.
SOURCE Truist Financial Corporation