Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q3 2014 Earnings Presentation
31 slides from Truist Financial's earnings presentation, Oct 16, 2014
Slide 1: Third Quarter 2014 Earnings Conference Call
Sharing Knowledge fora Brighter Direction Third Quarter 2014 Earnings Conference Call October 16, 2014 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: Earnings Highlights
3 3 Earnings Highlights Loans Loan Sale FHLB Extinguishment Strategic Announcements ▪ Net income 2 totaled $520 million vs. $268 million 3 in 3Q13 ▪ Diluted EPS was $0.71, compared with $0.37 3 in 3Q13 ▪ Earnings reduced by $0.01 due to merger - related and restructuring charges ▪ Average loans grew
Slide 4: Selected Items Affecting Earnings
4 4 Pre - Tax After Tax Diluted EPS Impact Gain on loan sale $ 42 $ 26 $ 0.04 Loss on early extinguishment of debt $ (122) $ (76) $ (0.11) Income tax adjustment N/A $ 50 $ 0.07 Merger - related and restructuring charges $ (7) $ (4) $ (0.01) Selected Items Affecting Earnings ($ in millions, except pe
Slide 5: Broad-based Loan Growth
5 5 Broad - based Loan Growth ▪ Average total loan growth for 4Q14 is expected to be down an annualized 1 - 2% vs 3Q14 due to the mortgage strategy and loan sale ▪ Excluding mortgage loans, average loans expected to be up 1 - 2% Expect growth in both CRE categories, Direct retail and Other lending
Slide 6: Improved Deposit Mix and Cost
6 6 Improved Deposit Mix and Cost $127.9 $125.9 $125.7 $129.6 $130.6 0.31% 0.28% 0.27% 0.26% 0.26% 0.20% 0.30% 0.40% $90.0 $100.0 $110.0 $120.0 $130.0 $140.0 3Q13 4Q13 1Q14 2Q14 3Q14 Total Interest-Bearing Deposit Cost Average Total Deposits ($ in billions) ▪ Strong DDA growth of 15.9% annualized vs
Slide 7: Credit Quality Continues to Improve
7 7 Credit Quality Continues to Improve 1 0.50% 0.50% 0.41% 0.47 2 % 0.43 3 % 0.56% 0.48% 0.00% 0.20% 0.40% 0.60% 0.80% 3Q13 4Q13 1Q14 2Q14 3Q14 Annualized Net Charge - offs / Average Loans Core Charge-offs Other Charge-Offs ▪ Core net charge - offs relatively flat ▪ Loans 30 - 89 days past due decr
Slide 8: Allowance Coverage Ratios Remain Strong
8 8 Allowance Coverage Ratios Remain Strong 1 ▪ Coverage ratios remain strong at 2.84x and 1.82x for the allowance to net charge - offs and NPLs, respectively ▪ The ALLL release was $17 million for 3Q14 compared to $39 million in 2Q14 ▪ Management anticipates no further ALLL releases in future quart
Slide 9: Net Interest Margin Stabilizing
9 9 Net Interest Margin Stabilizing 3.68% 3.56% 3.52% 3.43% 3.38% 3.39% 3.34% 3.29% 3.22% 3.20% 2.75% 3.25% 3.75% 4.25% 3Q13 4Q13 1Q14 2Q14 3Q14 Reported NIM Core NIM ▪ 3Q14 NIM declined 5 bps vs. 2Q14 as a result of: Lower yields on new loans Run off of covered assets Partially offset by: Imp
Slide 10: Fee Income Remains Strong
10 10 Fee Income Remains Strong ▪ Mortgage income increased $21 million reflecting wider margins and increased volume ▪ Insurance income declined primarily due to a seasonal decrease in property and casualty insurance commissions ▪ Other income increased primarily due to better results on investment
Slide 11: Adjusted Expenses Flat vs 2Q14
11 11 Adjusted Expenses Flat vs 2Q14 ▪ Personnel expense decreased $14 million vs. 2Q14 due to nearly 800 fewer FTEs and lower equity - based compensation for retirement eligible employees ▪ Other expense decreased $78 million vs. 2Q14, driven by an $85 million reserve related to FHA - insured mortg
Slide 12: Capital and Liquidity Strength
12 12 Capital and Liquidity Strength 1 11.3% 11.8% 12.1% 12.1% 12.4% 9.4% 9.9% 10.2% 10.2% 10.5% 8.5% 9.5% 10.5% 11.5% 12.5% 3Q13 4Q13 1Q14 2Q14 3Q14 Basel I Capital Ratios Tier 1 Tier 1 common ▪ Common equity Tier 1 ratio under Basel III was approximately 10.3% at September 30, 2014 2 and 10.0% at
Slide 13: Community Banking segment
13 13 ▪ Total C&I loan production increased $142.3 million, or 6.4%, compared to 2Q14 ▪ Average retail loans increased $247 million, or 13.0% annualized, compared to 2Q14 ▪ Noninterest income increased $8.4 million, or 9.5% annualized, compared to 2Q14 driven by higher service charges of deposits ▪
Slide 14: Residential Mortgage Banking segment
