Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Investor Presentation (May 2015)
54 slides from Truist Financial's investor presentation, May 15, 2015
Slide 1: BB&T Investor Presentation Second Quarter 2015
BB&T Investor Presentation Second Quarter 2015 Daryl N. Bible Chief Financial Officer
Slide 2: Investor Relations Contacts
2 2 Investor Relations Contacts
Slide 3: Forward-Looking Information
Forward - Looking Information This presentation contains “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 19 95, regarding the financial condition, results of operations, business plans and the future performance of BB&T that are based on the belie
Slide 4: BB&T is…
4 BB&T is… ▪ A values - driven highly profitable growth organization. While we have had a very successful merger history, our primary focus is on organic growth; nonetheless, we are well positioned for strategic opportunities. ▪ Our fundamental strategy is to deliver the best value proposition in ou
Slide 5: Among the Top 10 Largest U.S. Financial Institutions
5 5 1 Excludes home office deposits 2 Number of branches per state as of November 12, 2014 3 Deposit Market Share data as of June 30, 2014 4 Includes Citi and pending Bank of Kentucky and Susquehanna branches. Source : FactSet, FDIC, SNL DataSource State # of Branches 2 Deposits 3,4 State Rank 4 Nor
Slide 6: Premier Model for Community Banking and Diverse Non-Bank Businesses
6 6 27 Banking Regions Local decision - making Centralized support system Foundation for our sales and service culture model … and Diverse Non - Bank Businesses Premier Model for Community Banking…
Slide 7: BB&T Corporation footprint
7 7 BB&T Corporation * Includes Citi and pending Bank of Kentucky and Susquehanna branches Corporation footprint as of 11/12/2014
Slide 8: BB&T Has a Proven Ability to Generate Above Peer Returns in Differing Markets
8 8 BB&T Has a Proven Ability to Generate Above Peer Returns in Differing Markets Source: SNL Financial. Branch and deposit data as of June 30, 2014 Texas ▪ Acquisition of 63 branches ($3.5 billion in deposits) from Citibank ▪ 37 de novo branches since 2012 ▪ Branch presence has grown from 22 to 123
Slide 9: BB&T Has Growing Presence in Top Markets
9 9 BB&T Has Growing Presence in 7 of the Top 10 Markets Rank of Largest 100 MSAs MSA Population Population Growth Median Income Median Age Average Rank Dallas - Fort Worth - Arlington, TX 4 7 34 12 14.3 Houston - The Woodlands - Sugar Land, TX 5 6 35 11 14.3 Washington - Arlington - Alexandria, DC
Slide 10: Diversification Drives Revenue and Productivity
10 10 Diversification Drives Revenue and Productivity **Based on segment revenues, excluding other, treasury and corporate 2.2% 1.8% 1.8% Superior Performance… BB&T National Peers Largest 4 Banks Revenue/average assets 2004 - 2014 …With Less Volatility 1 0.3% 0.4% 0.4% Revenue/average assets standar
Slide 11: Solid Loan Growth
11 11 Solid Loan Growth 1 1 Excludes loans held for sale $115.1 $117.1 $118.6 $118.3 $118.8 $110.0 $112.0 $114.0 $116.0 $118.0 $120.0 1Q14 2Q14 3Q14 4Q14 1Q15 Average Loans Held for Investment ($ in billions) ▪ Excluding Residential mortgage, loans grew 5.4% annualized vs. 4Q14 ▪ Experienced robust
Slide 12: Portfolio De-Risking and Re-Positioning Largely Complete
