CHARLOTTE, N.C., April 20,
2023 /PRNewswire/ -- Truist Financial Corporation
(NYSE: TFC) today reported GAAP earnings of $1.4 billion, or $1.05 per share for the first quarter of 2023.
PPNR(1) was up 47% and adjusted PPNR(1) was
up 19% compared to the first quarter of 2022. Capital, liquidity,
and credit quality remain strengths.
1Q23 Key Financial
Data
|
|
|
|
|
(Dollars in
billions, except per share data)
|
1Q23
|
4Q22
|
1Q22
|
Summary Income
Statement
|
Net interest income -
TE
|
$ 3.92
|
$ 4.03
|
$ 3.21
|
Noninterest
income
|
2.23
|
2.23
|
2.14
|
Total revenue -
TE
|
6.15
|
6.26
|
5.35
|
Noninterest
expense
|
3.69
|
3.72
|
3.67
|
Net income available to
common shareholders
|
1.41
|
1.61
|
1.33
|
PPNR -
unadjusted(1)
|
2.46
|
2.54
|
1.68
|
PPNR -
adjusted(1)
|
2.66
|
2.87
|
2.23
|
Per Share
Metrics
|
Diluted earnings per
common share
|
$ 1.05
|
$ 1.20
|
$ 0.99
|
BVPS
|
41.82
|
40.58
|
43.82
|
TBVPS(1)
|
19.45
|
18.04
|
21.87
|
Key
Ratios
|
ROCE
|
10.3 %
|
11.7 %
|
9.0 %
|
ROTCE(1)
|
24.1
|
27.6
|
18.6
|
Efficiency ratio -
GAAP
|
60.5
|
60.0
|
69.0
|
Efficiency ratio -
adjusted(1)
|
56.8
|
54.2
|
58.3
|
NIM - TE
|
3.17
|
3.25
|
2.76
|
NCO ratio
|
0.37
|
0.34
|
0.25
|
ALLL ratio
|
1.37
|
1.34
|
1.44
|
CET1(2)
|
9.1
|
9.0
|
9.4
|
Average
Balances
|
Assets
|
$
560
|
$
553
|
$
536
|
Securities
|
141
|
142
|
153
|
Loans and
leases
|
328
|
323
|
292
|
Deposits
|
408
|
413
|
415
|
Amounts may not foot
due to rounding.
|
1Q23 Performance
Highlights(3)
- Net income was $1.4 billion, or
$1.05 per diluted share
-
- Includes $63 million
($48 million after-tax), or
$0.04 per share, of merger-related
and restructuring charges
- Adjusted PPNR was $2.7 billion,
down 7.2% compared to prior quarter due to lower net interest
income and higher noninterest expense
-
- Up 19% from the year ago quarter due to NIM expansion and
strong loan growth, partially offset by higher noninterest
expense
- Average loans and leases increased 1.7% compared to the prior
quarter driven by growth within the commercial and industrial
portfolio
- Average deposits decreased 1.2% compared to the prior quarter
primarily driven by the impacts of monetary tightening and
higher-rate alternatives
- Asset quality remains strong with the net charge-off ratio at
37 basis points, stable nonperforming loans and lower
delinquencies
- Capital and liquidity levels remained strong
-
- CET1 ratio was 9.1% as of March
31
-
- TIH minority stake sale closed April
3, which adds approximately 30 basis points
- Consolidated LCR was 113%
- $166 billion of available
liquidity sources
(1)
|
Represents a non-GAAP
measure. A reconciliation of each of these non-GAAP measures to the
most directly comparable GAAP measure is included in the appendix
to Truist's First Quarter 2023 Earnings Presentation.
|
(2)
|
Current quarter capital
ratios are preliminary.
|
(3)
|
Comparisons noted in
this section summarize changes from first quarter of 2023 compared
to fourth quarter of 2022, unless otherwise noted.
|
CEO Commentary
"In a challenging and unique quarter for the banking industry,
Truist demonstrated strength and leadership that reflects our
diverse business model, granular and relationship-oriented deposit
base, and strong capital and liquidity position. We also closed on
the sale of a 20% minority stake in Truist Insurance Holdings in
early April, which adds approximately 30 basis points to our
risk-based capital ratios and, longer term, provides strategic and
financial flexibility for both Truist and TIH.
