Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q1 2019 Earnings Presentation
31 slides from Truist Financial's earnings presentation, Apr 18, 2019
Slide 1: First Quarter 2019 Earnings Conference Call
First Quarter 2019 Earnings Conference Call April 18, 2019 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: Additional Statements
Additional Statements Additional Information about the Merger and Where to Find It In connection with the proposed merger with SunTrust, BB&T has filed with the SEC a registration statement on Form S-4 to register the shares of BB&T’s capital stock to be issued in connection with the merger. The reg
Slide 4: 2019 first quarter performance highlights
2019 first quarter performance highlights1 ▪ Net income2 was $749 million, up 0.5% vs. 1Q18; net income2 excluding merger-related and restructuring charges was a record $813 million, up 6.0% vs 1Q18 Growing ▪ Diluted EPS was $0.97, up 3.2% vs. 1Q18; adjusted diluted EPS was a record $1.05, up 8.2% E
Slide 5: Selected item affecting earnings
Selected item affecting earnings Diluted EPS ($ in millions, except per share impact) Pre-Tax After-TaxDiluted EPSImpact Pre -Tax After Tax Impact Merger-related and restructuring charges $ (80) $ (64) $ (0.08) 5
Slide 6: Strong C&I and Residential Mortgage loan growth
Strong C&I and Residential Mortgage loan growth Average Loans Held for Investment Average Loans Held for Investment ($ in billions) ($ in millions) 1Q19 v. 4Q18 $150.0 $147.5 $148.1 $146.2 1Q19 Annualized $144.1 $142.9 Average Increase Balance (Decrease) $140.0 Commercial: C&I $ 61,370 5.5% $130.0 C
Slide 7: Interest-bearing deposits support total deposit growth
Interest-bearing deposits support total deposit growth Average Total Deposits Average Deposits ($ in billions) ($ in millions) $160.0 1.10% $160.0 1Q19 v. 4Q18 $157.1 $157.7 $157.3 $157.8 1Q19 Annualized 0.90% 0.95% Average Increase Balance (Decrease) 0.78% 0.70% $140.0 Noninterest-bearing deposits
Slide 8: Asset quality remains excellent
Asset quality remains excellent Annualized Net Charge-offs / Average Loans ▪ Credit quality results reflect seasonality 0.60% – Net charge-offs totaled $147 million, up 2 bps as a percent of average loans vs. 4Q18 and down 1 bp 0.41% 0.38% 0.40% vs. 1Q18 0.40% 0.35% 0.30% – Loans 90 days or more pas
Slide 9: Allowance coverage ratios remain strong
Allowance coverage ratios remain strong ALLL Coverage Ratios ▪ Coverage ratios remain strong at 2.62x and 2.97x for the allowance to net charge-offs 3.49x 3.50x and NPLs, respectively ▪ The ALLL to loans ratio remained at 1.05% 3.05x 2.99x 2.97x – Excluding loans acquired in business 3.00x acquisiti
Slide 10: Net interest margin increase reflects asset-sensitivity
Net interest margin increase reflects asset-sensitivity Net Interest Margin ▪ 1Q19 reported NIM increased 2 bps and core 3.51% NIM increased 4 bps vs. 4Q18 3.55% 3.47% 3.49% 3.44% 3.45% – Reported and core NIM increased 4 bps in 1Q19 3.45% from dividends on NQDCP assets 3.44% 3.35% 3.40% 3.37% – Tot
Slide 11: Record insurance income offset by declines in other fee categories
Record insurance income offset by declines in other fee categories Fee Income Ratio Noninterest Income ($ in millions)1 45.0% 1Q19 v. 1Q19 v. 4Q18 1Q18 44.0% Increase Increase 1Q19 (Decrease) (Decrease) 43.0% 42.5% 42.3% Insurance income $ 510 19.2 % 17.0% 41.9% 42.0% 42.0% 41.5% Service charges on
Slide 12: Strong expense management
Strong expense management Efficiency Ratio Noninterest Expense ($ in millions) 2 70.0% 1Q19 v. 1Q19 v. 4Q18 1Q18 60.7% 61.0% Increase Increase 60.0% 59.7% 59.5% 1Q19 (Decrease) (Decrease) 60.0% Personnel expense $ 1,087 (3.3)% 4.6% 57.3% 57.4% 57.3% 56.6% 56.5% Occupancy and equipment expense 187 (2
Slide 13: Capital, liquidity and payout ratio remain strong
Capital, liquidity and payout ratio remain strong Common Equity Tier 1 ▪ 1Q19 dividend payout and total payout ratios 10.5% were 41.3% 10.3% ▪ Suspended share repurchases in 1Q19 10.2% 10.2% 10.2% 10.2% 10.0% ▪ Liquidity ratios remain strong 1 – Modified average LCR was 130% – Liquid asset buffer wa
Slide 14: Community Banking Retail and Consumer Finance
Community Banking Retail and Consumer Finance Revenue ($ in millions) Average Loans5 ($ in billions) $1,320 $66.0 $65.9 $1,277 $1,303 $1,274 $62.8 $63.5 $65.4 $1,225 $2.9 $3.1 $3.1 $56 $58 $49 $2.8 $2.8 $68 $135 $5.6 $5.9 $5.9 $5.7 $77 $134 $135 $131 $5.3 $125 $115 $118 $105 $13.0 $13.1 $13.2 $99 $1
Slide 15: Community Banking Commercial
