Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Investor Presentation (August 2018)
51 slides from Truist Financial's investor presentation, Aug 7, 2018
Slide 1: Investor Presentation Third Quarter 2018
Investor Presentation Daryl N. Bible Third Quarter 2018
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: Well-Positioned for the Future
Well-Positioned for the Future . Differentiated businesses driving top-tier operating performance . Diversification produces stable, consistent and growing earnings . Achieving targeted cost savings / intense focus on expenses . “Disrupt or Die” – investing in our company . Client first mentality .
Slide 4: BB&T Corporation: A Growing Franchise
BB&T Corporation: A Growing Franchise 8th Largest U.S. Financial Institution1 # of Deposits1 Deposit State Branches3 ($bn) Rank North Carolina2 319 $29.6 2 Virginia 303 23.2 4 Florida 288 18.0 7 Pennsylvania 232 13.7 6 Georgia 141 12.0 5 Maryland 152 10.0 6 South Carolina 99 8.1 3 Texas 115 6.3 14 K
Slide 5: Diversification Drives Revenue and Productivity
Diversification Drives Revenue and Productivity Superior Performance… PPNR/average assets 10-year average (2Q08 – 1Q18) Revenue Diversification by Segment* Insurance Holdings & Community Premium Bank – Retail 2.0% Finance 44% 1.6% 1.6% 17% BB&T National Largest Peers 4 Banks …With Less Volatility PP
Slide 6: Our Differentiating Businesses
Our Differentiating Businesses Diversification and Execution 6
Slide 7: Strategic Advantage: The BB&T Leadership Institute
Strategic Advantage The BB&T Leadership Institute The BB&T Leadership Institute provides organizations with a leadership development partner that helps create dynamic and effective leaders, increase employee retention and improve the bottom line. Beginning with each client's specific goals and chall
Slide 8: Strategic Advantage: BB&T Financial Insights
Strategic Advantage BB&T Financial Insights . The three-step BB&T Financial Insights plan is an in-depth financial analysis that offers innovative advice, ideas and solutions tailored to support a business’ unique goals and aspirations To learn more about BB&T Business Services, please visit BBT.com
Slide 9: 2018 Represents an Inflection Point
2018 Represents an Inflection Point 9
Slide 10: Investing in Our Businesses: Disrupt or Die
Investing in Our Businesses: Disrupt or Die Rationalize / Increased branch closures improve risk (148 in 2017 and 160-170 in 2018) management Optimize systems branch Voice of the Client Consistent network Substantially Small Business focus FTE reductions positive increase digital operating client se
Slide 11: Focused on Organic and Internal Priorities
Focused on Organic and Internal Priorities . Insurance Profitability . Community Bank – Commercial – Integrate Regions Insurance Group – Optimize credit delivery process – Pursue integrated retail operating model – Differentiate commercial services offerings – Automate back office operations • Finan
Slide 12: Focused on Reducing Expenses
Focused on…Reducing Expenses . FTE reductions . Back office consolidation . Continued rationalization of branch network and corresponding reinvestment strategies – 148 branches closed in 2017 – 160-170 branches to be closed in 2018 • Developing prospective 5 year optimization and reinvestment plan –
Slide 13: Digital Performance
Digital Performance Online Account Opening Percentage of Total Bank Production* Accolades Retail Checking Retail Savings Business Checking Bankcard Mortgage 7%7% 15% 6% 17%19% 21%21% 26%27% iOS Mobile App Rating 4.8 †† 20% -34% 14% 32% 70% *YTD 2018, Unit Sales Growth YOY Digital Users† Android Mobi
Slide 14: Primary Focus is Organic Growth; Acquisitions May Be Considered
BB&T’s Primary Focus is Organic Growth; However, Acquisitions May Be Considered That Benefit BB&T’s Shareholders . Strategic Fit: Quality institution, generally in the $20 billion to $30 billion asset size range . Culture: Target’s culture must be compatible with BB&T’s culture . Risk Appetite: Cons
Slide 15: Client First Strategy
BRST [] Client First Strategy
Slide 16: Enterprise Voice of the Client Program
Enterprise “Voice of the Client” Program Launched enterprise-wide VOC program in 2018 that provides near real-time aggregate and granular client feedback on a digital platform across multiple lines and multiple channels. VOC program enables dynamic data analytics that is leveraged to support the ong
Slide 17: Client First Solutions
Client First Solutions Established Client First Council with the Chief Client Experience Officer as the Executive Sponsor Six Sigma like team dedicated daily to discover, uncover and dissolve multi-channel client and associate challenges related to the client experience Driven to eliminate client fr
Slide 18: Virtual Banking Center (VBC)
Virtual Banking Center (VBC) VBC Objective: Enhance and deepen client relationships to improve client retention, expand household product penetration, ultimately resulting in increased revenue generation. Service to Sales Model The Virtual Banking Center Servicing clients who are a Interacting with
Slide 19: Maintaining a strong, conservative credit culture
Maintaining a strong, conservative credit culture
Slide 20: Differentiating Credit Risk Management Through the Next Cycle
Differentiating BB&T’s Credit Risk Management Through the Next Cycle Maintain alignment of Vision / Leverage analytical capabilities to Constantly innovate and re- Mission / Values with conservative enhance through-the-cycle conceptualize risk appetite performance (‘Disrupt or Die’ mentality) Cont
Slide 21: Loan Portfolio Consistently Outperformed Over Multiple Cycles
BB&T’s Loan Portfolio Consistently Outperformed Over Multiple Cycles… Risk Adjusted Loan Yield % (Yield – NCO) Risk Adjusted Loan Yield % (Yield – NCO) 14% 14% Tightening of peer performance 12% 12% occurred at ‘peak’ 10% 10% of last cycle BB&T Consistently All-time tightest 8% 8% Higher range for p
Slide 22: Consistent and Superior Risk / Return Positioning
BB&T’s Consistent and Superior Risk / Return Positioning (BB&T Risk / Return Positioning vs Peers (2014 DFAST) (BB&TBB&T Risk / ReturnRisk / PositioningReturn Positioning vs Peers (2018 vs DFAST)Peers (2018 DFAST) 2.25% (Higher Return, (Higher Return, Lower Risk) (Higher Return, (Higher Return, Lowe
Slide 23: CCAR 2018 vs 2017: More Resilient Capital Under Stress
CCAR 2018 vs 2017: More Resilient Capital Under Stress 158 22 55 Change to Minimum CET1 – CCAR 2018 Change to Minimum CET1 – CCAR 2017 252 184 USB BBT HBAN STI FITB PNC KEY CFG WFC RF MTB USB HBAN CMA WFC BBT KEY FITB STI PNC MTB CFG RF ZION 18 0.0% 0.0% -1.0% 161 -1.0% 146 -2.0% 141 -2.0% -3.0% 64
Slide 24: Second quarter performance recap
Second quarter performance recap
Slide 25: 2018 Second Quarter Performance Highlights
2018 Second Quarter Performance Highlights1 Record net income GAAP efficiency NPA ratio available to common ratio was 59.7% was 0.28% a shareholders totaled adjusted decrease of 3 bps vs. 2Q17 $775 million, efficiency ratio up 22.8% vs. 2Q17 was 57.4% in 2Q18 Diluted EPS Increased was a record Achie
Slide 26: BB&T is Defined by Top-Tier Performance