12 12 ▪ Less dependent on higher - risk portfolios Reduced Land and Construction allocation by 80%+ since 2007 Within Consumer Real Estate: Reduced Alt - A and Interest - only loans (see above) ▪ Pro - forma merger adjusted mix brings portfolio closer to target mix in CRE Other and Consumer RE B
Slide 13: BB&T Has Avoided Riskier Leveraged Loans
13 13 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 BBT Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 2011 2012 2013 2014 $50,000 Source : Dealogic ; data includes leveraged loan volumes Peers include: CMA, MTB, PNC, USB, WFC BB&T Has Avoided Riskier Leveraged Loans $100,000 $150,000 ~
Slide 14: Improved Deposit Mix and Cost
14 14 Improved Deposit Mix and Cost $125.7 $129.6 $130.6 $130.3 $129.5 0.27% 0.26% 0.26% 0.25% 0.25% 0.20% 0.25% 0.30% 0.35% 0.40% $100.0 $110.0 $120.0 $130.0 $140.0 1Q14 2Q14 3Q14 4Q14 1Q15 Total Interest-Bearing Deposit Cost ▪ Overall Noninterest Bearing DDA growth vs. 4Q14 was 5.9% annualized ▪ P
Slide 15: Significantly Improved Deposit Mix and Cost
15 15 Significantly Improved Deposit Mix and Cost 0.69% 0.43% 0.32% 0.26% 0.25% 0.20% 0.40% 0.60% 0.80% 2011 2012 2013 2014 1Q15 Interest Bearing Deposits Cost of Funds 20.4% 22.7% 26.4% 28.9% 30.7% 16.0% 20.0% 24.0% 28.0% 32.0% 2011 2012 2013 2014 1Q15 DDA Mix $ 22.9 $ 28.9 $ 33.9 $37.3 $ 39.7 $20,
Slide 16: Credit Quality Improved Across the Board
16 16 Credit Quality Improved Across the Board 1 ▪ NPAs declined 2.2% vs. 4Q14 ▪ Delinquent loans declined 19.6% ▪ Net charge - offs decreased 12.9% ▪ Performing TDRs decreased 5.1% ▪ Management expects 2Q15 net charge - offs to be 35 - 40 bps ▪ Expect NPAs to remain stable for the foreseeable futur
Slide 17: Allowance Coverage Ratios Remain Strong
17 17 Allowance Coverage Ratios Remain Strong 2.54x 3.28x 2.67x 3.21 3.60x 1.82x 1.89x 1.92x 2.39 2.45x 0.00 1.00 2.00 3.00 4.00 5.00 1Q14 2Q14 3Q14 4Q14 1Q15 ALLL to Net Charge-offs ALLL to NPLs HFI ▪ Coverage ratios remain strong at 3.60x and 2.45x for the allowance to net charge - offs and NPLs,
Slide 18: Net Interest Margin Relatively Stable in 1Q15
18 18 Net Interest Margin Relatively Stable in 1Q15 3.52% 3.43% 3.38% 3.36% 3.33% 3.29% 3.22% 3.20% 3.20% 3.18% 3.22% 3.16% 3.07% 3.02% 2.99% 2.75% 3.25% 3.75% 1Q14 2Q14 3Q14 4Q14 1Q15 Reported NIM Core NIM Peers ▪ 1Q15 NIM declined 3 bps vs. 4Q14 as a result of: Lower yields on new loans Runoff
Slide 19: Strong Fee Income
19 19 Strong Fee Income ▪ Insurance income was a record $440 million, up $31 million vs. 4Q14 primarily due to seasonal growth in employee benefits commissions ▪ Mortgage banking income declined $18 million vs. 4Q14 primarily reflecting lower net mortgage servicing rights income ▪ Investment banking
Slide 20: Progress in Fee Income Diversification
20 20 1 Based on segment revenues, excluding other, treasury and corporate; segment methodologies have changed over time 2 2015 Revenue Mix for quarter ending 03/31/2015 Community Banking 60% Residential Mortgage Banking 9% Dealer Financial Services 8% Specialized Lending 2% Financial Services 10% I
Slide 21: Highlighting BB&T Insurance Holdings
21 21 Highlighting BB&T Insurance Holdings ▪ 5 th largest distributor of insurance products in the U.S. and 6 th largest in the World 1 ▪ Founded 1922 ▪ Largest insurance wholesaler in the U.S. ▪ Largest life insurance wholesaler in the U.S. ▪ Second largest P&C wholesaler in the U.S. ▪ Third larges
Slide 22: The Industry's Most Diversified Platform
