Truist Financial Corporation · NYSE:TFC
Truist Financial — Q4 2021 Earnings Presentation
44 slides from Truist Financial's earnings presentation, Jan 18, 2022
Slide 1: Fourth Quarter 2021 Earnings Conference Call
Fourth Quarter 2021 Earnings Conference Call Bill Rogers – CEO Daryl Bible – CFO January 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, Responsible Business and Technology and Human Capital and ESG and Environmental Financial Inclusion, and Ethical Conduct Client Service DEI Sustainability Education – 113% of prorated goal for the $60 – Truist’s indu
Slide 6: Financial Results
mlatclaterrs! Results
Slide 7: Selected items affecting 4Q21 results
Selected items affecting 4Q21 results Item Diluted EPS Pre-Tax After-Tax ($ MM, except per share impact) Impact Merger-related and restructuring charges ($212) ($163) ($0.12) Incremental operating expenses related to the merger ($215) ($165) ($0.12) See non-GAAP reconciliations in the appendix Dilut
Slide 8: 4Q21 performance highlights
4Q21 performance highlights Summary Income Statement ($ MM) Commentary Change vs. 4Q21 3Q21 4Q20 Earnings and profitability – Strong overall financial results: $1.9 billion of adjusted net income ($1.38 per GAAP / Unadjusted share) and 22.6% adjusted ROTCE Revenue $5,590 (0.6)% (1.6)% ◦ Sequential a
Slide 9: 2021 performance highlights
2021 performance highlights Summary Income Statement ($ MM) Commentary 2021 2020 Change Earnings and profitability GAAP / Unadjusted – Strong overall financial results: $7.5 billion of adjusted net income ($5.53 per Revenue $22,404 $22,830 (1.9)% share) and 22.0% adjusted ROTCE Expense $15,116 $14,8
Slide 10: Digital First migration
Digital First migration Truist Migration Waves 2Q21 3Q21 4Q21 1Q22 Truist digital experience pilot Client migration waves to Completion of BB&T migration Truist core conversion Truist experience begins – 12K teammate digital pilot – ~7 million Truist clients migrated to the – ~9 million Retail, Busi
Slide 11: Digital acceleration
Digital acceleration New Truist platform will support clients across the continuum (including Retail, Wealth, Digital Lending Growth1 Mobile App Users2 Business, and Corporate/Commercial) with relevant differentiation for each client segment Truist’s One View Corporate Banking solution brings a comp
Slide 12: Average loans & leases HFI
Average loans & leases HFI 5-Quarter Trend Full Year $309.0 $302.9 $294.7 $288.6 $288.9 $286.2 $286.3 $127.3 $124.6 $120.9 $120.3 $118.0 $120.4 $121.8 (5. 5% ) % $178.3 0.8 . $181.7 $173.8 $170.5 $165.8 ex $164.5 (7.2 $168.6 P 4.13% 4.11% 4.03% PP 4.35% %) 3.92% 3.81% 3.97% 3.63% 3.65% 3.61% 3.58% 3
Slide 13: Average deposits
Average deposits 5-Quarter Trend Full Year $398.4 $411.0 $396.3 $402.7 % 10 $383.2 $363.3 $375.3 0.22% 0.07% 0.05% 0.04% 0.03% 0.03% 0.04% 4Q20 1Q21 2Q21 3Q21 4Q21 2020 2021 Total deposits ($ B) Total deposit cost (%) vs. Prior Quarter vs. Year-over-Year vs. Prior Year – Average deposits increased $
Slide 14: Net interest income & net interest margin
Net interest income & net interest margin 5-Quarter Trend Full Year $13,951 $3,394 $3,313 $13,114 $3,273 $3,261 $3,267 3.22% 3.08% 3.01% 2.88% 2.81% 2.86% 2.76% 2.72% 2.69% 2.79% 2.60% 2.58% 2.55% 2.60% 4Q20 1Q21 2Q21 3Q21 4Q21 2020 2021 Net interest income TE ($ MM) Reported NIM (%) Core NIM (%) vs
Slide 15: Interest rate sensitivity
Interest rate sensitivity Balanced approach to managing interest rate risk provides enhanced current earnings while also maintaining significant upside to higher rates Year 1 Net Interest Income Sensitivity1 Commentary – 5.2% asset sensitivity in +100 bps ramp ◦ ~75% of asset sensitivity from short-
Slide 16: Noninterest income
Noninterest income 5-Quarter Trend Full Year $2,405 $2,365 $9,290 $2,285 $2,323 $8,879 ex. s $2,197 % 10 gain . sec 40.4% 42.6% 42.2% 41.7% 41.7% 40.1% 39.1% 4.6 % 4Q20 1Q21 2Q21 3Q21 4Q21 2020 2021 Noninterest income ($ MM) Fee income ratio (%) vs. Prior Quarter vs. Year-over-Year vs. Prior Year –
Slide 17: Noninterest expense
Noninterest expense 5-Quarter Trend ($ MM) Full Year ($ MM) $4,011 $14,897 $15,116 $200 $3,795 $285 $266 $3,833 3,610 $3,700 $685 $574 $172 $36 $30 $142 $145 $143 $144 $1,394 $1,593 $487 $316 $487 $363 $427 $3,174 $3,117 $3,182 $3,257 $3,131 $12,533 $12,687 1.2% 67.8% 65.8% 71.0% 67.8% 66.5% 65.6% 6
Slide 18: Asset quality
Asset quality Asset quality remains excellent, reflecting our prudent risk culture, diverse portfolio, improving economic conditions, and the ongoing effects of government stimulus Net Charge-Offs $421 Provision Strong credit performance: 25 bps of NCO (slightly higher than 3Q given seasonally Provi
Slide 19: Capital and liquidity position
Capital and liquidity position Capital and liquidity position Commentary Capital position 14.5% – CET1 ratio was 9.6%, down 50 bps from 9/30 13.9% 13.9% 13.2% 12.1% 11.9% ◦ Decline driven by Service Finance acquisition, strong loan growth, and $500 11.3% million share repurchase 10.0% 10.1% 9.6% – D
Slide 20: Merger Integration Update
Merger Integration Update
Slide 21: Shifting from integrating to operating
Shifting from integrating to operating Core bank conversion in February 2022 Integration milestones successfully completed ▪ Truist Securities conversion ▪ Migrated teammates to the Truist retail mortgage origination ecosystem ▪ Wealth brokerage platform conversion ▪ Converted heritage BB&T retail a
Slide 22: Committed to achieving net cost saves
Committed to achieving net cost saves Third Party Spend Retail Banking Non-Branch Facilities Personnel1 Technology Cost saves Targeting Targeting 800+ total Targeting approximately Avg. FTEs decreased by Driven by integration 10% reduction in closures by 1Q22 5MM+ approximately 12% at efforts, appli
Slide 23: Cost saves progress
Cost saves progress 4Q21 Core Noninterest Expense ($ MM) Net Expense Savings Progress $6 $3,131 ($148) ($49) $2,940 4Q20 4Q21 4Q22 annualized annualized annualized $640MM $1,040MM $1,600MM Adjusted NIE Variable NQDCP NIE - Core NIE On track 40% of 65% of 100% of compensation acquisitions net cost sa
Slide 24: 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) – 7th largest U.S. technology foundation with ‘best of breed’ ◦ Continued confidence commercial b
Slide 25: Conclusion
Conclusion Solid performance in 2021... ...Well Positioned for 2022 Adjusted EPS Capital Deployment Ratio – Finalize the merger $5.53 % ◦ February conversion 46 115% % GAAP 49 ◦ Eliminate merger-related charges and incremental operating $3.80 $4.47 77% expenses related to the merger by year-end GAAP
Slide 26: Appendix
Appendix
Slide 27: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services, and National Consumer Finance & Payments Metrics Full Year Commentary Linked Qtr. Like Qtr. Full Year Full Year – Full year segment net income of $3.2 billion, up $0.2 bil
Slide 28: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CRE & Grandbridge Metrics Full Year Commentary 4Q21 Linked Qtr. Like Qtr. Full Year Full Year Income Statement ($ MM) – Net income of $4.3 billion increased $1.9 billion, or 84
Slide 29: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance Metrics Full Year and 4Q Commentary – Strong operating performance continued in 4Q21 driven by Truist Insurance Holdings 4Q21 Linked Qtr. Like Qtr. Full Year Full Year Income statement ($ MM)
