Truist Financial Corporation · NYSE:TFC
Truist Financial — Q3 2021 Earnings Presentation
41 slides from Truist Financial's earnings presentation, Oct 15, 2021
Slide 1: Third Quarter 2021 Earnings Conference Call
Third Quarter 2021 Earnings Conference Call Bill Rogers – CEO Daryl Bible – CFO October 15, 2021
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
Purpose Inspire and build better lives and communities Clients Provide distinctive, secure and successful client experiences through touch and technology. le sen with integ! Mission Teammates Create an inclusive and energizing environment that empowers teammates to learn, grow and have meaningful ca
Slide 5: Living our purpose
Living our purpose Inspire and build better lives and communities Community Impact, Responsible Business Technology and Human Capital ESG, Climate Change, Financial Inclusion, and Ethical Conduct Client Service and DEI and Environmental and Education Sustainability ▪ 112% of prorated goal for the $6
Slide 6: 3Q21 Results
3Q21 Results
Slide 7: 3Q21 performance highlights
3Q21 performance highlights Summary Income Statement ($ MM) GAAP / Unadjusted Adjusted2 Key Points Earnings and profitability Total taxable-equivalent revenue1 $5,626 $5,626 ▪ Strong adjusted net income available to common shareholders of $1.9 billion (adjusted EPS: $1.42) up 46% compared to 3Q20 (p
Slide 8: Selected items affecting 3Q21 results
Selected items affecting 3Q21 results Item Diluted EPS Pre-Tax After-Tax ($ MM, except per share impact) Impact Merger-related and restructuring charges ($172) ($132) ($0.10) Incremental operating expenses related to the merger ($191) ($147) ($0.11) Professional fee accrual ($30) ($23) ($0.02) See n
Slide 9: Digital First migration
Digital First migration Truist Migration Waves 2Q21 3Q21 4Q21 1Q22 Truist digital experience pilot Client migration waves to Completion of BB&T migration Truist core conversion Truist experience begins ▪ 12K teammate digital pilot ▪ ~7 million Truist clients have migrated to the Truist digital exper
Slide 10: Digital acceleration
Digital acceleration New Truist platform will support clients across the continuum (including Digital Commerce Growth1 Mobile App Users2 Retail, Wealth, and Small Business) with relevant differentiation for each client segment Wealth differentiation includes: ▪ Financial Planning Center: Provides a
Slide 11: Loans & leases
Loans & leases Average Loans & Leases HFI and Loan Yields Loans & Leases HFI ($ MM) $126,744 Linked Like $118,032 $120,399 Average balances 3Q21 Quarter Quarter Change Change Commercial: $183,700 $170,543 $165,760 Commercial and industrial, ex. PPP $125,345 $383 ($5,965) 4.06% 4.03% 3.92% PPP 4,680
Slide 12: Loans & leases – 2Q to 3Q waterfall
Loans & leases – 2Q to 3Q waterfall $603 $1,764 Solid growth within ($1,082) LightStream, Sheffield, ($4,004) prime auto $288,575 ($1,186) Driven by increased Utilization rates of $1,489 ~20-25% compared operational and correspondent to historical average Reflects current risk $286,159 capacity and
Slide 13: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) Linked Like Average balances 3Q21 Quarter Quarter $402,728 Change Change $396,255 Noninterest-bearing deposits $141,738 $3,846 $17,772 $372,211 Interest checking 107,802 1,681 11,095 0.10% 0.04% 0.03% Money market and savings 136,094 2,065 12,496 3Q2
Slide 14: Net interest income and interest rate sensitivity
Net interest income and interest rate sensitivity Net Interest Income & Margin Key Points ▪ Net interest income (TE) declined slightly: $12 million sequentially • Purchase accounting accretion declined $53 million sequentially $3,391 $3,273 $3,261 • Core net interest income increased $41 million seq
Slide 15: Noninterest income
Noninterest income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked Like $2,405 $2,365 3Q21 Quarter Quarter $2,210 Change Change 42.6% 42.2% Insurance income $645 ($45) $127 39.7% Wealth management income 356 11 32 3Q20 2Q21 3Q21 Service charges on deposits 276 23 29 Residentia
Slide 16: Noninterest expense & efficiency ratio
Noninterest expense & efficiency ratio Noninterest Expense & Efficiency Ratio Noninterest Expense ($ MM) $4,011 Linked Like $3,755 $3,795 3Q21 Quarter Quarter 71.0% Change Change 67.4% 67.8% Personnel expense $2,187 ($20) $129 Professional fees and outside processing 372 31 49 57.3% 56.1% 57.9% Net
Slide 17: Asset quality
Asset quality Net Charge-offs & Provision Nonperforming Assets Key Points ▪ Asset quality remains excellent, reflecting our prudent risk culture, diverse $421 portfolio, improving economic conditions, and the ongoing effects of government stimulus $326 $1,314 ▪ NCO ratio was 19 bps, down 1 bp sequen
Slide 18: Capital and liquidity position
Capital and liquidity position Capital Ratios Key Points Capital position ▪ CET1 ratio was 10.1% 14.6% 14.2% 13.9% ▪ Dividend of $0.48 per share (7% increase compared to previous level) 12.2% 12.0% 11.9% • Reflects 40% payout ratio on GAAP EPS and 34% payout ratio on adjusted EPS 10.0% 10.2% 10.1% ▪
Slide 19: Expanding our point-of-sale platform: Service Finance
Expanding our point-of-sale platform: Service Finance Strategic Rationale Financial Impact ▪ Expands scale and capabilities of existing point-of-sale lending business ▪ Strong profitability profile with low credit risk; accretive to ROA, ROTCE, efficiency ratio and EPS growth over the long-term • St
