Truist Financial Corporation · NYSE:TFC
Truist Financial — Q3 2020 Earnings Presentation
38 slides from Truist Financial's earnings presentation, Oct 15, 2020
Slide 1: Third Quarter 2020 Earnings Conference Call
Third Quarter 2020 Earnings Conference Call Kelly King - Chairman & CEO Daryl Bible - CFO October 15, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of Truist. Words such as “anticipates,” “
Slide 3: Non-GAAP Information
Non-GAAP Information This presentation contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Truist’s management uses these "non-GAAP" measures in their analysis o
Slide 4: Purpose, Mission and Values
Purpose Inspire and build better lives and communities Mission | Clients | Teammates Stakeholders Provide distinctive, secure and | Create an inclusive and Optimize long-term value for successful client experiences energizing environment that stakeholders through safe, through touch and technology.
Slide 5: Living Our Purpose
Living Our Purpose Inspire and Build Better Lives and Communities Accomplishments ~$32 billion $3.5 billion ▪ Announced a $40 million donation to help establish CornerSquare Community Capital, in home purchase mortgage loans for Community Reinvestment Act which focuses on providing funding to racial
Slide 6: 3Q20 Highlights
3Q20 Highlights Summary Income Statement ($ MM) 3Q20 Asset Quality and Capital 3Q20 1 Total taxable-equivalent revenue $5,601 Nonperforming assets as a % of total assets 0.26% Provision for credit losses 421 Net charge-offs as a % of average loans and leases 0.42% Income before income taxes 1,396 Co
Slide 7: Selected Items Affecting 3Q20 Results
Selected Items Affecting 3Q20 Results Item Pre-Tax After-Tax Diluted EPS Impact ($ MM, except per share impact) Securities gains $104 $80 $0.06 Merger-related and restructuring charges ($236) ($181) ($0.13) Incremental operating expenses related to the merger1 ($152) ($115) ($0.08) Charitable contri
Slide 8: Loans & Leases
Loans & Leases Average Loans & Leases HFI and Loan Yields Loans & Leases Held for Investment ($ MM) Linked Average balances 2Q20 3Q20 Quarter Change $129,803 $128,164 $126,744 Commercial: $193,465 $171,268 $183,700 Commercial and industrial $152,991 $143,452 ($9,539) 5.02% 4.21% 4.06% CRE 27,804 27,
Slide 9: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) Linked Average balances 2Q20 3Q20 Quarter $370,818 $372,211 Change $334,649 0.70% Noninterest-bearing deposits $113,875 $123,966 $10,091 0.32% 0.15% Interest checking 97,863 96,707 (1,156) 0.51% Money market and savings 126,071 123,598 (2,473) 0.22%
Slide 10: Net Interest Income and Interest Rate Sensitivity
Net Interest Income and Interest Rate Sensitivity Net Interest Income and Margin Key Points $3,687 ▪ Reported net interest margin decreased 3 bps sequentially to 3.10% $3,479 $3,391 3.58% • Purchase accounting accretion contributed 38 bps to the reported NIM compared to 46 bps in 2Q20 and 52 bps in
Slide 11: Noninterest Income
Noninterest Income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked $2,423 2Q20 3Q20 Quarter $2,210 Change $1,961 Insurance income $581 $518 ($63) 41.3% 39.7% Service charges on deposits 202 247 45 34.9% Wealth management income 289 324 35 1Q20 2Q20 3Q20 Card and payment relate
Slide 12: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense & Efficiency Noninterest Expense ($ MM) Linked $3,878 $3,755 2Q20 3Q20 Quarter $3,431 Change 67.4% 66.1% Personnel expense $2,008 $2,058 $50 61.1% Net occupancy expense 243 233 (10) 57.3% 54.6% 55.8% Professional fees and outside processing 289 32
Slide 13: Asset Quality
Asset Quality Key Points Net Charge-offs and Provision Nonperforming Assets ▪ Asset quality ratios were relatively stable vs. 2Q20 $1,252 $1,314 $1,177 $893 $844 • Nonperforming loans as a % of loans and leases were 0.37%, up 2 bps 0.25% 0.26% 0.39% 0.42% 0.23% • Nonperforming assets as a % of total
Slide 14: Selected Credit Exposures
Selected Credit Exposures A Highly Diversified Portfolio Outstandings % of Total Key Points as of 9/30/20 ($ B) Loans HFI ▪ Loan balances for COVID-sensitive industries decreased 7.3% or $2.2 billion Hotels, Resorts & Cruise Lines* $6.8 2.2 % from 2Q20, ending at $27.9 billion Senior Care 6.0 2.0 •
Slide 15: Client Accommodations
Client Accommodations 1 COVID-19 Payment Relief Program Trends Key Points ▪ Payment relief programs include forbearance, deferrals, extensions, and re-agings • Payment relief programs allow clients to defer payments without late fees being incurred, but with finance charges generally continuing to a
Slide 16: Allowance for Credit Losses
Allowance for Credit Losses Key Points Allowance for Credit Losses ($ in MM) Highlights ▪ 3Q20 ACL of $6.2 billion or 2.03% of total LHFI; $96 million increase from 2Q20; excluding PPP loans, ACL was 2.12% $6,133 $6,229 ▪ Modest reserve build reflects continued monitoring of clients’ financial posit
Slide 17: Capital Position
Capital Position Capital Ratios Key Points ▪ CET1 ratio increased to 10.0% from 9.7% in 2Q20 (9.4% on a fully 14.6% phased-in basis) 14.0% ▪ Issued $925 million of Series R preferred stock during 3Q20 to 12.7% 12.2% further strengthen Truist’s capital position 11.6% 10.5% ▪ Tier 1 capital ratio incr
Slide 18: Liquidity Position
Liquidity Position Category III Reduced LCR & HQLA Key Points ▪ Liquidity ratios remain strong 117% 117% 116% ▪ Average LCR was 117% for 3Q20 ▪ Liquid asset buffer was 18.6% at September 30, 2020 $79.5 $79.9 ▪ Access to secured funding sources remains robust, with $224.9 billion of cash, securities,
