Truist Financial Corporation · NYSE:TFC
Truist Financial — Q3 2023 Earnings Presentation
33 slides from Truist Financial's earnings presentation, Oct 19, 2023
Slide 1: Third Quarter 2023 Earnings Conference Call
Third Quarter 2023 Earnings Conference Call Bill Rogers – Chairman & CEO Mike Maguire – CFO October 19, 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: Financial Results
mlatclaterrs! Results
Slide 6: 3Q23 key takeaways
3Q23 key takeaways Net income available to common 1 Solid third quarter results $1.1 billion 2 Expenses well-controlled—$750 million cost saves Return on average tangible common equity program underway 17.3% 3 Increased CET1 29 bps and NIM 4 bps reflecting a Net interest margin more efficient balanc
Slide 7: 3Q23 performance highlights
3Q23 performance highlights ($ in millions, except per share data) Summary Income Statement Commentary Change vs. Earnings and profitability – $1.1 billion of net income available to common ($0.80 per share) and ROTCE of 17% 3Q23 2Q23 3Q22 – 3Q23 EPS negatively impacted by $0.04 per share of merger-
Slide 8: T3 is driving digital momentum
T3 is driving digital momentum Mobile App Users1 Zelle Transactions Seamless Digital Experiences Drive Relationship Quality and Transactions (in millions) (in millions) Digital Onboarding +8% +32% 25 – Platform enhancements have 23 4.7 driven a 19% increase in Truist 4.6 20 4.5 19 One funding rates
Slide 9: Average loans and leases HFI
Average loans and leases HFI ($ in billions) 5-Quarter Trend vs. Linked Quarter – Average loans decreased $8.3 billion, or 2.5% from 2Q23 – Excluding the impact of Student, average loans declined 1.1% from 2Q23 $321 $326 $326 – Average commercial loans decreased $2.2 billion, or 1.1% driven by a $2.
Slide 10: Average deposits
Average deposits ($ in billions) 5-Quarter Trend vs. Linked Quarter – Average deposits increased $1.2 billion, or 0.3% – Average noninterest-bearing deposits declined $4.8 billion, or 3.9% $420 $413 $408 $401 – Represented 30% of total deposits $146 $400 $141 $131 – Average money market and savings
Slide 11: Net interest income and net interest margin
Net interest income and net interest margin ($ in millions) 5-Quarter Trend vs. Linked Quarter – Net interest income declined 1.6% primarily due to lower earning assets – Reported NIM increased 4 bps to 2.95% driven by balance sheet optimization efforts including: $4,031 $3,919 – Decline in FHLB bor
Slide 12: Noninterest income
Noninterest income ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest income decreased $185 million, or 8.1% due to: $2,293 – Seasonally lower insurance revenue of $142 million $2,227 $2,234 – Lower service charges on deposits revenue of $88 million primarily due to $87 $2,102 $2,108 m
Slide 13: Noninterest expense
Noninterest expense ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest expense was flat – Merger-related and restructuring charges increased $21 million driven primarily by severance expense associated with our cost saves program $3,722 $3,748 – Adjusted noninterest expense2 decreased
Slide 14: $750 million gross cost saves program is underway
$750 million gross cost saves program is underway – Reductions in force – Spans and layers – Consolidation of redundant/similar functions – Select business restructuring – Geographic simplification ~$750MM – Organizational alignment and simplification gross cost – Consolidate businesses for operatio
Slide 15: Asset quality
Asset quality Increase in the loan loss reserve reflects normalization of asset quality Net Charge-Offs Provision for Credit Losses NCOs, excluding Student, increased 9 bps linked quarter reflecting higher commercial and indirect auto losses Provision increased vs. 3Q22 due to an allowance build and
Slide 16: Strong capital momentum
