8-K
Truist Financial Corp (TFC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
Form 8-K
Current Report
_____________________________________________
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
July 15, 2021
Date of Report (Date of earliest event reported)
Truist Financial Corporation
(Exact name of registrant as specified in its charter)
_____________________________________________
| North Carolina | 1-10853 | 56-0939887 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 214 North Tryon Street | ||
| --- | --- | --- |
| Charlotte, | North Carolina | 28202 |
| (Address of principal executive offices) | (Zip Code) |
(336) 733-2000
(Registrant's telephone number, including area code)
_____________________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $5 par value | TFC | New York Stock Exchange |
| Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred Stock | TFC.PI | New York Stock Exchange |
| 5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred Stock | TFC.PJ | New York Stock Exchange |
| Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock | TFC.PO | New York Stock Exchange |
| Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred Stock | TFC.PR | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
ITEM 2.02 Results of Operations and Financial Condition.
On July 15, 2021, Truist Financial Corporation ("Truist") issued a press release reporting second quarter 2021 results and posted on its website its second quarter 2021 Earnings Release, Quarterly Performance Summary and Earnings Release Presentation. The materials contain forward-looking statements regarding Truist and include cautionary language identifying important factors that could cause actual results to differ materially from those anticipated. The Earnings Release, Quarterly Performance Summary and Earnings Release Presentation are furnished as Exhibits 99.1, 99.2 and 99.3, respectively. Consequently, they are not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Such materials may only be incorporated by reference into another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K. All information in the Earnings Release, Quarterly Performance Summary and Earnings Release Presentation speaks as of the date thereof, and Truist does not assume any obligation to update such information in the future.
ITEM 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description of Exhibit |
|---|---|
| 99.1 | Earnings Release issued July 15, 2021. |
| 99.2 | Quarterly Performance Summary issued July 15, 2021. |
| 99.3 | Earnings Release Presentation issued July 15, 2021. |
| 104 | The cover page from this Current Report on Form 8-K, formatted in Inline XBRL. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRUIST FINANCIAL CORPORATION | |
|---|---|
| (Registrant) | |
| By: | /s/ Cynthia B. Powell |
| Cynthia B. Powell | |
| Executive Vice President and Corporate Controller | |
| (Principal Accounting Officer) |
Date: July 15, 2021
Document
 |
News Release | ||
|---|---|---|---|
| Contact: | |||
| Investors: | Ankur Vyas<br>404.827.6714 | investors@truist.com | |
| Media: | Brian Boudreaux<br>404.813.0881 | media@truist.com |
Truist reports second quarter 2021 results
GAAP earnings of $1.6 billion, or $1.16 per diluted share
Adjusted earnings of $2.1 billion, or $1.55 per diluted share
Results reflect diverse business mix, strong fee income and solid expense management
Excellent credit quality and improving economic conditions drive negative provision
Capital and liquidity remain strong
CHARLOTTE, N.C., (July 15, 2021) — Truist Financial Corporation (NYSE: TFC) today reported earnings for the second quarter of 2021.
Net income available to common shareholders was $1.6 billion, up 73%, compared to the second quarter last year. Earnings per diluted common share were $1.16, also an increase of 73% compared with the same period last year. Results for the second quarter produced an annualized return on average assets (ROA) of 1.28%, an annualized return on average common shareholders' equity (ROCE) of 10.1% and an annualized return on tangible common shareholders' equity (ROTCE) of 18.9%.
Adjusted net income available to common shareholders was $2.1 billion, or $1.55 per diluted share, excluding merger-related and restructuring charges of $297 million ($228 million after-tax), incremental operating expenses related to the merger of $190 million ($146 million after-tax) and charitable contributions of $200 million ($153 million after-tax). Adjusted results produced an annualized ROA of 1.69%, an annualized ROCE of 13.5% and an annualized ROTCE of 24.7%. Adjusted earnings per diluted share were up 89% compared to the prior year and 31% compared to first quarter 2021.
“Truist produced record adjusted earnings for the second quarter, driven by a negative loan loss provision and strong fee income, including record insurance commissions, wealth management income, card and payment related fees and commercial real estate related income,” said Chairman and Chief Executive Officer Kelly S. King. “In addition to this strong performance, earlier this month we successfully completed the acquisition of Constellation Affiliated Partners through our CRC Group insurance subsidiary. The acquisition is CRC’s eighth in the last 18 months and more than doubles our specialty and programs business. The acquisition makes CRC one of the largest program managers in North America and continues to drive growth in our largest fee income generating business.
“We were also excited to announce the results of the CCAR stress testing process in June. Truist was one of the top performers compared with our peers that were subject to the process with the second lowest loan loss rate among our peers under the severely adverse stress scenario. We also announced plans to propose a 7% increase in our dividend to a record $0.48 as part of our mission to continue providing a stable and growing dividend for our shareholders. In addition, given our progress towards a successful conversion, an improving economic outlook, and successful CCAR results, we plan to lower our near-term CET1 target to approximately 9.75%, giving us additional capacity to deploy incremental capital on behalf of our clients and shareholders.
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“We continued to fulfill our purpose in meaningful ways in the communities we serve. In the quarter, we released our inaugural supplier diversity report, which reflects a $1 billion impact for last year, significantly expanded our partnership with Operation HOPE to help provide more education, insights and tools to help more people build better lives, and contributed a combined $200 million to the Truist Foundation and the Truist Charitable Fund to further support the important work of organizations across our diverse markets.”
Second Quarter 2021 Performance Highlights
•Earnings per diluted common share were $1.16
–Adjusted diluted earnings per share were $1.55, up $0.37 per share, or 31%, compared to first quarter 2021 and $0.73 per share, or 89%, compared to second quarter 2020
–ROA was 1.28%; adjusted ROA was 1.69%
–ROCE was 10.1%; adjusted ROCE was 13.5%
–ROTCE was 18.9%; adjusted ROTCE was 24.7%
•Taxable-equivalent revenue was $5.7 billion
–Adjusted taxable-equivalent revenue, excluding securities gains and a gain on sale of a business in the prior quarter, was up 3.7% compared to first quarter 2021 and 1.4% compared to second quarter 2020
–Noninterest income, excluding securities gains and gain on sale of a business in the prior quarter, was up 11% compared to first quarter 2021 and 13% compared to second quarter 2020
–Record revenues from insurance, wealth, card and payment related fees, and commercial real estate related income; very strong investment banking income
–Fee income ratio was 42.6%, compared to 40.1% for first quarter 2021
–Net interest margin was 2.88%, down 13 basis points from first quarter 2021
–Core net interest margin was 2.60%, down nine basis points from first quarter 2021
•Noninterest expense was $4.0 billion
–Adjusted noninterest expense was $3.2 billion, up 2.1% compared to first quarter 2021 and 1.8% compared to second quarter 2020
–GAAP efficiency ratio was 71.0%, compared to 65.8% for first quarter 2021
–Adjusted efficiency ratio improved to 56.1%, compared to 56.9% for first quarter 2021
•Asset quality ratios improved reflecting improving economic conditions and effective problem asset resolution
–Nonperforming assets were 0.23% of total assets, down two basis points from first quarter 2021
–Loans 90 days or more past due and still accruing were 0.72% of loans held for investment, relatively stable to the first quarter 2021
–Excluding government guaranteed loans, loans 90 days or more past due and still accruing were 0.04% of loans held for investment
–Net charge-offs were 0.20% of average loans and leases, down 13 basis points compared to first quarter 2021 due primarily to lower losses in the indirect auto and commercial portfolios combined with higher recoveries
–The ALLL ratio was 1.79% compared to 1.94% for first quarter 2021
–Provision for credit losses was a negative $434 million for second quarter 2021, primarily reflecting an improving economic outlook and lower loan balances
–The allowance for loan and lease loss coverage ratio was 4.83X nonperforming loans and leases held for investment, versus 4.84X in first quarter 2021
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•Capital and liquidity levels remained strong
–Common equity tier 1 to risk-weighted assets was 10.2%
–Tier 1 risk-based capital was 11.9%
–Total risk-based capital was 14.1%
–Repurchased $610 million of common shares
–Redeemed $465 million of preferred stock
–Consolidated average LCR ratio was 113%
| EARNINGS HIGHLIGHTS | Change 2Q21 vs. | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions, except per share data) | 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | ||||||||||
| Net income available to common shareholders | $ | 1,559 | $ | 1,334 | $ | 902 | $ | 225 | $ | 657 | |||||
| Diluted earnings per common share | 1.16 | 0.98 | 0.67 | 0.18 | 0.49 | ||||||||||
| Net interest income - taxable equivalent | $ | 3,273 | $ | 3,313 | $ | 3,479 | $ | (40) | $ | (206) | |||||
| Noninterest income | 2,405 | 2,197 | 2,423 | 208 | (18) | ||||||||||
| Total taxable-equivalent revenue | $ | 5,678 | $ | 5,510 | $ | 5,902 | $ | 168 | $ | (224) | |||||
| Less taxable-equivalent adjustment | 28 | 28 | 31 | ||||||||||||
| Total revenue | $ | 5,650 | $ | 5,482 | $ | 5,871 | |||||||||
| Return on average assets | 1.28 | % | 1.17 | % | 0.75 | % | 0.11 | % | 0.53 | % | |||||
| Return on average risk-weighted assets (current quarter is preliminary) | 1.75 | 1.58 | 1.00 | 0.17 | 0.75 | ||||||||||
| Return on average common shareholders' equity | 10.1 | 8.7 | 5.9 | 1.4 | 4.2 | ||||||||||
| Return on average tangible common shareholders' equity (1) | 18.9 | 16.4 | 11.8 | 2.5 | 7.1 | ||||||||||
| Net interest margin - taxable equivalent | 2.88 | 3.01 | 3.13 | (0.13) | (0.25) |
(1)Excludes certain items as detailed in the non-GAAP reconciliations in the Quarterly Performance Summary.
Second Quarter 2021 compared to First Quarter 2021
Total taxable-equivalent revenue was $5.7 billion for the second quarter of 2021, an increase of $168 million, or 3.0%, compared to the prior quarter.
Net interest income for the second quarter of 2021 was down $40 million, or 1.2%, compared to the prior quarter due primarily to lower purchase accounting accretion. Average earning assets increased $11.3 billion compared to the prior quarter. Average securities available for sale increased $13.4 billion, and average other earning assets (primarily cash at the Federal Reserve) increased $4.2 billion, while average total loans decreased $6.6 billion. The growth in average earning assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. The investment in securities positively impacted net interest income compared to the yields available on excess balances at the Federal Reserve. Average deposits increased $13.1 billion primarily due to the ongoing impacts of stimulus.
The net interest margin was 2.88% for the second quarter, down 13 basis points compared to the prior quarter. The net interest margin was negatively impacted by 6 basis points from a net liquidity build of approximately $17.8 billion (cash and securities) due to strong deposit growth and lower loan balances. The yield on the total loan portfolio for the second quarter was 4.01%, down eight basis points compared to the prior quarter primarily due to lower purchase accounting accretion and lower rates on new volumes. The yield on the average securities portfolio for the second quarter was 1.47%, up two basis points compared to the prior quarter.
The average cost of total deposits was 0.04%, down one basis point compared to the prior quarter. The average rate on long-term debt was 1.60%, up three basis points compared to the prior quarter.
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The provision for credit losses was negative $434 million and net charge-offs were $142 million for the second quarter, compared to $48 million and $238 million, respectively, for the prior quarter. The net charge-off rate for the current quarter of 0.20% was down 13 basis points compared to the first quarter of 2021, primarily due to lower losses in the indirect auto and commercial portfolios combined with higher recoveries. The decrease in the provision for credit losses was primarily related to the commercial portfolio due to an improving economic outlook and lower loan balances.
Noninterest income was $2.4 billion, an increase of $208 million, or 9.5%, compared to the prior quarter. Insurance income increased $64 million primarily due to seasonality and premium growth. Commercial real-estate related income increased $95 million primarily due to client-related structured real estate transactions and an increase in the commercial mortgage banking business. Other income was up $43 million as a result of $71 million of increased investment income (primarily valuation gains) from the Company's SBIC and Truist Ventures investments. In addition, other income increased $18 million related to higher valuations of assets held for certain post-retirement benefits, which is largely offset by higher benefits expense included in personnel expense. These increases were partially offset by the gain of $37 million from the divestiture of certain businesses recorded in the prior quarter.
Noninterest expense was $4.0 billion for the second quarter, up $401 million compared to the prior quarter. Merger-related and restructuring charges increased $156 million primarily due to costs in connection with a voluntary separation and retirement program. Incremental operating expenses related to the merger increased $15 million. The current quarter also includes $200 million of expense associated with charitable contributions to the Truist Foundation and the Truist Charitable Fund, whereas the prior quarter included $36 million for an acceleration of loss recognition related to certain terminated cash flow hedges. Excluding the aforementioned items, changes in amortization of intangibles, and a small gain from debt extinguishment, adjusted noninterest expense was up $65 million, or 2.1%, compared to the prior quarter. Personnel expense increased $65 million compared to the prior quarter primarily due to higher incentives due to variable compensation from higher revenues and improved overall performance relative to targets, higher equity-based compensation due to timing of grants late in first quarter 2021 and higher other benefits expense primarily due to the previously mentioned increase in noninterest income. These increases in personnel expense were partially offset by lower salaries and wages due to fewer FTEs and lower payroll taxes as a result of teammates reaching limits in the first half of 2021.
The provision for income taxes was $415 million for the second quarter of 2021, compared to $351 million for the prior quarter. The effective tax rate for the second quarter of 2021 was 20.0%, compared to 19.2% for the prior quarter.
Second Quarter 2021 compared to Second Quarter 2020
Total taxable-equivalent revenues were $5.7 billion for the second quarter of 2021, a decrease of $224 million, or 3.8%, compared to the earlier quarter, due primarily to securities gains of $300 million in the second quarter of 2020.
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Net interest income for the second quarter of 2021 was down $206 million, or 5.9%, compared to the earlier quarter due to lower purchase accounting accretion and lower rates on earning assets. These decreases were partially offset by lower funding costs, higher fees on Payroll Protection Program loans and fewer interest deferrals on COVID-19 loan accommodations. Average earning assets increased $8.4 billion compared to the earlier quarter. The increase in average earning assets reflects a $60.5 billion increase in average securities, while average total loans and leases decreased $33.5 billion and average other earning assets decreased $19.9 billion. The growth in average earnings assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. Average interest-bearing liabilities decreased $20.1 billion compared to the earlier quarter. The decline in average interest-bearing liabilities was offset by significant growth in average noninterest-bearing deposits, which increased $24.0 billion compared to the earlier quarter. Average interest-bearing deposits increased $1.4 billion, while average long-term debt decreased $18.7 billion and average short-term borrowings decreased $2.8 billion.
Net interest margin was 2.88%, down 25 basis points compared to the earlier quarter. The yield on the total loan portfolio for the second quarter of 2021 was 4.01%, down 18 basis points compared to the earlier quarter, reflecting the impact of a lower rate environment and lower purchase accounting accretion. The yield on the average securities portfolio was 1.47%, down 90 basis points compared to the earlier quarter primarily due to lower yields on new purchases.
The average cost of total deposits was 0.04%, down 18 basis points compared to the earlier quarter. The average rate on short-term borrowings was 0.98%, down 26 basis points compared to the earlier quarter. The average rate on long-term debt was 1.60%, up eight basis points compared to the earlier quarter. The lower rates on interest-bearing liabilities reflect the lower rate environment.
The provision for credit losses was a negative $434 million, compared to $844 million for the earlier quarter. The earlier quarter included significant uncertainty of the economic impacts resulting from the pandemic, whereas the current quarter includes a reserve release due to improving economic outlook and lower loan balances. Net charge-offs for the second quarter of 2021 totaled $142 million compared to $316 million in the earlier quarter. The net charge-off ratio for the current quarter of 0.20% was down 19 basis points compared to the second quarter of 2020, primarily driven by lower losses in the indirect auto and commercial portfolios combined with higher recoveries, as well as lower losses in the residential mortgage portfolio.
Noninterest income for the second quarter of 2021 decreased $18 million compared to the earlier quarter. Noninterest income for the second quarter of 2020 included $300 million of securities gains on available-for-sale securities. Excluding securities gains, noninterest income increased $282 million, or 13%, compared to the earlier quarter. Insurance income increased $109 million due to acquisitions, as well as new business and higher retention. Commercial real-estate related income increased $89 million primarily due to client-related structured real estate transactions. Investment banking and trading income increased $43 million due to strong investment banking income from loan syndications, merger and acquisition fees and asset securitization transactions, which was partially offset by lower trading income. Other income increased $92 million primarily due to an increase of $67 million related to increased investment income (primarily valuations gains) from the Company's SBIC and Truist Ventures investments. In addition, other income increased $43 million from higher valuations of assets held for certain post-retirement benefits, which is primarily offset by higher benefits expense included in personnel expense. Revenues related to wealth management, service charges on deposits and card and payment related activities increased $161 million as transaction volumes and asset levels increased compared to the levels in the earlier quarter due to improving economic conditions. Residential mortgage banking income decreased $224 million primarily due to lower production related revenues as a result of lower gain on sale margins and volumes, coupled with lower servicing income due to a reduction in the third-party servicing portfolio as a result of prepayments.
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Noninterest expense for the second quarter of 2021 was up $133 million compared to the earlier quarter. Merger-related and restructuring charges increased $88 million and other incremental operating expenses related to the merger increased $61 million, primarily reflected in professional fees and outside processing. The current quarter also includes $200 million for charitable contributions to the Truist Foundation and the Truist Charitable Fund, whereas the earlier quarter included a $235 million loss on the early extinguishment of debt. Excluding the aforementioned items and changes in amortization of intangibles, adjusted noninterest expense was up $55 million, or 1.8%, compared to the earlier quarter. Personnel expense increased $199 million primarily due to higher incentive expenses due to improved performance, higher other employee benefits due to the previously mentioned increase in noninterest income, as well as higher pension and insurance benefits expense. These increases in personnel expense were partially offset by lower salaries due to fewer FTEs. Other expense also includes decreases of $42 million for non-service-related pension cost components and $31 million for certain expenses provided in the earlier quarter related to support for teammates through the pandemic. There was also a decrease of $61 million from net occupancy expense primarily due to branch and property consolidations.
The provision for income taxes was $415 million for the second quarter of 2021, compared to $191 million for the earlier quarter. This produced an effective tax rate for the second quarter of 2021 of 20.0%, compared to 16.6% for the earlier quarter. The higher effective tax rate is primarily due to higher pre-tax income in the current quarter and lower discrete tax benefits compared to the earlier quarter.
| LOANS AND LEASES | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | ||||||||
| Average balances | 2Q21 | 1Q21 | Change | % Change | ||||
| Commercial: | ||||||||
| Commercial and industrial | $ | 133,646 | $ | 136,051 | $ | (2,405) | (1.8) | % |
| CRE | 25,645 | 26,211 | (566) | (2.2) | ||||
| Commercial construction | 6,359 | 6,557 | (198) | (3.0) | ||||
| Lease financing | 4,893 | 4,975 | (82) | (1.6) | ||||
| Total commercial | 170,543 | 173,794 | (3,251) | (1.9) | ||||
| Consumer: | ||||||||
| Residential mortgage | 43,605 | 45,823 | (2,218) | (4.8) | ||||
| Residential home equity and direct | 25,238 | 25,658 | (420) | (1.6) | ||||
| Indirect auto | 26,444 | 26,363 | 81 | 0.3 | ||||
| Indirect other | 10,797 | 10,848 | (51) | (0.5) | ||||
| Student | 7,396 | 7,519 | (123) | (1.6) | ||||
| Total consumer | 113,480 | 116,211 | (2,731) | (2.4) | ||||
| Credit card | 4,552 | 4,645 | (93) | (2.0) | ||||
| Total loans and leases held for investment | $ | 288,575 | $ | 294,650 | $ | (6,075) | (2.1) |
Average loans and leases held for investment for the second quarter of 2021 were $288.6 billion, down $6.1 billion compared to the first quarter of 2021.
Average commercial loans decreased $3.3 billion primarily due to a $1.3 billion decrease in average Paycheck Protection Program loans (commercial and industrial), a $1.2 billion decrease in average dealer floor plan loans (commercial and industrial), a $566 million decrease in average CRE loans, and a $198 million decrease in average commercial construction loans.
Average consumer loans decreased $2.7 billion primarily due to refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans.
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| DEPOSITS | ||||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | ||||||||
| Average balances | 2Q21 | 1Q21 | Change | % Change | ||||
| Noninterest-bearing deposits | $ | 137,892 | $ | 128,579 | $ | 9,313 | 7.2 | % |
| Interest checking | 106,121 | 104,744 | 1,377 | 1.3 | ||||
| Money market and savings | 134,029 | 129,303 | 4,726 | 3.7 | ||||
| Time deposits | 18,213 | 20,559 | (2,346) | (11.4) | ||||
| Total deposits | $ | 396,255 | $ | 383,185 | $ | 13,070 | 3.4 |
Average deposits for the second quarter of 2021 were $396.3 billion, an increase of $13.1 billion compared to the prior quarter. Average noninterest bearing deposits grew 7.2% compared to the prior quarter and represented 34.8% of total deposits for the second quarter of 2021, compared to 33.6% for the prior quarter. Average money market and savings and interest checking grew 3.7% and 1.3%, respectively, compared to the prior quarter.
Average time deposits decreased primarily due to the maturity of wholesale negotiable certificates of deposit and higher-cost personal accounts.
| CAPITAL RATIOS | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Risk-based: | (preliminary) | |||||||||
| Common equity Tier 1 | 10.2 | % | 10.1 | % | 10.0 | % | 10.0 | % | 9.7 | % |
| Tier 1 | 11.9 | 12.0 | 12.1 | 12.2 | 11.6 | |||||
| Total | 14.1 | 14.3 | 14.5 | 14.6 | 14.0 | |||||
| Leverage | 9.1 | 9.4 | 9.6 | 9.6 | 9.0 | |||||
| Supplementary leverage | 7.9 | 8.3 | 8.7 | 8.9 | 8.5 |
Capital ratios remained strong compared to the regulatory requirements for well capitalized banks. Truist declared common dividends of $0.45 per share during the second quarter of 2021 and completed $610 million of share repurchases. The dividend and total payout ratios for the second quarter of 2021 were 39% and 78%, respectively. Truist also redeemed $465 million of preferred stock during the quarter to optimize the Company's capital position.
Truist completed the 2021 Comprehensive Capital Analysis and Review (CCAR) process and received the preliminary stress capital buffer of 2.5% for the period October 1, 2021 to September 30, 2022. Truist also previously announced plans to increase the quarterly dividend 7% to $0.48 beginning in the third quarter of 2021. Truist's dividends are subject to approval by its Board of Directors, and the third quarter dividend will be considered by the Truist Board at its upcoming meeting. Truist plans to target a CET1 ratio of approximately 9.75% over the near-term, and accordingly, the Company expects to be able to, with appropriate approvals from its Board of Directors, deploy approximately $4 billion to $5 billion of capital (either in the form of share repurchases or acquisitions) over the next 5 quarters (3Q21-3Q22).
Truist's average LCR was 113% for the three months ended June 30, 2021, compared to the regulatory minimum of 100%. Truist continues to maintain a strong liquidity position and is prepared to meet the funding needs of clients. In addition, the liquid asset buffer, which is defined as high quality unencumbered liquid assets as a percentage of total assets, was 24.7% at June 30, 2021.
