Truist Financial Corporation · NYSE:TFC
Truist Financial — Q4 2022 Earnings Presentation
38 slides from Truist Financial's earnings presentation, Jan 19, 2023
Slide 1: Fourth Quarter 2022 Earnings Conference Call
Fourth Quarter 2022 Earnings Conference Call Bill Rogers – Chairman & CEO Mike Maguire – CFO January 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: A purpose-driven year
A purpose-driven year In 2022, Truist remained true to our commitment to inspire and build better lives for our clients, teammates, and communities Strengthened financial inclusion Making Truist a great place to Momentum for ESG and CSR – Truist One Banking with no work programs overdraft fees – Ind
Slide 6: Financial Results
mlatclaterrs! Results
Slide 7: Selected items affecting 4Q22 results
Selected items affecting 4Q22 results Item Diluted EPS Pre-Tax After-Tax ($ in millions, except per share data) Impact Merger-related and restructuring charges ($114) ($87) ($0.07) Incremental operating expenses related to the merger ($56) ($43) ($0.03) See non-GAAP reconciliations in the appendix 7
Slide 8: 4Q22 performance highlights
4Q22 performance highlights ($ in millions, except per share data) Summary Income Statement Commentary Change vs. Earnings and profitability 4Q22 3Q22 4Q21 – $1.7 billion of adjusted net income available to common ($1.30 per share) and adjusted GAAP / Unadjusted ROTCE of 30% Revenue $6,258 6.3% 11.9
Slide 9: 2022 performance highlights
2022 performance highlights ($ in millions, except per share data) Summary Income Statement Commentary 2022 2021 Change GAAP / Unadjusted Earnings and profitability Revenue $23,177 $22,404 3.5% – Strong overall financial results: $6.6 billion of adjusted net income ($4.96 per share) Expense $14,589
Slide 10: Client-centric digital growth
Client-centric digital growth Product, Experience, and Platform Innovations Delivered in 2022 Position Truist for Mobile App Users1 Zelle Transactions Continued Digital Growth and Client Engagement in 2023 – Long Game Acquisition (2Q). Mobile +42% 4.4MM application uses prize-linked savings and fun
Slide 11: Average loans & leases HFI
Average loans & leases HFI 5-Quarter Trend Full-Year Trend vs. Linked Quarter – Strong growth: Average loans up 3.6% (3.0% excluding BankDirect Capital Finance) – C&I up 4.7% due to growth across most CIB industry verticals and product $320.7 +5% groups and CCB $309.4 $296.7 $303.9 – BankDirect Capi
Slide 12: Average deposits
Average deposits 5-Quarter Trend Full-Year Trend vs. Linked Quarter +5% – Average deposits declined $6.8 billion, or 1.6%, driven by monetary tightening, inflation, and higher rate alternatives $418.1 $415.2 $423.8 $420.1 $411.0 $413.3 $398.4 – Well-controlled deposit costs $145.4 $148.6 $146.0 – To
Slide 13: Net interest income & net interest margin
Net interest income & net interest margin 5-Quarter Trend Full-Year Trend vs. Linked Quarter +10% – Net interest income increased 6.6% as a result of higher short-term interest rates and strong loan growth (alongside well-controlled deposit costs) $14,458 – Reported and core NIM expanded 13 and 15 b
Slide 14: Noninterest income
Noninterest income 5-Quarter Trend Full-Year Trend vs. Linked Quarter – Noninterest income increased $125 million, or 5.9% (6%) – Insurance income increased $41 million driven by seasonality and the BenefitMall acquisition $9,290 $2,323 $8,719 – Investment banking & trading increased $35 million, pr
Slide 15: Noninterest expense
Noninterest expense 5-Quarter Trend Full-Year Trend vs. Linked Quarter – Noninterest expense increased $109 million, or 3.0% $15,116 (3%) – 4Q22 included $170 million of merger costs1 compared to $152 million in 3Q22 $3,700 $262 $3,674 $3,722 – Adjusted noninterest expense2 was $3.4 billion, up $68
Slide 16: Asset quality
Asset quality Strong asset quality continues to reflect Truist’s prudent risk culture and diverse loan portfolio Net Charge-Offs $421 Provision / (Benefit) for Credit Losses Continued strong credit performance; sequential and YoY trends primarily driven by seasonality / Provision expense increased s
Slide 17: Capital and liquidity position
Capital and liquidity position Capital and liquidity position Commentary Capital position 13.2% – CET1 ratio was 9.0%, down 10 bps from 9/30 12.6% 13.9% 12.5% 11.3% – Decline driven by strong 2.7% EOP organic loan growth and BankDirect Capital 10.7% 10.5% Finance acquisition 9.6% 9.1% 9.0% – Dividen
Slide 18: 1Q23 and 2023 outlook
1Q23 and 2023 outlook ($ in billions) 4Q22 Actuals 1Q23 Outlook 13.9% Revenue (TE) $6.3 Down 2-3% compared to 4Q22 1Q23 Adjusted expenses $3.4 Up 1-2% Full Year 2022 Actuals Full Year 2023 Outlook Adjusted revenue (TE) $23.2 Up 7-9% Adjusted expenses $13.1 Up 5-7% Full year 2023 full year 2022 compa
Slide 19: Building momentum
