Truist's new CEO puts investment behind checking, where consumer deposits rose 1.2%

Quarter on quarter, total average deposits rose 1.4% ^[3] while the Consumer and Small Business Banking segment was essentially flat ^[4], so nearly all of the new balances came from outside it. Over twelve months the spread is 2.4 percentage points, 3.6% for the bank against 1.2% for the segment ^[18]. On the Oct. 16 call, the new CEO, Mike Lyons, indicated he wants a larger share of customers' primary banking relationships ^[5], and he put the goal in his own words: the consumer bank should "win the DDA of every client across our branch footprint" ^[1].

Activity is running ahead of balances. Card spending grew 4.5% ^[15], 3.3 points faster than segment deposits ^[21], though one is a flow and the other a stock, so the comparison is loose. Lyons said investment in the consumer bank will include "the branch network, ATM network, technology, mobile digital, performance-based marketing, an enhanced client-focused credit card platform, and a rewards platform." ^[2] PYMNTS did not report a dollar figure for any of it.

What Truist is not doing is buying consumer loan growth. Management is moving lending toward credit cards, home lending and unsecured loans, the products tied most directly to deposit relationships, and away from national, single-product businesses ^[8]. It is also cutting businesses that do not support core relationships ^[6]. The one sale PYMNTS names is the RAC portfolio, whose losses put reported net charge-offs at 77 basis points against 38 without it, a 39-point difference ^[17][20]. The report does not say which other businesses are on the list.

Treasury management already has momentum on the fee line: CFO Mike Maguire said fees continue to grow, supported by product adoption and the sales pipeline ^[10]. Small business is the other target, and it sits inside the segment whose deposits grew 1.2% ^[4]. Lyons called it "a deposit machine where we are underpenetrated in lending" ^[11].

Consumer deposits could accelerate once the spending lands, wholesale clients could keep carrying the total while the consumer bank spends with no visible return, or deposit costs could keep climbing from 1.59% ^[13], which was 1.56% a quarter earlier ^[19]. We think the first is likelier. Management says Truist generated positive net new checking account growth in the quarter and year to date and plans to speed it up ^[16], and Lyons set his own test: a top-performing Truist would include "faster net new DDA account growth" and deeper treasury management penetration ^[12]. The view is wrong if segment deposits are still growing near 1.2% a year from now, or if accounts accelerate and balances do not.