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| ASSET QUALITY | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | ||||||||||
| Total nonperforming assets | $ | 1,192 | $ | 1,299 | $ | 1,387 | $ | 1,314 | $ | 1,252 | |||||
| Total performing TDRs | 1,501 | 1,539 | 1,361 | 1,217 | 1,107 | ||||||||||
| Total loans 90 days past due and still accruing | 2,068 | 2,072 | 2,008 | 1,197 | 1,072 | ||||||||||
| Total loans 30-89 days past due | 1,824 | 1,788 | 2,220 | 2,148 | 1,901 | ||||||||||
| Nonperforming loans and leases as a percentage of loans and leases held for investment | 0.37 | % | 0.40 | % | 0.44 | % | 0.37 | % | 0.35 | % | |||||
| Nonperforming loans and leases as a percentage of loans and leases, including loans held for sale | 0.39 | 0.42 | 0.44 | 0.40 | 0.37 | ||||||||||
| Nonperforming assets as a percentage of total assets | 0.23 | 0.25 | 0.27 | 0.26 | 0.25 | ||||||||||
| Loans 30-89 days past due and still accruing as a percentage of loans and leases | 0.64 | 0.61 | 0.74 | 0.70 | 0.60 | ||||||||||
| Loans 90 days or more past due and still accruing as a percentage of loans and leases | 0.72 | 0.71 | 0.67 | 0.39 | 0.34 | ||||||||||
| Loans 90 days or more past due and still accruing as a percentage of loans and leases, excluding PPP and other government guaranteed | 0.04 | 0.04 | 0.04 | 0.03 | 0.04 | ||||||||||
| Allowance for loan and lease losses as a percentage of loans and leases held for investment | 1.79 | 1.94 | 1.95 | 1.91 | 1.81 | ||||||||||
| Net charge-offs as a percentage of average loans and leases, annualized | 0.20 | 0.33 | 0.27 | 0.42 | 0.39 | ||||||||||
| Ratio of allowance for loan and lease losses to net charge-offs, annualized | 8.98x | 5.87x | 7.15x | 4.52x | 4.49x | ||||||||||
| Ratio of allowance for loan and lease losses to nonperforming loans and leases held for investment | 4.83x | 4.84x | 4.39x | 5.22x | 5.24x |
Nonperforming assets totaled $1.2 billion at June 30, 2021, down $107 million compared to March 31, 2021. Nonperforming loans and leases represented 0.39% of total loans and leases, down three basis points compared to March 31, 2021. The decrease in nonperforming loans and leases was primarily in the commercial loan portfolios.
Performing TDRs were down $38 million during the second quarter compared to the prior quarter.
Loans 90 days or more past due and still accruing totaled $2.1 billion at June 30, 2021, down slightly compared to the prior quarter. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.72% at June 30, 2021, up one basis point from the prior quarter. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at June 30, 2021, unchanged from March 31, 2021.
Loans 30-89 days past due and still accruing totaled $1.8 billion at June 30, 2021, up $36 million compared to the prior quarter. The increase was primarily in indirect automobile due to seasonality. The ratio of loans 30-89 days past due and still accruing as a percentage of loans and leases was 0.64% at June 30, 2021, up 3 basis points from the prior quarter.
Net charge-offs during the second quarter totaled $142 million, down $96 million compared to the prior quarter. The net charge-off ratio was 0.20%, down 13 basis points compared to the prior quarter. The decrease in net charge-offs was primarily due to lower losses in the indirect auto and commercial portfolios combined with higher recoveries.
The allowance for credit losses was $5.4 billion and includes $5.1 billion for the allowance for loan and lease losses and $315 million for the reserve for unfunded commitments. The allowance for loan and lease loss ratio was 1.79% compared to 1.94% at March 31, 2021. The allowance for loan and lease losses covered nonperforming loans and leases held for investment 4.83X compared to 4.84X at March 31, 2021. At June 30, 2021, the allowance for loan and lease losses was 8.98X annualized net charge-offs, compared to 5.87X at March 31, 2021.
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| SEGMENT RESULTS | Change 2Q21 vs. | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in millions) | ||||||||||
| Segment Net Income | 2Q21 | 1Q21 | 2Q20 | 1Q21 | 2Q20 | |||||
| Consumer Banking and Wealth | $ | 862 | $ | 800 | $ | 712 | $ | 62 | $ | 150 |
| Corporate and Commercial Banking | 1,227 | 912 | 402 | 315 | 825 | |||||
| Insurance Holdings | 156 | 131 | 126 | 25 | 30 | |||||
| Other, Treasury & Corporate | (587) | (370) | (282) | (217) | (305) | |||||
| Total net income | $ | 1,658 | $ | 1,473 | $ | 958 | $ | 185 | $ | 700 |
Truist operates and measures business activity across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury and Corporate. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see “Note 21. Operating Segments” of the Annual Report on Form 10-K for the year ended December 31, 2020.
Second Quarter 2021 compared to First Quarter 2021
Consumer Banking and Wealth (“CB&W”)
CB&W net income was $862 million for the second quarter of 2021, an increase of $62 million compared to the prior quarter. Segment net interest income decreased $17 million primarily driven by a decline in retail loan balances and credit card spreads, as well as lower purchase accounting accretion. The allocated provision for credit losses decreased $104 million which reflects lower net charge offs primarily in the auto portfolios and an allowance release that was primarily driven by an improving economic outlook. Noninterest expense increased $12 million primarily due to higher restructuring charges, partially offset by lower personnel related expenses as well as lower professional fees and outside processing expenses.
Average loans held for investment decreased $2.9 billion compared to the prior quarter primarily due to lower residential mortgage and home equity lending, partially offset by increased indirect auto lending. Average total deposits increased $10.8 billion compared to the prior quarter primarily due to the impact of government stimulus programs.
Corporate and Commercial Banking (“C&CB”)
C&CB net income was $1.2 billion for the second quarter of 2021, an increase of $315 million compared to the prior quarter. Segment net interest income was stable. The allocated provision for credit losses decreased $364 million which reflects an allowance release driven by an improving economic outlook, lower net charge offs primarily in the commercial and industrial portfolio and lower loan balances. Noninterest income increased $115 million primarily due to client-related structured real estate activity and an increase in the commercial mortgage banking business, higher income from strategic investments, and record investment banking fees, partially offset by lower trading revenues associated with counterparty derivative reserves. Noninterest expense increased $69 million primarily due to higher incentives related to fee income growth and restructuring charges.
Average loans held for investment decreased $3.1 billion compared to the prior quarter primarily due to a decline in Paycheck Protection Program loans and a decrease in dealer floor plan line utilization. Average total deposits increased $3.1 billion compared to the prior quarter primarily due to the impact of the government stimulus programs.
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Insurance Holdings (“IH”)
IH net income was $156 million for the second quarter of 2021, an increase of $25 million compared to the prior quarter. Noninterest income increased $65 million primarily due to seasonality in property and casualty insurance commissions and strong organic growth. Noninterest expense increased $36 million primarily due to seasonally higher performance-based incentives and increased merger-related charges.
Other, Treasury & Corporate (“OT&C”)
OT&C generated a net loss of $587 million for the second quarter of 2021, compared to a net loss of $370 million for the prior quarter. Segment net interest income decreased $24 million primarily due to lower net funding charges to other segments due to lower market rates partially offset by higher earnings in the securities portfolio from purchases to utilize excess liquidity. The allocated provision for credit losses decreased $12 million primarily driven by an improving economic outlook. Noninterest income increased $23 million primarily due to investment income from Truist Ventures related partnerships and investments and gains on equity securities from market value changes this quarter. Noninterest expense increased $284 million primarily due to charitable contributions to the Truist Foundation and the Truist Charitable Fund, restructuring charges, and higher software expenses, partially offset by lower occupancy expense.
Second Quarter 2021 compared to Second Quarter 2020
Consumer Banking and Wealth
CB&W net income was $862 million for the second quarter of 2021, an increase of $150 million compared to the earlier quarter. Segment net interest income decreased $45 million primarily due to a decline in the funding credit provided on liabilities, lower purchase accounting accretion, and a decline in average loans. The allocated provision for credit losses decreased $274 million which reflects the impact of an allowance release during the current quarter, an allowance build during the earlier quarter resulting from the deteriorating economic outlook caused by the pandemic, and lower net charge-offs in the current quarter primarily in the mortgage, home equity and auto portfolios. Noninterest income decreased $83 million driven by lower residential mortgage income due to lower gain on sale margins and volumes, partially offset by increases in card and related fee income as well as wealth management income due to favorable market conditions in the current quarter. Noninterest expense decreased $47 million primarily due to lower amortization of intangibles related to the merger, occupancy expenses, and personnel related expenses, partially offset by increased restructuring charges in the current quarter.
Corporate and Commercial Banking
C&CB net income was $1.2 billion for the second quarter of 2021, an increase of $825 million compared to the earlier quarter. Segment net interest income decreased $78 million primarily due to reduced funding credit on liabilities, lower purchase accounting accretion, and a decline in average loans. The allocated provision for credit losses decreased $933 million primarily reflecting the allowance release in the current quarter and a significant allowance build in the earlier quarter resulting from the deteriorating economic outlook caused by the onset of the pandemic. Noninterest income increased $188 million driven by commercial real estate income, investment banking, lending related fees, service charges on deposits, and income from strategic investments, partially offset by lower trading fees. Noninterest expense decreased $36 million primarily due to lower operating lease depreciation, reduction in LIHTC liability mark accretion in the earlier quarter, and lower allocated corporate expenses in the current quarter, partially offset by higher incentives tied to performance as well as increased restructuring charges in current quarter.
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Insurance Holdings
IH net income was $156 million for the second quarter of 2021, an increase of $30 million compared to the earlier quarter. Noninterest income increased $100 million primarily due to higher property and casualty insurance production from strong organic growth, as well as acquisitions. Noninterest expense increased $67 million primarily due to higher performance-based incentives, merger related expenses, and amortization of intangibles related to the acquisitions.
Other, Treasury & Corporate
OT&C generated a net loss of $587 million in the second quarter of 2021, compared to a net loss of $282 million in the earlier quarter. Segment net interest income decreased $78 million primarily due to lower net funding charges to other segments due to lower market rates partially offset by an increase in income on securities. The allocated provision for credit losses decreased $64 million which primarily reflects an allowance release in the current quarter resulting from the improving economic outlook and an allowance build during the earlier quarter related to the deteriorating economic outlook caused by the onset of the pandemic. Noninterest income decreased $223 million primarily due to gain on sale of non-agency mortgage-backed securities in the earlier quarter. Noninterest expense increased $149 million primarily due to charitable contributions to the Truist Foundation and the Truist Charitable Fund, as well as higher incremental operating expenses related to the merger and higher restructuring charges in the current quarter, partially offset by the loss on early extinguishment of long-term debt in the earlier quarter.
Earnings Presentation and Quarterly Performance Summary
To listen to Truist's live second quarter 2021 earnings conference call at 8 a.m. ET today, please call 866-519-2796 and enter the participant code 391805. A presentation will be used during the earnings conference call and is available on our website at https://ir.truist.com/events-and-presentation. Replays of the conference call will be available for 30 days by dialing 888-203-1112 (access code 391805).
The presentation, including an appendix reconciling non-GAAP disclosures and Truist's Second Quarter 2021 Quarterly Performance Summary, which contains detailed financial schedules, are available at https://ir.truist.com/earnings.
About Truist
Truist Financial Corporation is a purpose-driven financial services company committed to inspiring and building better lives and communities. Formed by the historic merger of equals of BB&T and SunTrust, Truist has leading market share in many high-growth markets in the country. The company offers a wide range of services including retail, small business and commercial banking; asset management; capital markets; commercial real estate; corporate and institutional banking; insurance; mortgage; payments; specialized lending; and wealth management. Headquartered in Charlotte, North Carolina, Truist is a top 10 U.S. commercial bank with total assets of $522 billion as of June 30, 2021. Truist Bank, Member FDIC. Learn more at Truist.com.
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Capital ratios and return on risk-weighted assets are preliminary.
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This news release 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 of the Corporation's performance and the efficiency of its operations. Management believes these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant items in the current period. The Corporation believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. Truist's management believes investors may find these non-GAAP financial measures useful. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this news release:
•Adjusted Efficiency Ratio - The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges, and other selected items. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
•Tangible Common Equity and Related Measures - Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk.
•Core NIM - Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial Bank acquisition and b) loans, deposits and long-term debt from SunTrust, Susquehanna, National Penn and Colonial Bank are excluded to approximate the yields paid by clients. Truist's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities acquired provide investors with useful information related to the performance of Truist's earning assets.
•Adjusted Diluted EPS - The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
•Performance Ratios - The adjusted performance ratios, including adjusted return on average assets, adjusted return on average common shareholders’ equity, and adjusted return on average tangible common shareholders’ equity, are non-GAAP in that they exclude merger-related and restructuring charges, selected items, and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets. Truist's management uses these measures in their analysis of the Corporation's performance. Truist's management believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrate the effects of significant gains and charges.
•Insurance Holdings Adjusted EBITDA - EBITDA is a non-GAAP measurement of operating profitability that is calculated by adding back interest, taxes, depreciation and amortization to net income. Truist's management also adds back merger-related and restructuring charges, incremental operating expenses related to the merger, and other selected items. Truist's management uses this measure in its analysis of the Corporation's Insurance Holdings segment. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
•Allowance for Loan and Lease Losses and Unamortized Fair Value Mark as a Percentage of Gross Loans and Leases - Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases is a non-GAAP measurement of credit reserves that is calculated by adjusting the ALLL and loans and leases held for investment by the unamortized fair value mark. Truist's management uses these measures to assess loss absorption capacity.
A reconciliation of each of these non-GAAP measures to the most directly comparable GAAP measure is included in the appendix to Truist's Second Quarter 2021 Earnings Presentation, which is available at https://ir.truist.com/earnings.
This news release 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,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could” and other similar expressions are intended to identify these forward-looking statements.
Forward-looking statements are not based on historical facts but instead represent management's expectations and assumptions regarding Truist's business, the economy and other future conditions. Such statements involve inherent uncertainties, risks and changes in circumstances that are difficult to predict. As such, Truist’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed under Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Truist's subsequent filings with the Securities and Exchange Commission:
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•risks and uncertainties relating to the Merger of heritage BB&T and heritage SunTrust, including the ability to successfully integrate the companies or to realize the anticipated benefits of the Merger;
•expenses relating to the Merger and integration of heritage BB&T and heritage SunTrust;
•deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;
•the COVID-19 pandemic disrupted the global economy and adversely impacted Truist’s financial condition and results of operations, including through increased expenses, reduced fee income and net interest margin, and increases in the allowance for credit losses; although conditions have improved in the U.S., a worsening of the pandemic, whether due to new variants of the coronavirus or others factors, could reintroduce or prolong these negative impacts and also adversely affect Truist’s capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets;
•Truist is subject to credit risk by lending or committing to lend money, and may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;
•changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark and potentially negative interest rates, which could adversely affect Truist’s revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity;
•inability to access short-term funding or liquidity, loss of client deposits or changes in Truist’s credit ratings, which could increase the cost of funding or limit access to capital markets;
•risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk;
•risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators;
•failure to execute on strategic or operational plans, including the ability to successfully complete or integrate mergers and acquisitions;
•increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards, and (ii) products and services offered by non-bank financial technology companies, may reduce Truist’s client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact Truist’s businesses or results of operations;
•failure to maintain or enhance Truist’s competitive position with respect to new products, services and technology, whether it fails to anticipate client expectations or because its technological developments fail to perform as desired or do not achieve market acceptance or regulatory approval or for other reasons, may cause Truist to lose market share or incur additional expense;
•negative public opinion, which could damage Truist’s reputation;
•increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance;
•regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences;
•evolving legislative, accounting and regulatory standards, including with respect to capital and liquidity requirements, and results of regulatory examinations may adversely affect Truist’s financial condition and results of operations;
•the monetary and fiscal policies of the federal government and its agencies could have a material adverse effect on profitability;
•accounting policies and processes require management to make estimates about matters that are uncertain, including the potential write down to goodwill if there is an elongated period of decline in market value for Truist’s stock and adverse economic conditions are sustained over a period of time;
•general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, and instability in global geopolitical matters or volatility in financial markets could result in, among other things, slower deposit or asset growth, a deterioration in credit quality, or a reduced demand for credit, insurance, or other services;
•risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases;
•risks relating to Truist’s role as a loan servicer, including an increase in the scope or costs of the services Truist is required to perform, without any corresponding increase in servicing fees or a breach of Truist’s obligations as servicer;
•Truist’s success depends on hiring and retaining key personnel, and if these individuals leave or change roles without effective replacements, Truist’s operations and integration activities could be adversely impacted, which could be exacerbated as Truist continues to integrate the management teams of heritage BB&T and heritage SunTrust;
•fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect, or mitigate;
•security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s teammates and clients, malware intrusion, data corruption attempts, system breaches, cyber attacks, and identity theft, could result in the disclosure of confidential information, adversely affect Truist’s business or reputation or create significant legal or financial exposure; and
•widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism and pandemics), and the effects of climate change could have an adverse effect on Truist’s financial condition and results of operations, lead to material disruption of Truist’s operations or the ability or willingness of clients to access Truist’s products and services.
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Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, Truist undertakes no obligation to revise or update any forward-looking statements.
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Document
Quarterly Performance Summary
Truist Financial Corporation
Second Quarter 2021
| Table of Contents | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarterly Performance Summary | ||||||||||||||||||
| Truist Financial Corporation | ||||||||||||||||||
| Page | ||||||||||||||||||
| Financial Highlights | 1 | |||||||||||||||||
| Financial Highlights - Five Quarter Trend | 2 | |||||||||||||||||
| Consolidated Statements of Income | 3 | |||||||||||||||||
| Consolidated Statements of Income - Five Quarter Trend | 4 | |||||||||||||||||
| Segment Financial Performance - Five Quarter Trend | 5 | |||||||||||||||||
| Consolidated Ending Balance Sheets - Five Quarter Trend | 6 | |||||||||||||||||
| Average Balance Sheets | 7 | |||||||||||||||||
| Average Balance Sheets - Five Quarter Trend | 8 | |||||||||||||||||
| Average Balances and Rates - Quarters | 9 | |||||||||||||||||
| Credit Quality | 12 | |||||||||||||||||
| Capital Information - Five Quarter Trend | 16 | |||||||||||||||||
| Selected Mortgage Banking Information & Additional Information | 17 | |||||||||||||||||
| Selected Items | 18 | |||||||||||||||||
| Non-GAAP Reconciliations | 18 | |||||||||||||||||
| Financial Highlights | ||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Quarter Ended | Year-to-Date | |||||||||||||||||
| June 30 | % | June 30 | % | |||||||||||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||
| Summary Income Statement | ||||||||||||||||||
| Interest income - taxable equivalent (1) | $ | 3,471 | $ | 3,919 | (11.4) | % | $ | 6,993 | $ | 8,382 | (16.6) | % | ||||||
| Interest expense | 198 | 440 | (55.0) | 407 | 1,216 | (66.5) | ||||||||||||
| Net interest income - taxable equivalent | 3,273 | 3,479 | (5.9) | 6,586 | 7,166 | (8.1) | ||||||||||||
| Less: Taxable-equivalent adjustment | 28 | 31 | (9.7) | 56 | 68 | (17.6) | ||||||||||||
| Net interest income | 3,245 | 3,448 | (5.9) | 6,530 | 7,098 | (8.0) | ||||||||||||
| Provision for credit losses | (434) | 844 | (151.4) | (386) | 1,737 | (122.2) | ||||||||||||
| Net interest income after provision for credit losses | 3,679 | 2,604 | 41.3 | 6,916 | 5,361 | 29.0 | ||||||||||||
| Noninterest income | 2,405 | 2,423 | (0.7) | 4,602 | 4,384 | 5.0 | ||||||||||||
| Noninterest expense | 4,011 | 3,878 | 3.4 | 7,621 | 7,309 | 4.3 | ||||||||||||
| Income before income taxes | 2,073 | 1,149 | 80.4 | 3,897 | 2,436 | 60.0 | ||||||||||||
| Provision for income taxes | 415 | 191 | 117.3 | 766 | 415 | 84.6 | ||||||||||||
| Net income | 1,658 | 958 | 73.1 | 3,131 | 2,021 | 54.9 | ||||||||||||
| Noncontrolling interests | 1 | 3 | (66.7) | (3) | 6 | (150.0) | ||||||||||||
| Net income available to the bank holding company | 1,657 | 955 | 73.5 | 3,134 | 2,015 | 55.5 | ||||||||||||
| Preferred stock dividends and other | 98 | 53 | 84.9 | 241 | 127 | 89.8 | ||||||||||||
| Net income available to common shareholders | 1,559 | 902 | 72.8 | 2,893 | 1,888 | 53.2 | ||||||||||||
| Per Common Share Data | ||||||||||||||||||
| Earnings per share-basic | $ | 1.16 | $ | 0.67 | 73.1 | % | $ | 2.16 | $ | 1.40 | 54.3 | % | ||||||
| Earnings per share-diluted | 1.16 | 0.67 | 73.1 | 2.14 | 1.39 | 54.0 | ||||||||||||
| Earnings per share-adjusted diluted (2) | 1.55 | 0.82 | 89.0 | 2.72 | 1.65 | 64.8 | ||||||||||||
| Cash dividends declared | 0.45 | 0.45 | — | 0.90 | 0.90 | — | ||||||||||||
| Common shareholders' equity | 46.20 | 45.74 | 1.0 | 46.20 | 45.74 | 1.0 | ||||||||||||
| Tangible common shareholders' equity (2) | 26.50 | 26.38 | 0.5 | 26.50 | 26.38 | 0.5 | ||||||||||||
| End of period shares outstanding | 1,334,770 | 1,347,609 | (1.0) | 1,334,770 | 1,347,609 | (1.0) | ||||||||||||
| Weighted average shares outstanding-basic | 1,338,302 | 1,347,512 | (0.7) | 1,341,963 | 1,345,942 | (0.3) | ||||||||||||
| Weighted average shares outstanding-diluted | 1,349,492 | 1,355,834 | (0.5) | 1,354,210 | 1,356,809 | (0.2) | ||||||||||||
| Performance Ratios | ||||||||||||||||||
| Return on average assets | 1.28 | % | 0.75 | % | 1.23 | % | 0.82 | % | ||||||||||
| Return on average risk-weighted assets (current period is preliminary) | 1.75 | 1.00 | 1.67 | 1.06 | ||||||||||||||
| Return on average common shareholders' equity | 10.1 | 5.9 | 9.4 | 6.2 | ||||||||||||||
| Return on average tangible common shareholders' equity (2) | 18.9 | 11.8 | 17.7 | 12.5 | ||||||||||||||
| Net interest margin - taxable equivalent | 2.88 | 3.13 | 2.95 | 3.34 | ||||||||||||||
| Fee income ratio | 42.6 | 41.3 | 41.3 | 38.2 | ||||||||||||||
| Efficiency ratio-GAAP | 71.0 | 66.1 | 68.5 | 63.7 | ||||||||||||||
| Efficiency ratio-adjusted (2) | 56.1 | 55.8 | 56.5 | 55.2 | ||||||||||||||
| Credit Quality | ||||||||||||||||||
| Nonperforming assets as a percentage of: | ||||||||||||||||||
| Assets, including LHFS | 0.23 | % | 0.25 | % | 0.23 | % | 0.25 | % | ||||||||||
| Loans and leases plus foreclosed property | 0.39 | 0.37 | 0.39 | 0.37 | ||||||||||||||
| Net charge-offs as a percentage of average loans and leases | 0.20 | 0.39 | 0.26 | 0.38 | ||||||||||||||
| Allowance for loan and lease losses as a percentage of LHFI | 1.79 | 1.81 | 1.79 | 1.81 | ||||||||||||||
| Ratio of allowance for loan and lease losses to nonperforming LHFI | 4.83x | 5.24x | 4.83x | 5.24x | ||||||||||||||
| Average Balances | ||||||||||||||||||
| Assets | $ | 518,774 | $ | 514,720 | 0.8 | % | $ | 513,832 | $ | 496,135 | 3.6 | % | ||||||
| Securities available for sale (3) | 135,647 | 75,159 | 80.5 | 128,984 | 75,430 | 71.0 | ||||||||||||
| Loans and leases | 292,965 | 326,435 | (10.3) | 296,235 | 317,091 | (6.6) | ||||||||||||
| Deposits | 396,255 | 370,818 | 6.9 | 389,756 | 352,733 | 10.5 | ||||||||||||
| Common shareholders' equity | 61,709 | 61,484 | 0.4 | 61,979 | 60,854 | 1.8 | ||||||||||||
| Total shareholders' equity | 68,665 | 66,863 | 2.7 | 69,352 | 66,137 | 4.9 | ||||||||||||
| Period-End Balances | ||||||||||||||||||
| Assets | $ | 521,964 | $ | 504,336 | 3.5 | % | $ | 521,964 | $ | 504,336 | 3.5 | % | ||||||
| Securities available for sale (3) | 139,879 | 77,805 | 79.8 | 139,879 | 77,805 | 79.8 | ||||||||||||
| Loans and leases | 289,494 | 321,148 | (9.9) | 289,494 | 321,148 | (9.9) | ||||||||||||
| Deposits | 398,279 | 376,235 | 5.9 | 398,279 | 376,235 | 5.9 | ||||||||||||
| Common shareholders' equity | 61,663 | 61,634 | — | 61,663 | 61,634 | — | ||||||||||||
| Total shareholders' equity | 68,336 | 68,883 | (0.8) | 68,336 | 68,883 | (0.8) | ||||||||||||
| Capital Ratios (current quarter is preliminary) | ||||||||||||||||||
| Common equity Tier 1 | 10.2 | % | 9.7 | % | 10.2 | % | 9.7 | % | ||||||||||
| Tier 1 | 11.9 | 11.6 | 11.9 | 11.6 | ||||||||||||||
| Total | 14.1 | 14.0 | 14.1 | 14.0 | ||||||||||||||
| Leverage | 9.1 | 9.0 | 9.1 | 9.0 | ||||||||||||||
| Supplementary leverage | 7.9 | 8.5 | 7.9 | 8.5 | ||||||||||||||
| Applicable ratios are annualized. | ||||||||||||||||||
| (1) Interest income includes certain fees, deferred costs, fair value mark accretion, and dividends. | ||||||||||||||||||
| (2) Represents a non-GAAP measure. See the calculations and management's reasons for using these measures in the Non-GAAP Reconciliations and Preliminary Capital Information - Five Quarter Trend sections of this supplement. | ||||||||||||||||||
| (3) Average balances reflect AFS securities at amortized cost. Period-end balances reflect AFS securities at fair value. |
Truist Financial Corporation 1
| Financial Highlights - Five Quarter Trend | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||
| Summary Income Statement | ||||||||||||||||
| Interest income - taxable equivalent (1) | $ | 3,471 | $ | 3,522 | $ | 3,639 | $ | 3,652 | $ | 3,919 | ||||||
| Interest expense | 198 | 209 | 245 | 261 | 440 | |||||||||||
| Net interest income - taxable equivalent | 3,273 | 3,313 | 3,394 | 3,391 | 3,479 | |||||||||||
| Less: Taxable-equivalent adjustment | 28 | 28 | 28 | 29 | 31 | |||||||||||
| Net interest income | 3,245 | 3,285 | 3,366 | 3,362 | 3,448 | |||||||||||
| Provision for credit losses | (434) | 48 | 177 | 421 | 844 | |||||||||||
| Net interest income after provision for credit losses | 3,679 | 3,237 | 3,189 | 2,941 | 2,604 | |||||||||||
| Noninterest income | 2,405 | 2,197 | 2,285 | 2,210 | 2,423 | |||||||||||
| Noninterest expense | 4,011 | 3,610 | 3,833 | 3,755 | 3,878 | |||||||||||
| Income before income taxes | 2,073 | 1,824 | 1,641 | 1,396 | 1,149 | |||||||||||
| Provision for income taxes | 415 | 351 | 311 | 255 | 191 | |||||||||||
| Net income | 1,658 | 1,473 | 1,330 | 1,141 | 958 | |||||||||||
| Noncontrolling interests | 1 | (4) | 1 | 3 | 3 | |||||||||||
| Net income available to the bank holding company | 1,657 | 1,477 | 1,329 | 1,138 | 955 | |||||||||||
| Preferred stock dividends and other | 98 | 143 | 101 | 70 | 53 | |||||||||||
| Net income available to common shareholders | 1,559 | 1,334 | 1,228 | 1,068 | 902 | |||||||||||
| Per Common Share Data | ||||||||||||||||
| Earnings per share-basic | $ | 1.16 | $ | 0.99 | $ | 0.91 | $ | 0.79 | $ | 0.67 | ||||||
| Earnings per share-diluted | 1.16 | 0.98 | 0.90 | 0.79 | 0.67 | |||||||||||
| Earnings per share-adjusted diluted (2) | 1.55 | 1.18 | 1.18 | 0.97 | 0.82 | |||||||||||
| Cash dividends declared | 0.45 | 0.45 | 0.45 | 0.45 | 0.45 | |||||||||||
| Common shareholders' equity | 46.20 | 45.17 | 46.52 | 45.86 | 45.74 | |||||||||||
| Tangible common shareholders' equity (2) | 26.50 | 25.53 | 26.78 | 26.63 | 26.38 | |||||||||||
| End of period shares outstanding | 1,334,770 | 1,344,845 | 1,348,961 | 1,348,118 | 1,347,609 | |||||||||||
| Weighted average shares outstanding-basic | 1,338,302 | 1,345,666 | 1,348,493 | 1,347,916 | 1,347,512 | |||||||||||
| Weighted average shares outstanding-diluted | 1,349,492 | 1,358,932 | 1,361,763 | 1,358,122 | 1,355,834 | |||||||||||
| Performance Ratios | ||||||||||||||||
| Return on average assets | 1.28 | % | 1.17 | % | 1.05 | % | 0.91 | % | 0.75 | % | ||||||
| Return on average risk-weighted assets (current quarter is preliminary) | 1.75 | 1.58 | 1.40 | 1.19 | 1.00 | |||||||||||
| Return on average common shareholders' equity | 10.1 | 8.7 | 7.9 | 6.9 | 5.9 | |||||||||||
| Return on average tangible common shareholders' equity (2) | 18.9 | 16.4 | 15.0 | 13.3 | 11.8 | |||||||||||
| Net interest margin - taxable equivalent | 2.88 | 3.01 | 3.08 | 3.10 | 3.13 | |||||||||||
| Fee income ratio | 42.6 | 40.1 | 40.4 | 39.7 | 41.3 | |||||||||||
| Efficiency ratio-GAAP | 71.0 | 65.8 | 67.8 | 67.4 | 66.1 | |||||||||||
| Efficiency ratio-adjusted (2) | 56.1 | 56.9 | 55.9 | 57.3 | 55.8 | |||||||||||
| Credit Quality | ||||||||||||||||
| Nonperforming assets as a percentage of: | ||||||||||||||||
| Assets, including LHFS | 0.23 | % | 0.25 | % | 0.27 | % | 0.26 | % | 0.25 | % | ||||||
| Loans and leases plus foreclosed property | 0.39 | 0.42 | 0.46 | 0.39 | 0.37 | |||||||||||
| Net charge-offs as a percentage of average loans and leases | 0.20 | 0.33 | 0.27 | 0.42 | 0.39 | |||||||||||
| Allowance for loan and lease losses as a percentage of LHFI | 1.79 | 1.94 | 1.95 | 1.91 | 1.81 | |||||||||||
| Ratio of allowance for loan and lease losses to nonperforming LHFI | 4.83x | 4.84x | 4.39x | 5.22x | 5.24x | |||||||||||
| Average Balances | ||||||||||||||||
| Assets | $ | 518,774 | $ | 508,833 | $ | 503,181 | $ | 500,826 | $ | 514,720 | ||||||
| Securities available for sale (3) | 135,647 | 122,246 | 102,053 | 79,828 | 75,159 | |||||||||||
| Loans and leases | 292,965 | 299,541 | 308,188 | 315,691 | 326,435 | |||||||||||
| Deposits | 396,255 | 383,185 | 375,266 | 372,211 | 370,818 | |||||||||||
| Common shareholders' equity | 61,709 | 62,252 | 61,991 | 61,804 | 61,484 | |||||||||||
| Total shareholders' equity | 68,665 | 70,047 | 70,145 | 69,634 | 66,863 | |||||||||||
| Period-End Balances | ||||||||||||||||
| Assets | $ | 521,964 | $ | 517,537 | $ | 509,228 | $ | 499,183 | $ | 504,336 | ||||||
| Securities available for sale (3) | 139,879 | 123,807 | 120,788 | 86,132 | 77,805 | |||||||||||
| Loans and leases | 289,494 | 297,179 | 305,793 | 312,149 | 321,148 | |||||||||||
| Deposits | 398,279 | 395,562 | 381,077 | 370,747 | 376,235 | |||||||||||
| Common shareholders' equity | 61,663 | 60,752 | 62,759 | 61,819 | 61,634 | |||||||||||
| Total shareholders' equity | 68,336 | 67,876 | 70,912 | 69,973 | 68,883 | |||||||||||
| Capital Ratios (current quarter is preliminary) | ||||||||||||||||
| Common equity Tier 1 | 10.2 | % | 10.1 | % | 10.0 | % | 10.0 | % | 9.7 | % | ||||||
| Tier 1 | 11.9 | 12.0 | 12.1 | 12.2 | 11.6 | |||||||||||
| Total | 14.1 | 14.3 | 14.5 | 14.6 | 14.0 | |||||||||||
| Leverage | 9.1 | 9.4 | 9.6 | 9.6 | 9.0 | |||||||||||
| Supplementary leverage | 7.9 | 8.3 | 8.7 | 8.9 | 8.5 | |||||||||||
| Applicable ratios are annualized. | ||||||||||||||||
| (1) Interest income includes certain fees, deferred costs, fair value mark accretion, and dividends. | ||||||||||||||||
| (2) Represents a non-GAAP measure. See the calculations and management's reasons for using these measures in the Non-GAAP Reconciliations and Preliminary Capital Information - Five Quarter Trend sections of this supplement. | ||||||||||||||||
| (3) Average balances reflect AFS securities at amortized cost. Period-end balances reflect AFS securities at fair value. |
2 Truist Financial Corporation
| Consolidated Statements of Income | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Year-to-Date | |||||||||||||
| June 30 | Change | June 30 | Change | |||||||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2020 | % | 2021 | 2020 | % | ||||||||
| Interest Income | ||||||||||||||
| Interest and fees on loans and leases | $ | 2,901 | $ | 3,377 | (14.1) | % | $ | 5,903 | $ | 7,153 | (17.5) | % | ||
| Interest on securities | 497 | 444 | 53 | 11.9 | 940 | 938 | 2 | 0.2 | ||||||
| Interest on other earning assets | 45 | 67 | (22) | (32.8) | 94 | 223 | (129) | (57.8) | ||||||
| Total interest income | 3,443 | 3,888 | (445) | (11.4) | 6,937 | 8,314 | (1,377) | (16.6) | ||||||
| Interest Expense | ||||||||||||||
| Interest on deposits | 36 | 201 | (165) | (82.1) | 83 | 622 | (539) | (86.7) | ||||||
| Interest on long-term debt | 147 | 211 | (64) | (30.3) | 295 | 483 | (188) | (38.9) | ||||||
| Interest on other borrowings | 15 | 28 | (13) | (46.4) | 29 | 111 | (82) | (73.9) | ||||||
| Total interest expense | 198 | 440 | (242) | (55.0) | 407 | 1,216 | (809) | (66.5) | ||||||
| Net Interest Income | 3,245 | 3,448 | (203) | (5.9) | 6,530 | 7,098 | (568) | (8.0) | ||||||
| Provision for credit losses | (434) | 844 | (1,278) | (151.4) | (386) | 1,737 | (2,123) | (122.2) | ||||||
| Net Interest Income After Provision for Credit Losses | 3,679 | 2,604 | 1,075 | 41.3 | 6,916 | 5,361 | 1,555 | 29.0 | ||||||
| Noninterest Income | ||||||||||||||
| Insurance income | 690 | 581 | 109 | 18.8 | 1,316 | 1,130 | 186 | 16.5 | ||||||
| Wealth management income | 345 | 289 | 56 | 19.4 | 686 | 621 | 65 | 10.5 | ||||||
| Service charges on deposits | 253 | 202 | 51 | 25.2 | 511 | 507 | 4 | 0.8 | ||||||
| Residential mortgage income | 117 | 341 | (224) | (65.7) | 217 | 586 | (369) | (63.0) | ||||||
| Investment banking and trading income | 317 | 274 | 43 | 15.7 | 657 | 392 | 265 | 67.6 | ||||||
| Card and payment related fees | 225 | 171 | 54 | 31.6 | 425 | 358 | 67 | 18.7 | ||||||
| Lending related fees | 94 | 66 | 28 | 42.4 | 194 | 133 | 61 | 45.9 | ||||||
| Operating lease income | 66 | 83 | (17) | (20.5) | 134 | 160 | (26) | (16.3) | ||||||
| Commercial real estate related income | 138 | 49 | 89 | 181.6 | 181 | 93 | 88 | 94.6 | ||||||
| Income from bank-owned life insurance | 46 | 45 | 1 | 2.2 | 96 | 89 | 7 | 7.9 | ||||||
| Securities gains (losses) | — | 300 | (300) | NM | — | 298 | (298) | NM | ||||||
| Other income (loss) | 114 | 22 | 92 | NM | 185 | 17 | 168 | NM | ||||||
| Total noninterest income | 2,405 | 2,423 | (18) | (0.7) | 4,602 | 4,384 | 218 | 5.0 | ||||||
| Noninterest Expense | ||||||||||||||
| Personnel expense | 2,207 | 2,008 | 199 | 9.9 | 4,349 | 3,980 | 369 | 9.3 | ||||||
| Professional fees and outside processing | 341 | 289 | 52 | 18.0 | 691 | 536 | 155 | 28.9 | ||||||
| Net occupancy expense | 182 | 243 | (61) | (25.1) | 391 | 464 | (73) | (15.7) | ||||||
| Software expense | 246 | 216 | 30 | 13.9 | 456 | 426 | 30 | 7.0 | ||||||
| Amortization of intangibles | 142 | 178 | (36) | (20.2) | 286 | 343 | (57) | (16.6) | ||||||
| Equipment expense | 122 | 120 | 2 | 1.7 | 235 | 236 | (1) | (0.4) | ||||||
| Marketing and customer development | 66 | 56 | 10 | 17.9 | 132 | 140 | (8) | (5.7) | ||||||
| Operating lease depreciation | 47 | 77 | (30) | (39.0) | 97 | 148 | (51) | (34.5) | ||||||
| Loan-related expense | 55 | 56 | (1) | (1.8) | 109 | 118 | (9) | (7.6) | ||||||
| Regulatory costs | 31 | 30 | 1 | 3.3 | 56 | 59 | (3) | (5.1) | ||||||
| Merger-related and restructuring charges | 297 | 209 | 88 | 42.1 | 438 | 316 | 122 | 38.6 | ||||||
| Loss (gain) on early extinguishment of debt | — | 235 | (235) | (100.0) | (3) | 235 | (238) | (101.3) | ||||||
| Other expense | 275 | 161 | 114 | 70.8 | 384 | 308 | 76 | 24.7 | ||||||
| Total noninterest expense | 4,011 | 3,878 | 133 | 3.4 | 7,621 | 7,309 | 312 | 4.3 | ||||||
| Earnings | ||||||||||||||
| Income before income taxes | 2,073 | 1,149 | 924 | 80.4 | 3,897 | 2,436 | 1,461 | 60.0 | ||||||
| Provision for income taxes | 415 | 191 | 224 | 117.3 | 766 | 415 | 351 | 84.6 | ||||||
| Net income | 1,658 | 958 | 700 | 73.1 | 3,131 | 2,021 | 1,110 | 54.9 | ||||||
| Noncontrolling interests | 1 | 3 | (2) | (66.7) | (3) | 6 | (9) | (150.0) | ||||||
| Net income available to the bank holding company | 1,657 | 955 | 702 | 73.5 | 3,134 | 2,015 | 1,119 | 55.5 | ||||||
| Preferred stock dividends and other | 98 | 53 | 45 | 84.9 | 241 | 127 | 114 | 89.8 | ||||||
| Net income available to common shareholders | $ | 1,559 | $ | 902 | 72.8 | % | $ | 2,893 | $ | 1,888 | 53.2 | % | ||
| Earnings Per Common Share | ||||||||||||||
| Basic | $ | 1.16 | $ | 0.67 | 73.1 | % | $ | 2.16 | $ | 1.40 | 54.3 | % | ||
| Diluted | 1.16 | 0.67 | 0.49 | 73.1 | 2.14 | 1.39 | 0.75 | 54.0 | ||||||
| Weighted Average Shares Outstanding | ||||||||||||||
| Basic | 1,338,302 | 1,347,512 | (9,210) | (0.7) | 1,341,963 | 1,345,942 | (3,979) | (0.3) | ||||||
| Diluted | 1,349,492 | 1,355,834 | (6,342) | (0.5) | 1,354,210 | 1,356,809 | (2,599) | (0.2) | ||||||
| NM - not meaningful |
All values are in US Dollars.
