Truist Financial Corporation · NYSE:TFC
Truist Financial — Q4 2019 Earnings Presentation
33 slides from Truist Financial's earnings presentation, Feb 11, 2020
Slide 1: First Quarter 2020 Investor Presentation
First Quarter 2020 Investor Presentation Kelly King – Chairman & CEO Daryl Bible – CFO February 2020
Slide 2: Forward-Looking Statement
Forward-Looking Statement 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,” “b
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: We Are Truist Financial Corporation
We Are Truist Financial Corporation Successfully closed Largest financial 275+ combined merger of equals institution merger in years of serving our between BB&T and more than 15 years clients and SunTrust communities 6th largest U.S. #2 weighted $473.1B assets commercial bank by average deposit $75.
Slide 5: Purpose, Mission and Values
Purpose Inspire and build better lives and communities Mission Clients Teammates Stakeholders Provide distinctive, secure and Create an inclusive and Optimize long-term value for successful client experiences energizing environment that stakeholders through safe, through touch and technology. empowe
Slide 6: Culture will determine our long-term success
Culture will determine our long-term success 6
Slide 7: Two Like-Minded Cultures
Two Like-Minded Cultures Our common beliefs Honesty, trust and caring One-team mentality Driven to help clients and communities Inspired by a bigger “why” 7
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Slide 9: Culture Survey: Engaging Our Teammates Along the Way
Culture Survey: Engaging Our Teammates Along the Way “How would you describe your current culture” Structured Flexible Cautious Risk-permitting Planning Doing Diplomatic Direct Individualistic Collaborative Internal External BB&T Overall SunTrust Overall 9
Slide 10: Early Engagement Results Are Positive
Early Engagement Results Are Positive 97% of town hall attendees agree the Truist purpose, “ The town hall was amazing!! Kelly and Bill were very genuine mission and values statements inspire them and shared personal stories that connected to the Purpose, Mission and Values. I have Neither agree pla
Slide 11: The Definition of Value Has Changed
The Definition of Value Has Changed Touch Personal world class service provided (T3) by our passionate teammates. Technology Creating and leveraging innovative technology-driven solutions that allow our clients to have a Q . seamless/frictionless experience when doing their banking. Trust The combin
Slide 12: Truist 2020 Strategic Priorities
Truist 2020 Strategic Priorities Relentless Focus on a Seamless and Holistic Client Experience Ensuring our clients continue to receive the unparalleled service, advice, support and competence they expect of us Execution of Merger Integration Commitment to identifying best-of-breed across branches,
Slide 13: Committed to Ensuring Sound Environmental, Social and Governance Practices
Committed to Ensuring Sound Environmental, Social and Governance Practices Building long-term value for shareholders through responsible and ethical practices Investing in our Teammates Delivering for Investors: Supporting Communities Governance & Disclosure Providing Better Client Service Responsib
Slide 14: 4Q19 Earnings Review
4Q19 Earnings Review
Slide 15: 4Q19 Highlights
4Q19 Highlights Summary Income Statement ($ MM) 4Q19 Asset Quality and Capital 4Q19 Total taxable-equivalent revenue1 $3,650 Nonperforming assets as a % of total assets 0.14 % Provision for credit losses 171 Net charge-offs as a % of average loans and leases 0.40 % Income before income taxes 879 Com
Slide 16: Implementation of Current Expected Credit Losses (CECL)
Implementation of Current Expected Credit Losses (CECL) Allowance for Credit Losses ($ B) Summary of Key Inputs and Assumptions 12/31/2019 Incurred Impact at Adoption 1/1/2020 CECL Commercial $1.1 $0.9 $2.0 Reasonable and Supportable ▪ 2 years 1-4 Single Family Residential 0.2 0.3 0.5 Period Consume
Slide 17: Outlook
Outlook Category First Quarter Full Year 2020 Earning assets - average $405.5B - $406.5B $405B - $408B Net interest margin 3.45% - 3.49% 3.40% - 3.46% Core net interest margin 3.01% - 3.05% 3.01% - 3.07% Net charge-offs 35 - 50 bps 35 - 50 bps Loan loss provision $325MM - $375MM $1.35B - $1.45B Noni
Slide 18: Medium-Term Targets
Medium-Term Targets Performance Targets Key Points . 2019 noninterest expense, excluding merger-related and ROTCE Adjusted CET1 Ratio restructuring charges, incremental operating expenses Efficiency related to the merger and a one-time charitable contribution, on a combined basis was ~$12.9B Low 20%
Slide 19: Achieving $1.6B Net Cost Savings
Achieving $1.6B Net Cost Savings Personnel Personnel IT/back office Branch 3rd party Corporate integration consolidations spend facilities Savings Technology & digital Personnel Branding, marketing & community innovation investment Investments 19
Slide 20: Capital & Liquidity Position
Capital & Liquidity Position 1 Key Points . The CET1 ratio1 was 9.4% for 4Q19 . Items reducing regulatory capital: . MSR RWA impact of 10 bps in 1Q20 as a result of the simplification rule . CECL phase-in impact of 14 bps in 1Q20 (3-year phase- in period) . The dividend and total payout ratios were
Slide 21: 4Q19 Truist Peer TBV Per Share Growth
4Q19 Truist Peer TBV Per Share Growth Peer Q-o-Q Y-o-Y Truist Financial Corp 5.2 % 18.5 % Bank of America 0.8 8.4 Citizens Financial 1.9 11.7 Fifth Third 0.3 10.2 JP Morgan 0.8 8.3 KeyCorp 0.6 12.7 M&T Bank 0.7 8.9 PNC 1.1 10.4 Regions Financial (1.9) 15.1 U.S. Bancorp (2.1) 6.3 Wells Fargo (1.0) 5.