Community Banking Commercial Revenue ($ in millions) Average Loans1 ($ in billions) $52.3 $52.6 $52.6 $52.6 $52.6 $703 $689 $655 $681 $2.0 $2.0 $2.1 $2.4 $2.4 $640 $50 $49 $48 $48 $46 $62 $62 $60 $60 $62 $19.7 $19.7 $19.6 $19.4 $19.1 $591 $534 $545 $571 $580 $30.6 $30.9 $30.9 $30.8 $31.1 1Q18 2Q18 3
Slide 16: Financial Services and Commercial Finance
Financial Services and Commercial Finance Revenue ($ in millions) Average Loans2 ($ in billions) $534 $491 $505 $494 $29.0 $478 $27.2 $27.3 $28.1 $81 $26.9 $2.0 $87 $85 $2.0 $80 $87 $28 $1.9 $1.9 $1.9 $1.6 $1.7 $28 $1.5 $1.5 $1.6 $1.8 $30 $31 $15 $1.7 $1.9 $1.9 $1.9 $139 $116 $111 $113 $108 $77 $75
Slide 17: Insurance Holdings
Insurance Holdings Adjusted EBITDA1 ($ in millions) Revenue ($ in millions) 26.1% 23.7% 24.5% 22.0% $538 $518 18.3% $506 $21 $19 $19 $475 $140 $459 $120 $127 $19 $101 $19 $87 $215 $273 $258 1Q18 2Q18 3Q18 4Q18 1Q19 $232 n 1 $221 Adjusted EBITDA — Adjusted EBITDA Margin Other Segment Highlights ($ in
Slide 18: Strong Fee Income Performance – Insurance Holdings Revenue
Strong Fee Income Performance – Insurance Holdings Revenue ($ in millions) ▪ Strong results across all lines of 17.2% business $538 $459 ▪ July 2018 acquisition of Regions Insurance Group (RIG) added $46M in revenue and continues to meet expectations ▪ YoY new business up 8% with ongoing 1Q18 1Q19 >
Slide 19: Strong Fee Income Performance – Insurance Holdings Adjusted EBITDA
Strong Fee Income Performance – Insurance Holdings Adjusted EBITDA1 ($ in millions) ▪ Continued focus on enhancing margin 38.6% profile with improved performance across all lines of business $140 $101 ▪ Exceeding RIG synergies cost savings ▪ Organic growth and strong expense control driving margin e
Slide 20: 2Q19 and full-year 2019 outlook
2Q19 and full-year 2019 outlook Category 2Q19 Average total loans held for investment Up 4% - 6% annualized vs. 1Q19 Credit quality NCOs expected to be 35 - 45 bps Net interest margin GAAP and Core NIM down 4 - 6 bps vs. 1Q19 Noninterest income1 Up 5% - 7% vs. 2Q18 Expenses1,2 Flat to up 2% vs. 2Q18
Slide 21: Merger of Equals Update
Merger of Equals Update Highly Synergistic; Financially Compelling; Transformative Momentum Established Next Steps • New Executive Management Team (E14) meeting • FRB/FDIC public hearings in Charlotte (4/25) and weekly since late February to guide organizational Atlanta (5/3) design and oversee inte
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, December 31, 2018 $ (298) $ (101) $ (14) $ (365) Net interest income: Normal accretion/amortization 17 7 2 1 Cash recoveries/early payoffs 3
Slide 25: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio (Dollars in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2019 2018 2018 2018 2018 Efficiency ratio numerator - noninterest expense - GAAP $ 1,768 $ 1,784 $ 1,742 $ 1,720 $ 1,686 Amortization of intangibles (32) (34) (33) (31) (33) Merge
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 March 31 Dec. 31 Sept. 30 June 30 March 31 2019 2018 2018 2018 2018 Common shareholders' equity $ 27,770 $ 27,069 $ 26,895 $ 26
Slide 27: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM (Dollars in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2019 2018 2018 2018 2018 Net interest income - GAAP $ 1,696 $ 1,705 $ 1,687 $ 1,657 $ 1,633 Taxable-equivalent adjustment 24 24 27 22 23 Net interest income - taxable-equivalent 1,720 1,7
Slide 28: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS (Dollars in millions, except per share data, shares in thousands) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2019 2018 2018 2018 2018 Net income available to common shareholders - GAAP $ 749 $ 754 $ 789 $ 775 $ 745 Merger-related and restructuring c
Slide 29: Non-GAAP reconciliations: Operating leverage
Non-GAAP reconciliations Operating leverage1 (Dollars in millions) Quarter Ended March 31 Dec. 31 March 31 % Growth 1Q19 vs. 2019 2018 2018 4Q18 1Q18 (annualized) Revenue2 - GAAP $ 2,898 $ 2,940 $ 2,813 (5.8)% 3.0% Taxable equivalent adjustment 24 24 23 Securities (gains) losses, net — (2) — Revenue
Slide 30: Non-GAAP reconciliations: Performance ratios
Non-GAAP reconciliations Performance ratios (Dollars in millions, except per share data, shares in thousands) Quarter Ended March 31, 2019 Common Tangible Assets Equity Common Equity2 Net income - GAAP $ 798 Net income available to common shareholders - GAAP $ 749 $ 749 Merger-related and restructur
Slide 31: Non-GAAP reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings Adjusted EBITDA (Dollars in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2019 2018 2018 2018 2018 Segment net interest income $ 23 $ 22 $ 23 $ 22 $ 20 Noninterest income 515 496 452 484 439 Total revenue $ 538 $ 518 $ 475 $ 506 $ 459