Truist Financial Corporation · NYSE:TFC
Truist Financial — Q3 2022 Earnings Presentation
37 slides from Truist Financial's earnings presentation, Oct 18, 2022
Slide 1: Third Quarter 2022 Earnings Conference Call
Third Quarter 2022 Earnings Conference Call Bill Rogers – Chairman & CEO Mike Maguire – CFO October 18, 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 Bringing T3 to Life: Human Capital and DEI ESG and Environmental Inclusion, and Education Ethical Conduct Technology and Touch Sustainability – Continued teammate listening – 16.5%
Slide 6: Financial Results
mlatclaterrs! Results
Slide 7: Selected items affecting 3Q22 results
Selected items affecting 3Q22 results Item Diluted EPS Pre-Tax After-Tax ($ MM, except per share impact) Impact Merger-related and restructuring charges ($62) ($48) ($0.04) Incremental operating expenses related to the merger ($90) ($69) ($0.05) See non-GAAP reconciliations in the appendix Diluted E
Slide 8: 3Q22 performance highlights
3Q22 performance highlights Summary Income Statement ($ MM) Commentary Change vs. Earnings and profitability 3Q22 2Q22 3Q21 – $1.7 billion of adjusted net income available to common ($1.24 per share) and GAAP / Unadjusted adjusted ROTCE of 25.1% Revenue $5,885 3.6% 4.6% – Adjusted EPS up 3.3% sequen
Slide 9: Digital care for Truist clients
Digital care for Truist clients Mobile App Users1 Zelle Transactions Introducing Truist Assist: Continuing to Bring T3 to Life 38% – Our AI-enhanced virtual assistant, 5% 4.4MM 18MM combining innovative technology with 16MM personalized human touch, available to 4.3MM Retail banking clients 24x7 in
Slide 10: Average loans & leases HFI
Average loans & leases HFI 5-Quarter Trend vs. Prior Quarter – Broad-based growth: average loans up 4.3% $309.4 – C&I up 4.5% due to growth across most CIB industry verticals and $296.7 $286.2 $286.3 $288.6 product groups $129.7 $123.4 – Residential mortgage up $4.0 billion, or 8.2%, as a result of
Slide 11: Average deposits
Average deposits 5-Quarter Trend vs. Prior Quarter – Average deposits decreased $3.7 billion, or 0.9%, driven by monetary tightening, $423.8 increased consumer spending, and seasonality $411.0 $415.2 $420.1 $402.7 – Well-controlled deposit costs $145.9 $148.6 $146.0 $141.7 $146.5 – Total cost of dep
Slide 12: Net interest income & net interest margin
Net interest income & net interest margin 5-Quarter Trend vs. Prior Quarter $3,783 – Net interest income increased 10% as a result of higher short-term interest rates and strong loan growth (alongside well-controlled deposit costs), partially offset $113 by lower PAA $3,435 $3,670 $3,261 $3,267 $3,2
Slide 13: Noninterest income
Noninterest income 5-Quarter Trend vs. Prior Quarter – Noninterest income declined $146 million, or 6.5% $2,365 $2,323 – Insurance income decreased $100 million, or 12%, primarily driven by $2,248 seasonality $772 $657 $2,142 $577 $2,102 – Investment banking & trading declined $33 million, or 13%, d
Slide 14: Noninterest expense
Noninterest expense 5-Quarter Trend ($ MM) vs. Prior Quarter – Noninterest expense increased $33 million, or 0.9% $3,795 – Merger costs1 declined $86 million, or 36% $30 $3,700 $3,674 – Adjusted noninterest expense was $3.3 billion, up $83 million, or 2.6% $3,580 $3,613 $145 $143 – Professional fees
Slide 15: Asset quality
Asset quality Asset quality remains excellent, reflecting our prudent risk culture and diverse portfolio Net Charge-Offs $421 Provision / (Benefit) for Credit Losses Continued strong credit performance; sequential and YoY trends driven by normalizing trends and Provision expense increased sequential
Slide 16: Capital and liquidity position
Capital and liquidity position Capital and liquidity position Commentary Capital position 13.9% – CET1 ratio was 9.1% 12.6% 13.9% 12.6% 11.9% – Sequential decline driven by strong 3.5% EOP loan growth and 10.8% 10.7% 10.1% BenefitMall acquisition 9.2% 9.1% – Increased dividend 8% to $0.52 per share
Slide 17: 3Q22 acquisition detail
3Q22 acquisition detail BenefitMall BankDirect Capital Finance 13.9% – Entered into an agreement to purchase BankDirect Capital – Acquisition of a wholesale employee benefits insurance broker Finance, the insurance premium finance unit of Texas Capital Description focused on small to medium sized bu
Slide 18: Shifting from integration focus to execution and growth