Building momentum Operating Leverage Increasing and... ...Well Positioned for the Future Quarterly Trends (YoY) Full Year Trend – Shifting from integrating focus to operating focus (executional excellence and purposeful growth) 10.8% 10.9% – Realize significant benefit from becoming One Truist (syst
Slide 20: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability relative to Purpose-Driven Culture – Further modernize peers (with lower – Top 10 U.S. commercial technology stack volatility) bank – Obsess over enhanced – Inspire
Slide 21: Appendix
Appendix
Slide 22: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail and Small Business Banking, Wealth, Mortgage Banking, and Consumer Finance Solutions Metrics Full Year Commentary – Segment net income of $3.8 billion, flat YoY Income statement ($ MM) 4Q22 vs. 3Q22 vs. 4Q21 Full Year Full Year 2022 Change
Slide 23: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CRE & Grandbridge Metrics Full Year Commentary – Net income of $4.4 billion, down 9.0%, primarily driven by higher provision for credit Full Year Full Year losses and lower IB
Slide 24: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail, Wholesale, and Services Divisions Metrics 4Q and Full Year Commentary Full Year Full Year 4Q commentary Income statement ($ MM) 4Q22 vs. 3Q22 vs. 4Q21 2022 Change – Revenue increased 20% Net interest income $46 $13 $23
Slide 25: Purchase accounting summary
(1) Purchase accounting summary ($ in millions) As of/For the Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2022 2022 2022 2022 2021 Loans and Leases(2) Beginning balance unamortized fair value mark $ (826) $ (924) $ (1,119) $ (1,323) $ (1,540) Accretion 80 96 189 191 217 Purchase accounti
Slide 26: M&A related financial impacts
M&A related financial impacts ($ in millions) Incremental operating Purchase accounting Merger-related and Amortization of intangibles expenses related to the accretion restructuring charges merger 1Q22 $210 $137 $216 $202 2Q22 204 143 121 117 3Q22 113 140 62 90 4Q22 94 163 114 56 FY 2022 621 583 51
Slide 27: 1Q23–4Q23 preferred stock projected dividends
1Q23–4Q23 preferred stock projected dividends Truist Preferred Outstandings ($ MM) 1Q23 2Q23 3Q23 4Q23 Series I $173 $2.3 $2.5 $2.6 $2.5 Series J $102 1.4 1.5 1.5 1.5 Series L $750 14.8 15.8 16.0 15.6 Series M $500 — 12.8 — 12.8 Series N $1,700 40.8 — 40.8 — Series O $575 7.5 7.5 7.5 7.5 Series P $1
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 29: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ in millions, except per share data, shares in thousands) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Net income available to common shareholders - GAAP $ 1,610 $ 1,536 $ 1,454 $ 1,327 $
Slide 30: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ in millions) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. Dec. 2022 2022 2022 2022 2021 2022 2021 Efficiency ratio numerator - noninterest expense - GAAP $ 3,722 $ 3,613 $ 3,580 $ 3,674 $ 3,700 $ 14,589 $ 15,116 Merger-related a
Slide 31: Non-GAAP reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ in millions) Link Quarter Ended Year-to-Date Quarters Like Quarters Year-to-Date Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Dec. 31 Dec. 31 4Q22 vs. 4Q22 vs. 3Q22 vs. 2Q22 vs. 1Q22 vs. 2022 vs. 2021 vs. 2022 2022 2022 202
Slide 32: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ in millions) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Net income $ 1,682 $ 1,637 $ 1,532 $ 1,416 $ 1,602 $ 6,267 $ 6,437 Provision for credit losses 467 234 171 (95) (10
Slide 33: Non-GAAP reconciliations: Return on average assets
Non-GAAP reconciliations Return on average assets ($ in millions) As of / Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Net income - GAAP $ 1,682 $ 1,637 $ 1,532 $ 1,416 $ 1,602 $ 6,267 $ 6,437 Merger-related and restructuring c
Slide 34: 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 Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Common shareholders' equity $
Slide 35: Non-GAAP reconciliations: ROCE and ROTCE
Non-GAAP reconciliations Return on average common equity and average tangible common equity ($ in millions) As of / Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Net income available to common shareholders - GAAP $ 1,610 $ 1,536
Slide 36: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ in millions) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Net interest income - GAAP $ 3,981 $ 3,745 $ 3,407 $ 3,183 $ 3,243 $ 14,316 $ 13,006 Taxable-equivalent adjustment 50 38 28 26 24 14
Slide 37: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ in millions) Quarter Ended Year Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2022 2022 2022 2022 2021 2022 2021 Segment net interest income $ 46 $ 33 $ 28 $ 24 $ 23 $ 131 $ 101 Noninterest income 801 734 833 737 681 3,
Slide 38: To inspire and build better lives and communities
To inspire and build better lives and communities