Strong capital momentum ($ in billions) 2H23 Capital Walk AOCI Burn Down4 Commentary Truist continues to build capital and maintains significant strategic flexibility with its Securities AOCI projected to decline by 28% remaining stake in TIH by 12/31/26 CET1 Expectations – CET1 expected to reach an
Slide 17: 4Q23 and 2023 outlook
4Q23 and 2023 outlook ($ in billions unless otherwise noted) 3Q23 Actuals 4Q23 Outlook 13.9% Revenue (TE) $5.7 Flat to down 1% compared to 3Q23 4Q23 Adjusted expenses $3.5 Down 3.5% (excludes TIH independence readiness costs of ~$35 million) Full Year 2022 Actuals Full Year 2023 Outlook Adjusted rev
Slide 18: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability relative to peers Purpose-Driven Culture – Further modernize (with lower volatility) technology stack – Top 10 U.S. commercial – Diversified revenue streams bank –
Slide 19: Appendix
Appendix
Slide 20: Commercial real estate (CRE) spotlight
Commercial real estate (CRE) spotlight CRE Represents 9.2% of Total Loans HFI Including Office at 1.7% 5-Quarter Total CRE Trends Multifamily 11.1% 11.3% 31% 9.7% 1.09% 1.01% 8.1% 7.8% All other Total LHFI at Office 0.41% 1.02% 9/30/23 CRE Mix Retail 0.29% loans CRE 17% ($316B) 15% 0.02% 91.1% 9.2%
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 $834 million, down $110 million, or 12% vs. 2Q23 Income statement ($ MM) 3Q23 vs. 2Q23 vs. 3Q22 – Net interest income of
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 $892 million, increased $15 million, or 1.7% vs. prior quarter Income statement ($ MM) 3Q2
Slide 23: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail and Wholesale Divisions Metrics Commentary – Total revenue growth of 13% vs. 3Q22 Income statement ($ MM) 3Q23 vs. 2Q23 vs. 3Q22 – Driven by strong organic growth and additional interest income on fiduciary Noninterest i
Slide 24: Purchase accounting summary
(1) Purchase accounting summary ($ in millions) As of/For the Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Loans and Leases(2) Beginning balance unamortized fair value mark $ (579) $ (673) $ (741) $ (826) $ (924) Accretion 45 63 64 80 96 Purchase accounting adjus
Slide 25: Preferred dividend
Preferred dividend ($ in millions) 4Q23 1Q24 2Q24 3Q24 Estimated dividends based on projected interest rates $77 $106 $77 $106 and amounts outstanding ($ MM) Estimates assume forward-looking SOFR rates as of 9/30/23. Actual interest rates could vary significantly causing dividend payments to differ
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 2022 2022 Net income available to common shareholders - GAAP $ 1,610 $ 1,536 Merger-related and restructuring charges 87 48 Securities (gains) losses — 1 Incremental operat
Slide 28: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Efficiency ratio numerator - noninterest expense - GAAP $ 3,747 $ 3,748 $ 3,691 $ 3,722 $ 3,613 Merger-related and restructuring charges, net (75) (54) (63) (11
Slide 29: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Net income $ 1,183 $ 1,345 $ 1,515 $ 1,682 $ 1,637 Provision for credit losses 497 538 502 467 234 Provision for income taxes 245 287 394 337 363 Taxab
Slide 30: 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 Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Common shareholders’ equity $ 55,167 $ 56,853 $ 55,699 $ 53,841 $
Slide 31: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Net interest income - GAAP $ 3,564 $ 3,625 $ 3,868 $ 3,981 $ 3,745 Taxable-equivalent adjustment 57 54 51 50 38 Net interest income - taxable-equivalent 3,621 3,679 3,9
Slide 32: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2023 2023 2023 2022 2022 Segment interest income $ 25 $ 19 $ — $ — $ — Noninterest income 801 944 817 792 731 Total revenue 826 963 817 792 731 Segment net income (los
Slide 33: To inspire and build better lives and communities
To inspire and build better lives and communities