Shifting from integration focus to execution and growth 2020 2021 2022 2023 Well Positioned for the Future – Finalize the merger Pandemic – February conversion (complete) – Eliminate merger-related charges and incremental operating expenses by year-end Integration – Achieve cost saves objectives – S
Slide 19: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability (with Purpose-Driven Culture – Further modernize lower volatility) – Top 10 U.S. commercial technology stack – Continued confidence bank – Obsess over enhanced – In
Slide 20: Appendix
Appendix
Slide 21: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail and Small Business Banking, Wealth, Mortgage Banking, Dealer Retail Services, and Consumer Finance Metrics Commentary – Net income of $986 million, up $210 million from the prior quarter Income statement ($ MM) 3Q22 Linked Qtr. Like Qtr. Ch
Slide 22: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CRE & Grandbridge Metrics Commentary – Net income of $1.2 billion, up 21% from the prior quarter, primarily driven by higher NII Linked Qtr. Like Qtr. and lower provision for l
Slide 23: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail, Wholesale, and Services Divisions Metrics Commentary – Revenue increased 13% vs. 3Q21 Linked Qtr. Like Qtr. Income statement ($ MM) 3Q22 Change Change – Organic revenue growth was 6.5% Net interest income $33 $5 $5 – Ac
Slide 24: Purchase accounting summary
(1) Purchase accounting summary ($ MM) As of/For the Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Loans and Leases(2) Beginning balance unamortized fair value mark $ (924) $ (1,119) $ (1,323) $ (1,540) $ (1,777) Accretion 96 189 191 217 233 Purchase accounting ad
Slide 25: 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 $175 2Q21 308 142 297 190 3Q21 255 145 173 191 4Q21 237 143 212 215 1Q22 210 137 216 202 2Q
Slide 26: 4Q22–3Q23 preferred stock projected dividends
4Q22–3Q23 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 4Q22 1Q23 2Q23 3Q23 Series I $173 $1.7 $2.2 $2.3 $2.3 Series J $102 1.0 1.3 1.4 1.4 Series L $750 12.1 14.4 15.1 15.0 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 Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Net income available to common shareholders - GAAP $ 1,536 $ 1,454 $ 1,327 $ 1,524 $ 1,616 Merger-related and restructuring charge
Slide 29: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Efficiency ratio numerator - noninterest expense - GAAP $ 3,613 $ 3,580 $ 3,674 $ 3,700 $ 3,795 Merger-related and restructuring charges, net (62) (121) (216) (212) (172
Slide 30: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Net income $ 1,637 $ 1,532 $ 1,416 $ 1,602 $ 1,704 Provision for credit losses 234 171 (95) (103) (324) Provision for income taxes 363 372 330 367 423 Taxable-e
Slide 31: Non-GAAP reconciliations: Return on average assets
Non-GAAP reconciliations Return on average assets ($ MM) As of / Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Net income - GAAP $ 1,637 $ 1,532 $ 1,416 $ 1,602 $ 1,704 Merger-related and restructuring charges 48 92 166 163 132 Securities (gains) losses 1 — 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 Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Common shareholders' equity $ 54,115 $ 56,302 $ 58,348 $ 62,598 $ 62,227 L
Slide 33: Non-GAAP reconciliations: Return on common equity
Non-GAAP reconciliations Return on average common equity and average tangible common equity ($ MM) As of / Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Net income available to common shareholders - GAAP $ 1,536 $ 1,454 $ 1,327 $ 1,524 $ 1,616 Merger-related and r
Slide 34: Non-GAAP Reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ MM) Quarter Ended Year-to-Date % Growth Sept. 30 June 30 Sept. 30 Sept. 30 Sept. 30 % Growth Year-to-Date 2022 2022 2021 2022 2021 3Q22 vs. 3Q21 2022 vs. 2021 Revenue(2) - GAAP $ 5,847 $ 5,655 $ 5,598 $ 16,827 $ 16,730 4.4 % 0.6 % Taxable equivalent
Slide 35: Non-GAAP Reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Net interest income - GAAP $ 3,745 $ 3,407 $ 3,183 $ 3,243 $ 3,233 Taxable-equivalent adjustment 38 28 26 24 28 Net interest income - taxable-equivalent 3,783 3,435 3,209 3,267
Slide 36: Non-GAAP Reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ MM) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2022 2022 2022 2021 2021 Segment net interest income $ 33 $ 28 $ 24 $ 23 $ 28 Noninterest income 734 833 737 681 652 Total revenue $ 767 $ 861 $ 761 $ 704 $ 680 Segment net inc
Slide 37: To inspire and build better lives and communities
To inspire and build better lives and communities