Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q3 2013 Earnings Presentation
30 slides from Truist Financial's earnings presentation, Oct 17, 2013
Slide 1: Third Quarter 2013 Earnings Conference Call
Sharing Knowledge fora Brighter Direction Third Quarter 2013 Earnings Conference Call October 17, 2013 Kelly S. King Chairman and Chief Executive Officer Daryl N. Bible Chief Financial Officer
Slide 2: 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”) . BB&T’s management uses these “non - GAAP” measures in their analysi
Slide 3: 2013 Third Quarter Performance Highlights
2013 Third Quarter Performance Highlights 1 6 » Net income 2 was $268 million , or $ 0.37 per diluted share including a tax adjustment » Excluding the $235 million tax adjustment, net income 2 was $503 million, up 7.2% vs. 3Q12 » Excluding the tax adjustment, diluted EPS 2 totaled $ 0.70, an increas
Slide 4: Unusual Items Affecting Earnings
Pretax After Tax EPS Impact Provision for income taxes $ NA $ (235) $ (0.33) Other 1 (15) (9) (0.01) 1 Primarily represents fair value adjustments on land previously held for future branch expansion and merger - related and restructu ring expenses. 4 Unusual Items Affecting Earnings $ in millions, e
Slide 5: Average Loans Increase 3%
Average Loans Increase 3% 1 $112.7 $113.6 $113.2 $114.3 $115.1 $111 $112 $113 $114 $115 $116 3Q12 4Q12 1Q13 2Q13 3Q13 Average Loans Held for Investment ($ in billions) » Excluding Mortgage Warehouse Lending, C&I increased 2.1% » Other lending subsidiaries produced seasonally strong results with Shef
Slide 6: Improved Deposit Mix and Cost
Improved Deposit Mix and Cost » Strong organic growth in noninterest - bearing deposits, up 7.8% vs. 2Q13 » Successfully reduced interest - bearing deposit cost to 31 bps during 3Q13 and management expects deposit cost to move below 30 bps in 4Q13 » Management currently expects continued growth in n
Slide 7: Net Charge-offs Decrease Significantly
0.97% 0.85% 0.80% 0.71% 0.65% 0.50% 0.70% 0.90% 1.10% 3Q12 4Q12 1Q13 2Q13 3Q13 Total Nonperforming Assets as a Percentage of Total Assets Net Charge - offs Decrease Significantly 1 » 3Q13 net charge - offs were $142 million , down 34.0% vs. 2Q13 » Lowest charge - off rate in nearly 6 years » Recover
Slide 8: Commercial NPA Inflows Decline vs. 2Q13
» Commercial and total NPA inflows decreased significantly in 3Q13, driving loan loss improvement and a lower provision » Delinquencies improved across the board: □ 30 - 89 days at 0.79% of total loans and leases □ 90 days and greater at 0.10% » Total c ommercial watchlist down 11.3% Commercial NPA
Slide 9: Margin Remains Strong
3.94% 3.84% 3.76% 3.70% 3.68% 3.51% 3.42% 3.43% 3.40% 3.39% 2.75% 3.25% 3.75% 4.25% 3Q12 4Q12 1Q13 2Q13 3Q13 Net Interest Margin Reported NIM Core NIM 1 Margin Remains Strong » 3Q13 NIM better than expected and relatively flat compared to prior quarter due to: □ Positive adjustments to yields in inv
Slide 10: Fee Income Reflects Seasonality
Fee Income Reflects Seasonality 42.4% 44.1% 42.9% 44.6% 41.6% 30.0% 35.0% 40.0% 45.0% 50.0% 3Q12 4Q12 1Q13 2Q13 3Q13 Fee Income Ratio 1 1 Excludes securities gains (losses), the impact of FDIC loss share accounting and other selected items. See non - GAAP reconciliat ions included in the attached Ap
Slide 11: Noninterest Expense and Efficiency
Noninterest Expense and Efficiency 3Q13 3Q13 v. 2Q13 2 Increase (Decrease) 3Q13 v. 3Q12 Increase (Decrease) Personnel expense $ 805 (18.3)% 1.0 % Occupancy and equipment expense 177 16.3 6.6 Loan - related expense 70 44.1 (17.6) Foreclosed property expense 14 66.1 (74.1) Regulatory charges 40 56.7 -
Slide 12: Capital Strength
Capital Strength 1 8.8% 9.0% 9.1% 9.3% 9.4% 8.0% 9.0% 10.0% 3Q12 4Q12 1Q13 2Q13 3Q13 Basel I Tier 1 Common Ratio 1 Regulatory capital information is preliminary. Risk - weighted assets are determined based on regulatory capital requirements. Un der the regulatory framework for determining risk - wei
Slide 13: Community Banking Segment
Community Banking Segment Comments 4 Highlighted Metrics 3Q13 3Q12 ($ in millions) Inc/(Dec) 2Q13 Inc/(Dec) 3Q12 3Q13 ($ in billions) Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income $ (10) 3 (65) (38) 37 $ 59 $ (41) 18 (47) (14
Slide 14: Residential Mortgage Banking Segment
Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income Retail Originations Correspondent Purchases Total Production Loan Sales Loans Serviced for others (EOP) 30+ Days Delinquent (HFI only) % Non - Accrual (HFI only) Net Charge - Offs