Slide 19: Digital Acceleration
Digital Acceleration Digital Commerce Growth Active Mobile App Users Digital Accolades 474.1K Javelin’s 14th annual Mobile Banking Scorecard evaluates 25 of the top U.S. financial institutions to 390.3K 3.86MM identify the leaders in digital banking 3.58MM Aug-19 Aug-20 Aug-19 Aug-20 2020 Mobile Ban
Slide 20: Cost Savings Provide Investment Capacity and Performance Advantage
Cost Savings Provide Investment Capacity and Performance Advantage $1.6B in net Cost saves Performance Best-in-class adjusted cost saves ROTCE and efficiency ratio over the medium term Investments Increased investments in digital, marketing, talent, and technology 20
Slide 21: Merger Update
Merger Update Truist Securities August 2020 The corporate and investment banking businesses of BB&T and SunTrust have been integrated and Completed branch divestiture Unveiled Truist Corporate Social Responsibility Report are now doing business as Truist Securities Value to Clients ▪ Extensive range
Slide 22: Value Proposition
Value Proposition Purpose-driven: Committed to inspire and build better lives and communities Growing earnings stream with less volatility relative to Exceptional franchise with diverse Uniquely positioned to deliver Strong capital and liquidity with resilient peers over the products, services, and
Slide 23: Appendix
Appendix
Slide 24: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services and National Consumer Finance & Payments 2Q20 3Q20 Key Points Net interest income $2,160 $2,194 ▪ Branch divestiture arising from the merger completed in 3Q20; $425 million
Slide 25: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking and CIG – Real Estate 2Q20 3Q20 Key Points ▪ Integrated the heritage corporate and investment banking businesses to Net interest income $1,290 $1,276 form Truist Securities ▪ Nonint
Slide 26: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance 3Q19 3Q20 Key Points Net interest income $28 $24 ▪ 3Q organic growth driven by continued market firming, shrinking capacity, and stable exposure units Noninterest income 491 524 ▪ 3Q new busin
Slide 27: Allowance and Fair Value Marks Information
Allowance and Fair Value Marks Information ($ MM) Loans and Leases RUFC Total Allowance - End of period $ 5,863 $ 366 $ 6,229 Unamortized fair value mark(1) 2,676 — 2,676 Allowance plus unamortized fair value mark $ 8,539 $ 366 $ 8,905 Loans and leases held for investment $ 306,627 $ — $ 306,627 Una
Slide 28: Purchase Accounting Summary
Purchase Accounting Summary(1) ($ MM) September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Loans and Leases(2) Beginning balance unamortized fair value mark $ (3,077) $ (3,539) $ (4,564) $ (221) Additions - Merger with SunTrust — — — (4,513) Accretion 367 440 454 170 CECL adoption - res
Slide 29: Preferred Stock Projected Dividends
4Q20 - 2Q21 Preferred Stock Projected Dividends Truist Preferred Outstandings ($ MM) 4Q20 1Q21 2Q21 Series F $450.0 $5.9 $5.9 $5.9 Series G $500.0 6.5 6.5 6.5 Series H $465.0 6.5 6.5 6.5 Series I $172.5 Greater of 3ML+0.53% or 4% Series J $101.5 Greater of 3ML+0.645% or 4% Series L $750.0 18.9 — 18.
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 31: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2020 2020 2020 2019 2019 Net income available to common shareholders - GAAP $ 1,068 $ 902 $ 986 $ 702 $ 735 Merger-related and restructuring charges 181 16
Slide 32: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2020 2020 2020 2019 2019 Efficiency ratio numerator - noninterest expense - GAAP $ 3,755 $ 3,878 $ 3,431 $ 2,575 $ 1,840 Merger-related and restructuring charges, net (236) (209) (107) (223) (34
Slide 33: Non-GAAP Reconciliations: Tangible Common Equity
Non-GAAP Reconciliations Calculations of tangible common equity and related measures ($ MM, except per share data, shares in thousands) As of / Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2020 2020 2020 2019 2019 Common shareholders' equity $ 61,819 $ 61,634 $ 61,295 $ 61,282 $ 29,177 L
Slide 34: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended Sept. 30, 2020 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity2 Net income - GAAP $ 1,141 Net income available to common shareholders - GAAP $ 1,068 $ 1,068
Slide 35: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended Sept. 30 June 30 March 31 2020 2020 2020 Net interest income - GAAP $ 3,362 $ 3,448 $ 3,650 Taxable-equivalent adjustment 29 31 37 Net interest income - taxable-equivalent 3,391 3,479 3,687 Accretion of mark on acquired loans (367) (440) (454) A
Slide 36: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended Sept. 30 Sept. 30 2020 2019 Segment net interest income $ 24 $ 28 Noninterest income 524 491 Total revenue $ 548 $ 519 Segment net income (loss) - GAAP $ 77 $ 61 Provision (benefit) for income taxes 25 21 Depreciation &
Slide 37: Non-GAAP Reconciliations: Allowance with Fair Value Marks
Non-GAAP Reconciliations Allowance with Fair Value Marks ($ MM) As of/For the Quarter Ended Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 ALLL $ 5,863 $ 5,702 $ 5,211 $ 1,549 Unamortized fair value mark (1) 2,676 3,077 3,539 4,564 Allowance plus unamortized fair value mark $ 8,539 $ 8,779 $
Slide 38: To inspire and build better lives and communities
To inspire and build better lives and communities