Truist earned $1.4 billion of net
income and had an ROTCE of 24.1% in the first quarter. We continued
to experience the benefits of our shift to operating, including
improving organic production and integrated relationship management
momentum, although these benefits were offset by
higher-than-expected funding costs. As a result, adjusted
pre-provision net revenue decreased 7.2% sequentially, consistent
with our prior guidance. We have started the year with 310 basis
points of positive adjusted operating leverage, although work
remains. Asset quality metrics remain strong and we prudently
increased our ALLL ratio by 3 basis points to reflect increased
uncertainty.
Our focus on clients was unwavering, both during the first two
months of the quarter and in March. I am proud of how our teammates
continue to care for our clients and stakeholders and live our
purpose to inspire and build better lives and communities. I remain
highly confident in Truist's trajectory and ability to be a source
of strength and stability for our clients and communities."
— Bill Rogers, Truist Chairman
& CEO
Truist in the Spotlight
- Published 2022 Corporate Responsibility Report, highlighting
progress and achievements across climate and energy, DEI,
community, and financial inclusion
- Closed on transaction to sell minority stake in TIH,
positioning TIH for long-term success and growth and providing
strategic and financial flexibility for Truist
- Announced Where It Starts, a $22
million strategic initiative of Truist Foundation to
strengthen small businesses and create career pathways for
communities of color
Net Interest Income,
Net Interest Margin, and Average Balances
|
|
Quarter
Ended
|
|
Change
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
Link
|
|
Like
|
Interest
income(1)
|
$
5,836
|
|
$
5,288
|
|
$
3,383
|
|
$ 548
|
|
10.4 %
|
|
$
2,453
|
|
72.5 %
|
Interest
expense
|
1,917
|
|
1,257
|
|
174
|
|
660
|
|
52.5
|
|
1,743
|
|
NM
|
Net interest
income(1)
|
$
3,919
|
|
$
4,031
|
|
$
3,209
|
|
$ (112)
|
|
(2.8)
|
|
$ 710
|
|
22.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest
margin(1)
|
3.17 %
|
|
3.25 %
|
|
2.76 %
|
|
(8) bps
|
|
|
|
41 bps
|
|
|
Core net interest
margin(2)
|
3.10
|
|
3.17
|
|
2.57
|
|
(7) bps
|
|
|
|
53 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Balances(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earning
assets
|
$
499,149
|
|
$
492,805
|
|
$
469,940
|
|
$
6,344
|
|
1.3 %
|
|
$
29,209
|
|
6.2 %
|
Total interest-bearing
liabilities
|
352,472
|
|
336,584
|
|
311,586
|
|
15,888
|
|
4.7
|
|
40,886
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yields /
Rates(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total earning
assets
|
4.72 %
|
|
4.27 %
|
|
2.90 %
|
|
45 bps
|
|
|
|
182 bps
|
|
|
Total interest-bearing
liabilities
|
2.20
|
|
1.48
|
|
0.22
|
|
72 bps
|
|
|
|
198 bps
|
|
|
|
|
(1)
|
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.
|
(2)
|
Represents a non-GAAP
measure. A reconciliation of each of these non-GAAP measures to the
most directly comparable GAAP measure is included in the appendix
to Truist's First Quarter 2023 Earnings Presentation.
|
(3)
|
Excludes basis
adjustments for fair value hedges.
|
Taxable-equivalent net interest income for the first quarter of
2023 was down $112 million, or 2.8%,
compared to the fourth quarter of 2022 driven by higher funding
costs and two less days, partially offset by higher rates on
earning assets. The net interest margin was 3.17%, down eight basis
points.