Truist Financial Corporation 3
| Consolidated Statements of Income - Five Quarter Trend | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Interest Income | ||||||||||
| Interest and fees on loans and leases | $ | 2,901 | $ | 3,002 | $ | 3,158 | $ | 3,174 | $ | 3,377 |
| Interest on securities | 497 | 443 | 408 | 393 | 444 | |||||
| Interest on other earning assets | 45 | 49 | 45 | 56 | 67 | |||||
| Total interest income | 3,443 | 3,494 | 3,611 | 3,623 | 3,888 | |||||
| Interest Expense | ||||||||||
| Interest on deposits | 36 | 47 | 67 | 96 | 201 | |||||
| Interest on long-term debt | 147 | 148 | 165 | 152 | 211 | |||||
| Interest on other borrowings | 15 | 14 | 13 | 13 | 28 | |||||
| Total interest expense | 198 | 209 | 245 | 261 | 440 | |||||
| Net Interest Income | 3,245 | 3,285 | 3,366 | 3,362 | 3,448 | |||||
| Provision for credit losses | (434) | 48 | 177 | 421 | 844 | |||||
| Net Interest Income After Provision for Credit Losses | 3,679 | 3,237 | 3,189 | 2,941 | 2,604 | |||||
| Noninterest Income | ||||||||||
| Insurance income | 690 | 626 | 545 | 518 | 581 | |||||
| Wealth management income | 345 | 341 | 332 | 324 | 289 | |||||
| Service charges on deposits | 253 | 258 | 266 | 247 | 202 | |||||
| Residential mortgage income | 117 | 100 | 193 | 221 | 341 | |||||
| Investment banking and trading income | 317 | 340 | 308 | 244 | 274 | |||||
| Card and payment related fees | 225 | 200 | 203 | 200 | 171 | |||||
| Lending related fees | 94 | 100 | 105 | 77 | 66 | |||||
| Operating lease income | 66 | 68 | 77 | 72 | 83 | |||||
| Commercial real estate related income | 138 | 43 | 123 | 55 | 49 | |||||
| Income from bank-owned life insurance | 46 | 50 | 44 | 46 | 45 | |||||
| Securities gains (losses) | — | — | — | 104 | 300 | |||||
| Other income (loss) | 114 | 71 | 89 | 102 | 22 | |||||
| Total noninterest income | 2,405 | 2,197 | 2,285 | 2,210 | 2,423 | |||||
| Noninterest Expense | ||||||||||
| Personnel expense | 2,207 | 2,142 | 2,108 | 2,058 | 2,008 | |||||
| Professional fees and outside processing | 341 | 350 | 393 | 323 | 289 | |||||
| Net occupancy expense | 182 | 209 | 207 | 233 | 243 | |||||
| Software expense | 246 | 210 | 215 | 221 | 216 | |||||
| Amortization of intangibles | 142 | 144 | 172 | 170 | 178 | |||||
| Equipment expense | 122 | 113 | 121 | 127 | 120 | |||||
| Marketing and customer development | 66 | 66 | 58 | 75 | 56 | |||||
| Operating lease depreciation | 47 | 50 | 54 | 56 | 77 | |||||
| Loan-related expense | 55 | 54 | 65 | 59 | 56 | |||||
| Regulatory costs | 31 | 25 | 32 | 34 | 30 | |||||
| Merger-related and restructuring charges | 297 | 141 | 308 | 236 | 209 | |||||
| Loss (gain) on early extinguishment of debt | — | (3) | — | — | 235 | |||||
| Other expense | 275 | 109 | 100 | 163 | 161 | |||||
| Total noninterest expense | 4,011 | 3,610 | 3,833 | 3,755 | 3,878 | |||||
| Earnings | ||||||||||
| Income before income taxes | 2,073 | 1,824 | 1,641 | 1,396 | 1,149 | |||||
| Provision for income taxes | 415 | 351 | 311 | 255 | 191 | |||||
| Net income | 1,658 | 1,473 | 1,330 | 1,141 | 958 | |||||
| Noncontrolling interests | 1 | (4) | 1 | 3 | 3 | |||||
| Net income available to the bank holding company | 1,657 | 1,477 | 1,329 | 1,138 | 955 | |||||
| Preferred stock dividends and other | 98 | 143 | 101 | 70 | 53 | |||||
| Net income available to common shareholders | $ | 1,559 | $ | 1,334 | $ | 1,228 | $ | 1,068 | $ | 902 |
| Earnings Per Common Share | ||||||||||
| Basic | $ | 1.16 | $ | 0.99 | $ | 0.91 | $ | 0.79 | $ | 0.67 |
| Diluted | 1.16 | 0.98 | 0.90 | 0.79 | 0.67 | |||||
| Weighted Average Shares Outstanding | ||||||||||
| Basic | 1,338,302 | 1,345,666 | 1,348,493 | 1,347,916 | 1,347,512 | |||||
| Diluted | 1,349,492 | 1,358,932 | 1,361,763 | 1,358,122 | 1,355,834 |
4 Truist Financial Corporation
| Segment Financial Performance - Preliminary | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Consumer Banking and Wealth | ||||||||||
| Net interest income (expense) | $ | 1,688 | $ | 1,752 | $ | 1,818 | $ | 1,856 | $ | 1,843 |
| Net intersegment interest income (expense) | 430 | 383 | 380 | 341 | 320 | |||||
| Segment net interest income | 2,118 | 2,135 | 2,198 | 2,197 | 2,163 | |||||
| Allocated provision for credit losses | (4) | 100 | 116 | 181 | 270 | |||||
| Noninterest income | 925 | 920 | 997 | 997 | 1,008 | |||||
| Noninterest expense | 1,922 | 1,910 | 1,949 | 1,930 | 1,969 | |||||
| Income (loss) before income taxes | 1,125 | 1,045 | 1,130 | 1,083 | 932 | |||||
| Provision (benefit) for income taxes | 263 | 245 | 266 | 256 | 220 | |||||
| Segment net income (loss) | $ | 862 | $ | 800 | $ | 864 | $ | 827 | $ | 712 |
| Corporate and Commercial Banking | ||||||||||
| Net interest income (expense) | $ | 1,182 | $ | 1,208 | $ | 1,271 | $ | 1,235 | $ | 1,351 |
| Net intersegment interest income (expense) | 32 | 6 | 15 | 42 | (59) | |||||
| Segment net interest income | 1,214 | 1,214 | 1,286 | 1,277 | 1,292 | |||||
| Allocated provision for credit losses | (399) | (35) | 60 | 311 | 534 | |||||
| Noninterest income | 809 | 694 | 789 | 608 | 621 | |||||
| Noninterest expense | 850 | 781 | 842 | 852 | 886 | |||||
| Income (loss) before income taxes | 1,572 | 1,162 | 1,173 | 722 | 493 | |||||
| Provision (benefit) for income taxes | 345 | 250 | 257 | 146 | 91 | |||||
| Segment net income (loss) | $ | 1,227 | $ | 912 | $ | 916 | $ | 576 | $ | 402 |
| Insurance Holdings | ||||||||||
| Net interest income (expense) | $ | 25 | $ | 24 | $ | 26 | $ | 31 | $ | 33 |
| Net intersegment interest income (expense) | (4) | (4) | (4) | (7) | (10) | |||||
| Segment net interest income | 21 | 20 | 22 | 24 | 23 | |||||
| Allocated provision for credit losses | (1) | 1 | 2 | — | 6 | |||||
| Noninterest income | 698 | 633 | 562 | 524 | 598 | |||||
| Noninterest expense | 515 | 479 | 451 | 446 | 448 | |||||
| Income (loss) before income taxes | 205 | 173 | 131 | 102 | 167 | |||||
| Provision (benefit) for income taxes | 49 | 42 | 32 | 25 | 41 | |||||
| Segment net income (loss) | $ | 156 | $ | 131 | $ | 99 | $ | 77 | $ | 126 |
| Other, Treasury & Corporate (1) | ||||||||||
| Net interest income (expense) | $ | 350 | $ | 301 | $ | 251 | $ | 240 | $ | 221 |
| Net intersegment interest income (expense) | (458) | (385) | (391) | (376) | (251) | |||||
| Segment net interest income | (108) | (84) | (140) | (136) | (30) | |||||
| Allocated provision for credit losses | (30) | (18) | (1) | (71) | 34 | |||||
| Noninterest income | (27) | (50) | (63) | 81 | 196 | |||||
| Noninterest expense | 724 | 440 | 591 | 527 | 575 | |||||
| Income (loss) before income taxes | (829) | (556) | (793) | (511) | (443) | |||||
| Provision (benefit) for income taxes | (242) | (186) | (244) | (172) | (161) | |||||
| Segment net income (loss) | $ | (587) | $ | (370) | $ | (549) | $ | (339) | $ | (282) |
| Total Truist Financial Corporation | ||||||||||
| Net interest income (expense) | $ | 3,245 | $ | 3,285 | $ | 3,366 | $ | 3,362 | $ | 3,448 |
| Net intersegment interest income (expense) | — | — | — | — | — | |||||
| Segment net interest income | 3,245 | 3,285 | 3,366 | 3,362 | 3,448 | |||||
| Allocated provision for credit losses | (434) | 48 | 177 | 421 | 844 | |||||
| Noninterest income | 2,405 | 2,197 | 2,285 | 2,210 | 2,423 | |||||
| Noninterest expense | 4,011 | 3,610 | 3,833 | 3,755 | 3,878 | |||||
| Income (loss) before income taxes | 2,073 | 1,824 | 1,641 | 1,396 | 1,149 | |||||
| Provision (benefit) for income taxes | 415 | 351 | 311 | 255 | 191 | |||||
| Net income | $ | 1,658 | $ | 1,473 | $ | 1,330 | $ | 1,141 | $ | 958 |
| (1) Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. |
Truist Financial Corporation 5
| Consolidated Ending Balance Sheets - Five Quarter Trend | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Assets | ||||||||||
| Cash and due from banks | $ | 5,077 | $ | 5,097 | $ | 5,029 | $ | 4,194 | $ | 5,116 |
| Interest-bearing deposits with banks | 21,480 | 27,035 | 13,839 | 32,914 | 36,081 | |||||
| Securities borrowed or purchased under resale agreements | 1,242 | 1,349 | 1,745 | 1,300 | 1,345 | |||||
| Trading assets at fair value | 5,945 | 5,094 | 3,872 | 4,670 | 3,824 | |||||
| Securities available for sale at fair value | 139,879 | 123,807 | 120,788 | 86,132 | 77,805 | |||||
| Loans and leases: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | 130,924 | 135,432 | 138,354 | 140,874 | 147,141 | |||||
| CRE | 25,399 | 25,899 | 26,595 | 27,474 | 27,963 | |||||
| Commercial construction | 6,160 | 6,559 | 6,491 | 6,772 | 6,891 | |||||
| Lease financing | 4,957 | 4,883 | 5,240 | 5,493 | 5,783 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 44,036 | 44,298 | 47,272 | 50,379 | 51,671 | |||||
| Residential home equity and direct | 25,334 | 25,333 | 26,064 | 26,558 | 26,935 | |||||
| Indirect auto | 26,696 | 26,438 | 26,150 | 25,269 | 24,509 | |||||
| Indirect other | 11,039 | 10,631 | 11,177 | 11,527 | 11,592 | |||||
| Student | 7,341 | 7,478 | 7,552 | 7,480 | 7,484 | |||||
| Credit card | 4,599 | 4,560 | 4,839 | 4,801 | 4,856 | |||||
| Total loans and leases held for investment | 286,485 | 291,511 | 299,734 | 306,627 | 314,825 | |||||
| Loans held for sale | 3,009 | 5,668 | 6,059 | 5,522 | 6,323 | |||||
| Total loans and leases | 289,494 | 297,179 | 305,793 | 312,149 | 321,148 | |||||
| Allowance for loan and lease losses | (5,121) | (5,662) | (5,835) | (5,863) | (5,702) | |||||
| Premises and equipment | 3,699 | 3,787 | 3,870 | 3,968 | 4,002 | |||||
| Goodwill | 24,374 | 24,356 | 24,447 | 23,869 | 23,882 | |||||
| Core deposit and other intangible assets | 2,665 | 2,825 | 2,984 | 2,840 | 3,016 | |||||
| Mortgage servicing rights | 2,231 | 2,365 | 2,023 | 1,991 | 2,077 | |||||
| Other assets | 30,999 | 30,305 | 30,673 | 31,019 | 31,742 | |||||
| Total assets | $ | 521,964 | $ | 517,537 | $ | 509,228 | $ | 499,183 | $ | 504,336 |
| Liabilities | ||||||||||
| Deposits: | ||||||||||
| Noninterest-bearing deposits | $ | 138,623 | $ | 136,555 | $ | 127,629 | $ | 124,297 | $ | 122,694 |
| Interest checking | 107,993 | 107,082 | 105,269 | 98,694 | 99,005 | |||||
| Money market and savings | 134,118 | 132,733 | 126,238 | 121,856 | 123,974 | |||||
| Time deposits | 17,545 | 19,192 | 21,941 | 25,900 | 30,562 | |||||
| Total deposits | 398,279 | 395,562 | 381,077 | 370,747 | 376,235 | |||||
| Short-term borrowings | 5,652 | 5,889 | 6,092 | 6,244 | 5,700 | |||||
| Long-term debt | 37,969 | 37,753 | 39,597 | 41,008 | 42,133 | |||||
| Other liabilities | 11,728 | 10,457 | 11,550 | 11,211 | 11,385 | |||||
| Total liabilities | 453,628 | 449,661 | 438,316 | 429,210 | 435,453 | |||||
| Shareholders' Equity: | ||||||||||
| Preferred stock | 6,673 | 7,124 | 8,048 | 8,048 | 7,143 | |||||
| Common stock | 6,674 | 6,724 | 6,745 | 6,741 | 6,738 | |||||
| Additional paid-in capital | 34,898 | 35,360 | 35,843 | 35,774 | 35,676 | |||||
| Retained earnings | 21,139 | 20,184 | 19,455 | 18,834 | 18,373 | |||||
| Accumulated other comprehensive loss | (1,048) | (1,516) | 716 | 470 | 847 | |||||
| Noncontrolling interests | — | — | 105 | 106 | 106 | |||||
| Total shareholders' equity | 68,336 | 67,876 | 70,912 | 69,973 | 68,883 | |||||
| Total liabilities and shareholders' equity | $ | 521,964 | $ | 517,537 | $ | 509,228 | $ | 499,183 | $ | 504,336 |
6 Truist Financial Corporation
| Average Balance Sheets | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Year-to-Date | |||||||||||||
| June 30 | Change | June 30 | Change | |||||||||||
| (Dollars in millions) | 2021 | 2020 | % | 2021 | 2020 | % | ||||||||
| Assets | ||||||||||||||
| Securities available for sale at amortized cost: | ||||||||||||||
| U.S. Treasury | $ | 9,070 | $ | 2,237 | NM | $ | 5,435 | $ | 2,255 | 141.0 | % | |||
| U.S. government-sponsored entities (GSE) | 1,840 | 1,844 | (4) | (0.2) | 1,840 | 1,850 | (10) | (0.5) | ||||||
| Mortgage-backed securities issued by GSE | 124,251 | 70,374 | 53,877 | 76.6 | 121,228 | 70,595 | 50,633 | 71.7 | ||||||
| States and political subdivisions | 437 | 505 | (68) | (13.5) | 441 | 518 | (77) | (14.9) | ||||||
| Non-agency mortgage-backed | 17 | 162 | (145) | (89.5) | 8 | 174 | (166) | (95.4) | ||||||
| Other | 32 | 37 | (5) | (13.5) | 32 | 38 | (6) | (15.8) | ||||||
| Total securities | 135,647 | 75,159 | 60,488 | 80.5 | 128,984 | 75,430 | 53,554 | 71.0 | ||||||
| Loans and leases: | ||||||||||||||
| Commercial: | ||||||||||||||
| Commercial and industrial | 133,646 | 152,991 | (19,345) | (12.6) | 134,843 | 142,367 | (7,524) | (5.3) | ||||||
| CRE | 25,645 | 27,804 | (2,159) | (7.8) | 25,926 | 27,425 | (1,499) | (5.5) | ||||||
| Commercial construction | 6,359 | 6,748 | (389) | (5.8) | 6,457 | 6,578 | (121) | (1.8) | ||||||
| Lease financing | 4,893 | 5,922 | (1,029) | (17.4) | 4,933 | 5,996 | (1,063) | (17.7) | ||||||
| Consumer: | ||||||||||||||
| Residential mortgage | 43,605 | 52,380 | (8,775) | (16.8) | 44,708 | 52,687 | (7,979) | (15.1) | ||||||
| Residential home equity and direct | 25,238 | 27,199 | (1,961) | (7.2) | 25,447 | 27,381 | (1,934) | (7.1) | ||||||
| Indirect auto | 26,444 | 24,721 | 1,723 | 7.0 | 26,403 | 24,848 | 1,555 | 6.3 | ||||||
| Indirect other | 10,797 | 11,282 | (485) | (4.3) | 10,823 | 11,116 | (293) | (2.6) | ||||||
| Student | 7,396 | 7,633 | (237) | (3.1) | 7,457 | 7,710 | (253) | (3.3) | ||||||
| Credit card | 4,552 | 4,949 | (397) | (8.0) | 4,598 | 5,242 | (644) | (12.3) | ||||||
| Total loans and leases held for investment | 288,575 | 321,629 | (33,054) | (10.3) | 291,595 | 311,350 | (19,755) | (6.3) | ||||||
| Loans held for sale | 4,390 | 4,806 | (416) | (8.7) | 4,640 | 5,741 | (1,101) | (19.2) | ||||||
| Total loans and leases | 292,965 | 326,435 | (33,470) | (10.3) | 296,235 | 317,091 | (20,856) | (6.6) | ||||||
| Interest earning trading assets | 5,061 | 3,700 | 1,361 | 36.8 | 4,902 | 5,017 | (115) | (2.3) | ||||||
| Other earning assets | 21,592 | 41,531 | (19,939) | (48.0) | 19,515 | 32,641 | (13,126) | (40.2) | ||||||
| Total earning assets | 455,265 | 446,825 | 8,440 | 1.9 | 449,636 | 430,179 | 19,457 | 4.5 | ||||||
| Nonearning assets | 63,509 | 67,895 | (4,386) | (6.5) | 64,196 | 65,956 | (1,760) | (2.7) | ||||||
| Total assets | $ | 518,774 | $ | 514,720 | 0.8 | % | $ | 513,832 | $ | 496,135 | 3.6 | % | ||
| Liabilities and Shareholders' Equity | ||||||||||||||
| Deposits: | ||||||||||||||
| Noninterest-bearing deposits | $ | 137,892 | $ | 113,875 | 21.1 | % | $ | 133,261 | $ | 103,505 | 28.7 | % | ||
| Interest checking | 106,121 | 97,863 | 8,258 | 8.4 | 105,436 | 91,435 | 14,001 | 15.3 | ||||||
| Money market and savings | 134,029 | 126,071 | 7,958 | 6.3 | 131,680 | 123,504 | 8,176 | 6.6 | ||||||
| Time deposits | 18,213 | 33,009 | (14,796) | (44.8) | 19,379 | 34,289 | (14,910) | (43.5) | ||||||
| Total deposits | 396,255 | 370,818 | 25,437 | 6.9 | 389,756 | 352,733 | 37,023 | 10.5 | ||||||
| Short-term borrowings | 6,168 | 8,998 | (2,830) | (31.5) | 6,448 | 13,949 | (7,501) | (53.8) | ||||||
| Long-term debt | 36,873 | 55,537 | (18,664) | (33.6) | 37,344 | 51,042 | (13,698) | (26.8) | ||||||
| Other liabilities | 10,813 | 12,504 | (1,691) | (13.5) | 10,932 | 12,274 | (1,342) | (10.9) | ||||||
| Total liabilities | 450,109 | 447,857 | 2,252 | 0.5 | 444,480 | 429,998 | 14,482 | 3.4 | ||||||
| Shareholders' equity | 68,665 | 66,863 | 1,802 | 2.7 | 69,352 | 66,137 | 3,215 | 4.9 | ||||||
| Total liabilities and shareholders' equity | $ | 518,774 | $ | 514,720 | 0.8 | % | $ | 513,832 | $ | 496,135 | 3.6 | % | ||
| Average balances exclude basis adjustments for fair value hedges. | ||||||||||||||
| NM - not meaningful |
All values are in US Dollars.
Truist Financial Corporation 7
| Average Balance Sheets - Five Quarter Trend | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Assets | ||||||||||
| Securities available for sale at amortized cost: | ||||||||||
| U.S. Treasury | $ | 9,070 | $ | 1,759 | $ | 2,049 | $ | 2,218 | $ | 2,237 |
| U.S. government-sponsored entities (GSE) | 1,840 | 1,839 | 1,841 | 1,842 | 1,844 | |||||
| Mortgage-backed securities issued by GSE | 124,251 | 118,171 | 97,660 | 75,232 | 70,374 | |||||
| States and political subdivisions | 437 | 444 | 469 | 499 | 505 | |||||
| Non-agency mortgage-backed | 17 | — | — | — | 162 | |||||
| Other | 32 | 33 | 34 | 37 | 37 | |||||
| Total securities | 135,647 | 122,246 | 102,053 | 79,828 | 75,159 | |||||
| Loans and leases: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | 133,646 | 136,051 | 139,223 | 143,452 | 152,991 | |||||
| CRE | 25,645 | 26,211 | 27,030 | 27,761 | 27,804 | |||||
| Commercial construction | 6,359 | 6,557 | 6,616 | 6,861 | 6,748 | |||||
| Lease financing | 4,893 | 4,975 | 5,401 | 5,626 | 5,922 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 43,605 | 45,823 | 48,847 | 51,500 | 52,380 | |||||
| Residential home equity and direct | 25,238 | 25,658 | 26,327 | 26,726 | 27,199 | |||||
| Indirect auto | 26,444 | 26,363 | 25,788 | 24,732 | 24,721 | |||||
| Indirect other | 10,797 | 10,848 | 11,291 | 11,530 | 11,282 | |||||
| Student | 7,396 | 7,519 | 7,519 | 7,446 | 7,633 | |||||
| Credit card | 4,552 | 4,645 | 4,818 | 4,810 | 4,949 | |||||
| Total loans and leases held for investment | 288,575 | 294,650 | 302,860 | 310,444 | 321,629 | |||||
| Loans held for sale | 4,390 | 4,891 | 5,328 | 5,247 | 4,806 | |||||
| Total loans and leases | 292,965 | 299,541 | 308,188 | 315,691 | 326,435 | |||||
| Interest earning trading assets | 5,061 | 4,742 | 4,538 | 4,056 | 3,700 | |||||
| Other earning assets | 21,592 | 17,417 | 23,887 | 35,819 | 41,531 | |||||
| Total earning assets | 455,265 | 443,946 | 438,666 | 435,394 | 446,825 | |||||
| Nonearning assets | 63,509 | 64,887 | 64,515 | 65,432 | 67,895 | |||||
| Total assets | $ | 518,774 | $ | 508,833 | $ | 503,181 | $ | 500,826 | $ | 514,720 |
| Liabilities and Shareholders' Equity | ||||||||||
| Deposits: | ||||||||||
| Noninterest-bearing deposits | $ | 137,892 | $ | 128,579 | $ | 127,103 | $ | 123,966 | $ | 113,875 |
| Interest checking | 106,121 | 104,744 | 99,866 | 96,707 | 97,863 | |||||
| Money market and savings | 134,029 | 129,303 | 124,692 | 123,598 | 126,071 | |||||
| Time deposits | 18,213 | 20,559 | 23,605 | 27,940 | 33,009 | |||||
| Total deposits | 396,255 | 383,185 | 375,266 | 372,211 | 370,818 | |||||
| Short-term borrowings | 6,168 | 6,731 | 6,493 | 6,209 | 8,998 | |||||
| Long-term debt | 36,873 | 37,820 | 40,284 | 40,919 | 55,537 | |||||
| Other liabilities | 10,813 | 11,050 | 10,993 | 11,853 | 12,504 | |||||
| Total liabilities | 450,109 | 438,786 | 433,036 | 431,192 | 447,857 | |||||
| Shareholders' equity | 68,665 | 70,047 | 70,145 | 69,634 | 66,863 | |||||
| Total liabilities and shareholders' equity | $ | 518,774 | $ | 508,833 | $ | 503,181 | $ | 500,826 | $ | 514,720 |
| Average balances exclude basis adjustments for fair value hedges. |
8 Truist Financial Corporation
| Average Balances and Rates - Quarters | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||||
| June 30, 2021 | March 31, 2021 | |||||||||||
| (1) | (2) Interest | (2) | (1) | (2) Interest | (2) | |||||||
| Average | Income/ | Yields/ | Average | Income/ | Yields/ | |||||||
| (Dollars in millions) | Balances | Expense | Rates | Balances | Expense | Rates | ||||||
| Assets | ||||||||||||
| Securities available for sale at amortized cost: | ||||||||||||
| U.S. Treasury | $ | 9,070 | $ | 16 | 0.73 | % | $ | 1,759 | $ | 4 | 0.89 | % |
| U.S. government-sponsored entities (GSE) | 1,840 | 11 | 2.33 | 1,839 | 11 | 2.33 | ||||||
| Mortgage-backed securities issued by GSE | 124,251 | 466 | 1.50 | 118,171 | 426 | 1.44 | ||||||
| States and political subdivisions | 437 | 4 | 3.55 | 444 | 4 | 3.52 | ||||||
| Non-agency mortgage-backed | 17 | — | 2.46 | — | — | — | ||||||
| Other | 32 | — | 1.88 | 33 | — | 1.92 | ||||||
| Total securities | 135,647 | 497 | 1.47 | 122,246 | 445 | 1.45 | ||||||
| Loans and leases: | ||||||||||||
| Commercial: | ||||||||||||
| Commercial and industrial | 133,646 | 1,024 | 3.07 | 136,051 | 1,040 | 3.10 | ||||||
| CRE | 25,645 | 183 | 2.84 | 26,211 | 189 | 2.90 | ||||||
| Commercial construction | 6,359 | 45 | 2.95 | 6,557 | 48 | 3.04 | ||||||
| Lease financing | 4,893 | 48 | 3.91 | 4,975 | 53 | 4.28 | ||||||
| Consumer: | ||||||||||||
| Residential mortgage | 43,605 | 474 | 4.35 | 45,823 | 507 | 4.42 | ||||||
| Residential home equity and direct | 25,238 | 361 | 5.74 | 25,658 | 368 | 5.81 | ||||||
| Indirect auto | 26,444 | 409 | 6.20 | 26,363 | 426 | 6.56 | ||||||
| Indirect other | 10,797 | 185 | 6.86 | 10,848 | 187 | 6.98 | ||||||
| Student | 7,396 | 72 | 3.90 | 7,519 | 73 | 3.96 | ||||||
| Credit card | 4,552 | 99 | 8.73 | 4,645 | 106 | 9.24 | ||||||