22 22 The Industry’s Most Diversified Platform ▪ BB&T Insurance Services, Inc. 98 retail insurance agency locations focused on small to mid - sized accounts in our banking footprint Key unit for carrying out Integrated Relationship Management strategy (IRM) ▪ BB&T Insurance Services of Californi
Slide 23: Strong Revenue Contributions From Diverse Platform
23 23 Strong Revenue Contributions From Diverse Platform Revenue by Company March 31, 2015 McGriff 12% BB&T Insurance Services of California 7% BB&T Insurance Services 28% CRC 18 % Southern Cross Tapco 5% AmRisc 11% American Coastal 8% Crump Life 10%
Slide 24: Strategic Advantages of Insurance Holdings
24 24 Strategic Advantages of Insurance Holdings ▪ Insurance products are sound, complementary financial services needed and valued by our clients ▪ Provides clients with ready access to in - house risk management expertise ▪ Broadens connections and relationships in the macro Financial Services ind
Slide 25: Diversification of BB&T's Revenues
25 25 Diversification of BB&T’s Revenues ▪ Revenues are not interest sensitive, providing stability to BB&T’s revenues ▪ Not subject to the dynamics of credit cycles ▪ Provides broader product offering to clients and improves the ability to increase “ share of wallet ” ▪ Increases stability of BB&T’
Slide 26: Insurance Services Performance – Peer Comparison
26 26 Insurance Services Performance – Peer Comparison 17.3% 19.6% 20.2% 21.0% 18.6% 21.5% 19.3% 23.1% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2011 2012 2013 2014 Peer Median BB&T 2.8% 4.0% 3.1% 4.0% 3.4% 4.8% 3.9% 7.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 2011 2012 2013 2014 Peer Median BB&T Orga
Slide 27: Growing a Valuable Franchise
27 27 Growing a Valuable Franchise Putting BB&T Insurance in the Context of Brokerage Peers BB&T Insurance is a significant Top 5 U.S. insurance broker Brokerage businesses are highly cash generative, require minimal capital expenditures and are well positioned as intermediaries These business
Slide 28: Noninterest Expense Up Due To Seasonal Factors
28 28 Noninterest Expense Up Due To Seasonal Factors ▪ Personnel expense increased primarily due to an $18 million increase in pension plan and $22 million seasonal increase in payroll taxes, offset by a decline in FTEs of approximately 150 ▪ Other expense increased $42 million, primarily due to pri
Slide 29: Long-term Drivers of Financial Performance
29 29 Long - term Drivers of Financial Performance Earnings growth – including acquisitions and buyback 7% - 9% Return on common equity – target capital levels 13% - 15% Return on assets 1.30% - 1.50% Targeted credit loss range 0.50% - 0.70% Targeted loan growth 4% - 6% Targeted total deposit growth
Slide 30: Strong Funding and Liquidity
30 30 Strong Funding and Liquidity ▪ BB&T’s 1Q15 LCR was 130% vs. the January 1, 2016 minimum requirement of 90% ▪ BB&T’s 1Q15 liquid asset buffer is 13.7% (high quality liquid assets as a percentage of total assets ) ▪ Parent – Sources of Liquidity Cash on Deposit at Bank = $7.5 billion Annual
Slide 31: Among the Lowest Debt Costs
31 31 Among the Lowest Debt Costs 0.77% 0.85% 0.88% 0.90% 0.90% 0.95% 0.95% 1.00% 1.05% 1.25% 1.55% 0.00% 0.50% 1.00% 1.50% 2.00% USB BBT PNC CMA MTB FITB KEY STI HBAN RF ZION 5 Year Bank Debt Spread to U.S. Treasuries 1 1 As of 05/01/2015 based on Senior Holding Company issuance $17.3 $20.0 $27.3 $
Slide 32: Capital and Liquidity Strength