- Average earning assets increased primarily due to growth in
average total loans of $4.8 billion,
or 1.5%, and growth in average other earning assets of $3.7 billion, or 17%, primarily due to an
increase in balances held at the Federal Reserve to support
liquidity build, partially offset by a decline in average
securities of $1.9 billion, or
1.3%.
- The yield on the total loan portfolio was 5.81%, up 55 basis
points primarily due to higher market interest rates. The yield on
the average securities portfolio for the first quarter was 2.14%,
up six basis points primarily due to the higher rate
environment.
- Average deposits decreased $4.8
billion, or 1.2%, while average short-term borrowings
decreased $1.6 billion, or 6.2%, and
average long-term debt increased $12.4
billion, or 32%.
- The average cost of total deposits was 1.12%, up 46 basis
points. The average cost of short-term borrowings was 4.69%, up 94
basis points. The average cost of long-term debt was 4.05%, up 63
basis points. The increase in rates on deposits and other funding
sources was largely attributable to the higher rate
environment.
Taxable-equivalent net interest income for the first quarter of
2023 was up $710 million, or 22%,
compared to the first quarter of 2022 primarily due to higher
short-term interest rates and strong loan growth, alongside well
controlled deposit costs. These increases were partially offset by
lower purchase accounting accretion and PPP revenue. Net interest
margin was 3.17%, up 41 basis points.
- Average earning assets increased $29.2
billion, or 6.2%, primarily due to growth in average total
loans of $35.1 billion, or 12%, and
growth in other earning assets of $6.7
billion, or 35%, primarily due to an increase in balances
held at the Federal Reserve to support liquidity build, partially
offset by a decrease in average securities of $12.1 billion, or 7.9%.
- The yield on the total loan portfolio was 5.81%, up 212 basis
points, primarily reflecting higher market interest rates,
partially offset by lower purchase accounting accretion and PPP
revenue. The yield on the average securities portfolio was 2.14%,
up 46 basis points primarily due to the higher rate
environment.
- Average deposits decreased $6.8
billion, or 1.6%, average short-term borrowings increased
$17.1 billion, and average long-term
debt increased $15.7 billion, or
44.5%.
- The average cost of total deposits was 1.12%, up 109 basis
points. The average cost of short-term borrowings was 4.69%, up 409
basis points. The average cost of long-term debt was 4.05%, up 255
basis points. The increase in rates on deposits and other funding
sources was largely attributable to the higher rate
environment.
Noninterest
Income
|
|
Quarter
Ended
|
|
Change
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
Link
|
|
Like
|
Insurance
income
|
$ 813
|
|
$ 766
|
|
$ 727
|
|
$
47
|
|
6.1 %
|
|
$
86
|
|
11.8 %
|
Wealth management
income
|
339
|
|
324
|
|
343
|
|
15
|
|
4.6
|
|
(4)
|
|
(1.2)
|
Investment banking and
trading income
|
261
|
|
257
|
|
261
|
|
4
|
|
1.6
|
|
—
|
|
—
|
Service charges on
deposits
|
249
|
|
257
|
|
252
|
|
(8)
|
|
(3.1)
|
|
(3)
|
|
(1.2)
|
Card and payment
related fees
|
230
|
|
245
|
|
212
|
|
(15)
|
|
(6.1)
|
|
18
|
|
8.5
|
Mortgage banking
income
|
142
|
|
117
|
|
121
|
|
25
|
|
21.4
|
|
21
|
|
17.4
|
Lending related
fees
|
106
|
|
110
|
|
85
|
|
(4)
|
|
(3.6)
|
|
21
|
|
24.7
|
Operating lease
income
|
67
|
|
68
|
|
58
|
|
(1)
|
|
(1.5)
|
|
9
|
|
15.5
|
Securities gains
(losses)
|
—
|
|
—
|
|
(69)
|
|
—
|
|
—
|
|
69
|
|
(100.0)
|
Other income
|
27
|
|
83
|
|
152
|
|
(56)
|
|
(67.5)
|
|
(125)
|
|
(82.2)
|
Total noninterest
income
|
$
2,234
|
|
$
2,227
|
|
$
2,142
|
|
$
7
|
|
0.3
|
|
$
92
|
|
4.3
|
Noninterest income was relatively stable compared to the fourth
quarter of 2022 due to seasonally higher insurance income, higher
mortgage banking and wealth management income partially offset by
lower other income and card and payment related fees.
