Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q3 2018 Earnings Presentation
30 slides from Truist Financial's earnings presentation, Oct 18, 2018
Slide 1: Third Quarter 2018 Earnings Conference Call
Third Quarter 2018 Earnings Conference Call October 18, 2018 Kelly S. King Chairman and Chief Executive Officer Daryl N. Bible Chief Financial Officer
Slide 2: Forward-Looking Information
Forward-Looking Information 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 BB&T. Forward- looking statements are
Slide 3: 2018 third quarter performance highlights
2018 third quarter performance highlights1 ▪ Net income2 was a record $789 million, up 32.2% vs. 3Q17; net income2 excluding merger- related and restructuring charges was a record $802 million ▪ Diluted EPS was a record $1.01, up 36.5% vs. 3Q17; adjusted diluted EPS was also a record Record Earnings
Slide 4: Selected item affecting earnings
Selected item affecting earnings Diluted EPS ($ in millions, except per share impact) Pre-Tax After-TaxDiluted EPSImpact Pre -Tax After Tax Impact Merger-related and restructuring charges $ (18) $ (13) $ (0.02) 4
Slide 5: Average loans held for investment grew 5.8% annualized vs. 2Q18
Average loans held for investment grew 5.8% annualized vs. 2Q18 Average Loans Held for Investment Average Loans Held for Investment ($ in billions) ($ in millions) $150.0 3Q18 v. 2Q18 $146.2 $144.1 3Q18 Annualized $142.7 $142.7 $142.9 Average Increase Balance (Decrease) $140.0 Commercial: C&I $ 59,9
Slide 6: Total deposits reflect healthy core growth
Total deposits reflect healthy core growth Average Total Deposits Average Deposits ($ in billions) ($ in millions) 1.05% 3Q18 v. 2Q18 $165.0 $157.4 $158.0 $157.1 $157.7 $157.3 3Q18 Annualized 0.85% Average Increase 0.66% Balance (Decrease) $150.0 0.57% 0.65% 0.46% Noninterest-bearing deposits $ 54,1
Slide 7: Asset quality remains excellent
Asset quality remains excellent Annualized Net Charge-offs / Average Loans ▪ Credit quality results reflect seasonality and the 0.60% impact of Hurricane Florence – Net charge-offs totaled $127 million, up 5 bps as a 0.41% percent of average loans vs. 2Q18 and flat vs. 3Q17 0.40% 0.35% 0.36% 0.35% 0
Slide 8: Allowance coverage ratios remain strong
Allowance coverage ratios remain strong ALLL Coverage Ratios ▪ Coverage ratios remain strong at 3.05x and 2.86x for the allowance to net charge-offs 3.49x 3.50x and NPLs, respectively ▪ The ALLL to loans ratio remained at 1.05% 3.05x – Excluding loans acquired in business 2.93x 2.89x 3.00x acquisiti
Slide 9: Net interest margin increase reflects disciplined deposit pricing
Net interest margin increase reflects disciplined deposit pricing Net Interest Margin ▪ 3Q18 reported and core NIM increased 2 bps 3.55% 3.48% and 3 bps, respectively, vs. 2Q18 3.45% 3.47% 3.43% 3.44% – Core margin increased due to asset-sensitivity to 3.45% the June rate hike 3.35% 3.37% – Total in
Slide 10: Fee income a record $1.2 billion
Fee income a record $1.2 billion Fee Income Ratio Noninterest Income ($ in millions)1 45.0% 3Q18 v. 3Q18 v. 2Q18 3Q17 44.0% Increase Increase 3Q18 (Decrease) (Decrease) 42.7% 43.0% 42.5% 42.3% Insurance income $ 448 (27.2)% 12.8% 41.9% 42.0% 41.4% Service charges on deposits 183 8.9 2.2 41.0% Mortga
Slide 11: Strong expense management
Strong expense management Efficiency Ratio Noninterest Expense ($ in millions) 2 70.0% 3Q18 v. 3Q18 v. 64.7% 2Q18 3Q17 62.0% Increase Increase 60.0% 59.7% 59.5% 3Q18 (Decrease) (Decrease) 60.0% Personnel expense $ 1,104 11.1% 5.0 % 58.3% 57.3% 57.4% 57.3% 57.2% Occupancy and equipment expense 189 4.