Slide 20: Merger Integration Update
Merger Integration Update
Slide 21: Successful execution of integration milestones
Successful execution of integration milestones One conversion remaining Integration Milestones Truist Securities conversion (3Q20) Convert heritage BB&T retail and commercial clients to Truist ecosystem (Oct. ‘21) Wealth brokerage platform conversion (1Q21) Integrate industry-leading commercial lend
Slide 22: Committed to achieving net cost saves
Committed to achieving net cost saves Third Party Spend Retail Banking Non-Branch Facilities Personnel1 Technology Cost saves Targeting Targeting 800 total Targeting approximately Avg. FTEs decreased by Driven by integration 10% reduction in closures by 1Q22 4.8MM approximately 11% at efforts, appli
Slide 23: Approximately $1 billion remaining
Merger cost update Anticipated total merger costs through 2022 (not in run rate thereafter) Est. Total Merger Related and Restructuring Charges Examples ▪ Expenses to complete merger with no future benefit include: $2.1B • Severance and compensation ◦ (E.g. primarily severance payments) incurred Feb
Slide 24: Cost saves progress
Cost saves progress 3Q21 Core Noninterest Expense ($ MM) Net Expense Savings–Run Rate $3,257 ($145) ($32) ($53) $3,027 4Q20 4Q21 4Q22 annualized annualized annualized $640MM $1,040MM $1,600MM Adjusted NIE Variable NQDCP NIE - Insurance Core NIE On track On track 40% of 65% of 100% of compensation ac
Slide 25: 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 26: 3Q21 results in the context of our value proposition
3Q21 results in the context of our value proposition 1 Exceptional Franchise 2 Uniquely Positioned 3 Strong Capital, Liquidity, & Risk Mgmt. Total Assets Adjusted Diluted EPS Total Payout Ratio 7th largest US commercial bank; Current CET1 ratio = 10.1%; highest proj. pop. growth compared to peers1 n
Slide 27: Appendix
Appendix
Slide 28: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services, and National Consumer Finance & Payments Key Points Linked Qtr. Like Qtr. 3Q21 Change Change ▪ Segment net income of $872 million, up sequentially and YoY Net interest inc
Slide 29: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CRE & Grandbridge Key Points Linked Qtr. Like Qtr. 3Q21 ▪ C&CB net income of $1.1 billion Change Change • Sequential and YoY trends primarily impacted by changes in provision N
Slide 30: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance Key Points 3Q21 Linked Qtr. Like Qtr. Change Change Market backdrop ▪ P&C rate environment remains firm with rate increases in 3Q21 comparable Net interest income $25 $4 $1 or slightly up vs.
Slide 31: Purchase accounting summary
(1) Purchase accounting summary ($ MM) As of/For the Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2021 2021 2021 2020 2020 Loans and Leases(2) Beginning balance unamortized fair value mark $ (1,777) $ (2,067) $ (2,395) $ (2,676) $ (3,077) Accretion 233 285 316 356 367 Purchase accounting
Slide 32: Purchase accounting accretion – historical and forecast
Purchase accounting accretion – historical and forecast PAA ($ MM) Contribution to NIM (bps) PAA ($ MM) Contribution to NIM (bps) 1Q20 $506 52 4Q21 $229 20 2Q20 $483 46 1Q22 $211 19 3Q20 $402 38 2Q22 $193 17 4Q20 $385 36 3Q22 $175 15 1Q21 $340 32 4Q22 $159 14 2Q21 $308 28 1Q23 $142 12 3Q21 $253 23 2
Slide 33: 4Q21–2Q22 preferred stock projected dividends
4Q21–2Q22 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 4Q21 1Q22 2Q22 Series I $172.5 $1.7 $1.7 $1.8 Series J $101.5 1.0 1.0 1.0 Series L $750.0 18.9 — 18.9 Series M $500.0 12.8 — 12.8 Series N $1,700.0 — 40.8 — Series O $575.0 7.5 7.5 7.5 Series P $1,000.0 24.8 — 24.8 Se
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 35: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2021 2021 2021 2020 2020 Net income available to common shareholders - GAAP $ 1,616 $ 1,559 $ 1,334 $ 1,228 $ 1,068 Merger-related and restructuring charge
Slide 36: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2021 2021 2021 2020 2020 Efficiency ratio numerator - noninterest expense - GAAP $ 3,795 $ 4,011 $ 3,610 $ 3,833 $ 3,755 Merger-related and restructuring charges, net (172) (297) (141) (308) (23
Slide 37: 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 2021 2021 2021 2020 2020 Common shareholders' equity $ 62,227 $ 61,663 $ 60,752 $ 62,759 $ 61,819 L
Slide 38: Non-GAAP reconciliations: Performance ratios
Non-GAAP reconciliations Performance ratios ($ MM) Quarter Ended September 30, 2021 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity2 Net income - GAAP $ 1,704 Net income available to common shareholders - GAAP $ 1,616 $ 1,
Slide 39: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2021 2021 2021 2020 2020 Net interest income - GAAP $ 3,233 $ 3,245 $ 3,285 $ 3,366 $ 3,362 Taxable-equivalent adjustment 28 28 28 28 29 Net interest income - taxable-equivalent 3,261 3,273 3,313 3,394
Slide 40: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ MM) Quarter Ended Sept. 30 June 30 Sept. 30 2021 2021 2020 Segment net interest income $ 25 $ 21 $ 24 Noninterest income 652 698 524 Total revenue $ 677 $ 719 $ 548 Segment net income (loss) - GAAP $ 105 $ 156 $ 77 Provision (benefit) fo
Slide 41: To inspire and build better lives and communities
To inspire and build better lives and communities