14 14 Retains and services mortgage loans originated by the Residential Mortgage Lending Division and through its referral relation shi p with the Community Bank and referral partners as well as those purchased from various correspondent originators ($ in millions) Inc /(Dec) vs 2Q14 Inc/(Dec) 3 Q13
Slide 15: Dealer Financial Services segment
15 15 ▪ C ontinued to generate strong loan growth: □ Average loans were up 12.8% for Dealer Finance and 15.4% for Regional Acceptance vs. 2Q14 □ Regional Acceptance loan originations were up 17.5% vs. 3Q13 ▪ Dealer Finance asset quality indicators continue to exhibit strong performance compared to i
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 Insurance Services Segment Comments ($ in millions) Inc/(Dec) vs 2Q14 Inc/(Dec) 3Q13 3Q14 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics Same Store Sales Growth Noninterest Income Number of St
Slide 18: Financial Services segment
18 18 ▪ Average loan and deposit growth was driven by: □ Corporate Banking, which generated • 18.6% annualized loan growth and 23.2% annualized transaction deposit growth vs . 2Q14 • 24.5% loan growth vs. 3Q13 □ BB&T Wealth, which generated • 37.1% annualized loan growth and 9.3% annualized transact
Slide 19: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction
Slide 20: Appendix
Appendix
Slide 21: Capital Measures
Capital Measures 1 As of / Quarter Ended Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 Selected Capital Information Risk - based capital Tier 1 $17,402 $16,984 $16,699 $16,074 $ 15,606 Total 21,281 20,270 20,154 19,514 19,255 Risk - weighted assets 2 140,479 140,829 137,947 136
Slide 22: Basel III Common Equity Tier 1 Ratio
Basel III Common Equity Tier 1 Ratio 1 Sept. 30 2014 Tier 1 common equity under Basel I definition $ 14,799 Adjustments 91 Common equity Tier 1 under Basel III definition $ 14,890 Estimated risk - weighted assets under Basel III definition $ 144,965 Basel III common equity Tier 1 ratio 10.3% 1 Basel
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 As of / Quarter Ended Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 Calculations of tangible common equity, Tier 1 common equity, tangible assets and related measures: Total shareholders’ equity $ 24,314 $ 23,965 $ 23,556 $ 22,809 $ 22,094 Less: Pre
Slide 24: Non-GAAP Reconciliations
Non - GAAP Reconciliations As of / Quarter Ended Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 Asset Quality Ratios (including covered assets) Loans 30 - 89 days past due and still accruing as a percentage of loans and leases 1 0.77% 0.85% 0.80% 0.95% 0.95% Loans 90 days or mor
Slide 25: Non-GAAP Reconciliations
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 These asset quality ratios have been adjusted to remove the impact of covered loans and covered foreclosed property. Appropr i ate adjustm
Slide 26: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Efficiency and Fee Income Ratios Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 Efficiency ratio – GAAP 67.1 % 67.1 % 61.2 % 61.1 % 62.4 % Effect of securities gains (losses), net (0.1) - - 0.1 - Effect of merger - related and restructu
Slide 27: Return on Average Tangible Common Shareholders' Equity
Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 Return on Average Tangible Common Shareholders' Equity 2014 2014 2014 2013 2013 Net income available to common shareholders $ 520 $ 425 $ 501 $ 537 $ 268 Plus: Amortization of intangibles, net of tax 14 15 14 16 16 Tangible net income availabl
Slide 28: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 Reported net interest margin - GAAP 3.38% 3.43% 3.52% 3.56% 3.68% Adjustments to interest income for covered assets: Effect of cove
Slide 29: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 29 1 BB&T management uses this measure to evaluate net interest margin, excluding the impact of covered assets and believes this m ea sure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods. Quarter Ended Sept.
Slide 30: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended September 30, 2014 Adjusted Effective Tax Rate GAAP Tax Adj. Adjusted Income before income taxes $ 695 $ 695 Provision for income taxes 134 $ 50 184 Effective tax rate 19.3% 26.5% 30 1 BB&T’s management uses these measures in their analysis of the Corporati
Slide 31: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction