Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q4 2015 Earnings Presentation
29 slides from Truist Financial's earnings presentation, Jan 21, 2016
Slide 1: Fourth Quarter 2015 Earnings Conference Call
BB&T Fourth Quarter 2015 Earnings Conference Call January 21, 2016 Kelly S. King Chairman and Chief Executive Officer Daryl N. Bible Chief Financial Officer
Slide 2: 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 3: 2015 Fourth Quarter Performance Highlights
3 3 2015 Fourth Quarter Performance Highlights 1 ▪ Net income totaled $502 million 2 and diluted EPS totaled $0.64 ▪ Adjusted diluted EPS totaled $0.68 excluding merger - related charges ▪ GAAP ROA was 1.03 % and ROTCE was 13.37 % ▪ Adjusted ROA 3 was 1.09% and adjusted ROTCE 3 was 14.19% Earnings 1
Slide 4: Selected Items Affecting Earnings
4 4 Pre - Tax After Tax Diluted EPS Impact Merger - related and restructuring charges $ 50 $ 33 $ (0.04) Selected Items Affecting Earnings ($ in millions, except per share impact)
Slide 5: Record Loans Following Successful Acquisitions
5 5 Record Loans Following Successful Acquisitions 1 ▪ Average loan growth, excluding acquisitions 3 , was 2.0% annualized and 4.5% annualized excluding residential mortgage, vs. 3Q15 ▪ Experienced strong loan growth vs. 3Q15 in several categories (excludes acquisitions): C&I, up 7.8% annualized 3
Slide 6: Improved Deposit Mix and Cost
6 6 Improved Deposit Mix and Cost $130.3 $129.5 $131.9 $143.8 $ 148.5 0.25% 0.25% 0.24% 0.24% 0.24% 0.20% 0.25% 0.30% 0.35% 0.40% $105.0 $115.0 $125.0 $135.0 $145.0 $155.0 4Q14 1Q15 2Q15 3Q15 4Q15 Total Interest-Bearing Deposit Cost ▪ Average total deposits grew $4.7 billion, or 12.8% annualized ▪ E
Slide 7: Credit Quality Remains Excellent
7 7 Credit Quality Remains Excellent 1,2 ▪ Loans 90 days or more past due and still accruing decreased $69 million vs. 3Q15 ▪ Loans 30 - 89 days increased 13.5% vs. 3Q15 Reflects conversion of Susquehanna mortgage portfolio to MBA methodology ▪ Management expects 1Q16 net charge - offs to be in th
Slide 8: Allowance Coverage Ratios Remain Strong
8 8 Allowance Coverage Ratios Remain Strong 3.21x 3.60x 3.71x 3.44x 2.83x 2.39x 2.45x 2.55x 2.49x 2.53x 1.00 2.00 3.00 4.00 4Q14 1Q15 2Q15 3Q15 4Q15 ALLL to Net Charge-offs ALLL to NPLs HFI ▪ Coverage ratios remain healthy at 2.83x and 2.53x for the allowance to net charge - offs and NPLs, respectiv
Slide 9: Net Interest Margin Expected to Increase
9 9 Net Interest Margin Expected to Increase 3.36% 3.33% 3.27% 3.35% 3.35% 3.20% 3.18% 3.16% 3.15% 3.12% 2.50% 3.00% 3.50% 4.00% 4Q14 1Q15 2Q15 3Q15 4Q15 Reported NIM Core NIM ▪ 4Q15 NIM stable at 3.35% as a result of: Purchase accounting impact (+3 bps) Impact from rate, volume and earning asse
Slide 10: Fee Income Increases 10.8%
10 10 Fee Income Increases 10.8% ▪ Insurance income increased $26 million vs. 3Q15 primarily due to seasonality Decline vs. 4Q14 results from American Coastal sale ▪ Investment banking and brokerage fees and commissions decreased $14 million due to higher capital markets activity in the prior quar
Slide 11: Noninterest Expense Reflects Acquisitions
11 11 Noninterest Expense Reflects Acquisitions 4Q15 4Q15 v. 3Q15 2 Increase (Decrease) 4Q15 v. 4Q14 Increase (Decrease) Personnel expense $ 893 4.9 % 12.5 % Occupancy and equipment expense 192 19.5 14.3 Software expense 52 15.9 15.6 Loan - related expense 37 (10.4) (47.9) Outside IT services 41 68
Slide 12: Capital and Liquidity Strength
12 12 Capital and Liquidity Strength 10.6% 10.5% 10.4% 10.1% 10.2% 9.0% 9.5% 10.0% 10.5% 11.0% 4Q14 1Q15 2Q15 3Q15 4Q15 ▪ The common equity tier 1 ratio was 10.0% on a fully phased in basis. ▪ BB&T’s 4Q15 LCR was 130% driven by strong deposit growth and the acquisitions ▪ BB&T’s 4Q15 liquid asset bu
Slide 13: Community Banking Segment