32 32 Capital and Liquidity Strength 10.2% 10.2% 10.5% 10.6% 10.5% 9.0% 10.0% 11.0% 1Q14 2Q14 3Q14 4Q14 1Q15 ▪ Fully phased in common equity Tier 1 ratio under Basel III was approximately 10.3% at March 31, 2015 and December 31, 2014 ▪ BB&T’s 1Q15 LCR was 130% vs. the minimum requirement of 90% by J
Slide 33: Capital Levels More Resilient Under Stress
33 33 (2.7%) (2.8%) (3.0%) (3.4%) (4.0%) (5.3%) (3.2%) (3.4%) (4.0%) (4.8%) (6.0%) -7.0% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% STI HBAN USB MTB CMA KEY FITB BBT PNC RF ZION Change to Minimum CET1 – CCAR 2015 Normalizing for the impact of M&A on the CCAR 2015 results, the change to the minimum CET
Slide 34: Strong Minimum Capital Levels Under Stress
34 34 Strong Minimum Capital Levels Under Stress 8.2% 7.6% 7.6% 7.2% 7.1% 7.0% 7.0% 7.0% 6.8% 6.4% 5.9% 5.0% 6.0% 7.0% 8.0% 9.0% KEY CMA HBAN STI BBT MTB PNC RF USB FITB ZION Minimum Common Equity Tier 1 Ratio (CCAR) 8.7% 8.5% 8.5% 8.4% 8.3% 8.2% 8.2% 7.6% 7.6% 7.5% 6.6% 6.0% 7.0% 8.0% 9.0% BBT KEY
Slide 35: Strong Minimum Capital Levels Under Stress
35 35 Strong Minimum Capital Levels Under Stress 11.4% 11.1% 10.9% 10.7% 10.5% 10.4% 10.4% 10.3% 10.2% 9.7% 8.8% 8.0% 9.0% 10.0% 11.0% 12.0% BBT PNC MTB USB FITB HBAN KEY CMA STI RF ZION Minimum Total Risk - Based Capital Ratio (CCAR) 8.0% 7.8% 7.3% 7.1% 7.0% 6.9% 6.8% 6.6% 6.4% 6.4% 5.4% 0.0% 2.0%
Slide 36: Among Lowest Loan Losses Under Stress
36 36 Among Lowest Loan Losses Under Stress 4.2% 4.5% 4.5% 4.6% 4.7% 5.0% 5.2% 5.6% 6.5% 6.5% 6.9% 0.0% 2.0% 4.0% 6.0% 8.0% HBAN CMA STI BBT PNC KEY MTB FITB USB ZION RF Loan Loss Rate: Total Portfolio ( 9 - Quarter) 5.6% 3.8% 3.4% 3.3% 3.3% 3.3% 3.3% 3.2% 3.0% 2.4% 1.1% 0.0% 2.0% 4.0% 6.0% USB BBT
Slide 37: 2015 Capital Actions Include 12.5% Increase in Quarterly Dividend
37 37 2015 Capital Actions Include 12.5% Increase in Quarterly Dividend 15 - 25% 30 - 50% 30 - 50% Organic Dividends 2 Strategic Buyback Special Dividends 26% 42% 33% Targeted Payout Strategy 2015 CCAR Plan 1 Organic Buyback Dividends 2 38% 1 Based on consensus earnings as of March 11, 2015 2 Includ
Slide 38: Dividend Yields Should Continue to Increase
38 38 Dividend Yields Should Continue to Increase 2.8% 2.8% 2.5% 2.3% 2.3% 2.3% 2.2% 2.2% 2.1% 1.9% 0.9% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% BBT FITB RF HBAN STI USB MTB PNC KEY CMA ZION Post CCAR Dividend Yield Source: CLSA and Company Reports; Note: Assumes bank - announced capital actions post 201
Slide 39: Strong Total Shareholder Returns Since the Recession
39 39 Strong Total Shareholder Returns Since the Recession 9.9% 7.5% 7.1% 7.0% 2.8% - 1.3% - 1.7% - 3.9% - 4.5% - 6.6% - 9.9% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% MTB PNC BBT USB CMA HBAN FITB STI KEY ZION RF 12/31/2007 – 03/31/2015 1 Period: Quarterly (Annualized) Source: Bloomberg
Slide 40: BB&T's Stock Performance Was the Most Consistent During the Crisis
40 40 BB&T’s Stock Performance Was the Most Consistent During the Crisis 29.8% 23.8% 19.9% 19.4% 19.2% 11.6% 7.4% 7.3% 6.4% 4.0% 2.1% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% BBT MTB PNC CMA USB KEY STI ZION RF HBAN FITB 10 - Year Low as a % 10 - Year High Source: SNL Financial. 10 year perform
Slide 41: Among Highest Rated Regional Banks
41 41 Among Highest Rated Regional Banks ▪ BB&T has a strong risk profile A track record of foregoing excessive growth in overheated markets BB&T has not been active in the leveraged loan market BB&T performs very well in forward - looking stress tests BB&T’s capital position is resilient un