BB&T is Defined by Top-Tier Performance Return on Average Tangible Return on Average Assets NPAs / Assets Common Equity #4 out of 13 #2 out of 13 #1 out of 13 1.60% 0.60% 24.00% 1.52% BB&T GAAP = 1.49% BB&T GAAP = 19.78% 1.42% 0.50% 20.21% 1.40% 0.46% 20.00% 0.40% 16.31% 1.20% 16.00% 0.30% 0.28% 1.0
Slide 27: Noninterest-bearing Deposit Growth vs. Peers
Noninterest-bearing Deposit Growth vs. Peers 158 22 55 252 NIB DDA Growth (LQA) NIB DDA Growth (Like) 184 8.00% 6.00% 18 4.30% 4.00% 161 4.00% 146 2.60% 141 2.00% 0.00% 64 64 0.00% 64 -4.00% 179 -2.00% 161 198 -8.00% -4.00% 241 241 -12.00% 241 -6.00% -16.00% -8.00% BBT BBT Peer1 Peer2 Peer3 Peer4 Pe
Slide 28: Enhancing Our High Quality Core Deposit Base
Enhancing Our High Quality Core Deposit Base 158 22 Deposit Balances By Branch Census ($ in millions) 55 Branch Total Deposit Q2 Int Category Q2 total Growth Q2 Non Int NIB Growth Bearing IB Growth Yield 252 deposits (annualized) Bearing (annualized) Deposits (annualized) Q2 Yield Change 184 18 Urba
Slide 29: 3Q18 and Full-year 2018 Outlook
3Q18 and Full-year 2018 Outlook Category 3Q18 Average total loans Up 4% - 6% annualized vs. 2Q18 Credit quality NCOs expected to be 35 - 45 bps Net interest margin GAAP and core margins up slightly vs. 2Q18 Noninterest income3 Up 3% - 5% vs. 3Q17 Expenses1,3 Up 1% - 3% vs. 3Q17 Effective tax rate 20
Slide 30: Our Long-Term Performance Advantage
Our Long-Term Performance Advantage
Slide 31: Long-term Performance Advantage: Net Interest Margin
Long-term Performance Advantage 4.25% Net Interest Margin 3.75% 3.68% 3.46% 3.45% 3.42% 3.39% 3.32% 3.28% 3.28% 3.25% 3.15% 3.09% 2.98% 2.95% 2.75% 2013 2014 2015 2016 2017 1H18 BBT Peers Reflects fully taxable-equivalent Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
Slide 32: Long-term Performance Advantage: Efficiency Ratio
Long-term Performance Advantage Efficiency Ratio 70.0% 65.8% 65.2% 65.0% 63.4% 62.8% 62.5% 62.3% 63.1% 61.6% 59.9% 60.3% 59.8% 59.5% 60.0% 59.2% 59.7% 58.1% 57.8% 58.0% 57.4% 55.0% 2013 2014 2015 2016 2017 1H18 BBT GAAP BBT Adjusted Peers Source: S&P Global and company reports Peers include CFG, CMA
Slide 33: Long-term Performance Advantage: Return on Equity
Long-term Performance Advantage Return on Equity 19.57% 19.00% 16.26% 16.00% 14.68% 14.59% 13.99% 13.65% 13.34% 13.00% 13.69% 11.62% 11.53% 11.85% 11.07% 10.97% 11.59% 9.92% 10.00% 9.32% 8.71% 8.57% 8.07% 8.25% 9.11% 8.34% 8.23% 7.00% 7.88% 2013 2014 2015 2016 2017 1H18 BBT ROCE BBT ROTCE Peers ROCE
Slide 34: Strongest 5-Year DDA Growth Rate
Strongest 5-Year DDA Growth Rate Source: Company filings, Moody’s Investors Service 34
Slide 35: Strongest Shift in Deposit Mix
BB&T Has Seen the Strongest Shift in Deposit Mix 158 22 55 252 184 2012Y 2Q18 Change in Deposit Composition 18 Non-Interest Bearing Deposit Composition (%) Non-Interest Bearing Deposit Composition (%) MRQ vs. 2012Y (% Points) 161 CMA 42 CMA 53 BBT 12 146 ZION ZION CMA 141 38 45 10 MTB 35 RF 38 RF 7
Slide 36: Our Commitments
BRST Our Commitments
Slide 37: To make the world a better place to live
To make the world a better place to live by: . Helping our CLIENTS achieve economic success and financial security; . Creating a place where our ASSOCIATES can learn, grow and be fulfilled in their work; . Making the COMMUNITIES in which we work better places to be; and thereby: . Optimizing the lon
Slide 38: Committed to Our Associates
Committed to Our Associates A Strong Total Compensation Package Workers With Pension Coverage by Type of Plan 100% 1983 75% 71% 68% 1992 62% 2001 “Fewer than one in 10 corporate 2013 retirement plans match 5% of employees’ contributions dollar- 50% 44% for-dollar, according to the Plan 40% Sponsor C
