Truist Financial Corporation · NYSE:TFC
Truist Financial — Q1 2023 Earnings Presentation
34 slides from Truist Financial's earnings presentation, Apr 20, 2023
Slide 1: First Quarter 2023 Earnings Conference Call
First Quarter 2023 Earnings Conference Call Bill Rogers – Chairman & CEO Mike Maguire – CFO April 20, 2023
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 Living our our purpose purpose Inspire andand Inspiring build better better building lives and livescommunities and communities In 1Q23, Truist remained a source of strength by: Executing on strategic Enhancing the client Supporting Being a responsible decisions experience our teammates corpo
Slide 6: Financial Results
mlatclaterrs! Results
Slide 7: 1Q23 performance highlights
1Q23 performance highlights ($ in millions, except per share data) Summary Income Statement Commentary Earnings and profitability Change vs. – $1.4 billion of net income available to common ($1.05 per share) and ROTCE of 24% 1Q23 4Q22 1Q22 – EPS up 6.1% compared to 1Q22 given strong growth in PPNR a
Slide 8: Continued digital momentum
Continued digital momentum Mobile App Users1 Zelle Transactions Digital Experiences and Capabilities to Drive Deposit Growth and New Households (in millions) (in millions) – Digital onboarding delivered strong +5% +28% performance in driving deposit growth across 20.4 new and existing client relatio
Slide 9: Average loans & leases HFI
Average loans & leases HFI ($ in billions) 5-Quarter Trend vs. Linked Quarter – Solid 1.7% average loan growth given momentum from the prior quarter across most businesses – C&I up 3.6% on average due to growth across most CIB industry verticals and $321 $326 product groups and most CCB regions, in
Slide 10: Average deposits
Average deposits ($ in billions) 5-Quarter Trend vs. Linked Quarter – Average deposits declined $4.8 billion, or 1.2%, driven primarily by monetary tightening and higher rate alternatives $424 $420 $415 $413 $408 – Interest-bearing deposits up $5.1 billion $149 $146 – Noninterest-bearing deposits do
Slide 11: Strong, relationship-oriented deposit franchise
Strong, relationship-oriented deposit franchise Insured + collateralized deposits as a % of total deposits1 Weighted average deposit market share in respective markets2 69% 63% 58% 57% 57% 57% 56% 54% 53% 51% 50% 21% 20% 19% 57% 18% 17% insured; 16% 15% 15% 6% 13% public 12% 12% funds Peer 1 TFC Pee
Slide 12: Net interest income & net interest margin
Net interest income & net interest margin ($ in millions) 5-Quarter Trend vs. Linked Quarter – Net interest income declined 2.8% as a result of higher funding costs and two fewer days, partially offset by higher rates on earning assets – Reported and core NIM declined 8 and 7 bps, respectively. Core
Slide 13: Noninterest income
Noninterest income ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest income relatively stable $2,248 $2,227 $2,234 – Seasonally higher insurance revenue and higher residential mortgage $2,142 income partially offset by lower other income (due to positive NQDCP $2,102 valuation in 4Q22
Slide 14: Noninterest expense
Noninterest expense ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest expense declined $31 million, or 0.8% – 1Q23 included $63 million of restructuring charges compared to $170 million of total merger costs1 in 4Q22 $3,722 – Adjusted noninterest expense2 was $3.5 billion, up 3.0%, or
Slide 15: Asset quality
Asset quality Strong asset quality continues to reflect Truist’s prudent risk culture and diverse loan portfolio Net Charge-Offs $421 Provision / (Benefit) for Credit Losses Continued strong credit performance; YoY increase driven primarily by normalization within consumer Provision expense increase
Slide 16: Commercial real estate (CRE) spotlight
Commercial real estate (CRE) spotlight Limited Growth, Concentration, Risk vs. Peers 5-Quarter Total CRE Trends CRE growth1 CCAR CRE loan loss rate2 (4Q19-4Q22) 2022 9.3% 9.7% 8.9% 21.0% 13.1% 11.2% 8.1% 7.8% 8.0% 0.41% 0.29% 0.10% 0.07% 0.02% 2nd lowest 2nd lowest growth loss rate among peers among
Slide 17: Capital and liquidity position
Capital and liquidity position Capital and liquidity position Commentary Capital position 13.0% – CET1 ratio was 9.1%, up from 9.0% at 12/31 12.4% 12.6% 12.6% 11.0% 10.6% – ~20 bps organic capital generation1 partially offset by 12 bps CECL phase-in 10.5% 9.4% – TIH minority stake sale closed on Apr
