Truist Financial Corporation · NYSE:TFC
Truist Financial — Q2 2020 Earnings Presentation
38 slides from Truist Financial's earnings presentation, Jul 16, 2020
Slide 1: Second Quarter 2020 Earnings Conference Call
Second Quarter 2020 Earnings Conference Call Kelly King - Chairman & CEO Daryl Bible - CFO JULY 16, 2020
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: Inspire and build better lives
Inspire and build better lives Clients Provide distinctive, secure and successful client experiences through touch and technology. SS Trustworthy CoO. Caring Purpose Mission Teammates Create an inclusive and energizing environment that empowers teammates to learn, grow and have meaningful careers. V
Slide 5: Living Our Purpose
Living Our Purpose Inspire and Build Better Lives and Communities Serving our communities Addressing racial and social inequity ▪ Doubled our Truist Cares philanthropic pledge to $50 million to ▪ Expanding our efforts to advance equity, economic rebuild communities impacted by the pandemic empowerme
Slide 6: 2Q20 Highlights
2Q20 Highlights Summary Income Statement ($ MM) 2Q20 Asset Quality and Capital 2Q20 Total taxable-equivalent revenue1 $5,902 Nonperforming assets as a % of total assets 0.25% Provision for credit losses 844 Net charge-offs as a % of average loans and leases 0.39% Income before income taxes 1,149 Com
Slide 7: Selected Items Affecting 2Q20 Results
Selected Items Affecting 2Q20 Results Item Pre-Tax After-Tax Diluted EPS Impact ($ MM, except per share impact) Securities gains $300 $230 $0.17 Loss on extinguishment of debt $(235) $(180) $(0.13) Merger-related and restructuring charges $(209) $(160) $(0.12) Incremental operating expenses related
Slide 8: Loans & Leases
Loans & Leases Average Loans & Leases HFI & Loan Yields Loans & Leases Held for Investment ($ MM) Linked Average balances 1Q20 2Q20 Quarter $123,215 Change $124,269 Commercial: $193,465 $171,268 Commercial and industrial $131,743 $152,991 $21,248 5.02% 4.21% CRE 27,046 27,804 758 1Q20 2Q20 Commercia
Slide 9: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) Linked $370,818 Average balances 1Q20 2Q20 Quarter $334,649 Change 0.70% Noninterest-bearing deposits $93,135 $113,875 $20,740 0.32% Interest checking 85,008 97,863 12,855 0.51% Money market and savings 120,936 126,071 5,135 0.22% 1Q20 2Q20 Time depo
Slide 10: Net Interest Income and Interest Rate Sensitivity
Net Interest Income and Interest Rate Sensitivity Net Interest Income and Margin Key Points $3,687 ▪ Reported NIM for 2Q20 was 3.13%, down 45 bps vs. 1Q20 due to $3,479 declines in both core NIM and purchase accounting accretion (6 bps 3.58% decrease in PAA) 3.13% ▪ Core NIM was 2.67%, down 39 bps v
Slide 11: Noninterest Income
Noninterest Income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked $2,423 1Q20 2Q20 Quarter Change $1,961 Insurance income $549 $581 $32 41.3% Service charges on deposits 305 202 (103) 34.9% Wealth management income 332 289 (43) 1Q20 2Q20 Card and payment related fees 187 171
Slide 12: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense & Efficiency Noninterest Expense ($ MM) Linked 1Q20 2Q20 Quarter $3,878 Change $3,431 66.1% Personnel expense $1,972 $2,008 $36 61.1% Net occupancy expense 221 243 22 54.6% 55.8% Professional fees and outside processing 247 289 42 Software expense
Slide 13: Asset Quality
Asset Quality Net Charge-offs and Provision Nonperforming Assets Loss Absorbency $8,750 $8,779 $893 $844 $1,177 $1,252 2.76% $5,211 2.71% $5,702 0.39% 0.36% 0.23% 0.25% $316 1.81% $272 1.63% 1Q20 2Q20 1Q20 2Q20 1Q20 2Q20 Net charge-offs ($ MM) Nonperforming assets ($ MM) ALLL ($ MM) Provision as a %
Slide 14: Selected Credit Exposures
Selected Credit Exposures A Highly Diversified Portfolio Outstandings % of Total Key Points as of 6/30/20 ($ B) Loans HFI ▪ Comprehensive monitoring, reviews and client outreach focusing on Hotels, Resorts & Cruise Lines* 7.7 2.4 % COVID-19 impacted industries informs the risk grading process Senior
Slide 15: Allowance for Credit Losses - CECL
Allowance for Credit Losses - CECL Key Points Allowance for Credit Losses ($ in MM) Highlights ▪ 2Q20 ACL of $6.1 billion or 1.95%; $522 million increase from 1Q20; excluding PPP loans, ACL was 2.02% $522 $6,133 ▪ Reflects consideration of increased economic stress, sensitivity of impacted $5,611 in
Slide 16: Stressed Loss Resiliency
Stressed Loss Resiliency Well-Positioned for Future Credit Losses 2020 DFAST Results - Severely Adverse Scenario Stressed Loan Loss Loan Loss Rate Key Points Firm ($ B) (%) BAC $47.2 4.7% ▪ DFAST stressed loan losses estimated at $15.3 billion CFG $6.7 5.6% ▪ Loan loss rate of 5.1%, 60 bps better th
Slide 17: Capital Position
Capital Position Capital Ratios Key Points ▪ Truist continued to build capital in 2Q20, with the CET1 ratio improving 0.4% to 9.7% at 6/30/20 (9.1% on a fully phased-in 13.9% basis) 12.7% ▪ Truist increased Tier 1 capital through the issuance of three 11.5% tranches of preferred stock during 2Q20, i
Slide 18: Liquidity Position