13 13 ($ in millions) Inc/(Dec) vs 3Q15 Inc/(Dec) vs 4Q14 4 Q15 Comments 3 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics $ 855 331 39 718 157 $ 272 $ 83 (8) 35 26 5 $ 9 $ 125 2 19 73 13 $ 22 ($ in
Slide 14: Residential Mortgage Banking Segment
14 14 Retains and services mortgage loans originated by the Residential Mortgage Lending Division and through its referral relation shi p with the Community Bank and referral partners as well as those purchased from various correspondent originators ($ in millions) Inc /(Dec) vs 3Q15 Inc/(Dec) vs 4Q
Slide 15: Dealer Financial Services Segment
15 15 Primarily originates indirect loans to consumers on a prime and nonprime basis for the purchase of automobiles and other vehi cle s through approved dealers both in BB&T’s market and nationally (through Regional Acceptance Corporation) Comments 4 ($ in millions) Inc /(Dec) vs 3Q15 Inc /(Dec) v
Slide 16: Specialized Lending Segment
16 16 Provides specialty lending including: commercial finance, mortgage warehouse lending, tax - exempt governmental finance, equipment leasing, commercial mortgage banking, insurance premium finance, dealer - based equipment financing, and direct consumer finance Comments 4 ($ in millions) Inc/(De
Slide 17: Insurance Services Segment
17 17 Comments 4 ($ in millions) Inc/(Dec) vs 3Q15 Inc/(Dec) 4Q14 4Q15 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics Noninterest Income Number of Stores 3 EBITDA Margin 5 4 Q15 Like Provides proper
Slide 18: Financial Services Segment
18 18 Provides trust services, wealth management, investment counseling, asset management, estate planning, employee benefits, corporate banking, and capital market services to individuals, corporations, governments, and other organizations Comments 4 ($ in millions) Inc/(Dec) vs 3Q15 Inc/(Dec) vs 4
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Slide 20: Appendix
Appendix
Slide 21: Capital Measures
Capital Measures 1 (Dollars in millions, except per share data) 1 2 Current quarter regulatory capital is preliminary Risk - weighted assets are determined based on regulatory capital requirements in effect for the period presented 3 4 Tangible common equity and related ratios are non - GAAP measure
Slide 22: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 22 (Dollars in millions, except per share data) 1 2 Current quarter regulatory capital is preliminary Tangible common equity and related ratios are non - GAAP measures. BB&T's management uses these measures to assess the quality of capital and believes that investors may
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 23 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures pro vide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects
Slide 24: Non-GAAP Reconciliations
24 1 BB&T’s management believes investors use this measure to evaluate the return on average common shareholders’ equity withou t t he impact of intangible assets and their related amortization. Non - GAAP Reconciliations 1 (Dollars in millions) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 2015 D
Slide 25: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin Dec. 31 2015 Sept. 30 2015 June 30 2015 March 31 2015 Dec. 31 2014 Reported net interest margin - GAAP 3.35% 3.35% 3.27% 3.33% 3.36% Adjustments to interest income for assets acquired: Effect of secu
Slide 26: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 26 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a g reater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects
Slide 27: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 27 (Dollars in millions) 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a g reater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demo
Slide 28: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 28 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
Slide 29: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 29 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