Slide 42: BB&T's Culture
BB&T BB&T’s Culture
Slide 43: 2015 Key Strategic Objectives
43 43 2015 Key Strategic Objectives ▪ Deliver the BB&T Value Promise enterprise - wide and across all delivery channels thereby creating the Perfect Client Experience ▪ Ensure a strong associate value proposition ▪ Drive revenue growth in a very challenging environment both organically and through s
Slide 44: Greenwich: Best Balance of Client Satisfaction and Customer Penetration
44 44 Greenwich: BB&T Has the Best Balance of Client Satisfaction and Customer Penetration Among Peers 0% 5% 10% 15% 20% 40% 45% 50% 55% 60% 65% 70% 75% 80% ▪ Preserved our historically high level of client service during a challenging year Community Bank is alive and well Winner of 22 excellenc
Slide 45: Industry Leading Recognition
45 45 Industry Leading Recognition BB&T Ranked First for Overall Customer Experience Among U.S. Retail Banking Websites for the Third Straight Year, Placing First in all Four Customer Experience Categories. Second highest rated regional bank in the country by Forbes America’s Best Banks BB&T was nam
Slide 46: Industry Leading Recognition
46 46 Industry Leading Recognition BB&T Retirement and Institutional Services received a top ranking and 33 Best - in - Class awards in the national ‘2014 Defined Contribution Survey,’ conducted by PLANSPONSOR magazine Greenwich Associates recognized BB&T as a “Best Brand” award recipient for 2014.
Slide 47: The Most Engaged Associates
47 47 The Most Engaged Associates 80 69 87 82 85 80 14 17 11 13 10 13 7 14 3 4 5 7 0% 20% 40% 60% 80% 100% Overall, I am very satisfied working at BB&T. I rarely consider looking for a job outside of BB&T. I am proud to work for BB&T. I would recommend BB&T as an employer. I am motivated to put fort
Slide 48: Deep and Experienced Executive Management Team
48 48 Deep and Experienced Executive Management Team Chris Henson Chief Operating Officer Daryl Bible Chief Financial Officer Ricky Brown President, Community Banking Barbara Duck Enterprise Risk Manager Donna Goodrich Deposit Services Manager Kelly King Chairman and Chief Executive Officer Bob John
Slide 49: Culture Matters – Values Are Consistent and Important
49 49 Value System Revenues Superior Shareholder Long - term Returns Value System Attract / Train and Retain the Right People Perfect Client Experience Culture Matters – Values Are Consistent and Important
Slide 50: BB&T – Since 1872
50 50 BB&T – Since 1872 ▪ Strong diversification in revenue, geography, products, and loan portfolios ▪ Premier community banking model with diverse national businesses ▪ Growing capital markets and corporate banking capabilities ▪ Accelerating growth for risk/return advantaged lending platforms ▪ M
Slide 51: While we're performing at a superior level, we believe
While we’re performing at a superior level, we believe
Slide 52: Appendix
Slide 53: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin March 31 2015 Dec. 31 2014 Sept. 30 2014 June 30 2014 March 31 2014 Reported net interest margin - GAAP 3.33 % 3.36 % 3.38 % 3.43 % 3.52 % Adjustments to interest income for assets acquired from FDIC
Slide 54: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 54 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects o