Truist Financial Corporation · NYSE:TFC
Truist Financial — Q2 2022 Earnings Presentation
37 slides from Truist Financial's earnings presentation, Jul 19, 2022
Slide 1: Second Quarter 2022 Earnings Conference Call
Second Quarter 2022 Earnings Conference Call Bill Rogers – Chairman & CEO Daryl Bible – CFO July 19, 2022
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, Financial Responsible Business and Technology and Human Capital and ESG and Environmental Inclusion, and Education Ethical Conduct Client Service DEI Sustainability – Executive leadership began a – Eliminated signifi
Slide 6: Financial Results
mlatclaterrs! Results
Slide 7: Selected items affecting 2Q22 results
Selected items affecting 2Q22 results Item Diluted EPS Pre-Tax After-Tax ($ MM, except per share impact) Impact Merger-related and restructuring charges ($121) ($92) ($0.07) Incremental operating expenses related to the merger ($117) ($89) ($0.07) Gain on early extinguishment of debt $39 $30 $0.02 S
Slide 8: 2Q22 performance highlights
2Q22 performance highlights Summary Income Statement ($ MM) Commentary Change vs. Earnings and profitability 2Q22 1Q22 2Q21 – Solid financial results despite volatile market conditions GAAP / Unadjusted – $1.6 billion of adjusted net income available to common, or $1.20 per share and adjusted ROTCE
Slide 9: Digital care for Truist clients
Digital care for Truist clients Building momentum to accelerate client adoption and operationalize innovation Digital Commerce Growth1 Mobile App Users2 Introducing Truist’s Innovation and Technology Center – Announced the grand opening of our Innovation and Technology Center (ITC) in June 355K 4.2M
Slide 10: Average loans & leases HFI
Average loans & leases HFI 5-Quarter Trend vs. Prior Quarter – Broad-based growth: average loans up 2.8%; up 3.1% ex. PPP – C&I up 4.8%, primarily due to growth across most CIB industry verticals $296.7 $288.6 $286.2 $286.3 $288.6 and product groups $123.4 – CRE/commercial construction down $0.8 bil
Slide 11: Average deposits
Average deposits 5-Quarter Trend vs. Prior Quarter – Average deposits increased $8.5 billion, or 2.0% $415.2 $423.8 – Ex. brokered deposits, average deposits declined $2.9 billion, or 0.7% $402.7 $411.0 $396.3 $148.6 – Noninterest-bearing deposits increased 1.9% $146.5 $145.9 $137.9 $141.7 – Control
Slide 12: Net interest income & net interest margin
Net interest income & net interest margin 5-Quarter Trend vs. Prior Quarter – Net interest income increased 7.0% as a result of higher short-term interest rates (alongside controlled deposit costs) and strong loan growth $3,435 – Reported NIM and core NIM expanded 13 and 15 bps, respectively, as a r
Slide 13: Noninterest income
Noninterest income 5-Quarter Trend vs. Prior Quarter – Noninterest income increased $106 million, or 4.9% $2,405 $2,365 $2,323 – Insurance income increased $98 million, or 13%, driven by seasonality, $715 $2,248 $772 $2,142 continued strong organic growth, and the acquisition of Kensington $657 Vang
Slide 14: Noninterest expense
Noninterest expense 5-Quarter Trend ($ MM) vs. Prior Quarter $4,011 – Noninterest expense declined $94 million, or 2.6% $3,795 – 2Q22 included $238 million of merger costs1 compared to $418 million in $200 $30 1Q22 $3,700 $3,674 $3,580 – Adjusted noninterest expense was $3.2 billion, up $119 million
Slide 15: Asset quality
Asset quality Asset quality remains excellent, reflecting our prudent risk culture, diverse portfolio, and solid economic conditions Net Charge-Offs $421 Provision / (Benefit) for Credit Losses Continued strong credit performance Provision expense approximated net charge-offs in 2Q22 as the impacts
Slide 16: Capital and liquidity position
Capital and liquidity position Capital and liquidity position Commentary Capital position 14.2% – CET1 ratio was 9.2%, down 20 bps from 3/31 13.0% 13.9% 12.6% 12.0% 11.0% 10.8% – Decline driven by strong 4.7% EOP loan growth and $250 million share 10.2% repurchase 9.4% 9.2% – Board will consider a r
Slide 17: Shifting from integration focus to executional excellence, transformation, and growth
Shifting from integration focus to executional excellence, transformation, and growth 2020 2021 2022 2023 Well Positioned for 2022 and Beyond – Finalize the merger Pandemic – February conversion (complete) – Eliminate merger-related charges and incremental operating expenses by year-end Integration
Slide 18: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability (with Purpose-Driven Culture – Building a better lower volatility) – 6th largest U.S. technology foundation with ‘best of breed’ – Continued confidence commercial b
Slide 19: Appendix
Appendix
Slide 20: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail and Small Business Banking, Wealth, Mortgage Banking, Dealer Retail Services, and Consumer Finance & Payments Metrics Commentary – Net income of $773 million, down $100 million from the prior quarter Income statement ($ MM) 2Q22 Linked Qtr.