Slide 39: Committed to Our Communities
Committed to Our Communities Lighthouse Project . Since 2009 we have completed more than 10,000 community service projects, provided more than 500,000 volunteer hours, and helped change the lives of more than 15 million people 39
Slide 40: Committed to Our Shareholders
Committed to Our Shareholders Top Tier Dividend Yield Dividend Yield as of 07/31/2018 4.00% 3.63% 3.50% 3.26% 3.19% 3.01% 3.00% 3.00% 2.71% Peer Median: 2.62% 2.55% 2.48% 2.43% 2.50% 2.32% 2.26% 2.22% 2.00% 1.85% 1.50% 1.00% 0.50% 0.00% HBAN KEY BBT RF WFC CFG PNC CMA FITB ZION USB STI MTB Source: N
Slide 41: Committed to Corporate Social Responsibility
Committed to Corporate Social Responsibility Environmental Sustainability . Bank-wide facilities initiatives Corporate paper recycling Many departments working towards paperless goals Purchase of copy paper recycled using sustainable forestry practices Environmentally-friendly janitorial cle
Slide 42: Credit Ratings Aligned with Best-in-Class Banks
BB&T’s Credit Ratings Aligned with Best-in-Class Banks 158 22 55 252 184 S&P Moody’s1 Fitch2 18 161 AA-/Aa3 146 141 A+/A1 64 64 64 A/A2 179 161 198 A-/A3 241 BBB+/ 241 Baa1 241 BBB/ Baa2 BBB-/ Baa3 Source: S&P, Moody’s and Fitch Reports 1. Excludes CFG, which is not rated by Moody’s 42 2. Excludes Z
Slide 43: Well-Positioned for the Future
Well-Positioned for the Future . Differentiated businesses driving top-tier operating performance . Diversification produces stable, consistent and growing earnings . Achieving targeted cost savings / intense focus on expenses . “Disrupt or Die” – investing in our company . Client first mentality .
Slide 44: A-44
A-44
Slide 45: PRL
r PRL BBS All we see
Slide 46: Appendix
BRST [] Appendix
Slide 47: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio (Dollars in millions) Quarter Ended June 30 2018 Efficiency ratio numerator - noninterest expense - GAAP $ 1,720 Amortization of intangibles (31 ) Merger-related and restructuring charges, net (24 ) Gain (loss) on early extinguishment of debt — Charitable co
Slide 48: Non-GAAP reconciliations: Operating leverage
Non-GAAP reconciliations Operating leverage1 (Dollars in millions) Quarter Ended June 30 March 31 June 30 % Growth 2Q18 vs. 2018 2018 2017 1Q18 2Q17 (annualized) Revenue2 - GAAP $ 2,879 $ 2,813 $ 2,855 9.4 % 0.8 % Taxable equivalent adjustment 22 23 40 Securities (gains) losses, net (1 ) — — Revenue
Slide 49: Non-GAAP reconciliations: Performance ratios
Non-GAAP reconciliations Performance ratios (Dollars in millions, except per share data, shares in thousands) Quarter Ended June 30, 2018 Tangible Assets Common Equity2 Net income - GAAP $ 822 Net income available to common shareholders - GAAP $ 775 Merger-related and restructuring charges 17 17 Amo
Slide 50: Non-GAAP reconciliations: Efficiency ratio
Non-GAAP reconciliations Efficiency ratio (Dollars in millions) 1H18 FY17 FY16 FY15 FY14 FY13 Efficiency ratio numerator - noninterest expense – GAAP $ 3,406 $ 7,444 $ 6,721 $ 6,266 $ 5,852 $ 5,777 Amortization of intangibles (64) (142) (150) (105) (91) (106) Merger-related and restructuring charges
Slide 51: Non-GAAP reconciliations: Return on Average Tangible Common Equity
Non-GAAP reconciliations Return on Average Tangible Common Equity Return on average tangible common equity 1H18 FY2017 FY2016 FY2015 FY2014 FY2013 Net income available to common shareholders $ 1,520 $ 2,220 $ 2,259 $ 1,936 $ 1,983 $ 1,563 Plus: Amortization of intangibles, net of tax 48 89 94 66 57