Slide 22: Truist Remains Committed to Industry-Leading Implied Shareholder Returns
Truist Remains Committed to Industry-Leading Implied Shareholder Returns Annual Return to Capital Deployment Shareholders High quality and diverse revenue base Organic 15 – 20% 3.5 – 4.5% Strong expense discipline driving consistent positive Growth operating leverage Robust earnings power driv
Slide 23: Merger Integration Timeline
Merger Integration Timeline Nov. Dec. Jan. 1H'20 2H'20 4Q'20 1H'21 3Q'21 4Q'21 1H'22 2H'22 4Q'22 '19 '19 '20 Unveiled Truist Close and Announced Brand Visual Consolidate Convert Wealth, Rationalize Branch Identity and Branches in Non- Brokerage and Shared Divestiture Purpose, Mission Overlapping Tru
Slide 24: Client-Centered Integration Requires Time and Focus
Client-Centered Integration Requires Time and Focus 20% Expanded investment Future of capacity will enable strategies Banking that position Truist for 50% SunTrust success in the “Future of Future of MOE Banking” Banking Positions Truist for the 80% Future of Short-term strategic focus Successful wi
Slide 25: Appendix and Non-GAAP Reconciliations
Appendix and Non-GAAP Reconciliations
Slide 26: Net Interest Income and Margin Dynamics
Net Interest Income and Margin Dynamics Net Interest Income Net Interest Margin . 2019 net interest income - TE on a combined basis was . 3Q19 core net interest margin on a combined basis was ~$13.2B ~3.15% to 3.20% . Excluding accretion of mark on PCI loans, non-PCI loans, . 1Q20 core net interest
Slide 27: 2020 Preferred Stock Projected Dividends
2020 Preferred Stock Projected Dividends Projected 2020 Dividends Truist Outstanding 1Q20 2Q20 3Q20 4Q20 Preferred ($ MM) Series F $450.0 $5.9 $5.9 $5.9 $5.9 Series G $500.0 6.5 6.5 6.5 6.5 Series H $465.0 6.5 6.5 6.5 6.5 Greater of Greater of Greater of Greater of Series I $172.5 3 month LIBOR+0.53
Slide 28: Non-GAAP Reconciliations Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended Year-to-Date Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2019 2019 2019 2019 2018 2019 2018 Net income available to common shareholders - GAAP $702 $735 $842 $749 $754 $3,028 $3,063 Me
Slide 29: Non-GAAP Reconciliations Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended Year-to-Date Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2019 2019 2019 2019 2018 2019 2018 Efficiency ratio numerator - noninterest expense - GAAP $ 2,575 $ 1,840 $ 1,751 $ 1,768 $ 1,784 $ 7,934 $ 6,932 Merger-related and
Slide 30: Non-GAAP Reconciliations Tangible Common Equity
Non-GAAP Reconciliations Calculations of tangible common equity and related measures ($ MM, except per share data, shares in thousands) As of / Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2019 2019 2019 2019 2018 Common shareholders' equity $ 61,282 $ 29,177 $ 28,650 $ 27,770 $ 27,069 Le
Slide 31: Non-GAAP Reconciliations Performance Ratios
Non-GAAP Reconciliations Quarter Ended December 31, 2019 Performance Ratios Return on Average Return on Average ($ MM, except per share data, shares in thousands) Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity(2) Net income - GAAP $ 726 Net income available
Slide 32: Non-GAAP Reconciliations Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ MM) Quarter Ended Dec. 31 Sept. 30 Dec. 31 % Growth 4Q19 vs. 2019 2019 2018 3Q19 4Q18 (annualized) Revenue(2) - GAAP $ 3,625 $ 3,003 $ 2,940 82.2 % 23.3 % Taxable equivalent adjustment 25 23 24 Securities (gains) losses, net 116 — (2) Gain (loss) on
Slide 33: To inspire and build better lives and communities
To inspire and build better lives and communities