| Total loans and leases held for investment | 288,575 | 2,900 | 4.03 | 294,650 | 2,997 | 4.11 | ||||||
| Loans held for sale | 4,390 | 28 | 2.57 | 4,891 | 32 | 2.59 | ||||||
| Total loans and leases | 292,965 | 2,928 | 4.01 | 299,541 | 3,029 | 4.09 | ||||||
| Interest earning trading assets | 5,061 | 37 | 2.82 | 4,742 | 32 | 2.79 | ||||||
| Other earning assets | 21,592 | 9 | 0.19 | 17,417 | 16 | 0.37 | ||||||
| Total earning assets | 455,265 | 3,471 | 3.06 | 443,946 | 3,522 | 3.20 | ||||||
| Nonearning assets | 63,509 | 64,887 | ||||||||||
| Total assets | $ | 518,774 | $ | 508,833 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Interest-bearing deposits: | ||||||||||||
| Interest checking | $ | 106,121 | 15 | 0.06 | $ | 104,744 | 15 | 0.06 | ||||
| Money market and savings | 134,029 | 8 | 0.03 | 129,303 | 10 | 0.03 | ||||||
| Time deposits | 18,213 | 13 | 0.28 | 20,559 | 22 | 0.44 | ||||||
| Total interest-bearing deposits (3) | 258,363 | 36 | 0.06 | 254,606 | 47 | 0.07 | ||||||
| Short-term borrowings | 6,168 | 15 | 0.98 | 6,731 | 14 | 0.82 | ||||||
| Long-term debt | 36,873 | 147 | 1.60 | 37,820 | 148 | 1.57 | ||||||
| Total interest-bearing liabilities | 301,404 | 198 | 0.26 | 299,157 | 209 | 0.28 | ||||||
| Noninterest-bearing deposits (3) | 137,892 | 128,579 | ||||||||||
| Other liabilities | 10,813 | 11,050 | ||||||||||
| Shareholders' equity | 68,665 | 70,047 | ||||||||||
| Total liabilities and shareholders' equity | $ | 518,774 | $ | 508,833 | ||||||||
| Average interest-rate spread | 2.80 | 2.92 | ||||||||||
| Net interest income/ net interest margin - taxable equivalent | $ | 3,273 | 2.88 | % | $ | 3,313 | 3.01 | % | ||||
| Taxable-equivalent adjustment | $ | 28 | $ | 28 | ||||||||
| Applicable ratios are annualized. | ||||||||||||
| (1) Excludes basis adjustments for fair value hedges. | ||||||||||||
| (2) Amounts are on a taxable-equivalent basis utilizing the federal income tax rate of 21% for the periods presented. Interest income includes certain fees, deferred costs, and dividends. | ||||||||||||
| (3) Total deposit costs were 0.04% and 0.05% for the three months ended June 30, 2021 and March 31, 2021, respectively. |
Truist Financial Corporation 9
| Average Balances and Rates - Quarters | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | ||||||||||||||||||
| December 31, 2020 | September 30, 2020 | June 30, 2020 | ||||||||||||||||
| (1) | (2) Interest | (2) | (1) | (2) Interest | (2) | (1) | (2) Interest | (2) | ||||||||||
| Average | Income/ | Yields/ | Average | Income/ | Yields/ | Average | Income/ | Yields/ | ||||||||||
| (Dollars in millions) | Balances | Expense | Rates | Balances | Expense | Rates | Balances | Expense | Rates | |||||||||
| Assets | ||||||||||||||||||
| Securities available for sale at amortized cost: | ||||||||||||||||||
| U.S. Treasury | $ | 2,049 | $ | 9 | 1.62 | % | $ | 2,218 | $ | 10 | 1.78 | % | $ | 2,237 | $ | 10 | 1.88 | % |
| U.S. government-sponsored entities (GSE) | 1,841 | 11 | 2.33 | 1,842 | 10 | 2.33 | 1,844 | 12 | 2.33 | |||||||||
| Mortgage-backed securities issued by GSE | 97,660 | 385 | 1.58 | 75,232 | 366 | 1.95 | 70,374 | 413 | 2.35 | |||||||||
| States and political subdivisions | 469 | 3 | 3.52 | 499 | 7 | 5.03 | 505 | 4 | 3.57 | |||||||||
| Non-agency mortgage-backed | — | — | — | — | — | — | 162 | 7 | 16.71 | |||||||||
| Other | 34 | — | 1.98 | 37 | 1 | 1.99 | 37 | — | 2.27 | |||||||||
| Total securities | 102,053 | 408 | 1.60 | 79,828 | 394 | 1.97 | 75,159 | 446 | 2.37 | |||||||||
| Loans and leases: | ||||||||||||||||||
| Commercial: | ||||||||||||||||||
| Commercial and industrial | 139,223 | 1,091 | 3.12 | 143,452 | 1,087 | 3.02 | 152,991 | 1,204 | 3.16 | |||||||||
| CRE | 27,030 | 197 | 2.88 | 27,761 | 203 | 2.88 | 27,804 | 227 | 3.26 | |||||||||
| Commercial construction | 6,616 | 51 | 3.13 | 6,861 | 55 | 3.26 | 6,748 | 61 | 3.70 | |||||||||
| Lease financing | 5,401 | 65 | 4.82 | 5,626 | 52 | 3.71 | 5,922 | 70 | 4.71 | |||||||||
| Consumer: | ||||||||||||||||||
| Residential mortgage | 48,847 | 542 | 4.44 | 51,500 | 576 | 4.47 | 52,380 | 608 | 4.65 | |||||||||
| Residential home equity and direct | 26,327 | 388 | 5.86 | 26,726 | 394 | 5.86 | 27,199 | 391 | 5.78 | |||||||||
| Indirect auto | 25,788 | 416 | 6.41 | 24,732 | 405 | 6.51 | 24,721 | 407 | 6.63 | |||||||||
| Indirect other | 11,291 | 195 | 6.87 | 11,530 | 204 | 7.05 | 11,282 | 201 | 7.18 | |||||||||
| Student | 7,519 | 80 | 4.23 | 7,446 | 80 | 4.30 | 7,633 | 87 | 4.55 | |||||||||
| Credit card | 4,818 | 114 | 9.35 | 4,810 | 109 | 9.03 | 4,949 | 114 | 9.27 | |||||||||
| Total loans and leases held for investment | 302,860 | 3,139 | 4.13 | 310,444 | 3,165 | 4.06 | 321,629 | 3,370 | 4.21 | |||||||||
| Loans held for sale | 5,328 | 47 | 3.54 | 5,247 | 37 | 2.78 | 4,806 | 36 | 3.04 | |||||||||
| Total loans and leases | 308,188 | 3,186 | 4.12 | 315,691 | 3,202 | 4.04 | 326,435 | 3,406 | 4.19 | |||||||||
| Interest earning trading assets | 4,538 | 33 | 2.89 | 4,056 | 32 | 3.23 | 3,700 | 39 | 4.19 | |||||||||
| Other earning assets | 23,887 | 12 | 0.20 | 35,819 | 24 | 0.26 | 41,531 | 28 | 0.28 | |||||||||
| Total earning assets | 438,666 | 3,639 | 3.31 | 435,394 | 3,652 | 3.34 | 446,825 | 3,919 | 3.52 | |||||||||
| Nonearning assets | 64,515 | 65,432 | 67,895 | |||||||||||||||
| Total assets | $ | 503,181 | $ | 500,826 | $ | 514,720 | ||||||||||||
| Liabilities and Shareholders' Equity | ||||||||||||||||||
| Interest-bearing deposits: | ||||||||||||||||||
| Interest checking | $ | 99,866 | 17 | 0.07 | $ | 96,707 | 15 | 0.06 | $ | 97,863 | 55 | 0.23 | ||||||
| Money market and savings | 124,692 | 10 | 0.03 | 123,598 | 19 | 0.06 | 126,071 | 57 | 0.18 | |||||||||
| Time deposits | 23,605 | 40 | 0.66 | 27,940 | 62 | 0.89 | 33,009 | 89 | 1.09 | |||||||||
| Total interest-bearing deposits (3) | 248,163 | 67 | 0.11 | 248,245 | 96 | 0.15 | 256,943 | 201 | 0.32 | |||||||||
| Short-term borrowings | 6,493 | 13 | 0.77 | 6,209 | 13 | 0.85 | 8,998 | 28 | 1.24 | |||||||||
| Long-term debt | 40,284 | 165 | 1.64 | 40,919 | 152 | 1.48 | 55,537 | 211 | 1.52 | |||||||||
| Total interest-bearing liabilities | 294,940 | 245 | 0.33 | 295,373 | 261 | 0.35 | 321,478 | 440 | 0.55 | |||||||||
| Noninterest-bearing deposits (3) | 127,103 | 123,966 | 113,875 | |||||||||||||||
| Other liabilities | 10,993 | 11,853 | 12,504 | |||||||||||||||
| Shareholders' equity | 70,145 | 69,634 | 66,863 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 503,181 | $ | 500,826 | $ | 514,720 | ||||||||||||
| Average interest-rate spread | 2.98 | 2.99 | 2.97 | |||||||||||||||
| Net interest income/ net interest margin - taxable equivalent | $ | 3,394 | 3.08 | % | $ | 3,391 | 3.10 | % | $ | 3,479 | 3.13 | % | ||||||
| Taxable-equivalent adjustment | $ | 28 | $ | 29 | $ | 31 | ||||||||||||
| Applicable ratios are annualized. | ||||||||||||||||||
| (1) Excludes basis adjustments for fair value hedges. | ||||||||||||||||||
| (2) Amounts are on a taxable-equivalent basis utilizing the federal income tax rate of 21% for the periods presented. Interest income includes certain fees, deferred costs, and dividends. | ||||||||||||||||||
| (3) Total deposit costs were 0.07%, 0.10%, and 0.22% for the three months ended December 31, 2020, September 30, 2020, and June 30, 2020, respectively. |
10 Truist Financial Corporation
| Average Balances and Rates - Year-To-Date | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year-to-Date | ||||||||||||
| June 30, 2021 | June 30, 2020 | |||||||||||
| (1) | (2) Interest | (2) | (1) | (2) Interest | (2) | |||||||
| Average | Income/ | Yields/ | Average | Income/ | Yields/ | |||||||
| (Dollars in millions) | Balances | Expense | Rates | Balances | Expense | Rates | ||||||
| Assets | ||||||||||||
| Securities available for sale at amortized cost: | ||||||||||||
| U.S. Treasury | $ | 5,435 | $ | 20 | 0.76 | % | $ | 2,255 | $ | 21 | 1.91 | % |
| U.S. government-sponsored entities (GSE) | 1,840 | 22 | 2.33 | 1,850 | 22 | 2.33 | ||||||
| Mortgage-backed securities issued by GSE | 121,228 | 892 | 1.47 | 70,595 | 874 | 2.48 | ||||||
| States and political subdivisions | 441 | 8 | 3.54 | 518 | 9 | 3.57 | ||||||
| Non-agency mortgage-backed | 8 | — | 2.45 | 174 | 15 | 16.71 | ||||||
| Other | 32 | — | 1.90 | 38 | — | 2.65 | ||||||
| Total securities | 128,984 | 942 | 1.46 | 75,430 | 941 | 2.49 | ||||||
| Loans and leases: | ||||||||||||
| Commercial: | ||||||||||||
| Commercial and industrial | 134,843 | 2,064 | 3.08 | 142,367 | 2,623 | 3.70 | ||||||
| CRE | 25,926 | 372 | 2.87 | 27,425 | 514 | 3.75 | ||||||
| Commercial construction | 6,457 | 93 | 2.99 | 6,578 | 137 | 4.27 | ||||||
| Lease financing | 4,933 | 101 | 4.09 | 5,996 | 135 | 4.49 | ||||||
| Consumer: | ||||||||||||
| Residential mortgage | 44,708 | 981 | 4.39 | 52,687 | 1,202 | 4.56 | ||||||
| Residential home equity and direct | 25,447 | 729 | 5.78 | 27,381 | 843 | 6.19 | ||||||
| Indirect auto | 26,403 | 835 | 6.38 | 24,848 | 835 | 6.76 | ||||||
| Indirect other | 10,823 | 372 | 6.92 | 11,116 | 402 | 7.27 | ||||||
| Student | 7,457 | 145 | 3.93 | 7,710 | 191 | 4.97 | ||||||
| Credit card | 4,598 | 205 | 8.99 | 5,242 | 247 | 9.49 | ||||||
| Total loans and leases held for investment | 291,595 | 5,897 | 4.07 | 311,350 | 7,129 | 4.60 | ||||||
| Loans held for sale | 4,640 | 60 | 2.58 | 5,741 | 89 | 3.10 | ||||||
| Total loans and leases | 296,235 | 5,957 | 4.05 | 317,091 | 7,218 | 4.57 | ||||||
| Interest earning trading assets | 4,902 | 69 | 2.81 | 5,017 | 103 | 4.09 | ||||||
| Other earning assets | 19,515 | 25 | 0.27 | 32,641 | 120 | 0.74 | ||||||
| Total earning assets | 449,636 | 6,993 | 3.13 | 430,179 | 8,382 | 3.91 | ||||||
| Nonearning assets | 64,196 | 65,956 | ||||||||||
| Total assets | $ | 513,832 | $ | 496,135 | ||||||||
| Liabilities and Shareholders' Equity | ||||||||||||
| Interest-bearing deposits: | ||||||||||||
| Interest checking | $ | 105,436 | 30 | 0.06 | $ | 91,435 | 184 | 0.41 | ||||
| Money market and savings | 131,680 | 18 | 0.03 | 123,504 | 235 | 0.38 | ||||||
| Time deposits | 19,379 | 35 | 0.36 | 34,289 | 203 | 1.19 | ||||||
| Total interest-bearing deposits (3) | 256,495 | 83 | 0.07 | 249,228 | 622 | 0.50 | ||||||
| Short-term borrowings | 6,448 | 29 | 0.90 | 13,949 | 111 | 1.60 | ||||||
| Long-term debt | 37,344 | 295 | 1.58 | 51,042 | 483 | 1.90 | ||||||
| Total interest-bearing liabilities | 300,287 | 407 | 0.27 | 314,219 | 1,216 | 0.78 | ||||||
| Noninterest-bearing deposits (3) | 133,261 | 103,505 | ||||||||||
| Other liabilities | 10,932 | 12,274 | ||||||||||
| Shareholders' equity | 69,352 | 66,137 | ||||||||||
| Total liabilities and shareholders' equity | $ | 513,832 | $ | 496,135 | ||||||||
| Average interest-rate spread | 2.86 | 3.13 | ||||||||||
| Net interest income/ net interest margin - taxable equivalent | $ | 6,586 | 2.95 | % | $ | 7,166 | 3.34 | % | ||||
| Taxable-equivalent adjustment | $ | 56 | $ | 68 | ||||||||
| Applicable ratios are annualized. | ||||||||||||
| (1) Excludes basis adjustments for fair value hedges. | ||||||||||||
| (2) Amounts are on a taxable-equivalent basis utilizing the federal income tax rate of 21% for the periods presented. Interest income includes certain fees, deferred costs, and dividends. | ||||||||||||
| (3) Total deposit costs were 0.04% and 0.35% for the six months ended June 30, 2021 and 2020, respectively. |
Truist Financial Corporation 11
| Credit Quality | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Nonperforming Assets | ||||||||||
| Nonaccrual loans and leases: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | $ | 397 | $ | 451 | $ | 532 | $ | 507 | $ | 428 |
| CRE | 25 | 58 | 75 | 52 | 42 | |||||
| Commercial construction | 12 | 13 | 14 | 7 | 13 | |||||
| Lease financing | 5 | 23 | 28 | 32 | 56 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 302 | 290 | 316 | 205 | 198 | |||||
| Residential home equity and direct | 165 | 172 | 205 | 180 | 192 | |||||
| Indirect auto | 148 | 158 | 155 | 137 | 155 | |||||
| Indirect other | 6 | 6 | 5 | 4 | 3 | |||||
| Total nonaccrual loans and leases held for investment | 1,060 | 1,171 | 1,330 | 1,124 | 1,087 | |||||
| Loans held for sale | 78 | 72 | 5 | 130 | 102 | |||||
| Total nonaccrual loans and leases | 1,138 | 1,243 | 1,335 | 1,254 | 1,189 | |||||
| Foreclosed real estate | 13 | 18 | 20 | 30 | 43 | |||||
| Other foreclosed property | 41 | 38 | 32 | 30 | 20 | |||||
| Total nonperforming assets | $ | 1,192 | $ | 1,299 | $ | 1,387 | $ | 1,314 | $ | 1,252 |
| Troubled Debt Restructurings (TDRs) | ||||||||||
| Performing TDRs: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | $ | 144 | $ | 142 | $ | 78 | $ | 84 | $ | 57 |
| CRE | 24 | 47 | 47 | 36 | 22 | |||||
| Commercial construction | — | — | — | 1 | 36 | |||||
| Lease financing | 58 | 59 | 60 | 1 | 1 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 727 | 733 | 648 | 640 | 533 | |||||
| Residential home equity and direct | 107 | 109 | 88 | 71 | 71 | |||||
| Indirect auto | 389 | 399 | 392 | 336 | 342 | |||||
| Indirect other | 7 | 7 | 6 | 5 | 4 | |||||
| Student | 13 | 8 | 5 | 5 | 4 | |||||
| Credit card | 32 | 35 | 37 | 38 | 37 | |||||
| Total performing TDRs | 1,501 | 1,539 | 1,361 | 1,217 | 1,107 | |||||
| Nonperforming TDRs | 190 | 207 | 164 | 140 | 111 | |||||
| Total TDRs | $ | 1,691 | $ | 1,746 | $ | 1,525 | $ | 1,357 | $ | 1,218 |
| Loans 90 Days or More Past Due and Still Accruing | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | $ | 14 | $ | 14 | $ | 13 | $ | 6 | $ | 9 |
| CRE | — | — | — | 8 | 3 | |||||
| Lease financing | — | — | — | — | 1 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 976 | 975 | 841 | 573 | 521 | |||||
| Residential home equity and direct | 7 | 11 | 10 | 5 | 9 | |||||
| Indirect auto | 2 | 2 | 2 | 8 | 10 | |||||
| Indirect other | 1 | 1 | 2 | 3 | 3 | |||||
| Student | 1,046 | 1,037 | 1,111 | 570 | 478 | |||||
| Credit card | 22 | 32 | 29 | 24 | 38 | |||||
| Total loans 90 days past due and still accruing | $ | 2,068 | $ | 2,072 | $ | 2,008 | $ | 1,197 | $ | 1,072 |
| Loans 30-89 Days Past Due | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | $ | 128 | $ | 117 | $ | 83 | $ | 155 | $ | 282 |
| CRE | 7 | 9 | 14 | 7 | 6 | |||||
| Commercial construction | 1 | 4 | 5 | — | 1 | |||||
| Lease financing | 18 | 35 | 6 | 9 | 10 | |||||
| Consumer: | ||||||||||
| Residential mortgage | 543 | 577 | 782 | 796 | 703 | |||||
| Residential home equity and direct | 73 | 82 | 98 | 103 | 108 | |||||
| Indirect auto | 428 | 328 | 495 | 321 | 265 | |||||
| Indirect other | 47 | 45 | 68 | 52 | 50 | |||||
| Student | 548 | 556 | 618 | 666 | 442 | |||||
| Credit card | 31 | 35 | 51 | 39 | 34 | |||||
| Total loans 30-89 days past due | $ | 1,824 | $ | 1,788 | $ | 2,220 | $ | 2,148 | $ | 1,901 |
12 Truist Financial Corporation
| As of/For the Quarter Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Allowance for Credit Losses | ||||||||||
| Beginning balance | $ | 6,011 | $ | 6,199 | $ | 6,229 | $ | 6,133 | $ | 5,611 |
| Provision for credit losses | (434) | 48 | 177 | 421 | 844 | |||||
| Charge-offs: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | (51) | (73) | (84) | (112) | (123) | |||||
| CRE | — | (4) | (19) | (44) | (14) | |||||
| Commercial construction | — | (2) | (8) | (19) | — | |||||
| Lease financing | (2) | (6) | (4) | (44) | (4) | |||||
| Consumer: | ||||||||||
| Residential mortgage | (4) | (11) | (6) | (4) | (35) | |||||
| Residential home equity and direct | (57) | (55) | (46) | (52) | (65) | |||||
| Indirect auto | (69) | (105) | (84) | (72) | (80) | |||||
| Indirect other | (11) | (17) | (14) | (8) | (20) | |||||
| Student | (3) | (3) | (3) | (6) | (6) | |||||
| Credit card | (42) | (40) | (35) | (44) | (50) | |||||
| Total charge-offs | (239) | (316) | (303) | (405) | (397) | |||||
| Recoveries: | ||||||||||
| Commercial: | ||||||||||
| Commercial and industrial | 20 | 19 | 34 | 20 | 21 | |||||
| CRE | 4 | 1 | 1 | — | 4 | |||||
| Commercial construction | 1 | 1 | 1 | 2 | 7 | |||||
| Lease financing | 3 | — | — | 4 | — | |||||
| Consumer: | ||||||||||
| Residential mortgage | 5 | 2 | 3 | 3 | 2 | |||||
| Residential home equity and direct | 20 | 18 | 20 | 16 | 15 | |||||
| Indirect auto | 27 | 22 | 24 | 22 | 18 | |||||
| Indirect other | 7 | 6 | 5 | 4 | 7 | |||||
| Student | — | — | — | — | 1 | |||||
| Credit card | 10 | 9 | 10 | 8 | 6 | |||||
| Total recoveries | 97 | 78 | 98 | 79 | 81 | |||||
| Net charge-offs | (142) | (238) | (205) | (326) | (316) | |||||
| Other | 1 | 2 | (2) | 1 | (6) | |||||
| Ending balance | $ | 5,436 | $ | 6,011 | $ | 6,199 | $ | 6,229 | $ | 6,133 |
| Allowance for Credit Losses: | ||||||||||
| Allowance for loan and lease losses (excluding PCD loans) | $ | 4,979 | $ | 5,506 | $ | 5,668 | $ | 5,675 | $ | 5,408 |
| Allowance for PCD loans | 142 | 156 | 167 | 188 | 294 | |||||
| Reserve for unfunded lending commitments (RUFC) | 315 | 349 | 364 | 366 | 431 | |||||
| Total | $ | 5,436 | $ | 6,011 | $ | 6,199 | $ | 6,229 | $ | 6,133 |
Truist Financial Corporation 13
| As of/For the Year-to-Date | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Period Ended June 30 | |||||||||
| (Dollars in millions) | 2021 | 2020 | |||||||
| Allowance for Credit Losses | |||||||||
| Beginning balance | $ | 6,199 | $ | 1,889 | |||||
| CECL adoption - impact to retained earnings before tax | — | 2,762 | |||||||
| CECL adoption - reserves on PCD assets | — | 378 | |||||||
| Provision for credit losses | (386) | 1,737 | |||||||
| Charge-offs: | |||||||||
| Commercial: | |||||||||
| Commercial and industrial | (124) | (162) | |||||||
| CRE | (4) | (15) | |||||||
| Commercial construction | (2) | (3) | |||||||
| Lease financing | (8) | (6) | |||||||
| Consumer: | |||||||||
| Residential mortgage | (15) | (46) | |||||||
| Residential home equity and direct | (112) | (133) | |||||||
| Indirect auto | (174) | (222) | |||||||
| Indirect other | (28) | (38) | |||||||
| Student | (6) | (14) | |||||||
| Credit card | (82) | (103) | |||||||
| Total charge-offs | (555) | (742) | |||||||
| Recoveries: | |||||||||
| Commercial: | |||||||||
| Commercial and industrial | 39 | 38 | |||||||
| CRE | 5 | 4 | |||||||
| Commercial construction | 2 | 8 | |||||||
| Lease financing | 3 | — | |||||||
| Consumer: | |||||||||
| Residential mortgage | 7 | 4 | |||||||
| Residential home equity and direct | 38 | 30 | |||||||
| Indirect auto | 49 | 41 | |||||||
| Indirect other | 13 | 14 | |||||||
| Student | — | 1 | |||||||
| Credit card | 19 | 14 | |||||||
| Total recoveries | 175 | 154 | |||||||
| Net charge-offs | (380) | (588) | |||||||
| Other | 3 | (45) | |||||||
| Ending balance | $ | 5,436 | $ | 6,133 | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| 2021 | 2020 | 2020 | 2020 | ||||||
| Asset Quality Ratios | |||||||||
| Loans 30-89 days past due and still accruing as a percentage of loans and leases | % | 0.61 | % | 0.74 | % | 0.70 | % | 0.60 | % |
| Loans 90 days or more past due and still accruing as a percentage of loans and leases | 0.71 | 0.67 | 0.39 | 0.34 | |||||
| Nonperforming loans and leases as a percentage of loans and leases held for investment | 0.40 | 0.44 | 0.37 | 0.35 | |||||
| Nonperforming loans and leases as a percentage of loans and leases (1) | 0.42 | 0.44 | 0.40 | 0.37 | |||||
| Nonperforming assets as a percentage of: | |||||||||
| Total assets (1) | 0.25 | 0.27 | 0.26 | 0.25 | |||||
| Loans and leases plus foreclosed property | 0.42 | 0.46 | 0.39 | 0.37 | |||||
| Net charge-offs as a percentage of average loans and leases (2) | 0.33 | 0.27 | 0.42 | 0.39 | |||||
| Allowance for loan and lease losses as a percentage of loans and leases | 1.94 | 1.95 | 1.91 | 1.81 | |||||
| Ratio of allowance for loan and lease losses to: | |||||||||
| Net charge-offs | 5.87X | 7.15X | 4.52X | 4.49X | |||||
| Nonperforming loans and leases | 4.84X | 4.39X | 5.22X | 5.24X | |||||
| Asset Quality Ratios (Excluding PPP and other Government Guaranteed) | |||||||||
| Loans 90 days or more past due and still accruing as a percentage of loans and leases | % | 0.04 | % | 0.04 | % | 0.03 | % | 0.04 | % |
| Applicable ratios are annualized. | |||||||||
| (1)Includes loans held for sale. | |||||||||
| (2)The third quarter of 2020 includes 97 million of charge-offs on PCD assets directly related to the implementation of CECL. | |||||||||
| As of/For the Year-to-Date | |||||||||
| Period Ended June 30 | |||||||||
| 2021 | 2020 | ||||||||
| Asset Quality Ratios | |||||||||
| Net charge-offs as a percentage of average loans and leases | 0.26 | % | 0.38 | % | |||||
| Ratio of allowance for loan and lease losses to net charge-offs | 6.68X | 4.82X | |||||||
| Applicable ratios are annualized. |
All values are in US Dollars.
14 Truist Financial Corporation
| June 30, 2021 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Past Due 30-89 | Past Due 90+ | ||||||||||||||||
| (Dollars in millions) | Current Status | Days | Days | Total | |||||||||||||
| Troubled Debt Restructurings | |||||||||||||||||
| Performing TDRs: (1) | |||||||||||||||||
| Commercial: | |||||||||||||||||
| Commercial and industrial | $ | 144 | 100.0 | % | $ | — | — | % | $ | — | — | % | $ | 144 | |||
| CRE | 24 | 100.0 | — | — | — | — | 24 | ||||||||||
| Lease financing | 58 | 100.0 | — | — | — | — | 58 | ||||||||||
| Consumer: | |||||||||||||||||
| Residential mortgage | 475 | 65.3 | 95 | 13.1 | 157 | 21.6 | 727 | ||||||||||
| Residential home equity and direct | 101 | 94.4 | 6 | 5.6 | — | — | 107 | ||||||||||
| Indirect auto | 333 | 85.6 | 56 | 14.4 | — | — | 389 | ||||||||||
| Indirect other | 6 | 85.7 | 1 | 14.3 | — | — | 7 | ||||||||||
| Student | 13 | 100.0 | — | — | — | — | 13 | ||||||||||
| Credit card | 29 | 90.6 | 2 | 6.3 | 1 | 3.1 | 32 | ||||||||||
| Total performing TDRs (1) | 1,183 | 78.8 | 160 | 10.7 | 158 | 10.5 | 1,501 | ||||||||||
| Nonperforming TDRs (2) | 89 | 46.9 | 16 | 8.4 | 85 | 44.7 | 190 | ||||||||||
| Total TDRs (1)(2) | $ | 1,272 | 75.2 | % | $ | 176 | 10.4 | % | $ | 243 | 14.4 | % | $ | 1,691 | |||
| (1)Past due performing TDRs are included in past due disclosures. | |||||||||||||||||
| (2)Nonperforming TDRs are included in nonaccrual loan disclosures. | |||||||||||||||||
| Quarter Ended | |||||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||
| 2021 | 2021 | 2020 | 2020 | 2020 | |||||||||||||
| Net Charge-offs as a Percentage of Average Loans and Leases: | |||||||||||||||||
| Commercial: | |||||||||||||||||
| Commercial and industrial | 0.09 | % | 0.16 | % | 0.15 | % | 0.25 | % | 0.27 | % | |||||||
| CRE | (0.05) | 0.04 | 0.27 | 0.63 | 0.15 | ||||||||||||
| Commercial construction | (0.06) | 0.08 | 0.39 | 1.02 | (0.43) | ||||||||||||
| Lease financing | (0.04) | 0.44 | 0.20 | 2.92 | 0.33 | ||||||||||||
| Consumer: | |||||||||||||||||
| Residential mortgage | (0.01) | 0.08 | 0.03 | 0.01 | 0.25 | ||||||||||||
| Residential home equity and direct | 0.59 | 0.58 | 0.39 | 0.53 | 0.73 | ||||||||||||
| Indirect auto | 0.63 | 1.28 | 0.92 | 0.76 | 1.03 | ||||||||||||
| Indirect other | 0.17 | 0.39 | 0.31 | 0.21 | 0.41 | ||||||||||||
| Student | 0.16 | 0.16 | 0.17 | 0.28 | 0.31 | ||||||||||||
| Credit card | 2.75 | 2.74 | 2.11 | 3.00 | 3.50 | ||||||||||||
| Total loans and leases | 0.20 | 0.33 | 0.27 | 0.42 | 0.39 | ||||||||||||
| Applicable ratios are annualized. | |||||||||||||||||
| Credit Quality - Allowance with Fair Value Marks | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| As of/For the Quarter Ended | |||||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||||
| ALLL | $ | 5,121 | $ | 5,662 | $ | 5,835 | $ | 5,863 | $ | 5,702 | |||||||
| Unamortized fair value mark (1) | 1,777 | 2,067 | 2,395 | 2,676 | 3,077 | ||||||||||||
| Allowance plus unamortized fair value mark | $ | 6,898 | $ | 7,729 | $ | 8,230 | $ | 8,539 | $ | 8,779 | |||||||
| Loans and leases held for investment | $ | 286,485 | $ | 291,511 | $ | 299,734 | $ | 306,627 | $ | 314,825 | |||||||
| Unamortized fair value mark (1) | 1,777 | 2,067 | 2,395 | 2,676 | 3,077 | ||||||||||||
| Gross loans and leases | $ | 288,262 | $ | 293,578 | $ | 302,129 | $ | 309,303 | $ | 317,902 | |||||||
| Allowance for loan and lease losses as a percentage of loans and leases - GAAP | 1.79 | % | 1.94 | % | 1.95 | % | 1.91 | % | 1.81 | % | |||||||
| Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases - Adjusted (1) (2) | 2.39 | 2.63 | 2.72 | 2.76 | 2.76 |
(1)Unamortized fair value mark includes credit, interest rate and liquidity components.
(2)Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases is a non-GAAP measurement of credit reserves that is calculated by adjusting the ALLL and loans and leases held for investment by the unamortized fair value mark. Truist's management uses these measures to assess loss absorption capacity.
Truist Financial Corporation 15
| Rollforward of Intangible Assets and Selected Fair Value Marks (1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As of/For the Quarter Ended | ||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | ||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | |||||
| Loans and Leases (2) | ||||||||||
| Beginning balance unamortized fair value mark | $ | (2,067) | $ | (2,395) | $ | (2,676) | $ | (3,077) | $ | (3,539) |
| Accretion | 285 | 316 | 356 | 367 | 440 | |||||
| Purchase accounting adjustments and other activity | 5 | 12 | (75) | 34 | 22 | |||||
| Ending balance | $ | (1,777) | $ | (2,067) | $ | (2,395) | $ | (2,676) | $ | (3,077) |
| Core deposit and other intangible assets | ||||||||||
| Beginning balance | $ | 2,825 | $ | 2,984 | $ | 2,840 | $ | 3,016 | $ | 3,168 |
| Additions - acquisitions | — | 14 | 320 | — | — | |||||
| Amortization of intangibles | (142) | (144) | (172) | (170) | (178) | |||||
| Amortization in net occupancy expense | (3) | (3) | (4) | (6) | (6) | |||||
| Purchase accounting adjustments and other activity | (15) | (26) | — | — | 32 | |||||
| Ending balance | $ | 2,665 | $ | 2,825 | $ | 2,984 | $ | 2,840 | $ | 3,016 |
| Deposits (3) | ||||||||||
| Beginning balance unamortized fair value mark | $ | (15) | $ | (19) | $ | (26) | $ | (37) | $ | (54) |
| Amortization | 3 | 4 | 7 | 11 | 17 | |||||
| Ending balance | $ | (12) | $ | (15) | $ | (19) | $ | (26) | $ | (37) |
| Long-Term Debt (3) | ||||||||||
| Beginning balance unamortized fair value mark | $ | (196) | $ | (216) | $ | (238) | $ | (262) | $ | (285) |
| Amortization | 20 | 20 | 22 | 24 | 23 | |||||
| Ending balance | $ | (176) | $ | (196) | $ | (216) | $ | (238) | $ | (262) |
(1)Includes the merger with SunTrust. This summary includes only selected information and does not represent all purchase accounting adjustments.
(2)Purchase accounting marks on loans and leases includes credit, interest and liquidity components, and are generally recognized using the level-yield or straight-line method over the remaining life of the individual loans or recognized in full in the event of prepayment.
(3)Purchase accounting marks on liabilities represents interest rate marks on time deposits and long-term debt and are recognized using the level-yield method over the term of the liability.
| Capital Information - Five Quarter Trend | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of/For the Quarter Ended | |||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||
| Selected Capital Information | (preliminary) | ||||||||||||||
| Risk-based capital: | |||||||||||||||
| Common equity tier 1 | $ | 38,688 | $ | 38,267 | $ | 37,869 | $ | 37,879 | $ | 37,107 | |||||
| Tier 1 | 45,359 | 45,388 | 45,915 | 45,925 | 44,248 | ||||||||||
| Total | 53,640 | 54,245 | 55,011 | 55,030 | 53,436 | ||||||||||
| Risk-weighted assets | 379,620 | 378,458 | 379,153 | 377,420 | 382,826 | ||||||||||
| Average quarterly assets for leverage ratio | 496,390 | 484,961 | 478,608 | 476,868 | 490,203 | ||||||||||
| Average quarterly assets for supplementary leverage ratio | 576,858 | 546,470 | 530,716 | 513,230 | 518,010 | ||||||||||
| Risk-based capital ratios: | |||||||||||||||
| Common equity tier 1 | 10.2 | % | 10.1 | % | 10.0 | % | 10.0 | % | 9.7 | % | |||||
| Tier 1 | 11.9 | 12.0 | 12.1 | 12.2 | 11.6 | ||||||||||
| Total | 14.1 | 14.3 | 14.5 | 14.6 | 14.0 | ||||||||||
| Leverage capital ratio | 9.1 | 9.4 | 9.6 | 9.6 | 9.0 | ||||||||||
| Supplementary leverage | 7.9 | 8.3 | 8.7 | 8.9 | 8.5 | ||||||||||
| Equity as a percentage of total assets | 13.1 | 13.1 | 13.9 | 14.0 | 13.7 | ||||||||||
| Common equity per common share | $ | 46.20 | $ | 45.17 | $ | 46.52 | $ | 45.86 | $ | 45.74 | |||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||
| (Dollars in millions, except per share data, shares in thousands) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||
| Calculations of Tangible Common Equity and Related Measures: (1) | |||||||||||||||
| Total shareholders' equity | $ | 68,336 | $ | 67,876 | $ | 70,912 | $ | 69,973 | $ | 68,883 | |||||
| Less: | |||||||||||||||
| Preferred stock | 6,673 | 7,124 | 8,048 | 8,048 | 7,143 | ||||||||||
| Noncontrolling interests | — | — | 105 | 106 | 106 | ||||||||||
| Intangible assets, net of deferred taxes | 26,296 | 26,413 | 26,629 | 25,923 | 26,083 | ||||||||||
| Tangible common equity | $ | 35,367 | $ | 34,339 | $ | 36,130 | $ | 35,896 | $ | 35,551 | |||||
| Outstanding shares at end of period (in thousands) | 1,334,770 | 1,344,845 | 1,348,961 | 1,348,118 | 1,347,609 | ||||||||||
| Tangible Common Equity Per Common Share | $ | 26.50 | $ | 25.53 | $ | 26.78 | $ | 26.63 | $ | 26.38 |
(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These measures are not necessarily comparable to similar measures that may be presented by other companies.
16 Truist Financial Corporation
| Selected Mortgage Banking Information & Additional Information | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| As of/For the Quarter Ended | |||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | |||||||||||
| (Dollars in millions, except per share data) | 2021 | 2021 | 2020 | 2020 | 2020 | ||||||||||
| Residential Mortgage Income | |||||||||||||||
| Residential mortgage production revenue | $ | 122 | $ | 140 | $ | 229 | $ | 339 | $ | 344 | |||||
| Residential mortgage servicing revenue | 139 | 141 | 150 | 152 | 159 | ||||||||||
| Realization of expected residential MSR cash flows | (175) | (208) | (209) | (212) | (176) | ||||||||||
| Residential mortgage income before MSR valuation | 86 | 73 | 170 | 279 | 327 | ||||||||||
| Income statement impact of mortgage servicing rights valuation: | |||||||||||||||
| MSRs fair value increase (decrease) | (188) | 360 | 62 | (54) | (28) | ||||||||||
| MSRs hedge gains (losses) | 219 | (333) | (39) | (4) | 42 | ||||||||||
| Net MSRs valuation | 31 | 27 | 23 | (58) | 14 | ||||||||||
| Total residential mortgage income | $ | 117 | $ | 100 | $ | 193 | $ | 221 | $ | 341 | |||||
| Commercial Real Estate Related Income | |||||||||||||||
| Commercial mortgage production revenue | $ | 131 | $ | 40 | $ | 117 | $ | 49 | $ | 42 | |||||
| Commercial mortgage servicing revenue | 17 | 17 | 16 | 16 | 18 | ||||||||||
| Realization of expected commercial MSR cash flows | (11) | (15) | (11) | (10) | (8) | ||||||||||
| Commercial real estate related income before MSR valuation | 137 | 42 | 122 | 55 | 52 | ||||||||||
| Income statement impact of mortgage servicing rights valuation: | |||||||||||||||
| MSRs fair value increase (decrease) | (4) | 13 | 3 | 1 | (6) | ||||||||||
| MSRs hedge gains (losses) | 5 | (12) | (2) | (1) | 3 | ||||||||||
| Net MSRs valuation | 1 | 1 | 1 | — | (3) | ||||||||||
| Commercial real estate related income | $ | 138 | $ | 43 | $ | 123 | $ | 55 | $ | 49 | |||||
| Other Mortgage Banking Information | |||||||||||||||
| Residential mortgage loan originations | $ | 14,301 | $ | 13,075 | $ | 13,235 | $ | 15,346 | $ | 14,631 | |||||
| Residential mortgage servicing portfolio (1): | |||||||||||||||
| Loans serviced for others | 178,004 | 179,836 | 188,341 | 198,881 | 209,070 | ||||||||||
| Bank-owned loans serviced | 46,031 | 48,800 | 50,693 | 54,587 | 56,365 | ||||||||||
| Total servicing portfolio | 224,035 | 228,636 | 239,034 | 253,468 | 265,435 | ||||||||||
| Weighted-average coupon rate on mortgage loans serviced for others | 3.66 | % | 3.76 | % | 3.84 | % | 3.92 | % | 3.98 | % | |||||
| Weighted-average servicing fee on mortgage loans serviced for others | 0.313 | 0.314 | 0.317 | 0.317 | 0.315 | ||||||||||
| Additional Information | |||||||||||||||
| Fair value of derivatives, net | 2,614 | 2,222 | 3,282 | 3,646 | 3,766 | ||||||||||
| Common stock prices: | |||||||||||||||
| High | 62.89 | 61.26 | 49.72 | 42.04 | 46.53 | ||||||||||
| Low | 52.61 | 46.71 | 37.86 | 33.47 | 26.41 | ||||||||||
| End of period | 55.50 | 58.32 | 47.93 | 38.05 | 37.55 | ||||||||||
| Banking offices | 2,557 | 2,556 | 2,781 | 2,884 | 2,916 | ||||||||||
| ATMs | 3,779 | 3,807 | 4,082 | 4,237 | 4,354 | ||||||||||
| FTEs (2) | 52,248 | 53,207 | 53,693 | 55,000 | 55,769 |
(1)Amounts reported are unpaid principal balance.
(2)FTEs represents an average for the quarter.
Truist Financial Corporation 17
| Selected Items (1) | ||||
|---|---|---|---|---|
| Favorable (Unfavorable) | ||||
| (Dollars in millions) | After-Tax at | |||
| Description | Pre-Tax | Marginal Rate | ||
| Selected Items | ||||
| Second Quarter 2021 | ||||
| Charitable contribution | $ | (200) | $ | (153) |
| Incremental operating expenses related to the merger ($137 million professional fees and outside processing, $42 million personnel expense, and $11 million other) | (190) | (146) | ||
| First Quarter 2021 | ||||
| Incremental operating expenses related to the merger ($120 million professional fees and outside processing, $42 million personnel expense, and $13 million other) | $ | (175) | $ | (134) |
| Acceleration for cash flow hedge unwind | (36) | (28) | ||
| Fourth Quarter 2020 | ||||
| Incremental operating expenses related to the merger ($124 million in professional fees and outside processing, $47 million in personnel expense, and $8 million in other expense) | $ | (179) | $ | (138) |
| Third Quarter 2020 | ||||
| Incremental operating expenses related to the merger ($99 million in professional fees and outside processing, $48 million in personnel expense, and $5 million in other expense) | $ | (152) | $ | (115) |
| Charitable contribution | (50) | (38) | ||
| Second Quarter 2020 | ||||
| Incremental operating expenses related to the merger ($64 million in professional fees and outside processing, $49 million in personnel expense, and $16 million in other expense) | $ | (129) | $ | (99) |
| First Quarter 2020 | ||||
| Incremental operating expenses related to the merger ($44 million in personnel expense, $20 million in professional fees and outside processing, and $10 million in other expense) | $ | (74) | $ | (57) |
(1)Includes costs not classified as merger-related and restructuring charges that are excluded from adjusted disclosures.
| Non-GAAP Reconciliations | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Quarter Ended | Year-to-Date | ||||||||||||||||||||
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | June 30 | June 30 | |||||||||||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||
| Efficiency Ratio (1) | |||||||||||||||||||||
| Efficiency Ratio Numerator - Noninterest Expense - GAAP | $ | 4,011 | $ | 3,610 | $ | 3,833 | $ | 3,755 | $ | 3,878 | $ | 7,621 | $ | 7,309 | |||||||
| Merger-related and restructuring charges, net | (297) | (141) | (308) | (236) | (209) | (438) | (316) | ||||||||||||||
| Gain (loss) on early extinguishment of debt | — | 3 | — | — | (235) | 3 | (235) | ||||||||||||||
| Incremental operating expense related to the merger | (190) | (175) | (179) | (152) | (129) | (365) | (203) | ||||||||||||||
| Amortization of intangibles | (142) | (144) | (172) | (170) | (178) | (286) | (343) | ||||||||||||||
| Charitable contribution | (200) | — | — | (50) | — | (200) | — | ||||||||||||||
| Acceleration for cash flow hedge unwind | — | (36) | — | — | — | (36) | — | ||||||||||||||
| Efficiency Ratio Numerator - Adjusted | $ | 3,182 | $ | 3,117 | $ | 3,174 | $ | 3,147 | $ | 3,127 | $ | 6,299 | $ | 6,212 | |||||||
| Efficiency Ratio Denominator - Revenue (2) - GAAP | $ | 5,650 | $ | 5,482 | $ | 5,651 | $ | 5,572 | $ | 5,871 | $ | 11,132 | $ | 11,482 | |||||||
| Taxable equivalent adjustment | 28 | 28 | 28 | 29 | 31 | 56 | 68 | ||||||||||||||
| Securities (gains) losses | — | — | — | (104) | (300) | — | (298) | ||||||||||||||
| Gains on divestiture of certain businesses | — | (37) | — | — | — | (37) | — | ||||||||||||||
| Efficiency Ratio Denominator - Adjusted | $ | 5,678 | $ | 5,473 | $ | 5,679 | $ | 5,497 | $ | 5,602 | $ | 11,151 | $ | 11,252 | |||||||
| Efficiency Ratio - GAAP | 71.0 | % | 65.8 | % | 67.8 | % | 67.4 | % | 66.1 | % | 68.5 | % | 63.7 | % | |||||||
| Efficiency Ratio - Adjusted | 56.1 | 56.9 | 55.9 | 57.3 | 55.8 | 56.5 | 55.2 |
(1)The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges, and other selected items. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. These measures are not necessarily comparable to similar measures that may be presented by other companies.
(2)Revenue is defined as net interest income plus noninterest income.
18 Truist Financial Corporation
| Quarter Ended | Year-to-Date | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | June 30 | June 30 | |||||||||||||||
| (Dollars in millions) | 2021 | 2021 | 2020 | 2020 | 2020 | 2021 | 2020 | ||||||||||||||
| Return on Average Tangible Common Shareholders' Equity (1) | |||||||||||||||||||||
| Net income available to common shareholders | $ | 1,559 | $ | 1,334 | $ | 1,228 | $ | 1,068 | $ | 902 | $ | 2,893 | $ | 1,888 | |||||||
| Plus: Amortization of intangibles, net of tax | 107 | 111 | 131 | 130 | 137 | 218 | 262 | ||||||||||||||
| Tangible net income available to common shareholders | $ | 1,666 | $ | 1,445 | $ | 1,359 | $ | 1,198 | $ | 1,039 | $ | 3,111 | $ | 2,150 | |||||||
| Average common shareholders' equity | $ | 61,709 | $ | 62,252 | $ | 61,991 | $ | 61,804 | $ | 61,484 | $ | 61,979 | $ | 60,854 | |||||||
| Less: Average intangible assets, net of deferred taxes | 26,366 | 26,535 | 25,930 | 25,971 | 26,161 | 26,450 | 26,295 | ||||||||||||||
| Average tangible common shareholders' equity | $ | 35,343 | $ | 35,717 | $ | 36,061 | $ | 35,833 | $ | 35,323 | $ | 35,529 | $ | 34,559 | |||||||
| Return on average common shareholders' equity | 10.1 | % | 8.7 | % | 7.9 | % | 6.9 | % | 5.9 | % | 9.4 | % | 6.2 | % | |||||||
| Return on average tangible common shareholders' equity | 18.9 | 16.4 | 15.0 | 13.3 | 11.8 | 17.7 | 12.5 |
(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These measures are not necessarily comparable to similar measures that may be presented by other companies.
| Quarter Ended | Year-to-Date | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30 | March 31 | Dec. 31 | Sept. 30 | June 30 | June 30 | June 30 | ||||||||
| (Dollars in millions, except per share data) | 2021 | 2021 | 2020 | 2020 | 2020 | 2021 | 2020 | |||||||
| Diluted EPS (1) | ||||||||||||||
| Net income available to common shareholders - GAAP | $ | 1,559 | $ | 1,334 | $ | 1,228 | $ | 1,068 | $ | 902 | $ | 2,893 | $ | 1,888 |
| Merger-related and restructuring charges | 228 | 108 | 237 | 181 | 160 | 336 | 242 | |||||||
| Securities (gains) losses | — | — | — | (80) | (230) | — | (228) | |||||||
| Loss (gain) on early extinguishment of debt | (1) | (2) | — | — | 180 | (3) | 180 | |||||||
| Incremental operating expenses related to the merger | 146 | 134 | 138 | 115 | 99 | 280 | 156 | |||||||
| Charitable contribution | 153 | — | — | 38 | — | 153 | — | |||||||
| Acceleration for cash flow hedge unwind | — | 28 | — | — | — | 28 | — | |||||||
| Net income available to common shareholders - adjusted | $ | 2,085 | $ | 1,602 | $ | 1,603 | $ | 1,322 | $ | 1,111 | $ | 3,687 | $ | 2,238 |
| Weighted average shares outstanding - diluted | 1,349,492 | 1,358,932 | 1,361,763 | 1,358,122 | 1,355,834 | 1,354,210 | 1,356,809 | |||||||
| Diluted EPS - GAAP | $ | 1.16 | $ | 0.98 | $ | 0.90 | $ | 0.79 | $ | 0.67 | $ | 2.14 | $ | 1.39 |
| Diluted EPS - adjusted | 1.55 | 1.18 | 1.18 | 0.97 | 0.82 | 2.72 | 1.65 |
(1)The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
Truist Financial Corporation 19
ex993-earningsdeck2q21
Second Quarter 2021 Earnings Conference Call Kelly King – Chairman & CEO Bill Rogers – President & COO Daryl Bible – CFO July 15, 2021
2 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,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could” and other similar expressions are intended to identify these forward-looking statements. In particular, forward looking statements include, but are not limited to, statements we make about: (i) future levels of taxable-equivalent revenue, net interest income, net interest margin, noninterest expense and net charge-offs, (ii) the timing for completion of Truist’s merger integration and conversion activities, (iii) projected total amounts of merger-related and restructuring charges and incremental operating expenses related to the merger, (iv) anticipated client attrition from branch closures, (v) the amount of expense savings to be realized from the merger and the timing of such realization, including through reductions in third party spend and non-branch facilities, branch closures, decreases in personnel and technology integrations, (vi) Truist’s expectations for its CET1 ratio, (vii) anticipated capital deployment over the near term, including through share repurchases or acquisitions, and (viii) projections of future dividends. Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding Truist’s business, the economy and other future conditions. Such statements involve inherent uncertainties, risks and changes in circumstances that are difficult to predict. As such, Truist’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed under Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Truist's subsequent filings with the Securities and Exchange Commission: • risks and uncertainties relating to the Merger of heritage BB&T and heritage SunTrust, including the ability to successfully integrate the companies or to realize the anticipated benefits of the Merger; • expenses relating to the Merger and integration of heritage BB&T and heritage SunTrust; • deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated; • the COVID-19 pandemic disrupted the global economy and adversely impacted Truist’s financial condition and results of operations, including through increased expenses, reduced fee income and net interest margin, and increases in the allowance for credit losses; although conditions have improved in the U.S., a worsening of the pandemic, whether due to new variants of the coronavirus or others factors, could reintroduce or prolong these negative impacts and also adversely affect Truist’s capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets; • Truist is subject to credit risk by lending or committing to lend money, and may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral; • changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark and potentially negative interest rates, which could adversely affect Truist’s revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity; • inability to access short-term funding or liquidity, loss of client deposits or changes in Truist’s credit ratings, which could increase the cost of funding or limit access to capital markets; • risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk; • risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators; • failure to execute on strategic or operational plans, including the ability to successfully complete or integrate mergers and acquisitions; • increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards, and (ii) products and services offered by non-bank financial technology companies, may reduce Truist’s client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact Truist’s businesses or results of operations; • failure to maintain or enhance Truist’s competitive position with respect to new products, services and technology, whether it fails to anticipate client expectations or because its technological developments fail to perform as desired or do not achieve market acceptance or regulatory approval or for other reasons, may cause Truist to lose market share or incur additional expense; • negative public opinion, which could damage Truist’s reputation; • increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance; • regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences; • evolving legislative, accounting and regulatory standards, including with respect to capital and liquidity requirements, and results of regulatory examinations may adversely affect Truist’s financial condition and results of operations; • the monetary and fiscal policies of the federal government and its agencies could have a material adverse effect on profitability; • accounting policies and processes require management to make estimates about matters that are uncertain, including the potential write down to goodwill if there is an elongated period of decline in market value for Truist’s stock and adverse economic conditions are sustained over a period of time; • general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, and instability in global geopolitical matters or volatility in financial markets could result in, among other things, slower deposit or asset growth, a deterioration in credit quality, or a reduced demand for credit, insurance, or other services; • risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases; • risks relating to Truist’s role as a loan servicer, including an increase in the scope or costs of the services Truist is required to perform, without any corresponding increase in servicing fees or a breach of Truist’s obligations as servicer; • Truist’s success depends on hiring and retaining key personnel, and if these individuals leave or change roles without effective replacements, Truist’s operations and integration activities could be adversely impacted, which could be exacerbated as Truist continues to integrate the management teams of heritage BB&T and heritage SunTrust; • fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect, or mitigate; • security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s teammates and clients, malware intrusion, data corruption attempts, system breaches, cyber attacks, and identity theft, could result in the disclosure of confidential information, adversely affect Truist’s business or reputation or create significant legal or financial exposure; and • widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism and pandemics), and the effects of climate change could have an adverse effect on Truist’s financial condition and results of operations, lead to material disruption of Truist’s operations or the ability or willingness of clients to access Truist’s products and services. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, Truist undertakes no obligation to revise or update any forward-looking statements. Forward-Looking Statements
3 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 of the Corporation's performance and the efficiency of its operations. Management believes these non-GAAP measures provide a greater understanding of ongoing operations, enhance comparability of results with prior periods and demonstrate the effects of significant items in the current period. The Company believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. Truist’s management believes investors may find these non-GAAP financial measures useful. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non- GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this presentation: Adjusted Efficiency Ratio - The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges, and other selected items. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. Tangible Common Equity and Related Measures - Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. Core NIM - Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial Bank acquisition and b) loans, deposits and long-term debt from SunTrust, Susquehanna, National Penn and Colonial Bank are excluded to approximate the yields paid by clients. Truist's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities acquired provide investors with useful information related to the performance of Truist's earning assets. Adjusted Diluted EPS - The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. Performance Ratios - The adjusted performance ratios, including adjusted return on average assets, adjusted return on average common shareholders’ equity, and adjusted return on average tangible common shareholders’ equity, are non-GAAP in that they exclude merger-related and restructuring charges, selected items, and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets. Truist's management uses these measures in their analysis of the Corporation's performance. Truist's management believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrate the effects of significant gains and charges. Insurance Holdings Adjusted EBITDA - EBITDA is a non-GAAP measurement of operating profitability that is calculated by adding back interest, taxes, depreciation and amortization to net income. Truist's management also adds back merger- related and restructuring charges, incremental operating expenses related to the merger, and other selected items. Truist's management uses this measure in its analysis of the Corporation's Insurance Holdings segment. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. Allowance for Loan and Lease Losses and Unamortized Fair Value Mark as a Percentage of Gross Loans and Leases - Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases is a non- GAAP measurement of credit reserves that is calculated by adjusting the ALLL and loans and leases held for investment by the unamortized fair value mark. Truist's management uses these measures to assess loss absorption capacity. Selected items affecting results are included on slide 8.
4
5 Living our purpose Inspire and build better lives and communities Investments in our communities ▪ Contributed a combined $200 million to the Truist Foundation and the Truist Charitable Fund to support the important work of organizations across our diverse markets and communities ▪ Invested $22 million in Atlanta’s Mercy Care—a federally qualified health care for the homeless program ▪ Expanded our partnership with Operation HOPE with a $20 million investment to help provide more education, insights, and tools to help more people build better lives ▪ $2.5 million grant to the National Institute for Student Success to improve financial education and graduation rates for underserved students Our purpose in action ▪ Released inaugural Supplier Diversity Impact Report, which outlined a $1 billion total economic impact through supplier diversity relationships in 2020 ▪ 114% of prorated goal for the three year 2020-2022 Community Benefit Plan commitment1 ▪ Originated approximately $17 billion of PPP loans through 2Q21 to support our business clients and their employees ESG ▪ $2.4 billion of clean energy and sustainability related financing in 2020 with momentum continuing in first half of 2021 ▪ Look for the next Truist CSR and ESG Report in the coming weeks 51 As of May 2021
2Q21 Results
7 2Q21 performance highlights Total taxable-equivalent revenue1 $5,678 $5,678 Net income available to common shareholders 1,559 2,085 1 Composed of taxable-equivalent net interest income and noninterest income 2 See non-GAAP reconciliations in the appendix 3 Current quarter regulatory capital information is preliminary Earnings and profitability ▪ Strong adjusted net income available to common shareholders of $2.1 billion, up 30% vs. 1Q21, driven by strong fee income and a $576 million reserve release • On a diluted per share basis, adjusted net income was $1.55 per share, up 31% vs. 1Q21 and up 89% vs. 2Q20 ▪ Record adjusted ROATCE of 24.7% ▪ Sequentially, strong fee income offset a modest decrease in net interest income, reflecting record revenue in insurance, wealth, card and payment related fees, commercial real estate related income, and very strong investment banking income ▪ Noninterest expense reflects a $200 million charitable contribution, as well as increased merger-related charges primarily due to costs in connection with a voluntary separation & retirement program ▪ Sequentially, adjusted revenue growth of 3.7% drives adjusted expense growth of 2.1%, creating 1.6% of operating leverage Asset quality and capital ▪ Asset quality remains excellent, reflecting our prudent risk culture, diverse portfolio, and economic improvement ▪ Strong CCAR results ▪ Completed $610 million of share repurchases, resulting in a total payout ratio of 78% during 2Q21 ▪ Closed the acquisition of Constellation Affiliated Partners on July 1st Merger integration ▪ Completed trust platform conversion (Wealth) in 2Q and began client migration to the new Truist digital experience ▪ Merger integration on track; core bank conversion expected to be completed in 1Q22; decommissioning process to occur throughout 2022 Diluted EPS $1.16 $1.55 ROAA 1.28% 1.69% ROACE 10.1% 13.5% ROATCE 18.9% 24.7% Efficiency ratio 71.0% 56.1% NPAs / assets 0.23% NCOs / loans 0.20% CET1 ratio3 10.2% Key PointsSummary Income Statement ($ MM) GAAP / Unadjusted Adjusted2 Asset Quality and Capital Performance Metrics GAAP / Unadjusted Adjusted2
8 Selected items affecting 2Q21 results Item ($ MM, except per share impact) Pre-Tax After-Tax Diluted EPS Impact Merger-related and restructuring charges ($297) ($228) $0.17 Incremental operating expenses related to the merger ($190) ($146) $0.11 Charitable contribution to Truist Foundation and Truist Charitable Fund (Recorded in other expense) ($200) ($153) $0.11 The above table includes items on slide A-7 of the appendix Diluted EPS impact amounts may be rounded
9 Digital acceleration 2Q20 2Q21 2Q20 2Q21 1 Digital commerce defined as products delivered through digital applications 2 Active users reflects clients that have logged in using the mobile app over the prior 90 days; clients using mobile app at both organizations were counted only once Results reflect combined transactions and accounts from BB&T and SunTrust for the months of April–June 2020/2021 169.4K 210.2K 3.8MM 4.1MM Digital Commerce Growth1 Mobile App Users2 Mobile Check Deposits (Transactions) Zelle Transactions New Truist platform will support clients across the continuum, including Retail, Wealth, and Small Business The new Truist digital experience will deliver enhanced capabilities to help Small Business clients easily and securely manage their finances ▪ Single sign-on: Small Business clients with personal accounts will have one set of credentials and toggle between business and personal experiences ▪ Business dashboard: Delivers a summary snapshot with custom notifications and navigation based on the business’s needs ▪ Safety and security: Our fraud mitigation solutions will empower Small Business clients to protect themselves by identifying potentially fraudulent ACH and check transactions and requesting a reversal 24% 9% 2Q20 2Q21 5.2MM 6.1MM17% 2Q20 2Q21 8.1MM 12.9MM 60%
10 Loans & leases $193,465 $173,794 $170,543 $128,164 $120,856 $118,032 4.21% 4.11% 4.03% Commercial LHFI ($ MM) Consumer & Card LHFI ($ MM) Loans HFI yield (%) 2Q20 1Q21 2Q21 ▪ Average loans and leases decreased $6.1 billion, or 2.1%, sequentially ▪ Average commercial loans decreased $3.3 billion, or 1.9%, sequentially • Average C&I loans decreased $2.4 billion, or 1.8%, reflecting a $1.3 billion decline in PPP loans and a $1.2 billion decline in dealer floor plan loans ◦ Excluding PPP loans and dealer floor plan, average C&I balances were relatively stable • Average CRE loans decreased $566 million ▪ Average consumer loans decreased $2.7 billion, or 2.3%, largely attributable to a $2.2 billion decline in residential mortgages and a $420 million decline in residential home equity and direct loans, driven by continued elevated prepayment activity Average balances 2Q21 Linked Quarter Change Like Quarter Change Commercial: Commercial and industrial, ex. PPP $124,962 ($1,064) ($19,380) PPP 8,684 (1,341) 35 CRE 25,645 (566) (2,159) Commercial construction 6,359 (198) (389) Lease financing 4,893 (82) (1,029) Consumer: Residential mortgage 43,605 (2,218) (8,775) Residential home equity and direct 25,238 (420) (1,961) Indirect auto 26,444 81 1,723 Indirect other 10,797 (51) (485) Student 7,396 (123) (237) Credit card 4,552 (93) (397) Total loans & leases held for investment $288,575 ($6,075) ($33,054) Average Loans & Leases HFI and Loan Yields Key Points Loans & Leases HFI ($ MM) (2.1%) (10.3%)Change:
11 Deposits $370,818 $383,185 $396,255 0.22% 0.05% 0.04% Total deposits ($ MM) Total deposit cost (%) 2Q20 1Q21 2Q21 ▪ Average deposits grew 3.4% sequentially to $396.3 billion ▪ Deposit growth was driven by continued government stimulus ▪ Total deposit costs decreased 1 bp to 4 bps ▪ Loans-to-deposits ratio was 73% based on average balances ▪ Building franchise value • Record consumer checking production (311K new accounts opened, +60% YoY) ◦ Results in +51K net new checking accounts (record); 70% from new clients to bank ◦ 44% opened digitally in 2Q21 • Attrition rates from branch closures well below modeled expectations Average balances 2Q21 Linked Quarter Change Like Quarter Change Noninterest-bearing deposits $137,892 $9,313 $24,017 Interest checking 106,121 1,377 8,258 Money market and savings 134,029 4,726 7,958 Time deposits 18,213 (2,346) (14,796) Total deposits $396,255 $13,070 $25,437 Key Points Average Deposits & Costs Deposits ($ MM) 3.4% 6.9%Change:
12 Net interest income and interest rate sensitivity ▪ Net interest income decreased $40 million sequentially, primarily due to reduced purchase accounting accretion ▪ Reported NIM declined 13 bps • Purchase accounting contribution to NIM declined 4 bps sequentially • Core NIM declined 9 bps ◦ Primarily driven by net increase in approximately $18 billion of liquidity (6 bps) (strong deposit growth combined with lower loan balances) ◦ In addition, continued impact of low rate environment (3 bps) ▪ PPP positively impacted NII by $124 million and NIM by 6 bps in 2Q21 (relatively consistent with 1Q21) ▪ Asset sensitivity increased modestly due to the increase in DDA and favorable deposit mix changes, partially offset by the increase in the investment portfolio • 57% of asset sensitivity from short-end of curve (<1 year) $3,479 $3,313 $3,273 3.13% 3.01% 2.88% 2.67% 2.69% 2.60% Net interest income TE ($ MM) Reported NIM (%) Core NIM (%) 2Q20 1Q21 2Q21 -1.75% -1.32% +2.92% +3.74% -1.91% -1.46% +3.06% +3.91% At 3/31/21 At 6/30/21 Down 50 Down 25 Up 50 Up 100 1 Market rate increase or decrease scenarios assume a ramped, parallel 25 basis point change per quarter in market interest rates and that market rates floor at 0% Key PointsNet Interest Income & Margin Net Interest Income Sensitivity1
13 Noninterest income 2Q21 Linked Quarter Change Like Quarter Change Insurance income $690 $64 $109 Wealth management income 345 4 56 Service charges on deposits 253 (5) 51 Residential mortgage income 117 17 (224) Investment banking and trading income 317 (23) 43 Card and payment related fees 225 25 54 Lending related fees 94 (6) 28 Operating lease income 66 (2) (17) Commercial real estate related income 138 95 89 Income from bank-owned life insurance 46 (4) 1 Securities gains (losses) — — (300) Other income (loss) 114 43 92 Total noninterest income $2,405 $208 ($18) Adjusted noninterest income1 $2,405 $245 $282 $2,423 $2,197 $2,405 41.3% 40.1% 42.6% Noninterest income ($ MM) Fee income ratio (%) 2Q20 1Q21 2Q21 1 Excludes securities gains (losses) and 1Q21 divestiture of certain businesses Noninterest Income & Fee Income Ratio Noninterest Income ($ MM) ▪ Noninterest income grew $208 million, or 9.5% sequentially, and was 42.6% of total revenue • Adjusted noninterest income grew 11% sequentially and 13% vs. 2Q20 ▪ Diverse business mix, firing on multiple cylinders, due to ongoing investments • Insurance income increased $64 million to a record $690 million largely due to seasonality and premium growth in P&C; organic revenue grew 15% vs. 2Q20 as a result of strong execution and favorable market conditions • Record investment banking income driven by strong syndicated finance and M&A results; offset by adverse CVA in trading due to rates • Record commercial real estate related income, led by client-driven structured real estate activity • Other income increased $43 million, driven by strategic investments within SBIC program and Truist Ventures Key Points 11% 13%Adjusted change:
14 Noninterest expense & efficiency ratio ▪ Noninterest expense increased $401 million sequentially, driven by: • $200 million charitable contribution to the Truist Foundation and Truist Charitable Fund • $156 million increase in merger-related charges (primarily driven by costs related to voluntary separation & retirement program) ▪ Adjusted noninterest expense increased $65 million sequentially, or 2.1%, driven primarily by higher variable incentive compensation as a result of strong fee income growth and overall strong performance • Adjusted revenue growth of 3.7% drives 1.6% sequential operating leverage ▪ Average FTEs declined 1.8% sequentially and are down 6,239 (or 11%) since the merger announcement 2Q21 Linked Quarter Change Like Quarter Change Personnel expense $2,207 $65 $199 Professional fees and outside processing 341 (9) 52 Net occupancy expense 182 (27) (61) Software expense 246 36 30 Amortization of intangibles 142 (2) (36) Equipment expense 122 9 2 Marketing and customer development 66 — 10 Operating lease depreciation 47 (3) (30) Loan-related expense 55 1 (1) Regulatory costs 31 6 1 Merger-related and restructuring charges 297 156 88 Loss (gain) on early extinguishment of debt — 3 (235) Other expense 275 166 114 Total noninterest expense $4,011 $401 $133 Adjusted noninterest expense1 $3,182 $65 $55 $3,878 $3,610 $4,011 66.1% 65.8% 71.0% 55.8% 56.9% 56.1% Total noninterest expense ($ MM) GAAP efficiency (%) Adjusted efficiency (%) 2Q20 1Q21 2Q21 1 Excludes selected items referenced on slide A-8 of the attached appendix Noninterest Expense & Efficiency Ratio Noninterest Expense ($ MM) Key Points Memo: Incremental operating expenses related to the merger $190 $15 $61 2.1% 1.8%Adjusted change:
15 Asset quality $1,252 $1,299 $1,192 0.25% 0.25% 0.23% Nonperforming assets ($ MM) NPAs as a % of total assets 2Q20 1Q21 2Q21 $316 $238 $142 $48 Net charge-offs ($ MM) Provision NCOs as % of avg. loans and leases 2Q20 1Q21 2Q21 0.39% 2Q20 1Q21 2Q21 4.5x 5.9x 0.33% ▪ Asset quality remains excellent, reflecting our prudent risk culture, diverse portfolio, economic improvement, and the effects of fiscal and monetary stimulus ▪ Nonperforming assets decreased 2 bps to 0.23% of assets ▪ Net charge-offs were 0.20% of average loans and leases, down 13 bps sequentially • The decrease reflected improved C&I and auto charge-offs, combined with higher recoveries ▪ ALLL was 1.79% of loans and leases, down 15 bps sequentially, as economic scenarios improved ▪ Resulted in provision for credit losses of ($434) million vs. $48 million in 1Q21 (reserve release of $576 million) Key PointsNet Charge-offs & Provision Nonperforming Assets ALLL to Annualized Net Charge-offs $5,702 $5,662 $5,121 1.81% 1.94% 1.79% ALLL ($ MM) % of ALLL to total LHFI 2Q20 1Q21 2Q21 ALLL 9.0x 0.20% $844 ($434)
16 Capital and liquidity position 2Q21 ▪ CET1 ratio increased to 10.2% ▪ Total payout ratio of 78% reflected: • Regular quarterly common dividend of $0.45 per share (dividend payout ratio was 39%) • Share repurchases of $610 million ▪ Redeemed all $465 million of Series H preferred stock Forward-looking commentary ▪ Recent CCAR results reflect prudent risk management • Second-lowest loss rate vs. peers under the severely adverse stress scenario • Preliminary stress capital buffer was reduced to 2.5% from 2.7% and is effective from Oct. 1, 2021 to Sept. 30, 2022 ▪ Strong CCAR results, improving economic outlook, continued progress on our merger, and the SCB framework provide additional capital flexibility: • Truist’s board will consider a proposal to increase the regular quarterly common dividend by 7% to $0.48 per share at its July meeting • Targeting an approximate 9.75% CET1 ratio over the near term; approximately $4-5 billion of potential capital deployment (share repurchases and acquisitions) over the next five quarters (3Q21-3Q22) Liquidity remains strong • Average LCR for 2Q21 was 113% consolidated and 148% at the bank level • Liquid asset buffer was 24.7% at June 30, 2021 9.7% 10.1% 10.2% Common Equity Tier 1 Tier 1 Total 2Q20 1Q21 2Q21 Current quarter regulatory capital information is preliminary 11.5% 13.9% 12.0% 116% 111% 113% $79.5 $80.2 $83.5 LCR HQLA ($ B) 2Q20 1Q21 2Q21 14.3% Key PointsCapital Ratios Category III LCR & HQLA 11.9% 14.1%
Merger Integration Update
18 Ongoing integration progress moderates merger risk Truist Securities conversion Wealth brokerage platform conversion Release of Truist job framework for all teammates in Workday Testing protocols for core bank conversion Wealth trust platform conversion Migrate teammates to the Truist retail mortgage origination ecosystem Integration Milestones Unveil Innovation and Technology Center in Charlotte, NC Retail branch consolidation (approximately 800 cumulative closures by 1Q22) Convert heritage BB&T retail and commercial clients to Truist ecosystem Integrate industry-leading commercial lending platform Launch Truist digital online banking and mobile experience Convert heritage SunTrust retail and commercial clients to Truist ecosystem
19 Committed to achieving net cost saves Digital Innovation Marketing / Branding Talent / Benefits Technology Platforms Third Party Spend Targeting 10% reduction in sourceable spend Non-Branch Facilities Targeting approximately 4.8MM net sq. ft. reductions Retail Banking Targeting 800 total closures by 1Q22 Technology Driven by integration efforts, applications, hardware, and staff rationalization; savings anticipated post conversion / decommissioning process Personnel1 Avg. FTEs decreased by approximately 11% at 2Q21 1 Reflects normal attrition and reductions in force from 1Q19 proforma through 2Q21 Achieved through: 1Q21–9.3% 2Q21–10.3% Cumulative closures through: 1Q21–374 2Q21–374 Cumulative closures through: 1Q21–3.5MM 2Q21–3.8MM C os t s av es In ve st m en ts Includes normal attrition and reductions in force Includes Lightstream expansion, Truist Digital, and agile teams Includes digital marketing, hyper-personalization, and CRM capabilities and teams Includes pension, revenue producers in fee businesses (e.g. CIB, wealth, and insurance), and positive impacts from Truist job structure framework Includes best of both technology, modernization, and cyber build out
20 Merger cost update Anticipated total merger costs through 2022 (not in run rate thereafter) Estimated total merger-related and restructuring charges and incremental operating expenses include costs projected through 2022 (not expected be part of the run rate post 2022); excludes non-merger restructuring items ▪ Expenses to complete merger with no future benefit include: • Severance and compensation ◦ (E.g. primarily severance payments) • Occupancy and equipment ◦ (E.g. impairments related to vacated buildings) • Professional fees and outside processing ◦ (E.g. investment banker and legal fees related to the merger as well as 3rd party labor related to system conversions and decommissioning) • System conversion costs ◦ (E.g. write-offs for technology assets) ExamplesEst. Total Merger Related and Restructuring Charges Est. Total Incremental Operating Expense Related to the Merger $1.6B $2.1B incurred Feb.’19–Jun. ‘21 $1.1B $1.8B ▪ Expenses for which the ongoing entity receives a future benefit include: • Personnel ◦ (E.g. salaries and incentive expense for FTEs dedicated to merger integration work) • Professional fees and outside processing ◦ (E.g. 3rd party labor related to target future state system design, optimization, and enhancement) • Marketing and other developments ◦ (E.g. rebranding costs) • All other operating expenses ◦ (E.g. includes net occupancy, software, equipment, loan processing, and other expense) Examples incurred Feb.’19–Jun. ‘21 A pproxim ately $1.3 billion rem aining
21 Cost saves progress 4Q20 annualized $640MM 40% of net cost saves 4Q21 annualized $1,040MM 65% of net cost saves 4Q22 annualized $1,600MM 100% of net cost saves $3,182 $2,952 Adjusted NIE Variable compensation related to higher fee revenue and improved performance NQDCP NIE - Insurance acq. post MOE Core NIE Adjusted NIE excludes selected items referenced on slide A-8 of the attached appendix NQDCP substantially offset in noninterest income Variable compensation related to higher fee revenue and improved performance is relative to one quarter of 2019 annual pro forma levels 2Q21 Core Noninterest Expense ($ MM) Remain committed to 4Q21 targeted core expenses of $2,940MM On track On track Net Expense Savings–Run Rate ($165) ($45) ($20)
22 Value proposition Purpose-driven: Committed to inspire and build better lives and communities Growing earnings stream with less volatility relative to peers over the long-term ▪ 7th largest commercial bank in the U.S. ▪ Strong market share in vibrant, fast-growing MSAs throughout the Southeast and Mid- Atlantic and a growing national presence ▪ Comprehensive business mix with distinct capabilities in traditional banking, capital markets and insurance ▪ Better together: “Best of breed” talent, technology, strategy, and processes ▪ Continued confidence in achieving $1.6 billion of net cost savings ▪ Highly complementary businesses and expanded client base combine to yield revenue synergies ▪ Meaningful investments in innovative technologies, teammates, and marketing ▪ Top quartile performance for ROATCE and efficiency ratio; medium-term targets: • ROATCE: low 20s • Efficiency ratio: low 50s • CET1 ratio: <10% ▪ Prudent and disciplined risk and financial management ▪ Conservative risk culture; leading credit metrics; among the highest-rated large banks ▪ Diversification benefits arising from the merger ▪ Stress test well (CCAR 2021 affirms) ▪ Strong capital and liquidity support flight to quality ▪ Defensive balance sheet insulated by purchase accounting marks, combined with CECL credit reserves Exceptional franchise with diverse products, services, and markets Uniquely positioned to deliver best-in-class efficiency and returns while investing in the future Strong capital and liquidity with resilient risk profile enhanced by the merger
23 2Q21 results in the context of our value proposition Total Assets $1.144 $1.352 2Q20 2Q21 Fee Income Diversity 3.6% 18% Exceptional Franchise1 Uniquely Positioned2 $0.82 $1.55 2Q20 2Q21 Adjusted Diluted EPS 89% 14.2% 24.7% 2Q20 2Q21 Adjusted ROATCE 74% Strong Capital, Liquidity, & Risk Mgmt.3 67% 78% 2Q20 2Q21 Total Payout Ratio 16% 0.39% 0.20% 2Q20 2Q21 NCOs / Loans 49% $504 $522 2Q20 2Q21 1 Source: S&P Global as of 7/12/21; demographic data as of 1/1/21; deposit data as of 6/30/20, pro forma for completed and announced M&A through 7/12/21. ’21-’26E projected growth deposit weighted by county. $ in billions, except per share impact Insurance, Investment Banking, & Wealth Current CET1 ratio = 10.2%; near-term target = 9.75% 7th largest US commercial bank; highest proj. pop. growth compared to peers1
Appendix
A-1 Consumer Banking & Wealth 2Q21 Linked Qtr. Change Like Qtr. Change Net interest income $2,118 ($17) ($45) Provision for credit losses (4) (104) (274) Noninterest income 925 5 (83) Noninterest expense 1,922 12 (47) Pre-tax income 1,125 80 193 Segment net income 862 62 150 Average loans(1) $130.7 ($2.9) ($9.5) Average deposits 244.4 10.8 26.3 Mortgages serviced for others ($ B)(2) $178.0 $1.1 ($31.1) Branches 2,557 1 (359) ATMs 3,779 (28) (575) In co m e S ta te m en t ( $ M M ) B al an ce S he et ($ B ) O th er K ey M et ric s (1) Excludes loans held for sale (2) Amount reported reflects end of period balance (3) Excludes impact of market changes Represents performance for Retail Community Banking, Wealth, Mortgage Banking, Dealer Retail Services, and National Consumer Finance & Payments Financial performance ▪ Segment net income of $862 million, improved both sequentially and YoY, as favorable credit trends more than offset lower loan balances ▪ Loan balances are down sequentially and YoY due primarily to decreases in the mortgage and home equity and direct lending portfolios ▪ Average deposits have benefited from continued stimulus and strong organic production ▪ 2Q21 average total deposit cost decreased to 3 bps ▪ Noninterest income improved sequentially with increased card, mortgage, and wealth income helping offset the one-time gain from the divestiture of certain businesses in the prior quarter • Mortgage noninterest income improved sequentially from lower prepayment speeds on serviced loans, partially offset by lower production income due to lower volume and tightening margins. On a YoY basis, volumes and margins declined from elevated levels • Card increased 31% YoY driven by rebounding economy and wealth rose 19% from higher market levels and positive net asset flows(3) Other key items ▪ Recently completed trust and brokerage conversions, allowing Truist Wealth to serve clients of both heritage firms on consistent platforms ▪ Branch count down net 359 (12%) YoY due to MOE consolidations Key Points
A-2 Corporate & Commercial Banking 2Q21 Linked Qtr. Change Like Qtr. Change Net interest income $1,214 $— ($78) Provision for credit losses (399) (364) (933) Noninterest income 809 115 188 Noninterest expense 850 69 (36) Pre-tax income 1,572 410 1,079 Segment net income 1,227 315 825 Average loans(1) $155.0 ($3.1) ($23.8) Average deposits 144.6 3.1 4.3 In co m e S ta te m en t ( $ M M ) ▪ Segment net income of $1.2 billion increased 34% from 1Q and over 200% vs. prior year due to strong fee activity and favorable credit trends ▪ Loan balances decreased YoY primarily with lower revolver funding that spiked in March 2020. Linked quarter decline impacted by PPP and dealer floor plan. • Loan commitments have continued to increase and new production is increasing ▪ Fee income up 17% sequentially and 30% vs. prior year • 2Q21 saw continued momentum further building from 1Q21 with record investment banking fees, up 22% from the previous record • Synergies between Corporate & Investment Banking with IRM natural fits continues to gain traction as internal education and partnership are driving an increase in client introductions • Record Commercial Real Estate related income was up $95 million sequentially led by structured real estate activity due to strong investor demand for e-commerce and essential assets alongside Truist expertise ▪ Partially offsetting the client related fee activity is lower sequential trading income primarily due to volatility in rates impacting the derivative CVA B al an ce S he et ($ B ) (1) Excludes loans held for sale Represents performance for Commercial Community Banking, Corporate & Investment Banking, and CIG – Real Estate Key Points
A-3 Insurance Holdings 2Q21 Linked Qtr. Change Like Qtr. Change Net interest income $21 $1 ($2) Noninterest income 698 65 100 Total revenue 719 66 98 Provision for credit losses (1) (2) (7) Noninterest expense 515 36 67 Pre-tax income 205 32 38 Segment net income 156 25 30 Y-o-Y organic revenue growth 14.8% 8.4% 12.7% Net acquired revenue $29 $1 $25 Performance based commissions 15 (1) — Adjusted EBITDA(1) 244 40 57 Adjusted EBITDA margin(1) 33.9% 2.7% 3.8% In co m e S ta te m en t ( $ M M ) P er fo rm an ce ($ M M ) ▪ Record quarterly revenue driven by recent acquired revenue and strong organic revenue growth as a result of increased new business sales, improved customer retention, and positive market conditions ▪ Market backdrop • Higher GDP growth and continued hard market conditions serving as a tailwind • P&C rate environment remains stable with some rate moderation across various lines of coverage, however rate environment remains favorable • Robust E&S market due to recent catastrophe losses, social inflation, and evolving views on risk ▪ Truist performance • 2Q21 new business up 25% vs. 2Q20 with high retention rates • EBITDA growth and margin expansion driven by positive operating leverage as a result of strong organic growth and prudent expense management • Linked quarter revenue and expense growth driven by seasonality, with 2Q generally the highest-revenue P&C quarter • Closed the acquisition of Constellation Affiliated Partners on July 1st with approximately $160 million in annualized revenue (1) EBITDA is a non-GAAP measurement of operating profitability that is calculated by adding back interest, taxes, depreciation and amortization to net income. Truist's management also adds back merger- related and restructuring charges, incremental operating expenses related to the merger, and other selected items. Truist's management uses this measure in its analysis of the Corporation's Insurance Holdings segment. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. See non-GAAP reconciliations included in the attached Appendix. Represents performance for Retail and Wholesale Insurance businesses and Premium Finance Key Points
A-4 Purchase Accounting Summary(1) ($ MM) As of/For the Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Loans and Leases(2) Beginning balance unamortized fair value mark $ (2,067) $ (2,395) $ (2,676) $ (3,077) $ (3,539) Accretion 285 316 356 367 440 CECL adoption - reserves on PCD assets — — — — — Purchase accounting adjustments and other activity 5 12 (75) 34 22 Ending balance $ (1,777) $ (2,067) $ (2,395) $ (2,676) $ (3,077) Core deposit and other intangible assets Beginning balance $ 2,825 $ 2,984 $ 2,840 $ 3,016 $ 3,168 Additions - acquisitions — 14 320 — — Amortization (142) (144) (172) (170) (178) Amortization in net occupancy expense (3) (3) (4) (6) (6) Purchase accounting adjustments and other activity (15) (26) — — 32 Ending balance $ 2,665 $ 2,825 $ 2,984 $ 2,840 $ 3,016 Deposits(3) Beginning balance unamortized fair value mark $ (15) $ (19) $ (26) $ (37) $ (54) Amortization 3 4 7 11 17 Ending balance $ (12) $ (15) $ (19) $ (26) $ (37) Long-Term Debt(3) Beginning balance unamortized fair value mark $ (196) $ (216) $ (238) $ (262) $ (285) Amortization 20 20 22 24 23 Ending balance $ (176) $ (196) $ (216) $ (238) $ (262) (1) Includes the merger with SunTrust. This summary includes only selected information and does not represent all purchase accounting adjustments. (2) Purchase accounting marks on loans and leases includes credit, interest and liquidity components, and are generally recognized using the level-yield or straight-line method over the remaining life of the individual loans or recognized in full in the event of prepayment. (3) Purchase accounting marks on liabilities represents interest rate marks on time deposits and long-term debt and are recognized using the level-yield method over the term of the liability.
A-5 3Q21–1Q22 preferred stock projected dividends 3ML = 3-month LIBOR. Estimates assume an average LIBOR rate of 0.17% for 3Q21-1Q22. Actual 3ML could vary significantly causing dividend payments to differ from the estimates shown above. Truist Preferred Outstandings ($ MM) 3Q21 4Q21 1Q22 Series I $172.5 $1.8 $1.7 $1.7 Series J $101.5 1.0 1.0 1.0 Series L $750.0 — 18.9 — Series M $500.0 — 12.8 — Series N $1,700.0 40.8 — 40.8 Series O $575.0 7.5 7.5 7.5 Series P $1,000.0 — 24.8 — Series Q $1,000.0 25.5 — 25.5 Series R $925.0 11.0 11.0 11.0 Estimated dividends based on current interest rates and amounts outstanding ($ MM) $87.6 $77.8 $87.6
Non-GAAP Reconciliations
A-7 Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Net income available to common shareholders - GAAP $ 1,559 $ 1,334 $ 1,228 $ 1,068 $ 902 Merger-related and restructuring charges 228 108 237 181 160 Securities (gains) losses — — — (80) (230) Loss (gain) on early extinguishment of debt (1) (2) — — 180 Incremental operating expenses related to the merger 146 134 138 115 99 Charitable contribution 153 — — 38 — Acceleration for cash flow hedge unwind — 28 — — — Net income available to common shareholders - adjusted $ 2,085 $ 1,602 $ 1,603 $ 1,322 $ 1,111 Weighted average shares outstanding - diluted 1,349,492 1,358,932 1,361,763 1,358,122 1,355,834 Diluted EPS - GAAP $ 1.16 $ 0.98 $ 0.90 $ 0.79 $ 0.67 Diluted EPS - adjusted(1) 1.55 1.18 1.18 0.97 0.82 Non-GAAP Reconciliations Diluted EPS ($ MM, except per share data, shares in thousands) (1) The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
A-8 Non-GAAP Reconciliations Efficiency Ratio ($ MM) (1) Revenue is defined as net interest income plus noninterest income. (2) The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges, and other selected items. Truist's management uses this measure in their analysis of the Corporation's performance. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Efficiency ratio numerator - noninterest expense - GAAP $ 4,011 $ 3,610 $ 3,833 $ 3,755 $ 3,878 Merger-related and restructuring charges, net (297) (141) (308) (236) (209) Gain (loss) on early extinguishment of debt — 3 — — (235) Incremental operating expense related to the merger (190) (175) (179) (152) (129) Amortization of intangibles (142) (144) (172) (170) (178) Charitable contribution (200) — — (50) — Acceleration for cash flow hedge unwind — (36) — — — Efficiency ratio numerator - adjusted $ 3,182 $ 3,117 $ 3,174 $ 3,147 $ 3,127 Efficiency ratio denominator - revenue(1) - GAAP $ 5,650 $ 5,482 $ 5,651 $ 5,572 $ 5,871 Taxable equivalent adjustment 28 28 28 29 31 Securities (gains) losses — — — (104) (300) Gains on divestiture of certain businesses — (37) — — — Efficiency ratio denominator - adjusted $ 5,678 $ 5,473 $ 5,679 $ 5,497 $ 5,602 Efficiency ratio - GAAP 71.0 % 65.8 % 67.8 % 67.4 % 66.1 % Efficiency ratio - adjusted(2) 56.1 56.9 55.9 57.3 55.8
A-9 Non-GAAP Reconciliations Calculations of tangible common equity and related measures ($ MM, except per share data, shares in thousands) (1) Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk.These measures are not necessarily comparable to similar measures that may be presented by other companies. As of / Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Common shareholders' equity $ 61,663 $ 60,752 $ 62,759 $ 61,819 $ 61,634 Less: Intangible assets, net of deferred taxes 26,296 26,413 26,629 25,923 26,083 Tangible common shareholders' equity(1) $ 35,367 $ 34,339 $ 36,130 $ 35,896 $ 35,551 Outstanding shares at end of period 1,334,770 1,344,845 1,348,961 1,348,118 1,347,609 Common shareholders' equity per common share $ 46.20 $ 45.17 $ 46.52 $ 45.86 $ 45.74 Tangible common shareholders' equity per common share(1) 26.50 25.53 26.78 26.63 26.38 Net income available to common shareholders $ 1,559 $ 1,334 $ 1,228 $ 1,068 $ 902 Plus amortization of intangibles, net of tax 107 111 131 130 137 Tangible net income available to common shareholders(1) $ 1,666 $ 1,445 $ 1,359 $ 1,198 $ 1,039 Average common shareholders' equity $ 61,709 $ 62,252 $ 61,991 $ 61,804 $ 61,484 Less: Average intangible assets, net of deferred taxes 26,366 26,535 25,930 25,971 26,161 Average tangible common shareholders' equity(1) $ 35,343 $ 35,717 $ 36,061 $ 35,833 $ 35,323 Return on average common shareholders' equity 10.1 % 8.7 % 7.9 % 6.9 % 5.9 % Return on average tangible common shareholders' equity(1) 18.9 16.4 15.0 13.3 11.8
A-10 Non-GAAP Reconciliations Performance Ratios ($ MM) (1) Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk.These measures are not necessarily comparable to similar measures that may be presented by other companies. (2) Tangible common equity is a non-GAAP measure. The reconciliation for this measure is on the previous slide. Quarter Ended June 30, 2021 Return on Average Assets Return on Average Common Shareholders’ Equity Return on Average Tangible Common Shareholders’ Equity2 Net income - GAAP $ 1,658 Net income available to common shareholders - GAAP $ 1,559 $ 1,559 Merger-related and restructuring charges 228 228 228 Loss (gain) on early extinguishment of debt (1) (1) (1) Incremental operating expenses related to the merger 146 146 146 Charitable contribution 153 153 153 Amortization — — 107 Numerator - adjusted(1) $ 2,184 $ 2,085 $ 2,192 Average assets $ 518,774 Average common shareholders' equity — $ 61,709 $ 61,709 Plus: Estimated impact of adjustments on denominator — 263 263 Less: Average intangible assets, net of deferred taxes — — 26,366 Denominator - adjusted(1) $ 518,774 $ 61,972 $ 35,606 Reported ratio 1.28 % 10.1 % 18.9 % Adjusted ratio 1.69 13.5 24.7
A-11 Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 Net interest income - GAAP $ 3,245 $ 3,285 $ 3,366 $ 3,362 $ 3,448 Taxable-equivalent adjustment 28 28 28 29 31 Net interest income - taxable-equivalent 3,273 3,313 3,394 3,391 3,479 Accretion of mark on acquired loans (285) (316) (356) (367) (440) Accretion of mark on acquired liabilities (23) (24) (29) (35) (40) Accretion of mark on securities acquired from FDIC — — — — (3) Net interest income - core(1) $ 2,965 $ 2,973 $ 3,009 $ 2,989 $ 2,996 Average earning assets - GAAP $ 455,265 $ 443,946 $ 438,666 $ 435,394 $ 446,825 Average balance - mark on acquired loans 1,947 2,263 2,550 2,918 3,297 Average balance - mark on securities acquired from FDIC — — — — 300 Average earning assets - core(1) $ 457,212 $ 446,209 $ 441,216 $ 438,312 $ 450,422 Annualized net interest margin: Reported - taxable-equivalent 2.88 % 3.01 % 3.08 % 3.10 % 3.13 % Core(1) 2.60 2.69 2.72 2.72 2.67 Non-GAAP Reconciliations Core NIM ($ MM) (1) Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial Bank acquisition and b) loans, deposits and long-term debt from SunTrust, Susquehanna, National Penn and Colonial Bank are excluded to approximate the yields paid by clients. Truist's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities acquired provide investors with useful information related to the performance of Truist's earning assets. These measures are not necessarily comparable to similar measures that may be presented by other companies.
A-12 Non-GAAP Reconciliations Insurance Holdings Adjusted EBITDA ($ MM) (1) EBITDA is a non-GAAP measurement of operating profitability that is calculated by adding back interest, taxes, depreciation and amortization to net income. Truist's management also adds back merger-related and restructuring charges, incremental operating expenses related to the merger, and other selected items. Truist's management uses this measure in its analysis of the Corporation's Insurance Holdings segment. Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. Quarter Ended June 30 March 31 June 30 2021 2021 2020 Segment net interest income $ 21 $ 20 $ 23 Noninterest income 698 633 598 Total revenue $ 719 $ 653 $ 621 Segment net income (loss) - GAAP $ 156 $ 131 $ 126 Provision (benefit) for income taxes 49 42 41 Depreciation & amortization 26 27 19 EBITDA 231 200 186 Merger-related and restructuring charges, net 13 4 1 Adjusted EBITDA(1) $ 244 $ 204 $ 187 Adjusted EBITDA(1) margin 33.9 % 31.2 % 30.1 %
A-13 Non-GAAP Reconciliations Allowance with Fair Value Marks ($ MM) As of/For the Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 2021 2021 2020 2020 2020 ALLL $ 5,121 $ 5,662 $ 5,835 $ 5,863 $ 5,702 Unamortized fair value mark (1) 1,777 2,067 2,395 2,676 3,077 Allowance plus unamortized fair value mark $ 6,898 $ 7,729 $ 8,230 $ 8,539 $ 8,779 Loans and leases held for investment $ 286,485 $ 291,511 $ 299,734 $ 306,627 314,825 Unamortized fair value mark (1) 1,777 2,067 2,395 2,676 3,077 Gross loans and leases $ 288,262 $ 293,578 $ 302,129 $ 309,303 $ 317,902 Allowance for loan and lease losses as a percentage of loans and leases - GAAP 1.79 % 1.94 % 1.95 % 1.91 % 1.81 % Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases - Adjusted (1) (2) 2.39 % 2.63 % 2.72 % 2.76 % 2.76 % (1) Unamortized fair value mark includes credit, interest rate and liquidity components. (2) Allowance for loan and lease losses and unamortized fair value mark as a percentage of gross loans and leases is a non-GAAP measurement of credit reserves that is calculated by adjusting the ALLL and loans and leases held for investment by the unamortized fair value mark. Truist's management uses these measures to assess loss absorption capacity.
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