Slide 21: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CRE & Grandbridge Metrics Commentary – Net income of $954 million, down 5% or $49 million vs. 1Q22, primarily driven by higher Linked Qtr. Like Qtr. provision for loan losses a
Slide 22: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail, Wholesale, and Services Divisions Metrics Commentary – Strong revenue quarter driven by growth from acquired revenue, strong new business Linked Qtr. Like Qtr. generation, stable retention and continued P&C renewal prem
Slide 23: Purchase accounting summary
(1) Purchase accounting summary ($ MM) As of/For the Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Loans and Leases(2) Beginning balance unamortized fair value mark $ (1,119) $ (1,323) $ (1,540) $ (1,777) $ (2,067) Accretion 189 191 217 233 285 Purchase accounting
Slide 24: M&A related financial impacts
M&A related financial impacts ($ MM) Incremental operating Purchase accounting Merger-related and Amortization of intangibles expenses related to the accretion restructuring charges merger 1Q21 $340 $144 $141 $175 2Q21 308 142 297 190 3Q21 255 145 172 191 4Q21 237 143 212 215 1Q22 210 137 216 202 2Q
Slide 25: PPP details
PPP details PPP Revenue PPP Yields Average PPP EOP PPP PPP Contribution to NIM ($ MM) (%) ($ B) ($ B) (bps) 2Q20 $55 2.6% $8.7 $12.0 0 3Q20 78 2.6 12.1 12.2 -1 4Q20 108 3.6 11.8 10.8 3 1Q21 132 5.3 10.0 10.1 6 2Q21 124 5.7 8.7 6.0 6 3Q21 85 7.2 4.7 3.5 5 4Q21 55 8.0 2.7 2.1 3 1Q22 34 8.5 1.6 1.2 2 2
Slide 26: 3Q22–2Q23 preferred stock projected dividends
3Q22–2Q23 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 3Q22 4Q22 1Q23 2Q23 Series I $173 $1.8 $1.7 $1.8 $1.9 Series J $102 1.0 1.0 1.1 1.2 Series L $750 9.5 11.7 12.8 13.1 Series M $500 — 12.8 — 12.8 Series N $1,700 40.8 — 40.8 — Series O $575 7.5 7.5 7.5 7.5 Series P $1,
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 28: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Net income available to common shareholders - GAAP $ 1,454 $ 1,327 $ 1,524 $ 1,616 $ 1,559 Merger-related and restructuring charges
Slide 29: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Efficiency ratio numerator - noninterest expense - GAAP $ 3,580 $ 3,674 $ 3,700 $ 3,795 $ 4,011 Merger-related and restructuring charges, net (121) (216) (212) (172) (297
Slide 30: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Net income $ 1,532 $ 1,416 $ 1,602 $ 1,704 $ 1,658 Provision for credit losses 171 (95) (103) (324) (434) Provision for income taxes 372 330 367 423 415 Taxable-
Slide 31: Non-GAAP reconciliations: Return on average assets
Non-GAAP reconciliations Return on average assets ($ MM) As of / Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Net income - GAAP $ 1,532 $ 1,416 $ 1,602 $ 1,704 $ 1,658 Merger-related and restructuring charges 92 166 163 132 228 Securities (gains) losses — 53 — — —
Slide 32: 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 June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Common shareholders' equity $ 56,302 $ 58,348 $ 62,598 $ 62,227 $ 61,663 Le
Slide 33: Non-GAAP reconciliations: Return on average common equity
Non-GAAP reconciliations Return on average common equity and average tangible common equity ($ MM) As of / Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Net income available to common shareholders - GAAP $ 1,454 $ 1,327 $ 1,524 $ 1,616 $ 1,559 Merger-related and re
Slide 34: Non-GAAP Reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ MM) Quarter Ended Year-to-Date % Growth Year- June 30 March 31 June 30 June 30 % Growth 2Q22 to-Date 2022 vs. 2022 2022 2022 2021 vs. 1Q22 2021 Revenue(2) - GAAP $ 5,655 $ 5,325 $ 10,980 $ 11,132 6.2 % (1.4)% Taxable equivalent adjustment 28 26 54 56
Slide 35: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Net interest income - GAAP $ 3,407 $ 3,183 $ 3,243 $ 3,233 $ 3,245 Taxable-equivalent adjustment 28 26 24 28 28 Net interest income - taxable-equivalent 3,435 3,209 3,267 3,261 3
Slide 36: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2022 2022 2021 2021 2021 Segment net interest income $ 28 $ 24 $ 23 $ 28 $ 25 Noninterest income 833 738 681 652 698 Total revenue $ 861 $ 762 $ 704 $ 680 $ 723 Segment net inco
Slide 37: To inspire and build better lives and communities
To inspire and build better lives and communities