Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — BancAnalysts Association of Boston 34th Annual Fall Conference (November 2015)
35 slides from Truist Financial's conference presentation, Nov 5, 2015
Slide 1: BancAnalysts Association of Boston 34th Annual Fall Conference
BB&T BancAnalysts Association of Boston 34% Annual Fall Conference Daryl N. Bible Chief Financial Officer November 5, 2015
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 19 95, regarding the financial condition, results of operations, business plans and the future performance of BB&T that are based on the belie
Slide 3: BB&T is…
3 3 BB&T is… ▪ A values - driven highly profitable growth organization. While we have had a very successful merger history, our primary focus is on organic growth; nonetheless, we are well positioned for strategic opportunities. ▪ Our fundamental strategy is to deliver the best value proposition in
Slide 4: BB&T Corporation: A Growing Franchise
4 4 1 Excludes home office deposits 2 Number of branches per state as of August 18, 2015 3 Deposit Market Share data as of September 14, 2015 State # of Branches 2 Deposits 3,4 State Rank 4 North Carolina 1 356 $ 25.7 bn Virginia 359 $ 21.5 bn Florida 326 $ 15.8 bn Pennsylvania 4,5 294 $ 15.7 bn Geo
Slide 5: Seasonally Stronger Loan Growth
5 5 Seasonally Stronger Loan Growth 1 ▪ Average loan growth, excluding Susquehanna and The Bank of Kentucky, was 3.2% annualized and 6.7% excluding residential mortgage, vs. 2Q15 ▪ Experienced strong loan growth vs. 2Q15 in several categories (excludes acquisitions): Grandbridge, up 83.4% annualiz
Slide 6: Credit Portfolio Strategies
6 6 Credit Portfolio Strategies ▪ Portfolio strategy and limits process in place for several years designed to: Maximize through the cycle earnings - per - share and returns L imit earnings variability P rovide earnings resiliency E nsure revenue and earnings diversification ▪ Fastest loan g
Slide 7: Portfolio De-Risking and Re-positioning Largely Complete
7 7 Portfolio De - Risking and Re - positioning Largely Complete Source: Y - 9C via SNL, RMO Analytics and Business Intelligence. Excludes loans held for sale. BB&T Loan Portfolio Mix Improvement Over Time ▪ Less dependent on higher - risk portfolios Reduced Land and Construction allocation by 80%
Slide 8: Accelerating Growth in Risk/Return Advantaged Lending Platforms
8 8 Accelerating Growth in Risk / Return Advantaged Lending Platforms While Improving Diversification 1 Excludes sold portion of Lendmark and reflects QM transfer of loans from DRL to MLA 2 Excludes the impact of Susquehanna. See non - GAAP reconciliations included in the appendix All figures exclud
Slide 9: Improved Deposit Mix and Cost
9 9 Improved Deposit Mix and Cost $130.6 $130.3 $129.5 $131.9 $ 143.8 1 0.26% 0.25% 0.25% 0.24% 0.24% 0.20% 0.25% 0.30% 0.35% 0.40% $100.0 $110.0 $120.0 $130.0 $140.0 $150.0 3Q14 4Q14 1Q15 2Q15 3Q15 Total Interest-Bearing Deposit Cost ▪ Average deposits grew $1.2 billion, or 3.6% annualized, excludi
Slide 10: Credit Quality Remains Excellent
10 10 Credit Quality Remains Excellent 1 ▪ Loans 90 days or more past due and still accruing increased 42.9% vs. 2Q15 Excluding Susquehanna, loans 90 days or more past due decreased 10.5% 3 ▪ Loans 30 - 89 days increased 8.6% vs. 2Q15 Excluding Susquehanna, loans 30 - 89 days past due increased
Slide 11: Allowance Coverage Ratios Remain Strong
11 11 Allowance Coverage Ratios Remain Strong 2.67x 3.21x 3.60x 3.71x 3.44x 1.92x 2.39x 2.45x 2.55x 2.49x 0.00 1.00 2.00 3.00 4.00 5.00 3Q14 4Q14 1Q15 2Q15 3Q15 ALLL to Net Charge-offs ALLL to NPLs HFI ▪ Coverage ratios remain strong at 3.44x and 2.49x for the allowance to net charge - offs and NPLs
Slide 12: Net Interest Margin Increases Due to Purchase Accounting
12 12 Net Interest Margin Increases Due to Purchase Accounting 3.38% 3.36% 3.33% 3.27% 3.35% 3.20% 3.20% 3.18% 3.16% 3.15% 3.07% 3.02% 2.99% 2.98% 2.95% 2.75% 3.25% 3.75% 3Q14 4Q14 1Q15 2Q15 3Q15 Reported NIM Core NIM Peers ▪ 3 Q15 NIM increased 8 bps vs. 2Q15 as a result of: Purchase accounting i
Slide 13: Improving Rate Sensitivity
13 13 Improving Rate Sensitivity 0.97% 1.89% 2.71% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Up 50 bps Up 100 bps Up 200 bps Sensitivity of Net Interest Income ▪ Sensitivities based on parallel shift and conservative beta assumptions (60% average beta)
Slide 14: Growth in 2016 Net Interest Income and Net Interest Margin
14 14 Growth in 2016 Net Interest Income and Net Interest Margin ▪ Assuming no rate increases, core net interest margin is expected to remain relatively stable ▪ Assuming increases in rates, core net interest margin is expected to increase ▪ These expectations include more realistic betas with a 50%
Slide 15: Betas Are Conservative
15 15 Betas Are Conservative 50% 50% 55% ~55% - 65% 60% 70% 0% 20% 40% 60% 80% Peer 1 Peer 2 Peer 3 Peer 4 BBT Peer 5 Company Deposit Beta (Rate Pass - Through) Assumptions More aggressive More conservative Source: Goldman Sachs Equity Research Peers include FITB , HBAN, KEY, MTB, and RF ▪ Must also