- Insurance income increased primarily due to seasonality.
- Mortgage banking income increased due to a gain on the sale of
a servicing portfolio, partially offset by mortgage servicing
rights valuation adjustments in the current quarter.
- Wealth management income increased due to higher brokerage
commissions and fees from higher asset valuations.
- Other income decreased primarily due to lower income from
investments held for certain post-retirement benefits (which is
primarily offset by lower personnel expense).
- Card and payment related fees decreased due to seasonally lower
transaction volumes.
Noninterest income was up $92
million, or 4.3%, compared to the first quarter of 2022 due
to 12% growth in insurance income, higher mortgage banking income,
higher fees from lending-related activities and card and payment
related activities. The first quarter of 2022 included $69 million of securities losses and a
$74 million gain on the redemption of
noncontrolling equity interest (included in other income). These
items were partially offset by lower other income.
- Insurance income increased primarily due to acquisitions and
4.7% organic growth.
- Mortgage banking income increased due to a gain on the sale of
a servicing portfolio, partially offset by mortgage servicing
rights valuation adjustments in the current quarter.
- Lending related fees increased primarily due to higher unused
commitment fees.
- Card and payment related fees increased due to higher volumes
and the acquisition of a merchant portfolio.
- Other income decreased due to the aforementioned gain in the
year ago quarter, lower investment income from the Company's SBIC
and other investments, partially offset by higher income from
investments held for certain post-retirement benefits (which is
primarily offset by higher personnel expense).
Noninterest
Expense
|
|
Quarter
Ended
|
|
Change
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
Link
|
|
Like
|
Personnel
expense
|
$
2,181
|
|
$
2,198
|
|
$
2,051
|
|
$ (17)
|
|
(0.8) %
|
|
$ 130
|
|
6.3 %
|
Professional fees and
outside processing
|
314
|
|
347
|
|
363
|
|
(33)
|
|
(9.5)
|
|
(49)
|
|
(13.5)
|
Software
expense
|
214
|
|
241
|
|
232
|
|
(27)
|
|
(11.2)
|
|
(18)
|
|
(7.8)
|
Net occupancy
expense
|
183
|
|
179
|
|
208
|
|
4
|
|
2.2
|
|
(25)
|
|
(12.0)
|
Amortization of
intangibles
|
136
|
|
163
|
|
137
|
|
(27)
|
|
(16.6)
|
|
(1)
|
|
(0.7)
|
Equipment
expense
|
110
|
|
124
|
|
118
|
|
(14)
|
|
(11.3)
|
|
(8)
|
|
(6.8)
|
Marketing and customer
development
|
78
|
|
70
|
|
84
|
|
8
|
|
11.4
|
|
(6)
|
|
(7.1)
|
Operating lease
depreciation
|
46
|
|
44
|
|
48
|
|
2
|
|
4.5
|
|
(2)
|
|
(4.2)
|
Regulatory
costs
|
75
|
|
52
|
|
35
|
|
23
|
|
44.2
|
|
40
|
|
114.3
|
Merger-related and
restructuring charges
|
63
|
|
114
|
|
216
|
|
(51)
|
|
(44.7)
|
|
(153)
|
|
(70.8)
|
Other
expense
|
291
|
|
190
|
|
182
|
|
101
|
|
53.2
|
|
109
|
|
59.9
|
Total noninterest
expense
|
$
3,691
|
|
$
3,722
|
|
$
3,674
|
|
$ (31)
|
|
(0.8)
|
|
$
17
|
|
0.5
|
Noninterest expense was down $31
million, or 0.8%, compared to the fourth quarter of 2022 due
to lower merger-related and restructuring charges, professional
fees and outside processing expenses, amortization of intangibles,
and software expenses. These decreases were partially offset by
higher other expenses and regulatory costs. Merger-related and
restructuring charges and incremental operating expenses related to
the merger decreased $51 million and
$56 million, respectively, due to the
completion of integration-related activities. The current quarter
merger-related and restructuring charges includes costs for
personnel and facilities optimization. Adjusted noninterest
expenses, which exclude merger-related costs and the amortization
of intangibles, increased $103
million, or 3.0%, compared to the prior quarter.
- Professional fees and outside processing expenses decreased due
to lower project spend for merger-related activities, partially
offset by enterprise technology investments.
- Software expense decreased due to accelerated depreciation for
certain contracts in the prior period.
- Personnel expense decreased slightly due to lower pension
expenses and lower other post-retirement benefit expense (which is
almost entirely offset by lower other income), partially offset by
seasonally higher payroll taxes and higher equity compensation
expense.
- Other expense increased primarily due to higher pension expense
(driven primarily by lower plan assets) and higher operating
losses.
- Regulatory costs increased primarily due to an increase in the
FDIC's deposit insurance assessment rate.
Noninterest expense was up $17
million, or 0.5%, compared to the first quarter of 2022 due
to higher personnel expense, other expense, and regulatory costs.
These increases were partially offset by lower merger-related and
restructuring charges and professional fees and outside processing
expenses. Merger-related and restructuring charges and incremental
operating expenses related to the merger decreased $153 million and $202
million, respectively, due to the completion of
integration-related activities. Adjusted noninterest expenses,
which exclude merger-related costs and the amortization of
intangibles increased $373 million,
or 12%.
- Personnel expense increased due to investments in teammates by
increasing Truist's minimum wage, the impact from acquisitions,
investments in revenue producing businesses and enterprise
technology, and higher other post-retirement benefit expense (which
is almost entirely offset by higher other income), partially offset
by lower pension expenses.
- Other expense increased primarily due to higher pension expense
(driven primarily by lower plan assets) and higher operating
losses.
- Regulatory costs increased primarily due to an increase in the
FDIC's deposit insurance assessment rate.
- Professional fees and outside processing expenses decreased due
to lower project spend for merger-related activities, partially
offset by enterprise technology investments.
Provision for Income
Taxes
|
|
Quarter
Ended
|
|
Change
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
Link
|
|
Like
|
Provision for income
taxes
|
$
394
|
|
$
337
|
|
$
330
|
|
$
57
|
|
16.9 %
|
|
$
64
|
|
19.4 %
|
Effective tax
rate
|
20.6 %
|
|
16.7 %
|
|
18.9 %
|
|
390 bps
|
|
|
|
170 bps
|
|
|
The effective tax rate increased compared to the fourth quarter
of 2022 primarily driven by discrete tax expenses recognized in the
current quarter compared to discrete tax benefits recognized in the
prior quarter and the adoption of accounting guidance related to
the proportional amortization of tax credit investments in the
current quarter. This guidance resulted in an increase in other
income and an increase in tax expense of $17
million for the first quarter of 2023 with no impact to net
income. The guidance was adopted prospectively and had no impact on
prior periods results.
The effective tax rate increased compared to the first quarter
of 2022 primarily driven by higher income before taxes, discrete
tax expense recognized in the current quarter compared to discrete
tax benefits recognized in the prior quarter, and the
aforementioned adoption of accounting guidance related to the
proportional amortization of tax credit investments.