Liquidity Position Category III Reduced LCR Key Points ▪ Liquidity ratios remain strong and include an average LCR of 116% for 2Q20 and a liquid asset buffer of 17.8% at 6/30/20 117% 116% ▪ Cash position remains strong with $35.8 billion cash reserves held at the FRB at 6/30/20 ▪ Access to secured f
Slide 19: Digital Acceleration
Digital Acceleration Digital Accolades Digital Commerce Growth Active Mobile App Users “U, BB&T now Truist’s mobile banking app, earned 3.79MM the number one ranking in the J.D. Power 2020 U.S. 264K 3.43MM Banking Mobile App Satisfaction Study ℠ 237K among national U.S. banks” May-19 YTD May-20 YTD
Slide 20: Merger Update, Medium Term Targets & Cost Saves
Merger Update, Medium Term Targets & Cost Saves Performance Targets Recent Accomplishments ROTCE Adjusted CET1 Ratio Efficiency ▪ Branded Truist Insurance and Truist Foundation ▪ Introduced Advisor Desktop to heritage BB&T Financial Advisors Low 20% Low 50% 10% (2020 target) ▪ Consolidated social me
Slide 21: 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 22: Appendix
Appendix
Slide 23: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services and National Consumer Finance & Payments 1Q20 2Q20 Key Points ▪ Consumer Banking & Wealth continues to focus on integrating Net interest income $2,250 $2,156 businesses to
Slide 24: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking and CIG – Real Estate 1Q20 2Q20 Key Points ▪ Corporate & Commercial Banking remains focused on realizing revenue Net interest income $1,335 $1,296 and expense synergies as businesse
Slide 25: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance 2Q19 2Q20 Key Points Net interest income $25 $23 ▪ Reported record quarterly revenue and earnings in 2Q20 Income Statement ($ MM) Noninterest income 570 598 ▪ 2Q20 organic growth driven by con
Slide 26: Allowance and Fair Value Marks Information
Allowance and Fair Value Marks Information ($ MM) Loans and RUFC Total Leases Allowance - End of period $ 5,702 $ 431 $ 6,133 Unamortized fair value mark(1) 3,077 — 3,077 Allowance plus unamortized fair value mark $ 8,779 $ 431 $ 9,210 Loans and leases held for investment $ 314,825 $ — $ 314,825 Una
Slide 27: Purchase Accounting Summary
(1) Purchase Accounting Summary ($ MM) June 30, 2020 March 31, 2020 (2) Loans and Leases Beginning balance unamortized fair value mark $ (3,539) $ (4,564) Accretion 440 454 CECL adoption - reserves on PCD assets — 378 Purchase accounting adjustments and other activity 22 193 Ending balance $ (3,077)
Slide 28: 2020 Preferred Stock Projected Dividends
2020 Preferred Stock Projected Dividends Projected 2020 Dividends Truist Preferred Outstandings ($ MM) 3Q20 4Q20 1Q21 Series F $450.0 $5.9 $5.9 $5.9 Series G $500.0 6.5 6.5 6.5 Series H $465.0 6.5 6.5 6.5 Series I $172.5 Greater of 3ML+0.53% or 4% Greater of 3ML+0.53% or 4% Greater of 3ML+0.53% or 4
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 30: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2020 2020 2019 2019 2019 Net income available to common shareholders - GAAP $902 $986 $702 $735 $842 Merger-related and restructuring charges 160 82 176 26
Slide 31: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2020 2020 2019 2019 2019 Efficiency ratio numerator - noninterest expense - GAAP $ 3,878 $ 3,431 $ 2,575 $ 1,840 $ 1,751 Merger-related and restructuring charges, net (209) (107) (223) (34) (23)
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 2020 2020 2019 2019 2019 Common shareholders' equity $ 61,634 $ 61,295 $ 61,282 $ 29,177 $ 28,650 Le
Slide 33: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended June 30, 2020 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity(2) Net income - GAAP $ 958 Net income available to common shareholders - GAAP $ 902 $ 902 Merge
Slide 34: Non-GAAP Reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ MM) Quarter Ended June 30 March 31 June 30 % Growth 2Q20 vs. 2020 2020 2019 1Q20 2Q19 (annualized) (2) Revenue - GAAP $ 5,871 $ 5,611 $ 3,042 18.7 % 93.3 % Taxable equivalent adjustment 31 37 24 Securities (gains) losses, net (300) 2 — Revenue(2) - a
Slide 35: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended June 30 March 31 2020 2020 Net interest income - GAAP $ 3,448 $ 3,650 Taxable-equivalent adjustment 31 37 Net interest income - taxable-equivalent 3,479 3,687 Accretion of mark, net of interest reversals - PCI loans NA NA Accretion of mark on ac
Slide 36: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) June 30 June 30 2020 2019 Segment net interest income $ 23 $ 25 Noninterest income 598 570 Total revenue $ 621 $ 595 Segment net income (loss) - GAAP $ 125 $ 111 Provision (benefit) for income taxes 41 38 Depreciation & amortization
Slide 37: Non-GAAP Reconciliations: Allowance with Fair Value Marks
Non-GAAP Reconciliations Allowance with Fair Value Marks ($ MM) As of/For the Quarter Ended June 30 March 31 December 31 2020 2020 2019 ALLL $ 5,702 $ 5,211 $ 1,549 Unamortized fair value mark (1) 3,077 3,539 4,564 Allowance plus unamortized fair value mark $ 8,779 $ 8,750 $ 6,113 Loans and leases h
Slide 38: To inspire and build better lives and communities
To inspire and build better lives and communities