Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Q4 2018 Earnings Presentation
27 slides from Truist Financial's earnings presentation, Jan 17, 2019
Slide 1: Fourth Quarter 2018 Earnings Conference Call
Fourth Quarter 2018 Earnings Conference Call January 17, 2019 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 1995, regarding the financial condition, results of operations, business plans and the future performance of BB&T. Forward- looking statements are
Slide 3: 2018 fourth quarter performance highlights
2018 fourth quarter performance highlights1 ▪ Net income2 was $754 million, up 22.8% vs. 4Q17; net income2 excluding merger-related and restructuring charges was a record $813 million Growing ▪ Diluted EPS was $0.97, up 26.0% vs. 4Q17; adjusted diluted EPS was a record $1.05, up Earnings 25.0% vs. 4
Slide 4: Selected item affecting earnings
Selected item affecting earnings Diluted EPS ($ in millions, except per share impact) Pre-Tax After-TaxDiluted EPSImpact Pre -Tax After Tax Impact Merger-related and restructuring charges $ (76) $ (59) $ (0.08) 4
Slide 5: Average loans held for investment grew 3.6% annualized vs. 3Q18
Average loans held for investment grew 3.6% annualized vs. 3Q18 Average Loans Held for Investment Average Loans Held for Investment ($ in billions) ($ in millions) 4Q18 v. 3Q18 $150.0 $147.5 $146.2 4Q18 Annualized $144.1 $142.7 $142.9 Average Increase Balance (Decrease) $140.0 Commercial: C&I $ 60,5
Slide 6: Interest checking and time deposits support total deposit growth
Interest checking and time deposits support total deposit growth Average Total Deposits Average Deposits ($ in billions) ($ in millions) $160.0 4Q18 v. 3Q18 $158.0 $157.1 $157.7 $157.3 $157.8 0.90% 4Q18 Annualized Average Increase 0.78% 0.70% Balance (Decrease) $140.0 0.66% Noninterest-bearing depos
Slide 7: Asset quality remains excellent
Asset quality remains excellent Annualized Net Charge-offs / Average Loans ▪ Credit quality results reflect seasonality 0.60% – Net charge-offs totaled $143 million, up 3 bps as a percent of average loans vs. 3Q18 and up 2 bps vs. 0.41% 0.38% 4Q17 0.40% 0.36% 0.35% 0.30% – Loans 90 days or more past
Slide 8: Allowance coverage ratios remain strong
Allowance coverage ratios remain strong ALLL Coverage Ratios ▪ Coverage ratios remain strong at 2.76x and 2.99x for the allowance to net charge-offs 3.49x 3.50x and NPLs, respectively ▪ The ALLL to loans ratio remained at 1.05% 3.05x 2.99x – Excluding loans acquired in business 3.00x 2.89x acquisiti
Slide 9: Net interest margin increase reflects asset-sensitivity
Net interest margin increase reflects asset-sensitivity Net Interest Margin ▪ 4Q18 reported and core NIM increased 2 bps and 3 bps, respectively, vs. 3Q18 3.55% 3.47% 3.49% 3.43% 3.44% 3.45% – Core margin increased due to asset-sensitivity to 3.45% the September rate hike 3.35% 3.40% 3.37% – Total i
Slide 10: Fee income fundamentals remain strong
Fee income fundamentals remain strong Fee Income Ratio Noninterest Income ($ in millions)1 45.0% 4Q18 v. 4Q18 v. 3Q18 4Q17 44.0% Increase Increase 4Q18 (Decrease) (Decrease) 42.7% 43.0% 42.5% 42.3% Insurance income $ 487 34.5 % 16.5% 41.9% 42.0% 42.0% Service charges on deposits 185 4.3 1.1 41.0% Mo
Slide 11: Strong expense management
Strong expense management Efficiency Ratio Noninterest Expense ($ in millions) 2 70.0% 4Q18 v. 4Q18 v. 64.7% 3Q18 4Q17 60.7% Increase Increase 60.0% 59.7% 59.5% 4Q18 (Decrease) (Decrease) 60.0% Personnel expense $ 1,096 (2.9)% 2.2 % 57.2% 57.3% 57.4% 57.3% 56.5% Occupancy and equipment expense 188 (
Slide 12: Capital, liquidity and payout ratio remain strong
Capital, liquidity and payout ratio remain strong Common Equity Tier 1 ▪ 4Q18 dividend payout ratio was 41.1% 10.5% ▪ 4Q18 total payout ratio was 90.8% 10.2% 10.2% 10.2% 10.2% 10.2% ▪ Completed $375 million in share repurchases in 4Q18 ▪ Plan to repurchase $425 million in shares in 10.0% 1Q19 ▪ Liqu
Slide 13: Community Banking Retail and Consumer Finance
Community Banking Retail and Consumer Finance Revenue ($ in millions) Average Loans5 ($ in billions) $1,303 $1,320 $65.4 $66.0 $1,253 $1,225 $1,277 $63.6 $62.8 $63.5 $58 $2.8 $2.9 $3.1 $68 $56 $2.8 $2.8 $5.9 $5.9 $75 $77 $135 $135 $5.5 $5.3 $5.6 $128 $134 $125 $115 $118 $13.0 $13.1 $116 $99 $112 $13
Slide 14: Community Banking Commercial
Community Banking Commercial Revenue ($ in millions) Average Loans ($ in billions) $52.3 $52.6 $52.6 $52.6 $703 $51.6 $680 $2.0 $2.0 $2.0 $2.1 $2.4 $653 $640 $655 $50 $45 $48 $47 $46 $62 $62 $62 $60 $62 $19.5 $19.7 $19.7 $19.6 $19.4 $591 $546 $534 $545 $571 $30.1 $30.6 $30.9 $30.9 $30.8 4Q17 1Q18 2Q
Slide 15: Financial Services and Commercial Finance
Financial Services and Commercial Finance Revenue ($ in millions) Average Loans2 ($ in billions) $534 $505 $494 $478 $491 $28.1 $81 $26.4 $26.9 $27.2 $27.3 $87 $2.0 $93 $80 $87 $28 $1.8 $1.9 $1.9 $1.9 $1.6 $28 $1.5 $1.5 $1.5 $1.6 $1.9 $34 $30 $31 $1.6 $1.7 $1.9 $1.9 $139 $116 $111 $113 $108 $77 $75
Slide 16: Insurance Holdings
Insurance Holdings Adjusted EBITDA1 ($ in millions) Revenue ($ in millions) 23.7% 24.5% $518 22.0% $506 $19 18.3% $19 17.0% $475 $459 $447 $19 $19 $19 $120 $127 $101 $87 $76 $215 $258 $232 $198 $221 4Q17 1Q18 2Q18 3Q18 4Q18 n 1 Adjusted EBITDA — Adjusted EBITDA Margin Other Segment Highlights ($ in
Slide 17: 1Q19 and full-year 2019 outlook
1Q19 and full-year 2019 outlook Category 1Q19 Average total loans held for investment Up 1% - 3% annualized vs. 4Q18 Credit quality NCOs expected to be 35 - 45 bps GAAP relatively flat vs. 4Q18 Net interest margin Core NIM up slightly vs. 4Q18 Noninterest income1 Up 3% - 5% vs. 1Q18 Expenses1,2 Up 1
Slide 18: Slide 18
Slide 19: Appendix
Appendix
Slide 20: Supplemental information: Purchase accounting summary
Supplemental information Purchase accounting summary (Dollars in millions) Acc. Yield PA Mark Acquired Loans1 Non-PCI Loans2 Liabilities3 Securities4 Balance, September 30, 2018 $ (308) $ (116) $ (16) $ (367) Net interest income: Normal accretion/amortization 18 9 2 1 Cash recoveries/early payoffs 8
Slide 21: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio (Dollars in millions) Quarter Ended Year-to-Date Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Dec. 31 Dec. 31 2018 2018 2018 2018 2017 2018 2017 Efficiency ratio numerator - noninterest expense - GAAP $ 1,784 $ 1,742 $ 1,720 $ 1,686 $ 1,855 $ 6,932 $ 7,444 Amor
Slide 22: Non-GAAP reconciliations: Tangible common equity and related measures
Non-GAAP reconciliations Calculations of tangible common equity and related measures (Dollars in millions, except per share data, shares in thousands) As of / Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2018 2018 2018 2018 2017 Common shareholders' equity $ 27,069 $ 26,895 $ 26,727 $ 26,
Slide 23: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM (Dollars in millions) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2018 2018 2018 2018 2017 Net interest income - GAAP $ 1,705 $ 1,687 $ 1,657 $ 1,633 $ 1,644 Taxable-equivalent adjustment 24 27 22 23 38 Net interest income - taxable-equivalent 1,729 1,71
Slide 24: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS (Dollars in millions, except per share data, shares in thousands) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 YTD Dec. 31 2018 2018 2018 2018 2017 2018 2017 Net income available to common shareholders - GAAP $ 754 $ 789 $ 775 $ 745 $ 614 $ 3,063 $ 2,2
Slide 25: Non-GAAP reconciliations: Operating leverage
Non-GAAP reconciliations Operating leverage1 (Dollars in millions) Quarter Ended Dec. 31 Sept. 30 Dec. 31 % Growth 4Q18 vs. 2018 2018 2017 3Q18 4Q17 (annualized) Revenue2 - GAAP $ 2,940 $ 2,926 $ 2,869 1.9% 2.5% Taxable equivalent adjustment 24 27 38 Securities (gains) losses, net (2) — 1 Revenue2 -
Slide 26: Non-GAAP reconciliations: Performance ratios
Non-GAAP reconciliations Performance ratios (Dollars in millions, except per share data, shares in thousands) Quarter Ended December 31, 2018 Common Tangible Assets Equity Common Equity2 Net income - GAAP $ 805 Net income available to common shareholders - GAAP $ 754 $ 754 Merger-related and restruc
Slide 27: Non-GAAP reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings Adjusted EBITDA (Dollars in millions) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2018 2018 2018 2018 2017 Segment net interest income $ 22 $ 23 $ 22 $ 20 $ 19 Noninterest income 496 452 484 439 428 Total revenue $ 518 $ 475 $ 506 $ 459 $ 447 S