Slide 30: Purchase accounting summary
(1) Purchase accounting summary ($ MM) As of/For the Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2021 2021 2021 2021 2020 Loans and Leases(2) Beginning balance unamortized fair value mark $ (1,540) $ (1,777) $ (2,067) $ (2,395) $ (2,676) Accretion 217 233 285 316 356 Purchase accounting
Slide 31: 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 $175 2Q21 308 142 297 190 3Q21 255 145 172 191 4Q21 237 143 212 215 1Q22 210 140 160 260 2Q
Slide 32: PPP details
PPP details PPP Revenue PPP Yields Average PPP EOP PPP PPP Contribution to NIM ($ 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 FY 2020 $241 3.0 $8.2 $
Slide 33: Fee income reclassification – selected line items
Fee income reclassification – selected line items – In 4Q21, the Company reclassified certain structured real estate activity from commercial mortgage income to investment banking & trading income and certain LIHTC activity from commercial mortgage income to other income. Prior periods were reclassi
Slide 34: 1Q22–3Q22 preferred stock projected dividends
1Q22–3Q22 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 1Q22 2Q22 3Q22 Series I $173 $1.7 $1.8 $1.8 Series J $102 1.0 1.0 1.0 Series L $750 — 18.9 6.7 Series M $500 — 12.8 — Series N $1,700 40.8 — 40.8 Series O $575 7.5 7.5 7.5 Series P $1,000 — 24.8 — Series Q $1,000 25.5
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 36: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Net income available to common shareholders - GAAP $ 1,524 $ 1,616 $ 1,559 $ 1,334 $ 1,228 $ 6
Slide 37: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ MM) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. Dec. 2021 2021 2021 2021 2020 2021 2020 Efficiency ratio numerator - noninterest expense - GAAP $ 3,700 $ 3,795 $ 4,011 $ 3,610 $ 3,833 $ 15,116 $ 14,897 Merger-related and restru
Slide 38: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ MM) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Net income $ 1,602 $ 1,704 $ 1,658 $ 1,473 $ 1,330 $ 6,437 $ 4,492 Provision for credit losses (103) (324) (434) 48 177 (813
Slide 39: Non-GAAP reconciliations: Return on average assets
Non-GAAP reconciliations Return on average assets ($ MM) As of / Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Net income - GAAP $ 1,602 $ 1,704 $ 1,658 $ 1,473 $ 1,330 $ 6,437 $ 4,492 Merger-related and restructuring charges 16
Slide 40: 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 Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Common shareholders' equity $ 62,598 $
Slide 41: Non-GAAP reconciliations: ROCE and ROTCE
Non-GAAP reconciliations Return on average common equity and average tangible common equity ($ MM) As of / Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Net income available to common shareholders - GAAP $ 1,524 $ 1,616 $ 1,559
Slide 42: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ MM) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Net interest income - GAAP $ 3,243 $ 3,233 $ 3,245 $ 3,285 $ 3,366 $ 13,006 $ 13,826 Taxable-equivalent adjustment 24 28 28 28 28 108 125 Net
Slide 43: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ MM) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2021 2021 2021 2021 2020 2021 2020 Segment net interest income $ 20 $ 25 $ 21 $ 20 $ 22 $ 86 $ 94 Noninterest income 681 652 698 633 562 2,664 2,241 T
Slide 44: To inspire and build better lives and communities
To inspire and build better lives and communities