Truist Financial Corporation · NYSE:TFC
Truist Financial — Q1 2021 Earnings Presentation
37 slides from Truist Financial's earnings presentation, Apr 15, 2021
Slide 1: First Quarter 2021 Earnings Conference Call
First Quarter 2021 Earnings Conference Call Kelly King - Chairman & CEO Bill Rogers - President & COO Daryl Bible - CFO April 15, 2021
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 Advanced environmental, social, and governance Showcasing the Truist Purpose in action through strategy and diversity, equity, and inclusion efforts key recognitions & milestones + Issued Truist’s inaugural social bond—first social bo
Slide 6: Excellent progress across key integration initiatives
Excellent progress across key integration initiatives Reducing risk in the merger Integration Priorities - Path to Completion Truist Securities conversion Retail branch consolidation (approximately 800 cumulative closures by 1Q22) Wealth brokerage conversion Unveil Innovation and Technology Center R
Slide 7: 1Q21 performance highlights
1Q21 performance highlights Summary Income Statement ($ MM) 1Q21 Asset Quality and Capital 1Q21 Total taxable-equivalent revenue1 $5,510 Nonperforming assets as a % of total assets 0.25% Net income 1,473 Net charge-offs as a % of average loans and leases 0.33% Net income available to common sharehol
Slide 8: Selected items affecting 1Q21 results
Selected items affecting 1Q21 results Item Pre-Tax After-Tax Diluted EPS Impact ($ MM, except per share impact) Merger-related and restructuring charges ($141) ($108) $0.08 Incremental operating expenses related to the merger ($175) ($134) $0.10 Acceleration for cash flow hedge unwind ($36) ($28) $0
Slide 9: Digital acceleration
Digital acceleration Digital Commerce YTD Growth Mobile App Users 1Q21: The Truist Digital Rollout Begins Our innovative, patent-pending “Digital Straddle,” enables a smooth digital 4.06MM 187.2K migration before core conversion for a better client experience 130.3K 3.65MM ▪ Teammate Pilot began in
Slide 10: Loans & leases
Loans & leases Average Loans & Leases HFI and Loan Yields Loans & Leases HFI ($ MM) Linked Like $129,803 $124,590 $120,856 Average balances 1Q21 Quarter Quarter Change Change $171,268 $178,270 $173,794 Commercial: 5.02% Commercial and industrial $136,051 ($3,172) $4,308 4.13% 4.11% CRE 26,211 (819)
Slide 11: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) Linked Like $375,266 $383,185 Average balances 1Q21 Quarter Quarter Change Change $334,649 0.70% Noninterest-bearing deposits $128,579 $1,476 $35,444 0.11% 0.07% 0.51% Interest checking 104,744 4,878 19,736 0.07% 0.05% Money market and savings 129,30
Slide 12: Net interest income and interest rate sensitivity
Net interest income and interest rate sensitivity Net Interest Income & Margin Key Points ▪ Net interest income decreased $81 million linked quarter, reflecting two $3,687 fewer days in the quarter ($43 million impact) and lower purchase $3,394 $3,313 accounting accretion ($43 million) 3.58% ▪ Repor
Slide 13: Noninterest income
Noninterest income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked Like 1Q21 Quarter Quarter $2,285 $2,197 Change Change $1,961 Insurance income $626 $81 $77 40.4% 40.1% Wealth management income 341 9 9 34.9% Service charges on deposits 258 (8) (47) 1Q20 4Q20 1Q21 Residential
Slide 14: Noninterest expense & efficiency ratio
Noninterest expense & efficiency ratio Noninterest Expense & Efficiency Ratio Noninterest Expense ($ MM) $3,833 Linked Like $3,431 $3,610 1Q21 Quarter Quarter 67.8% Change Change 65.8% 61.1% Personnel expense $2,142 $34 $170 Professional fees and outside processing 350 (43) 103 Net occupancy expense
Slide 15: Merger cost update
Merger cost update Anticipated total merger costs through 2022 (not in run rate thereafter) Merger-Related and Restructuring Charges Examples of Merger-Related Charges (Expenses to complete merger with no future benefit) Severance & comp Primarily severance payments Estimated Total Impairments relat
Slide 16: Asset quality
Asset quality Net Charge-offs & Provision Nonperforming Assets Key Points $893 ▪ Strong asset quality metrics remain stable, reflecting diversification $1,387 benefits of the merger and effective problem asset resolution $1,299 $1,177 ▪ Nonperforming assets / assets ratio decreased 2 bps $272 $238 0
Slide 17: Capital and liquidity position
Capital and liquidity position Capital Ratios Key Points ▪ CET1 ratio increased to 10.1% 14.5% 14.3% ▪ Our dividend payout ratio of 45.4% reflected the 1Q21 common dividend of 12.7% 12.1% 12.0% $0.45 per share 10.5% ▪ Share repurchases totaled $506 million in 1Q21, contributing to a total 10.0% 10.1
Slide 18: Committed to achieving net cost saves