Slide 15: Dealer Financial Services Segment
Highlighted Metrics Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income Primarily originates indirect loans to consumers on a prime and nonprime basis for the purchase of automobiles and other vehicles through approved dealers both
Slide 16: Specialized Lending Segment
Highlighted Metrics Specialized Lending Segment Provides specialty lending including: commercial finance, mortgage warehouse lending, tax - exempt governmental finance, equipment leasing, commercial mortgage banking, insurance premium finance, dealer - based equipment financing, and direct consumer
Slide 17: Insurance Segment
1 Noninterest Income includes intersegment net referral fees 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense 3 Nine months of current year over nine months of prior year 4 3Q13 YTD excludes experience - based return of premium Insurance Segment Comments Net
Slide 18: Financial Services Segment
Highlighted Metrics Financial Services Segment Comments Average Loan Balances Average Deposits Total Assets Invested Operating Margin Provides trust services, wealth management, investment counseling, asset management , estate planning, employee benefits, corporate banking, and capital market servic
Slide 19: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction
Slide 20: Appendix
Appendix
Slide 21: Capital Measures
Capital Measures 1 (Dollars in millions, except per share data) As of / Quarter Ended Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 Selected Capital Information Risk - based capital Tier 1 $ 15,606 $ 15,397 $ 14,432 $ 14,373 $ 13,593 Total 19,255 19,193 18,321 18,267 17,661 Risk -
Slide 22: Basel III Common Equity Tier 1 Ratio
Basel III Common Equity Tier 1 Ratio 1 (Dollars in millions) Sept. 30, 2013 Tier 1 common equity under Basel I definition $ 13,003 Adjustments: Other comprehensive income related to AFS securities, defined benefit pension and other postretirement employee benefit plans - Other adjustments 64 Common
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 (Dollars in millions, except per share data) As of / Quarter Ended Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 Calculations of tangible common equity, Tier 1 common equity, tangible assets and related measures: 2 Total shareholders’ equity $ 22,094 $
Slide 24: Non-GAAP Reconciliations: Asset Quality Ratios
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 Excludes mortgage loans guaranteed by the government. As of / Quarter Ended Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 20
Slide 25: Non-GAAP Reconciliations: Asset Quality Ratios excluding covered
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 Excludes mortgage loans guaranteed by the government. As of / Quarter Ended Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 20
Slide 26: Non-GAAP Reconciliations: Efficiency and Fee Income Ratios
Non - GAAP Reconciliations Quarter Ended Efficiency and Fee Income Ratios Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 Efficiency ratio – GAAP 62.4% 59.9% 57.5% 58.8% 61.6% Effect of securities gains (losses), net - 0.5 0.5 - - Effect of merger - related and restructuring charges
Slide 27: Return on Average Tangible Common Equity
Non - GAAP Reconciliations (Dollars in millions) Quarter Ended Sept 30 June 30 March 31 Dec 31 Sept 30 Return on Average Tangible Common Shareholders' Equity 2013 2013 2013 2012 2012 Net income available to common shareholders $ 268 $ 547 $ 210 $ 506 $ 469 Plus: Amortization of intangibles, net of t
Slide 28: Reported vs. Core Net Interest Margin
Non - GAAP Reconciliations Quarter Ended Reported net interest margin vs. core net interest margin Sept 30 2013 June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 Reported net interest margin - GAAP 3.68% 3.70% 3.76% 3.84% 3.94% Adjustments to interest income for covered assets: Effect of covered s
Slide 29: Net Income Available to Common Shareholders
Non - GAAP Reconciliations (Dollars in millions, except per share data) Net Income Available to Common Shareholders Quarter Ended Sept 30, 2013 Net income available to common shareholders - GAAP $ 268 Effect of tax adjustment 235 Net income available to common shareholders – adjusted $ 503 Diluted E
Slide 30: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction