Truist Financial Corporation · NYSE:TFC
Truist Financial — Q4 2020 Earnings Presentation
38 slides from Truist Financial's earnings presentation, Jan 21, 2021
Slide 1: Fourth Quarter 2020 Earnings Conference Call
Fourth Quarter 2020 Earnings Conference Call Kelly King - Chairman & CEO Bill Rogers - President & COO Daryl Bible - CFO January 21, 2021
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 Mission Stakeholders Optimize long-term value for stakeholders through safe, sound and ethical practices. Clients Teammates f Provide distinctive, secure and i Create an inclusive and successful client experiences | energizing environment that t
Slide 5: Living Our Purpose
Living Our Purpose Despite the many challenges of 2020, we were guided by our purpose to inspire and build better lives and communities Launched Seeds of Hope, Truist One Team Fund, Increased financial resources for LMI communities and The Home Page program through our $60 billion Community Benefits
Slide 6: Executing the Merger
Executing the Merger Accomplishments 2021 Integration Priorities ▪ Activated Truist culture ▪ Complete Wealth brokerage conversion ▪ Established brand and visual identity ▪ Align Wealth teammates under common Salesforce platform ▪ Integrated heritage capital markets businesses to go to market as Tru
Slide 7: 4Q20 Highlights
4Q20 Highlights Summary Income Statement ($ MM) 4Q20 Asset Quality and Capital 4Q20 Total taxable-equivalent revenue1 $5,679 Nonperforming assets as a % of total assets 0.27% Provision for credit losses 177 Net charge-offs as a % of average loans and leases 0.27% Income before income taxes 1,641 Com
Slide 8: Selected Items Affecting 4Q20 Results
Selected Items Affecting 4Q20 Results Item Pre-Tax After-Tax Diluted EPS Impact2 ($ MM, except per share impact) Merger-related and restructuring charges ($308) ($237) ($0.18) Incremental operating expenses related to the merger1 ($179) ($138) ($0.10) 1 Includes costs not classified as merger-relate
Slide 9: Digital First Migration
Digital First Migration Consumer Migration Waves 1Q21 2Q21 3Q21 4Q21 Two leading digital Pilot of the new Truist digital Client migrations to Truist Migration complete to the experiences experience experience in waves premier Truist experience 9
Slide 10: Digital Acceleration
Digital Acceleration Digital Commerce Growth Active Mobile App Users T3 Highlights from 4Q20 664K 3.90MM SunTrust: New Digital Experience 528K 3.48MM ▪ Rolled out new SunTrust business online and mobile experience, a digital platform for small business and emerging commercial clients ▪ Mobile experi
Slide 11: Loans & Leases
Loans & Leases Average Loans & Leases HFI and Loan Yields Loans & Leases Held for Investment ($ MM) Linked Average balances 3Q20 4Q20 Quarter $128,164 $126,744 Change $129,803 $124,590 Commercial: $193,465 $183,700 $178,270 $171,268 Commercial and industrial $143,452 $139,223 ($4,229) 5.02% 4.21% 4.
Slide 12: Deposits
Deposits Average Deposits & Costs Deposits ($ MM) $370,818 $372,211 $375,266 Linked Average balances 3Q20 4Q20 Quarter $334,649 Change 0.70% Noninterest-bearing deposits $123,966 $127,103 $3,137 0.32% 0.15% Interest checking 96,707 99,866 3,159 0.51% 0.11% Money market and savings 123,598 124,692 1,
Slide 13: Net Interest Income and Interest Rate Sensitivity
Net Interest Income and Interest Rate Sensitivity Net Interest Income and Margin Key Points $3,687 ▪ Reported NIM decreased 2 bps sequentially to 3.08% $3,479 $3,391 $3,394 3.58% • Purchase accounting accretion contributed 36 bps vs. 38 bps in 3Q20 3.13% ▪ Core NIM of 2.72% was unchanged vs. 3Q20; k
Slide 14: Noninterest Income
Noninterest Income Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) Linked $2,423 3Q20 4Q20 Quarter $2,210 $2,285 Change $1,961 Insurance income $518 $545 $27 41.3% 39.7% 40.4% 34.9% Service charges on deposits 247 266 19 Wealth management income 324 332 8 1Q20 2Q20 3Q20 4Q20 Card and
Slide 15: Noninterest Expense & Efficiency
Noninterest Expense & Efficiency Noninterest Expense & Efficiency Noninterest Expense ($ MM) Linked $3,878 $3,755 $3,833 3Q20 4Q20 Quarter $3,431 67.4% 67.8% Change 66.1% 61.1% Personnel expense $2,058 $2,108 $50 55.8% 57.3% 55.9% Net occupancy expense 233 207 (26) 54.6% Professional fees and outsid
Slide 16: Merger Cost Update
Merger Cost Update Anticipated Total Merger Costs Through 2022 (Not in Run Rate Thereafter) Merger-Related and Restructuring Charges (Expenses to complete merger with no future benefit) Severance & comp Estimated Total Occupancy & equipment Professional services ~$2.1B ($1.2B incurred since 1Q19) Sy
Slide 17: Asset Quality
Asset Quality Key Points Net Charge-offs and Provision Nonperforming Assets ▪ Asset quality metrics remained relatively stable compared with $1,387 3Q20, reflecting diversification benefits of the merger and $893 $1,314 $844 $1,177 $1,252 effective problem asset resolution 0.26% 0.27% ▪ Criticized a
Slide 18: Allowance for Credit Losses
Allowance for Credit Losses Allowance for Credit Losses ($ in MM) Key Points Highlights ▪ 4Q20 ACL of $6.2 billion or 2.07% (2.15% excluding PPP loans); $30 million sequential quarter decrease and $1.2 billion increase since adopting CECL on January 1, 2020 $6,133 $6,229 $6,199 ▪ Reserve considers:
Slide 19: Capital and Liquidity Position
Capital and Liquidity Position Capital Ratios Key Points 14.6% 14.5% ▪ CET1 ratio remained unchanged at 10.0% and was 9.3% on a fully 14.0% 12.7% 12.2% 12.1% phased-in basis 11.6% 10.5% ▪ Declared 4Q20 common dividend of $0.45 per share; dividend and 9.3% 9.7% 10.0% 10.0% total payout ratios were 49
Slide 20: Committed to Achieving Net Cost Saves
Committed to Achieving Net Cost Saves Third Party Spend Retail Banking Non-Branch Facilities Technology Personnel1 Significantly ahead of Driven by branch Targeting ~4.8MM Driven by integration Avg. FTEs decreased by target for contracted closures net sq. ft.reduction; efforts, applications, ~8% at
Slide 21: Cost Saves Progress
Cost Saves Progress Medium-Term Performance Targets 4Q20 Core Expenses Relative to Targeted Savings ($ in millions) ROTCE Adjusted CET1 $3,500 Targeted level of Efficiency core expenses $3,174 $3,040 Low 20% Low 50% 10% $3,000 $(69) $(35) $(33) $3,037 Net Expense Savings - Run Rate1 $2,500 $2,000 4Q
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 3Q20 4Q20 Key Points ▪ 104 branches closed, with 1 new branch opened, for a net of 103 branches Net interest income $2,193 $2,195 c
Slide 25: Corporate & Commercial Banking
Corporate & Commercial Banking Represents performance for Commercial Community Banking, Corporate & Investment Banking and CIG – Real Estate 3Q20 4Q20 Key Points ▪ Noninterest income increased $180 million, or 30% from 3Q20, driven Net interest income $1,277 $1,283 by higher investment banking and t
Slide 26: Insurance Holdings Performance
Insurance Holdings Represents performance for Retail and Wholesale Insurance businesses and Premium Finance 4Q19 3Q20 4Q20 Key Points Net interest income $27 $24 $22 ▪ 4Q20 organic growth driven by continued market firming, shrinking carrier capacity, and stable exposure units Income Statement ($ MM
Slide 27: Purchase Accounting Summary
(1) Purchase Accounting Summary ($ MM) As of/For the Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 2019 Loans and Leases(2) Beginning balance unamortized fair value mark $ (2,676) $ (3,077) $ (3,539) $ (4,564) $ (221) Additions - merger with SunTrust — — — — (4,513) Acc
Slide 28: Selected Credit Exposures
Selected Credit Exposures A Highly Diversified Portfolio Outstandings % of Total Key Points as of 12/31/20 ($ B) Loans HFI ▪ Loan balances for COVID-19 impacted industries decreased $0.7 billion or Hotels, Resorts & Cruise Lines* $6.5 2.2 % 2.6% from 3Q, ending at $27.1 billion Senior Care 6.2 2.1 ▪
Slide 29: 1Q21 - 3Q21 Preferred Stock Projected Dividends
1Q21 - 3Q21 Preferred Stock Projected Dividends Truist Preferred Outstandings ($ MM) 1Q21 2Q21 3Q21 Series F $450.0 $5.9 — — Series G $500.0 $6.5 — — Series H $465.0 $6.5 $6.5 $6.5 Series I $172.5 $1.7 $1.8 $1.8 Series J $101.5 $1.0 $1.0 $1.0 Series L $750.0 — $18.9 — Series M $500.0 — $12.8 — Serie
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations
Slide 31: Non-GAAP Reconciliations: Diluted EPS
Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 2019 Net income available to common shareholders - GAAP $ 1,228 $ 1,068 $ 902 $ 986 $ 702 Merger-related and restructuring charges 237 1
Slide 32: Non-GAAP Reconciliations: Efficiency Ratio
Non-GAAP Reconciliations Efficiency Ratio ($ MM) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 2019 Efficiency ratio numerator - noninterest expense - GAAP $ 3,833 $ 3,755 $ 3,878 $ 3,431 $ 2,575 Merger-related and restructuring charges, net (308) (236) (209) (107) (223
Slide 33: 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 2020 2020 2020 2020 2019 Common shareholders' equity $ 62,759 $ 61,819 $ 61,634 $ 61,295 $ 61,282 Le
Slide 34: Non-GAAP Reconciliations: Performance Ratios
Non-GAAP Reconciliations Performance Ratios ($ MM) Quarter Ended December 31, 2020 Return on Average Return on Average Return on Average Common Tangible Common Assets Shareholders’ Equity Shareholders’ Equity2 Net income - GAAP $ 1,330 Net income available to common shareholders - GAAP $ 1,228 $ 1,2
Slide 35: Non-GAAP Reconciliations: Core NIM
Non-GAAP Reconciliations Core NIM ($ MM) Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 2019 Net interest income - GAAP $ 3,366 $ 3,362 $ 3,448 $ 3,650 $ 2,227 Taxable-equivalent adjustment 28 29 31 37 25 Net interest income - taxable-equivalent 3,394 3,391 3,479 3,687 2
Slide 36: Non-GAAP Reconciliations: Insurance Holdings Adjusted EBITDA
Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) Quarter Ended Dec. 31 Sept. 30 Dec. 31 2020 2020 2019 Segment net interest income $ 22 $ 24 $ 27 Noninterest income 562 524 536 Total revenue $ 584 $ 548 $ 563 Segment net income (loss) - GAAP $ 99 $ 77 $ 59 Provision (benefit) for i
Slide 37: Non-GAAP Reconciliations: Allowance with Fair Value Marks
Non-GAAP Reconciliations Allowance with Fair Value Marks ($ MM) As of/For the Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2020 2020 2020 2020 2019 ALLL $ 5,835 $ 5,863 $ 5,702 $ 5,211 $ 1,549 Unamortized fair value mark (1) 2,395 2,676 3,077 3,539 4,564 Allowance plus unamortized fair va
Slide 38: To inspire and build better lives and communities
To inspire and build better lives and communities