Truist Financial Corporation · NYSE:TFC
Truist Financial — Q4 2019 Earnings Presentation
34 slides from Truist Financial's earnings presentation, Jan 30, 2020
Slide 1: Fourth Quarter 2019 Earnings Conference Call
Fourth Quarter 2019 Earnings Conference Call Kelly King - Chairman & CEO Daryl Bible - CFO January 30, 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 $75.
Slide 5: Inspire and build better lives
Inspire and build better lives Clients Provide distinctive, secure and successful client experiences through touch and technology. SS Trustworthy CoO. Caring Purpose Mission Teammates Create an inclusive and energizing environment that empowers teammates to learn, grow and have meaningful careers. V
Slide 6: 4Q19 Highlights
4Q19 Highlights Summary Income Statement ($ MM) 4Q19 Asset Quality and Capital 4Q19 Total taxable-equivalent revenue1 $3,650 Nonperforming assets as a % of total assets 0.14% Provision for credit losses 171 Net charge-offs as a % of average loans and leases 0.40% Income before income taxes 879 Commo
Slide 7: Selected Items Affecting 4Q19 Results
Selected Items Affecting 4Q19 Results Item Pre-Tax After-Tax Diluted EPS Impact ($ MM, except per share impact) Merger-related and restructuring charges $(223) $(176) $(0.19) Securities gains (losses), net $(116) $(90) $(0.10) Incremental operating expenses related to the merger1 $(101) $(79) $(0.08
Slide 8: Loans & Leases
Loans & Leases 4Q19 Loans & Leases Held for Investment ($ MM) $300,000 6.00% Average End of period $121,400 balance balance 4.94% $200,000 5.00% Commercial: $75,621 $169,339 Commercial and industrial $81,853 $130,180 $100,000 4.00% $109,612 CRE 19,896 26,832 $— 3.00% Commercial construction 4,506 6,
Slide 9: Deposits
Deposits 4Q19 Deposits ($ MM) $400,000 1.00% Average End of period balance balance 0.82% $334,727 Noninterest-bearing deposits $64,485 $92,405 $200,000 0.75% $210,716 Interest checking 43,246 85,492 0.57% 0.50% Money market and savings 79,903 120,934 $— 4Q19 Average balance 4Q19 End of period balanc
Slide 10: Net Interest Income and Interest Rate Sensitivity
Net Interest Income and Interest Rate Sensitivity Net Interest Income and Margin Key Points 4.00% $2,252 ▪ Reported NIM increased 4 bps and the core NIM decreased 15 $2,000 3.41% bps vs. 3Q19 3.50% ▪ Total loans and leases HFI portfolio yield decreased 6 bps vs. 3Q19 due to the impact of lower short
Slide 11: Balance Sheet Restructuring
Balance Sheet Restructuring A number of actions were taken in 4Q19 to optimize the balance sheet: enhance credit quality, build a strong liquidity profile, minimize option risk and premium amortization, create a more neutral interest rate risk profile, improve ongoing core net interest margin and in
Slide 12: Noninterest Income
Noninterest Income $1,500 $1,398 60% 4Q19 Noninterest Income ($ MM) 38.6% $1,000 40% Insurance income $509 Service charges on deposits 222 $500 20% Wealth management income 206 $— —% Card and payment related fees 156 4Q19 Residential mortgage income 65 Noninterest income ($ MM) Fee income ratio (%)
Slide 13: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency $3,000 $2,575 80% Noninterest Expense ($ MM) $2,000 70% Personnel expense $1,465 71.0% Net occupancy expense 147 $1,000 57.5% 60% Professional fees and outside processing 161 Software expense 118 $— 50% 4Q19 Equipment expense 83 Marketing and customer development 45
Slide 14: Asset Quality
Asset Quality Net Charge-offs Nonperforming Assets $240 1.00% $800 1.00% $192 $684 $120 0.50% $400 0.50% 0.40% 0.14% $— —% $— —% 4Q19 4Q19 Net charge-offs ($ MM) as % of avg. loans and leases Nonperforming assets ($ MM) as a % of total assets Key Points Allowance for Loan and Lease Losses ▪ Asset qu
Slide 15: 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 Reasonable and Commercial $1.1 $0.9 $2.0 Supportable ▪ 2 years 1-4 Single Family Residential 0.2 0.3 0.5 Period Consume
Slide 16: Capital & Liquidity Position
Capital & Liquidity Position 1 Common Equity Tier 1 Ratio Key Points 10% 9.4% ▪ The CET1 ratio1 was 9.4% for 4Q19 ▪ Items reducing regulatory capital: 5% ▪ 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) —% 4Q
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: Merger Update
Merger Update Accomplishments Converted Launched Introduced Closed Integrated Successfully Added derivatives, Restructured visual Truist merger financial retained leadership to FX and balance imagery, purpose, December 6 reporting talent and drive securities sheet colors and mission and systems clie
Slide 20: Appendix
Appendix
Slide 21: Consumer Banking & Wealth
Consumer Banking & Wealth 4Q19 Key Points ▪ Represents performance for Retail Community Banking, Wealth, Net interest income $1,399 Mortgage Banking, Dealer Retail Services and National Consumer Income Statement ($ MM) Finance & Payments Noninterest income 648 ▪ 2020 performance will be driven by: P
Slide 22: Corporate & Commercial
Corporate & Commercial 4Q19 Key Points ▪ Represents performance for Corporate and Investment Banking, Net interest income $840 Commercial Community Banking, Commercial Real Estate and Grandbridge Real Estate Capital Income Statement ($ MM) Noninterest income 390 ▪ 2020 performance will be driven by:
Slide 23: Insurance Holdings
Insurance Holdings 4Q19 Key Points Net interest income $27 ▪ Favorable market conditions with tightening capacity and increasing pricing in most lines Income Statement ($ MM) Noninterest income 536 ▪ Execution of Insurance Holdings Optimization Program initiatives Total revenue 563 delivering robust
Slide 24: Allowance and Fair Value Marks Information
Allowance and Fair Value Marks Information ($ MM) Allowance for Credit Losses & Fair Value Marks December 31, 2019 PCI Non-PCI Total ALLL RUFC Total ACL Allowance for credit losses - End of period $ 8 $ 1,541 $ 1,549 $ 340 $ 1,889 Unamortized fair value mark(1) 537 4,027 4,564 — 4,564 Allowance plus
Slide 25: Purchase Accounting Summary
Purchase Accounting Summary1 ($ MM) December 31, 2019 (2) PCI Loans and Leases Beginning balance unamortized fair value mark $ (152) Additions - Merger with SunTrust (425) Accretion 33 Interest reversal (19) Net charge offs 26 Ending balance $ (537) (2) Non-PCI Loans and Leases Beginning balance una
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 27: 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 $3,063 Me
Slide 28: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ 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 29: 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 30: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM, except per share data, shares in thousands) Quarter Ended December 31, 2019 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity(2) Net income - GAAP $ 726 Net income available
Slide 31: 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) (2) Revenue - 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 32: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended Dec. 31 2019 Net interest income - GAAP $ 2,227 Taxable-equivalent adjustment 25 Net interest income - taxable-equivalent 2,252 Accretion of mark, net of interest reversals - PCI loans (14) Accretion of mark on acquired non-PCI loans (130) Accre
Slide 33: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended Year-to-Date Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 2019 2019 2019 2019 2018 2019 Segment net interest income $ 27 $ 28 $ 25 $ 23 $ 22 $ 103 Noninterest income 536 491 570 515 496 2,112 Total revenue $ 563 $
Slide 34: To inspire and build better lives and communities
To inspire and build better lives and communities