126 Truist Financial Corporation (NYSE: TFC) has completed the sale of its remaining stake in Truist Insurance Holdings (TIH) to an investor group led by private equity firms Stone Point Capital, Clayton, Dubilier & Rice, Mubadala Investment Company, and other co-investors. This sale is expected to enhance Truist’s financial position and allow it to focus on investing in and growing its core banking businesses. At closing, Truist received after-tax cash proceeds of approximately $10.1 billion, resulting in an approximate after-tax gain of $4.7 billion. This transaction increased Truist’s Common Equity Tier 1 (CET1) capital by $9.4 billion. On a pro-forma basis, Truist’s 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. Additionally, Truist’s estimated CET1 ratio under proposed fully phased-in Basel III capital rules increased by 254 basis points to 8.4% at March 31, 2024. Following the sale of TIH, Truist executed a strategic balance sheet repositioning by selling $27.7 billion of lower-yielding investment securities. This resulted in an after-tax loss of $5.1 billion in the second quarter of 2024 but generated $29.3 billion available for reinvestment. Truist reinvested approximately $18.7 billion in shorter-duration investment securities yielding 5.27%, while 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. The balance sheet repositioning reduced Truist’s pro-forma CET1 capital ratio at March 31, 2024, by 107 basis points to 11.4%. However, Truist’s estimated pro-forma CET1 ratio under proposed fully phased-in Basel III capital rules increased from 8.4% to 8.9%. There is no impact on pro-forma tangible book value per share. Truist expects the proceeds from the sale of TIH and the balance sheet repositioning to 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. As a result of these transactions, Truist is adjusting its previous outlook for 2024 second-quarter and full-year revenue. The company now expects second-quarter 2024 revenue to increase by approximately 1% over the first quarter of 2024, compared to its previous outlook for a decline of approximately 2%. Additionally, Truist now expects full-year 2024 revenue to decline by 0.5% to 1.5% over 2023 annual revenue, compared to its previous outlook for a decline of 4% to 5%. You Might Be Interested In RTX Corp Agrees to $200 Million Settlement Over Export Law Violations Boeing Agrees to Plead Guilty to Criminal Fraud Charge Broadcom Clears EU Hurdle for $61 Billion VMware Acquisition Google Must Face Trial for Ad Dominance, Judge Rules Johnson & Johnson to Increase Settlement Offer to $9 Billion in Ongoing Talc Lawsuits MODULAR ATP Study of the mCRM System Meets Primary Safety and Efficacy Endpoints