Slide 12: Capital, liquidity and payout ratio remain strong
Capital, liquidity and payout ratio remain strong Common Equity Tier 1 ▪ 3Q18 dividend payout ratio was 39.6% 10.5% ▪ 3Q18 total payout ratio was 64.9% 10.2% 10.2% 10.2% 10.2% 10.2% ▪ Completed $200 million in share repurchases and acquired Regions Insurance in 3Q18 10.0% ▪ Plan to repurchase $375 m
Slide 13: Community Banking Retail and Consumer Finance
Community Banking Retail and Consumer Finance Serves individual and business clients by offering a variety of loan and deposit products and other financial services. Also, originates and sells mortgage loans and retains mortgage servicing rights. Comments Summarized Results Inc (Dec) Inc (Dec) ($ in
Slide 14: Community Banking Retail and Consumer Finance-continued
Community Banking Retail and Consumer Finance-continued Average Loans1,2 Average Deposits2 ($ in billions) 3Q18 2Q18 3Q17 ($ in billions) 3Q18 2Q18 3Q17 Bank Card $2.9 $2.8 $2.7 Noninterest-bearing deposits Sheffield & CEC $5.9 $5.6 $5.5 $17.0 $17.0 $16.1 $11.5 $11.9 Direct Retail Lending $11.6 Inte
Slide 15: Community Banking Commercial
Community Banking Commercial Serves large, medium and small business clients by offering a variety of loan and deposit products and connecting the client with the combined organization’s broad array of financial services. Summarized Results Inc (Dec) Inc (Dec) Comments ($ in millions) 3Q18 vs. 2Q18
Slide 16: Community Banking Commercial-continued
Community Banking Commercial-continued Average Loans1,2 Average Deposits2 ($ in billions) 3Q18 2Q18 3Q17 ($ in billions) 3Q18 2Q18 3Q17 $0.2 $0.3 Other $0.3 $19.7 CRE $19.7 $19.3 Noninterest-bearing deposits $34.6 $34.5 $34.6 Interest checking C&I, excluding dealer floor plan $30.9 $30.9 $30.3 $8.2
Slide 17: Financial Services and Commercial Finance
Financial Services and Commercial Finance Provides trust services, wealth management, investment counseling, asset management, estate planning, corporate retirement services, specialty finance, corporate banking, and capital market services to individuals, corporations, governments, and other organi
Slide 18: Financial Services and Commercial Finance-continued
Financial Services and Commercial Finance-continued Average Loans1,2 Average Deposits2 ($ in billions) 3Q18 2Q18 3Q17 ($ in billions) 3Q18 2Q18 3Q17 Other $1.9 $1.9 Noninterest-bearing deposits $1.7 $1.6 $1.5 $2.6 $2.5 Retail Interest checking $2.7 $1.9 $1.9 $1.4 Comm Lease $1.6 $5.4 $5.3 $5.2 CRE M
Slide 19: Insurance Holdings and Premium Finance
Insurance Holdings and Premium Finance Provides property and casualty, life, and health insurance to business and individual clients. It also provides workers compensation and professional liability, as well as surety coverage, title insurance and premium finance. Summarized Results Inc (Dec) Inc (D
Slide 20: 4Q18 outlook
4Q18 outlook Category 4Q18 Average total loans held for investment Up 1% - 3% annualized vs. 3Q18 Credit quality NCOs expected to be 35 - 45 bps Net interest margin GAAP and core margins up slightly vs. 3Q18 Noninterest income2 Up 2% - 4% vs. 4Q17 Expenses1,2 Up 1% - 3% vs. 4Q17 Effective tax rate 2
Slide 21: A-21
A-21
Slide 22: Slide 22
Slide 23: Appendix
Appendix
Slide 24: Supplemental information: Purchase accounting summary
Supplemental information Purchase accounting summary (Dollars in millions) Acc. Yield PA Mark Acquired Loans1 Non-PCI Loans2 Liabilities3 Securities4 Balance, June 30, 2018 $ (324) $ (134) $ (18) $ (370) Net interest income: Normal accretion/amortization 20 11 2 1 Cash recoveries/early payoffs 6 7 —
Slide 25: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio (Dollars in millions) Quarter Ended Year-to-Date Sept. 30 June 30 March 31 Dec. 31 Sept. 30 Sept. 30 Sept. 30 2018 2018 2018 2017 2017 2018 2017 Efficiency ratio numerator - noninterest expense - GAAP $ 1,742 $ 1,720 $ 1,686 $ 1,855 $ 1,745 $ 5,148 $ 5,589 A
Slide 26: Non-GAAP reconciliations: Tangible common equity and related measures
Non-GAAP reconciliations Calculations of tangible common equity and related measures (Dollars in millions, except per share data, shares in thousands) As of / Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2018 2018 2018 2017 2017 Common shareholders' equity $ 26,895 $ 26,727 $ 26,559 $ 26
Slide 27: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM (Dollars in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2018 2018 2018 2017 2017 Net interest income - GAAP $ 1,687 $ 1,657 $ 1,633 $ 1,644 $ 1,647 Taxable-equivalent adjustment 27 22 23 38 41 Net interest income - taxable-equivalent 1,714 1,6
Slide 28: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS (Dollars in millions, except per share data, shares in thousands) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 YTD Sept. 30 2018 2018 2018 2017 2017 2018 2017 Net income available to common shareholders - GAAP $ 789 $ 775 $ 745 $ 614 $ 597 $ 2,309 $ 1
Slide 29: Non-GAAP reconciliations: Operating leverage
Non-GAAP reconciliations Operating leverage1 (Dollars in millions) Quarter Ended Sept. 30 June 30 Sept. 30 % Growth 3Q18 vs. 2018 2018 2017 2Q18 3Q17 (annualized) Revenue2 - GAAP $ 2,926 $ 2,879 $ 2,813 6.5% 4.0% Taxable equivalent adjustment 27 22 41 Securities (gains) losses, net — (1) — Revenue2
Slide 30: Non-GAAP reconciliations: Performance ratios
Non-GAAP reconciliations Performance ratios (Dollars in millions, except per share data, shares in thousands) Quarter Ended September 30, 2018 Common Tangible Assets Equity Common Equity2 Net income - GAAP $ 839 Net income available to common shareholders - GAAP $ 789 $ 789 Merger-related and restru