Slide 18: 2Q23 and 2023 outlook
2Q23 and 2023 outlook ($ in billions) 1Q23 Actuals 2Q23 Outlook 13.9% Revenue (TE) $6.2 Relatively stable compared to 1Q23 2Q23 Adjusted expenses $3.5 Up 1-2% Full Year 2022 Actuals Full Year 2023 Outlook Adjusted revenue (TE) $23.2 Up 5-7% Adjusted expenses $13.1 Up 5-7% Full year 2023 full year 20
Slide 19: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability relative to Purpose-Driven Culture – Further modernize peers (with lower – Top 10 U.S. commercial technology stack volatility) bank – Obsess over enhanced – Inspire
Slide 20: Appendix
Appendix
Slide 21: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail and Small Business Banking, Wealth, Mortgage Banking, and Consumer Finance Solutions Metrics Commentary – Net income of $1.0 billion, down $151 million, or 13%, vs. 4Q22 Income statement ($ MM) 1Q23 vs. 4Q22 vs. 1Q22 – Net interest income o
Slide 22: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, CRE, Wholesale Payments, and Insurance Premium Finance Metrics Commentary – Net income of $1.0 billion, down $193 million, or 16%, vs. 4Q22 Income statement ($ MM) 1Q23 vs. 4Q22 vs
Slide 23: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail and Wholesale Divisions Metrics Commentary – Total revenue growth YoY of 13% Income statement ($ MM) 1Q23 vs. 4Q22 vs. 1Q22 – Driven by the 2022 acquisitions of Kensington Vanguard and BenefitMall, and Net interest incom
Slide 24: Purchase accounting summary
(1) Purchase accounting summary ($ in millions) As of/For the Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Loans and Leases(2) Beginning balance unamortized fair value mark $ (741) $ (826) $ (924) $ (1,119) $ (1,323) Accretion 64 80 96 189 191 Purchase accounting
Slide 25: Preferred dividend
Preferred dividend ($ in millions) 2Q23 3Q23 4Q23 1Q24 Estimated dividends based on projected interest rates $75 $105 $75 $103 and amounts outstanding ($ MM) Estimates assume forward-looking LIBOR and SOFR rates as of 3/31/23. Actual interest rates could vary significantly causing dividend payments
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 27: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ in millions, except per share data, shares in thousands) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 2022 2022 2022 2022 Net income available to common shareholders - GAAP $ 1,610 $ 1,536 $ 1,454 $ 1,327 Merger-related and restructuring charges 87 48 92 16
Slide 28: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Efficiency ratio numerator - noninterest expense - GAAP $ 3,691 $ 3,722 $ 3,613 $ 3,580 $ 3,674 Merger-related and restructuring charges, net (63) (114) (62) (1
Slide 29: Non-GAAP Reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ in millions) Link Like Quarter Ended Quarters Quarters Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 1Q23 vs. 1Q23 vs. 2023 2022 2022 2022 2022 4Q22 1Q22 Revenue(2) - GAAP $ 6,102 $ 6,208 $ 5,847 $ 5,655 $ 5,325 (1.7)% 14.6 % Taxable equivalent adjustment
Slide 30: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Net income $ 1,515 $ 1,682 $ 1,637 $ 1,532 $ 1,416 Provision for credit losses 502 467 234 171 (95) Provision for income taxes 394 337 363 372 330 Taxa
Slide 31: Non-GAAP reconciliations: Tangible common equity
Non-GAAP reconciliations Calculations of tangible common equity and related measures ($ in millions, except per share data, shares in thousands) As of / Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Common shareholders’ equity $ 55,699 $ 53,841 $ 54,115 $ 56,302 $
Slide 32: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Net interest income - GAAP $ 3,868 $ 3,981 $ 3,745 $ 3,407 $ 3,183 Taxable-equivalent adjustment 51 50 38 28 26 Net interest income - taxable-equivalent 3,919 4,031 3,7
Slide 33: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ in millions) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2023 2022 2022 2022 2022 Segment net interest income $ 14 $ 12 $ 11 $ 6 $ 3 Noninterest income 817 792 731 830 733 Total revenue $ 831 $ 804 $ 742 $ 836 $ 736 Segment
Slide 34: To inspire and build better lives and communities
To inspire and build better lives and communities