Committed to achieving net cost saves Third Party Spend Retail Banking Non-Branch Facilities Personnel1 Technology Targeting Targeting 800 total Targeting approximately Avg. FTEs decreased by Driven by integration Cost Saves 10% reduction in closures by 1Q22 4.8MM approximately 9% at 1Q21 efforts, a
Slide 19: Cost saves progress
Cost saves progress 1Q21 Core Noninterest Expense ($ MM) Medium-Term Performance Targets $3,117 $(32) $(20) $3,065 ROTCE Adjusted CET1 Efficiency Low 20% Low 50% Approx. 10% Adjusted noninterest Non-qualified plan Noninterest Core noninterest expense 1 expenses 2 expense-insurance expense acquisitio
Slide 20: Integrated Relationship Management
Integrated Relationship Management A Strong Community Bank and Investment Bank Partnership Delivering capital markets solutions through the Corporate & Institutional M&A Advisory Actions Group (CIG) to the Commercial Community Bank (CCB) is a key strategy. ▪ M&A transactions are growing YOY ▪ IRM pr
Slide 21: Integrated Relationship Management
Integrated Relationship Management Creating Value for SunTrust Clients with Truist Insurance Holdings Training and development began at merger to enrich new IRM relationships and provide product knowledge ▪ Almost half of all insurance introductions are now from heritage SunTrust teammates ▪ Heritag
Slide 22: 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 23: Appendix
Appendix
Slide 24: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services, and National Consumer Finance & Payments Key Points 1Q20 4Q20 1Q21 ▪ 226 branches closed in 1Q21 related to MOE branch consolidation. After accounting for 1 new branch ope
Slide 25: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CIG – Real Estate Key Points 1Q20 4Q20 1Q21 ▪ Noninterest income decreased $95 million, or 12% from 4Q20, driven primarily by lower commercial real estate related income from s
Slide 26: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance Key Points 1Q20 4Q20 1Q21 ▪ Record quarterly revenue as operating environment remains Net interest income $25 $22 $20 favorable with rising rates and positive momentum in economic growth Incom
Slide 27: Purchase Accounting Summary
(1) Purchase Accounting Summary ($ MM) As of/For the Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 Loans and Leases(2) Beginning balance unamortized fair value mark $ (2,395) $ (2,676) $ (3,077) $ (3,539) $ (4,564) Accretion 316 356 367 440 454 CECL adoption - res
Slide 28: 2Q21 - 4Q21 Preferred Stock Projected Dividends
2Q21 - 4Q21 Preferred Stock Projected Dividends Truist Preferred Outstandings ($ MM) 2Q21 3Q21 4Q21 Series H $465.0 $6.5 $6.5 $6.5 Series I $172.5 $1.8 $1.8 $1.7 Series J $101.5 $1.0 $1.0 $1.0 Series L $750.0 $18.9 — $18.9 Series M $500.0 $12.8 — $12.8 Series N $1,700.0 — $40.8 — Series O $575.0 $7.
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 30: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 Net income available to common shareholders - GAAP $ 1,334 $ 1,228 $ 1,068 $ 902 $ 986 Merger-related and restructuring charges 10
Slide 31: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 Efficiency ratio numerator - noninterest expense - GAAP $ 3,610 $ 3,833 $ 3,755 $ 3,878 $ 3,431 Merger-related and restructuring charges, net (141) (308) (236) (209) (10
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 March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 Common shareholders' equity $ 60,752 $ 62,759 $ 61,819 $ 61,634 $ 61,295 L
Slide 33: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended March 31, 2021 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity2 Net income - GAAP $ 1,473 Net income available to common shareholders - GAAP $ 1,334 $ 1,334
Slide 34: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 Net interest income - GAAP $ 3,285 $ 3,366 $ 3,362 $ 3,448 $ 3,650 Taxable-equivalent adjustment 28 28 29 31 37 Net interest income - taxable-equivalent 3,313 3,394 3,391 3,479
Slide 35: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended March 31 Dec. 31 March 31 2021 2020 2020 Segment net interest income $ 20 $ 22 $ 25 Noninterest income 633 562 557 Total revenue $ 653 $ 584 $ 582 Segment net income (loss) - GAAP $ 131 $ 99 $ 105 Provision (benefit) fo
Slide 36: Non-GAAP Reconciliations: Allowance with Fair Value Marks
Non-GAAP Reconciliations Allowance with Fair Value Marks ($ MM) As of/For the Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2021 2020 2020 2020 2020 ALLL $ 5,662 $ 5,835 $ 5,863 $ 5,702 $ 5,211 Unamortized fair value mark (1) 2,067 2,395 2,676 3,077 3,539 Allowance plus unamortized fair v
Slide 37: To inspire and build better lives and communities
To inspire and build better lives and communities