Slide 16: Fixed vs. Variable Loan Trends
16 16 Fixed vs. Variable Loan Trends 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Fixed Variable
Slide 17: Leading Improvement in Deposit Mix Since 3Q12
17 17 Leading Improvement in Deposit Mix Since 3Q12 39.7% 16.8% 15.3% 14.3% 14.3% 13.4% 9.3% 6.6% 4.7% 1.7% - 2.9% -5.0% 10.0% 25.0% 40.0% BBT Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Non - Interest Bearing Mix Improvement 3Q12 YTD vs 3Q15 YTD Peers include CMA, FITB, H
Slide 18: Fee Income Outlook
18 18 Fee Income Outlook ▪ Insurance income will be seasonally stronger in 4Q15 2016 affected by: - New business growth - Industry leading retention levels - Softer insurance market - Sale of American Coastal in 2Q15 ▪ Residential mortgage banking income is expected to be seasonally softer in 4Q15
Slide 19: Noninterest Expense Reflects Acquisitions
19 19 Noninterest Expense Reflects Acquisitions 1 Excludes certain items as detailed in non - GAAP reconciliation section 2 Effective 1/1/15, BB&T retrospectively adopted new accounting guidance for Qualified Affordable Housing investments. Prior period infor mat ion has been revised to conform to t
Slide 20: Committed to Achieving Cost Savings Goals
20 20 Committed to Achieving Cost Savings Goals 2015 2016 core expense growth SUSQ savings NPBC savings 4Q16 assuming flat rate scenario 56% - 57% ex. rates $160 million 58% - 60% Efficiency $65 million * Efficiency reflects “cash” efficiency consistent with SNL’s definition. flat - to - up 2% 56% -
Slide 21: Capital and Liquidity Strength
21 21 Capital and Liquidity Strength 10.5% 10.6% 10.5% 10.4% 10.1% 9.0% 10.0% 11.0% 3Q14 4Q14 1Q15 2Q15 3Q15 ▪ Committed to a peer - group leading dividend ▪ The Susquehanna transaction used approximately 0.6% in Common Equity Tier 1 capital ▪ The fully phased - in Common Equity Tier 1 ratio was 9.8
Slide 22: Introducing: U by BB&T
22 22 Introducing: U by BB&T ▪ Personalize the platform user interface ▪ Schedule appointments online ▪ Turn off/on check card ▪ Capture paper and electronic receipts and store them for up to 2 years ▪ Person - to - Person payments ▪ Aggregate account balances and transaction details from other bank
Slide 23: Impressive Growth in Mobile and Digital Products
23 23 Impressive Growth in Mobile and Digital Products ▪ Total U enrollments Over 100,000 new U enrollments since August 16 th Adding 10,000+ enrollments per week Localized advertising began in September - Triad and Greater Washington enrollments are up 4.5% YoY (largely due to lobby campaign
Slide 24: Acquisitions Fully On Track
24 24 Acquisitions Fully On Track ▪ Strategically compelling ▪ Financially attractive ▪ Significant expansion of attractive Mid - Atlantic footprint ▪ BB&T well prepared to successfully execute on acquisitions ▪ Compatible cultures with BB&T ▪ Susquehanna conversion scheduled for upcoming weekend
Slide 25: Pennsylvania Market Position with National Penn
25 25 York Williamsport Washington D.C. Hagerstown Baltimore Philadelphia Reading Harrisburg Camden Lancaster Ocean City Allentown Top 15 Banks in Pennsylvania Deposit Deposits Market Rank Institution Branches ($MM) Share 1. PNC 446 $35,394 14.4% 2. Wells Fargo 280 24,339 9.9 3. Citizens Financial 3
Slide 26: 2016 Outlook
26 2016 Outlook ▪ Loans ▪ Deposits ▪ Net interest income and net interest margin ▪ Credit ▪ Fees ▪ Expenses
Slide 27: Culture Matters – Values Are Consistent and Important
27 27 Value System Revenues Superior Shareholder Long - term Returns Value System Attract / Train and Retain the Right People Perfect Client Experience Culture Matters – Values Are Consistent and Important
Slide 28: Appendix
BB&T Appendix
Slide 29: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 29 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects o
Slide 30: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 30 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects o
Slide 31: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 31 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects o
Slide 32: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 32 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a g reater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects
Slide 33: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 33 (Dollars in millions) As of Loans 30 - 89 days past due as a % of loans held for investment Sept. 30 2015 June 30 2015 % Change Reported $905 $833 8.6 % Less: the impact of Susquehanna (30) - - Loans 30 - 89 days past due loans held for investment, adjusted $875 $833
Slide 34: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin Sept. 30 2015 June 30 2015 March 31 2015 Dec. 31 2014 Sept. 30 2014 Reported net interest margin - GAAP 3.35% 3.27% 3.33% 3.36% 3.38% Adjustments to interest income for assets acquired: Effect of sec
Slide 35: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 35 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures pro vide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects
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