Truist Financial Corporation · NYSE:TFC
Truist Financial — Q2 2023 Earnings Presentation
31 slides from Truist Financial's earnings presentation, Jul 20, 2023
Slide 1: Second Quarter 2023 Earnings Conference Call
Second Quarter 2023 Earnings Conference Call Bill Rogers – Chairman & CEO Mike Maguire – CFO July 20, 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: Financial Results
mlatclaterrs! Results
Slide 6: 2Q23 performance highlights
2Q23 performance highlights ($ in millions, except per share data) Summary Income Statement Commentary Change vs. Key areas of focus 2Q23 1Q23 2Q22 – Significant capital momentum and flexibility with completion of TIH minority stake sale, organic capital generation, and managed RWA growth GAAP / Una
Slide 7: Continued digital momentum
Continued digital momentum T3 (Touch + Technology = Trust) Connected Channel Experiences Deliver on Mobile App Users1 Zelle Transactions Deposit Acquisition, Retention, and Client Empowerment (in millions) (in millions) +31% New Account Quality – Digitally-originated +6% Truist One Checking average
Slide 8: Average loans & leases HFI
Average loans & leases HFI ($ in billions) 5-Quarter Trend vs. Linked Quarter – Average loans increased $352 million, or 0.1% from 1Q23 – Average commercial loans increased $1.6 billion, or 0.8%, due primarily to $326 $326 seasonally strong mortgage warehouse balances and ongoing traditional C&I $32
Slide 9: Average deposits
Average deposits ($ in billions) 5-Quarter Trend vs. Linked Quarter – Average deposits declined 2.1%, or $8.6 billion $424 – Noninterest-bearing deposits declined $7.4 billion, or 5.6% $420 $413 $408 – Represented 31% of total deposits $149 $146 $400 $141 $131 – Average interest-bearing checking dec
Slide 10: Net interest income & net interest margin
Net interest income & net interest margin ($ in millions) 5-Quarter Trend vs. Linked Quarter – Net interest income declined 6.1% due to higher funding costs – Partially offset by higher rates on earning assets $4,031 – Reported NIM declined 26 bps driven by: $3,919 $3,783 $94 – Acceleration of inter
Slide 11: Noninterest income
Noninterest income ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest income increased 2.6% due to record insurance revenue and higher other $2,293 income $2,248 $2,227 $2,234 – Partially offset by lower mortgage banking and investment banking and trading $2,102 revenue vs. Like Quarte
Slide 12: Noninterest expense
Noninterest expense ($ in millions) 5-Quarter Trend vs. Linked Quarter – Noninterest expense increased $57 million, or 1.5% – Adjusted noninterest expense2 increased $67 million, or 1.9%, due to higher variable comp and professional fees $3,722 $3,748 – Partially offset by lower operational losses $
Slide 13: Asset quality
Asset quality Increase in the loan loss reserve reflects normalization of asset quality Net Charge-Offs Provision for Credit Losses NCOs, excluding Student, increased 5 bps linked quarter reflecting higher commercial losses Provision increased slightly vs. 1Q23 due to higher NCOs and an updated econ
Slide 14: Commercial real estate (CRE) spotlight
Commercial real estate (CRE) spotlight CRE Represents 8.9% of Total Loans HFI Including Office at 1.6% 5-Quarter Total CRE Trends Multifamily 11.2% 30% 9.7% 8.9% 1.01% 8.1% 7.8% All other Total LHFI at 0.41% Office CRE Mix Retail 0.29% loans 6/30/23 CRE 18% 16% 0.07% 0.02% 91.1% ($322B) 0.49% 8.9% C
Slide 15: Significant capital momentum and flexibility
Significant capital momentum and flexibility ($ in billions) Truist’s CET1 Increased by 0.5% in 2Q23 and has Continuing Momentum and Flexibility AOCI Burn Down4 Truist continues to build capital and maintains significant strategic flexibility with AOCI should decrease by 36% by the end of 2026 its r
Slide 16: 3Q23 and 2023 outlook
3Q23 and 2023 outlook ($ in billions) 2Q23 Actuals 3Q23 Outlook 13.9% Revenue (TE) $6.0 Down 4% compared to 2Q23 3Q23 Adjusted expenses $3.6 Down 0-1% Full Year 2022 Actuals Full Year 2023 Outlook Adjusted revenue (TE) $23.2 Up 1-2% Adjusted expenses $13.1 Up ~7% Full year 2023 full year 2022 compar
Slide 17: Investment thesis: Why Truist?
Investment thesis Leading Financial Performance Investing in the Future Exceptional Company – Targeting strong growth and profitability relative to peers Purpose-Driven Culture – Further modernize (with lower volatility) technology stack – Top 10 U.S. commercial – Disciplined risk and bank – Obsess
Slide 18: Appendix
Appendix
Slide 19: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail and Small Business Banking, Wealth, Mortgage Banking, and Consumer Finance Solutions Metrics Commentary – Net income of $931 million, down $51 million, or 5.2% vs. 1Q23 Income statement ($ MM) 2Q23 vs. 1Q23 vs. 2Q22 – Net interest income of
Slide 20: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking, CRE, Wholesale Payments, and Insurance Premium Finance Metrics Commentary – Net income of $880 million, down $120 million, or 12% vs. 1Q23 Income statement ($ MM) 2Q23 vs. 1Q23 vs.
Slide 21: Insurance Holdings
Insurance Holdings Represents performance for Truist Insurance Holdings’ Retail and Wholesale Divisions Metrics Commentary – Total segment revenue growth of 16% vs. 1Q23 Income statement ($ MM) 2Q23 vs. 1Q23 vs. 2Q22 – Driven by strong organic growth, prior year acquisition of BenefitMall, and Nonin
Slide 22: Purchase accounting summary
(1) Purchase accounting summary ($ in millions) As of/For the Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Loans and Leases(2) Beginning balance unamortized fair value mark $ (673) $ (741) $ (826) $ (924) $ (1,119) Accretion 63 64 80 96 189 Purchase accounting adj
Slide 23: Preferred dividend
Preferred dividend ($ in millions) 3Q23 4Q23 1Q24 2Q24 Estimated dividends based on projected interest rates $106 $77 $106 $77 and amounts outstanding ($ MM) Estimates assume forward-looking SOFR rates as of 6/30/23. Actual interest rates could vary significantly causing dividend payments to differ
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 25: Non-GAAP reconciliations: Diluted EPS
Non-GAAP reconciliations Diluted EPS ($ in millions, except per share data, shares in thousands) Quarter Ended Dec. 31 Sept. 30 June 30 2022 2022 2022 Net income available to common shareholders - GAAP $ 1,610 $ 1,536 $ 1,454 Merger-related and restructuring charges 87 48 92 Securities (gains) losse
Slide 26: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio ($ in millions) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Efficiency ratio numerator - noninterest expense - GAAP $ 3,748 $ 3,691 $ 3,722 $ 3,613 $ 3,580 Merger-related and restructuring charges, net (54) (63) (114) (62
Slide 27: Non-GAAP reconciliations: Pre-provision net revenue
Non-GAAP reconciliations Pre-provision net revenue ($ in millions) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Net income $ 1,345 $ 1,515 $ 1,682 $ 1,637 $ 1,532 Provision for credit losses 538 502 467 234 171 Provision for income taxes 287 394 337 363 372 Taxabl
Slide 28: 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 June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Common shareholders’ equity $ 56,853 $ 55,699 $ 53,841 $ 54,115 $
Slide 29: Non-GAAP reconciliations: Core NIM
Non-GAAP reconciliations Core NIM ($ in millions) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Net interest income - GAAP $ 3,625 $ 3,868 $ 3,981 $ 3,745 $ 3,407 Taxable-equivalent adjustment 54 51 50 38 28 Net interest income - taxable-equivalent 3,679 3,919 4,03
Slide 30: Non-GAAP reconciliations: Insurance Holdings adjusted EBITDA
Non-GAAP reconciliations Insurance Holdings adjusted EBITDA ($ in millions) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2023 2023 2022 2022 2022 Segment interest income $ 19 $ — $ — $ — $ — Noninterest income 944 817 792 731 830 Total revenue 963 817 792 731 830 Segment net income (loss)
Slide 31: To inspire and build better lives and communities
To inspire and build better lives and communities