Truist Financial Corporation · NYSE:TFC
Truist Financial — Q2 2021 Earnings Presentation
38 slides from Truist Financial's earnings presentation, Jul 15, 2021
Slide 1: Second Quarter 2021 Earnings Conference Call
Second Quarter 2021 Earnings Conference Call Kelly King – Chairman & CEO Bill Rogers – President & COO Daryl Bible – CFO July 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 Investments in our communities ▪ Contributed a combined $200 million to the Truist Foundation and the Truist Charitable Fund to support the important work of organizations across our diverse markets and communities ▪ Invested $22 mill
Slide 6: 2Q21 Results
2Q21 Results
Slide 7: 2Q21 performance highlights
2Q21 performance highlights Summary Income Statement ($ MM) GAAP / Unadjusted Adjusted2 Key Points Earnings and profitability Total taxable-equivalent revenue1 $5,678 $5,678 ▪ Strong adjusted net income available to common shareholders of $2.1 billion, up 30% vs. 1Q21, driven by strong fee income an
Slide 8: Selected items affecting 2Q21 results
Selected items affecting 2Q21 results Item Diluted EPS Pre-Tax After-Tax ($ MM, except per share impact) Impact Merger-related and restructuring charges ($297) ($228) $0.17 Incremental operating expenses related to the merger ($190) ($146) $0.11 Charitable contribution to Truist Foundation and Truis
Slide 9: Digital acceleration
Digital acceleration New Truist platform will support clients across the continuum, including Digital Commerce Growth1 Mobile App Users2 Retail, Wealth, and Small Business The new Truist digital experience will deliver enhanced capabilities to help Small Business clients easily and securely manage t
Slide 10: Loans & leases
Loans & leases Average Loans & Leases HFI and Loan Yields Loans & Leases HFI ($ MM) Linked Like $128,164 Average balances 2Q21 Quarter Quarter $120,856 $118,032 Change Change Commercial: $193,465 $173,794 $170,543 Commercial and industrial, ex. PPP $124,962 ($1,064) ($19,380) PPP 8,684 (1,341) 35 4.
Slide 11: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) Linked Like $396,255 Average balances 2Q21 Quarter Quarter $370,818 $383,185 Change Change Noninterest-bearing deposits $137,892 $9,313 $24,017 0.22% Interest checking 106,121 1,377 8,258 0.05% 0.04% Money market and savings 134,029 4,726 7,958 2Q20
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 $40 million sequentially, primarily due to reduced purchase accounting accretion $3,479 $3,313 $3,273 ▪ Reported NIM declined 13 bps 3.13% 3.01% • Purchase accounting contributio
Slide 13: Noninterest income
Noninterest income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked Like $2,423 $2,405 2Q21 Quarter Quarter $2,197 Change Change Insurance income $690 $64 $109 41.3% 42.6% 40.1% Wealth management income 345 4 56 Service charges on deposits 253 (5) 51 2Q20 1Q21 2Q21 Residential
Slide 14: Noninterest expense & efficiency ratio
Noninterest expense & efficiency ratio Noninterest Expense & Efficiency Ratio Noninterest Expense ($ MM) $4,011 Linked Like $3,878 2Q21 Quarter Quarter $3,610 71.0% Change Change 66.1% 65.8% Personnel expense $2,207 $65 $199 Professional fees and outside processing 341 (9) 52 56.9% 56.1% Net occupan
Slide 15: Asset quality
Asset quality Net Charge-offs & Provision Nonperforming Assets Key Points ▪ Asset quality remains excellent, reflecting our prudent risk culture, diverse $844 portfolio, economic improvement, and the effects of fiscal and monetary stimulus $316 $1,299 $1,252 ▪ Nonperforming assets decreased 2 bps to
Slide 16: Capital and liquidity position
Capital and liquidity position Capital Ratios Key Points 2Q21 13.9% 14.3% 14.1% ▪ CET1 ratio increased to 10.2% 12.0% 11.9% ▪ Total payout ratio of 78% reflected: 11.5% 10.1% 10.2% • Regular quarterly common dividend of $0.45 per share (dividend payout ratio was 39%) 9.7% • Share repurchases of $610
Slide 17: Merger Integration Update
Merger Integration Update
Slide 18: Ongoing integration progress moderates merger risk
Ongoing integration progress moderates merger risk Integration Milestones Truist Securities conversion Unveil Innovation and Technology Center in Charlotte, NC Wealth brokerage platform conversion Retail branch consolidation (approximately 800 cumulative closures by 1Q22) Release of Truist job frame
Slide 19: 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 4.8MM approximately 11% at efforts, appli
Slide 20: Approximately $1.3 billion remaining
Merger cost update Anticipated total merger costs through 2022 (not in run rate thereafter) Est. Total Merger Related and Restructuring Charges Examples ▪ Expenses to complete merger with no future benefit include: $2.1B • Severance and compensation ◦ (E.g. primarily severance payments) • Occupancy
Slide 21: Cost saves progress
Cost saves progress 2Q21 Core Noninterest Expense ($ MM) Net Expense Savings–Run Rate $3,182 ($165) ($45) ($20) $2,952 4Q20 4Q21 4Q22 annualized annualized annualized $640MM $1,040MM $1,600MM On track On track 40% of 65% of 100% of Adjusted NIE Variable NQDCP NIE - Insurance Core NIE net cost saves
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: 2Q21 results in the context of our value proposition
2Q21 results in the context of our value proposition 1 Exceptional Franchise 2 Uniquely Positioned 3 Strong Capital, Liquidity, & Risk Mgmt. Total Assets Adjusted Diluted EPS Total Payout Ratio 7th largest US commercial bank; Current CET1 ratio = 10.2%; highest proj. pop. growth compared to peers1 n
Slide 24: Appendix
Appendix
Slide 25: 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 Linked Qtr. Like Qtr. 2Q21 Change Change Financial performance Net interest income $2,118 ($17) ($45) ▪ Segment net inc
Slide 26: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CIG – Real Estate Linked Qtr. Like Qtr. Key Points 2Q21 Change Change ▪ Segment net income of $1.2 billion increased 34% from 1Q and over 200% vs. prior year due to strong fee
Slide 27: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance Linked Qtr. Like Qtr. Key Points 2Q21 Change Change ▪ Record quarterly revenue driven by recent acquired revenue and strong Net interest income $21 $1 ($2) organic revenue growth as a result o
Slide 28: Purchase Accounting Summary
(1) Purchase Accounting Summary ($ MM) As of/For the Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Loans and Leases(2) Beginning balance unamortized fair value mark $ (2,067) $ (2,395) $ (2,676) $ (3,077) $ (3,539) Accretion 285 316 356 367 440 CECL adoption - rese
Slide 29: 3Q21–1Q22 preferred stock projected dividends
3Q21–1Q22 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 3Q21 4Q21 1Q22 Series I $172.5 $1.8 $1.7 $1.7 Series J $101.5 1.0 1.0 1.0 Series L $750.0 — 18.9 — Series M $500.0 — 12.8 — Series N $1,700.0 40.8 — 40.8 Series O $575.0 7.5 7.5 7.5 Series P $1,000.0 — 24.8 — Series Q
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 31: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Net income available to common shareholders - GAAP $ 1,559 $ 1,334 $ 1,228 $ 1,068 $ 902 Merger-related and restructuring charges 2
Slide 32: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Efficiency ratio numerator - noninterest expense - GAAP $ 4,011 $ 3,610 $ 3,833 $ 3,755 $ 3,878 Merger-related and restructuring charges, net (297) (141) (308) (236) (209
Slide 33: 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 2021 2021 2020 2020 2020 Common shareholders' equity $ 61,663 $ 60,752 $ 62,759 $ 61,819 $ 61,634 Le
Slide 34: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended June 30, 2021 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity2 Net income - GAAP $ 1,658 Net income available to common shareholders - GAAP $ 1,559 $ 1,559 M
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 2021 2021 2020 2020 2020 Net interest income - GAAP $ 3,245 $ 3,285 $ 3,366 $ 3,362 $ 3,448 Taxable-equivalent adjustment 28 28 28 29 31 Net interest income - taxable-equivalent 3,273 3,313 3,394 3,391 3
Slide 36: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended June 30 March 31 June 30 2021 2021 2020 Segment net interest income $ 21 $ 20 $ 23 Noninterest income 698 633 598 Total revenue $ 719 $ 653 $ 621 Segment net income (loss) - GAAP $ 156 $ 131 $ 126 Provision (benefit) fo
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 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 ALLL $ 5,121 $ 5,662 $ 5,835 $ 5,863 $ 5,702 Unamortized fair value mark (1) 1,777 2,067 2,395 2,676 3,077 Allowance plus unamortized fair va
Slide 38: To inspire and build better lives and communities
To inspire and build better lives and communities