Truist Financial Corporation · NYSE:TFC
Truist Financial — Q1 2020 Earnings Presentation
37 slides from Truist Financial's earnings presentation, Apr 20, 2020
Slide 1: First Quarter 2020 Earnings Conference Call
First Quarter 2020 Earnings Conference Call Kelly King - Chairman & CEO Daryl Bible - CFO APRIL 20, 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: 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 5: We Are Truist Financial Corporation
We Are Truist Financial Corporation 275+ combined years of serving our clients and communities 6th largest U.S. #2 weighted $506B commercial bank by assets average deposit assets and market value rank in Top 20 MSAs $324B loans $350B ~12 million households ~58,000 teammates deposits 5
Slide 6: Crisis Response
Crisis Response In response to the COVID-19 pandemic, Truist acted swiftly to support our communities, clients and teammates Clients Teammates ▪ Providing payment relief assistance including ▪ Awarded $1,200 coronavirus relief bonus to Truist forbearance, deferrals, extensions and re-aging (together
Slide 7: 1Q20 Highlights
1Q20 Highlights Summary Income Statement ($ MM) 1Q20 Asset Quality and Capital 1Q20 Total taxable-equivalent revenue1 $5,648 Nonperforming assets as a % of total assets 0.23% Provision for credit losses 893 Net charge-offs as a % of average loans and leases 0.36% Income before income taxes 1,287 Com
Slide 8: Selected Items Affecting 1Q20 Results
Selected Items Affecting 1Q20 Results Item Pre-Tax After-Tax Diluted EPS Impact ($ MM, except per share impact) Merger-related and restructuring charges $(107) $(82) $(0.06) Incremental operating expenses related to the merger1 $(74) $(57) $(0.04) COVID-19 impact2 $(71) $(54) $(0.04) 1 Includes cost
Slide 9: Loans & Leases
Loans & Leases 1Q20 Loans & Leases Held for Investment ($ MM) $400,000 6.00% 1Q20 Average 1Q20 End of 4Q19 End of 5.02% balance period period $124,269 $124,622 Commercial: $121,400 $200,000 4.00% Commercial and industrial $131,743 $149,161 $130,180 $171,268 $189,307 $169,339 CRE 27,046 27,532 26,832
Slide 10: Deposits
Deposits 1Q20 Deposits ($ MM) $400,000 1.00% 1Q20 Average 1Q20 End of 4Q19 End of $334,649 $350,179 $334,727 balance period period 0.75% $200,000 Noninterest-bearing deposits $93,135 $97,618 $92,405 0.70% 0.50% 0.51% Interest checking 85,008 92,950 85,492 $— 1Q20 Average 1Q20 End of 4Q19 End of Mone
Slide 11: Net Interest Income and Interest Rate Sensitivity
Net Interest Income and Interest Rate Sensitivity Net Interest Income and Margin Key Points ▪ Reported NIM for 1Q20 was 3.58%; increased 17 bps vs. 4Q19 $4,000 4.00% primarily due to a full quarter of purchase accounting accretion, partly $3,687 offset by a decline in the core NIM 3.50% ▪ Core NIM f
Slide 12: Noninterest Income
Noninterest Income 1Q20 Noninterest Income ($ MM) $2,000 60% $1,961 Insurance income $549 $1,000 40% Service charges on deposits 305 Wealth management income 332 34.9% Card and payment related fees 187 $— 20% 1Q20 Residential mortgage income 245 Noninterest income ($ MM) Fee income ratio (%) Investm
Slide 13: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency $4,500 80% 1Q20 Noninterest Expense ($ MM) Personnel expense $1,972 $3,000 $3,431 70% Net occupancy expense 221 61.1% Professional fees and outside processing 247 $1,500 60% 53.4% Software expense 210 $— 50% Equipment expense 116 1Q20 Marketing and customer developme
Slide 14: Asset Quality
Asset Quality Net Charge-offs Nonperforming Assets $320 1.00% $1,600 1.00% $272 $1,177 $160 0.50% $800 0.50% 0.23% 0.36% $— —% $— —% 1Q20 1Q20 Net charge-offs ($ MM) as % of avg. loans and leases Nonperforming assets ($ MM) as a % of total assets Loss Absorbency Key Points $9,000 4.00% ▪ Asset quali
Slide 15: Selected Credit Exposures
Selected Credit Exposures A Highly Diversified Portfolio Outstandings % of Key Points as of March 31, 2020 ($ in B) Total Loans HFI ▪ Oil and gas portfolio: Hotels, resorts and cruise lines $6.6 2.1 % ▪ 40% upstream Oil and gas portfolio 5.9 1.8 • 43% midstream Senior care 5.6 1.8 • 9% downstream Ac
Slide 16: Current Expected Credit Loss Roll Forward
Current Expected Credit Loss Roll Forward 12/31/2019 Incurred Loss Allowance for Credit Losses ($ in MM) $6,000 2.50% ▪ ACL of $1.9 billion or 0.63% based on the incurred loss method; purchase $582 accounting marks supplanted the ALLL on the merged SunTrust loans, which $5,611 reduced the ACL covera
Slide 17: CECL Loss Estimation Approach
CECL Loss Estimation Approach Modeled Approach ▪ Borrower and portfolio-segment level loss forecasting models designed to estimate probability of default, loss given default, payoff/prepayments, etc. ▪ Two year reasonable and supportable period followed by one year reversion to historic loss conditi
Slide 18: Capital Position
Capital Position 1 Common Equity Tier 1 Ratio Key Points 10% 9.3% ▪ The CET1 ratio1 was 9.3% for 1Q20 ▪ The dividend and total payout ratios were 61.4% for 1Q20 5% ▪ Management is taking a prudent approach to capital management given economic uncertainty; augmented the 2020 CCAR submission with a CO
Slide 19: Stressed Loss Resiliency
Stressed Loss Resiliency 2018 Stress Test Results - Severely Adverse Scenario Loss Absorbency CCAR (Planned DFAST 1Q20 Capital Actions) (Dividends Only) Reserves Credit Reserves as a Beginning Min Levels Min Levels Loan Loss Key Points Firm Erosion Erosion Reserves % of Stress 4Q17 CET1 CET1 ($ B) (
Slide 20: Liquidity Position
Liquidity Position Category III Reduced LCR 1 Key Points 150% ▪ Liquidity ratios remain strong and include an average LCR1 of 117% for 1Q20 and a liquid asset buffer of 19.6% at 03/31/20 100% 117% ▪ Management took quick action in response to COVID-19 to term out short-term borrowings and increase c
Slide 21: Merger Update and Medium-Term Targets
Merger Update and Medium-Term Targets Accomplishments Performance Net Targets Expense ▪ Introduced the Truist visual identity and logo Savings ▪ Completed 32 culture town hall meetings ROTCE Adjusted Cost Saves ▪ Completed purchase of Truist Center, our corporate HQ building Efficiency ▪ Launched th
Slide 22: Value Proposition
Value Proposition Purpose-driven: Committed to inspire and build better lives and communities Growing earnings stream with less volatility relative to Exceptional franchise with diverse Uniquely positioned to deliver Strong capital and liquidity with resilient peers over the products, services, and
Slide 23: Appendix
Appendix
Slide 24: Consumer Banking & Wealth
Consumer Banking & Wealth Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services and National Consumer Finance & Payments 1Q20 Key Points ▪ Continued focus on revenue and expense synergies as businesses are Net interest income $2,248 integrated Income S
Slide 25: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking and CIG – Real Estate 1Q20 Key Points ▪ 1Q performance meaningfully impacted by market disruption tied to Net interest income $1,340 COVID-19 ▪ End of period loans HFI were up $18.9
Slide 26: Insurance Holdings
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance 1Q20 Key Points Net interest income $25 ▪ 1Q organic growth driven by strong fundamentals - continued economic expansion, exposure unit growth and increasing insurance Income Statement ($ MM)
Slide 27: Allowance and Fair Value Marks Information
Allowance and Fair Value Marks Information ($ MM) March 31, 2020 Loans and RUFC Total Allowance for Credit Losses & Fair Value Marks Leases Allowance for credit losses - End of period $ 5,211 $ 400 $ 5,611 Unamortized fair value mark(1) 3,539 — 3,539 Allowance plus unamortized fair value mark $ 8,75
Slide 28: Purchase Accounting Summary
Purchase Accounting Summary1 ($ MM) March 31, 2020 December 31, 2019 (2) Loans and Leases Beginning balance unamortized fair value mark $ (4,564) $ (221) Additions - Merger with SunTrust — (4,513) Accretion 454 170 CECL adoption - reserves on PCD assets 378 — Adjustments and other additions 193 — En
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 30: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2020 2019 2019 2019 2019 Net income available to common shareholders - GAAP $986 $702 $735 $842 $749 Merger-related and restructuring charges 82 176 26 19
Slide 31: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended March 31 Dec. 31 Sept. 30 June 30 March 31 2020 2019 2019 2019 2019 Efficiency ratio numerator - noninterest expense - GAAP $ 3,431 $ 2,575 $ 1,840 $ 1,751 $ 1,768 Merger-related and restructuring charges, net (107) (223) (34) (23) (80)
Slide 32: 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 March 31 Dec. 31 Sept. 30 June 30 March 31 2020 2019 2019 2019 2019 Common shareholders' equity $ 61,295 $ 61,282 $ 29,177 $ 28,650 $ 27,770 L
Slide 33: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended March 31, 2020 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity(2) Net income - GAAP $ 1,063 Net income available to common shareholders - GAAP $ 986 $ 986 Me
Slide 34: Non-GAAP Reconciliations: Operating Leverage
Non-GAAP Reconciliations Operating Leverage(1) ($ MM) Quarter Ended March 31 Dec. 31 March 31 % Growth 1Q20 vs. 2020 2019 2019 4Q19 1Q19 (annualized) (2) Revenue - GAAP $ 5,611 $ 3,625 $ 2,898 220.2 % 93.6 % Taxable equivalent adjustment 37 25 24 Securities (gains) losses, net 2 116 — Gain (loss) on
Slide 35: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended March 31 Dec. 31 2020 2019 Net interest income - GAAP $ 3,650 $ 2,227 Taxable-equivalent adjustment 37 25 Net interest income - taxable-equivalent 3,687 2,252 Accretion of mark, net of interest reversals - PCI loans NA (14) Accretion of mark on
Slide 36: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended March 31 2020 Segment net interest income $ 25 Noninterest income 557 Total revenue $ 582 Segment net income (loss) - GAAP $ 105 Provision (benefit) for income taxes 36 Depreciation & amortization 19 EBITDA 160 Merger-r
Slide 37: To inspire and build better lives and communities
To inspire and build better lives and communities