Average Loans and
Leases
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
Change
|
|
%
Change
|
Commercial:
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$ 165,095
|
|
$ 159,308
|
|
$
5,787
|
|
3.6 %
|
CRE
|
22,689
|
|
22,497
|
|
192
|
|
0.9
|
Commercial
construction
|
5,863
|
|
5,711
|
|
152
|
|
2.7
|
Total
commercial
|
193,647
|
|
187,516
|
|
6,131
|
|
3.3
|
Consumer:
|
|
|
|
|
|
|
|
Residential
mortgage
|
56,422
|
|
56,292
|
|
130
|
|
0.2
|
Home
equity(1)
|
10,735
|
|
10,887
|
|
(152)
|
|
(1.4)
|
Indirect
auto
|
27,743
|
|
28,117
|
|
(374)
|
|
(1.3)
|
Other
consumer(1)
|
27,559
|
|
27,479
|
|
80
|
|
0.3
|
Student
|
5,129
|
|
5,533
|
|
(404)
|
|
(7.3)
|
Total
consumer
|
127,588
|
|
128,308
|
|
(720)
|
|
(0.6)
|
Credit card
|
4,785
|
|
4,842
|
|
(57)
|
|
(1.2)
|
Total loans and leases
held for investment
|
$ 326,020
|
|
$ 320,666
|
|
$
5,354
|
|
1.7
|
|
|
(1)
|
In the first quarter of
2023, the Company reclassified certain portfolios within the
consumer portfolio segment to delineate home equity from other
consumer portfolios. Prior periods were revised to conform to the
current presentation.
|
Average loans increased $5.4
billion, or 1.7%, compared to the prior quarter primarily
due to momentum from the prior quarter within the commercial
portfolio and the impact of the BankDirect acquisition. Loan growth
moderated during the quarter as production in lower return
portfolios was reduced with end of period loans up 0.5% compared to
December 31, 2022.
- Average commercial loans increased 3.3% due to broad-based
growth within the commercial and industrial portfolio and the
BankDirect acquisition. The BankDirect acquisition contributed
approximately $900 million of average
loan growth compared to the fourth quarter of 2022.
- Average consumer loans decreased 0.6% due to runoff in student
loans and partnership lending, as well as lower indirect auto
production.
Average
Deposits
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
Change
|
|
%
Change
|
Noninterest-bearing
deposits
|
$ 131,099
|
|
$ 141,032
|
|
$
(9,933)
|
|
(7.0) %
|
Interest
checking
|
108,886
|
|
110,001
|
|
(1,115)
|
|
(1.0)
|
Money market and
savings
|
139,802
|
|
144,730
|
|
(4,928)
|
|
(3.4)
|
Time
deposits
|
28,671
|
|
17,513
|
|
11,158
|
|
63.7
|
Total
deposits
|
$ 408,458
|
|
$ 413,276
|
|
$
(4,818)
|
|
(1.2)
|
Average deposits for the first quarter of 2023 were $408.5 billion, a decrease of $4.8 billion, or 1.2%, compared to the prior
quarter. The decrease in deposits was primarily driven by the
impacts of monetary tightening and higher-rate alternatives.
Average noninterest-bearing deposits decreased 7.0% compared to
the prior quarter and represented 32.1% of total deposits for the
first quarter of 2023 compared to 34.1% for the fourth quarter of
2022 and 35.1% compared to the year ago quarter. Average money
market and savings and interest checking declined 3.4% and 1.0%,
respectively, compared to the prior quarter. Average time deposits
increased 64% due to an increase in wholesale funding and
retail-client time deposits.
Capital
Ratios
|
|
1Q23
|
|
4Q22
|
|
3Q22
|
|
2Q22
|
|
1Q22
|
Risk-based:
|
(preliminary)
|
|
|
|
|
|
|
|
|
CET1
|
9.1 %
|
|
9.0 %
|
|
9.1 %
|
|
9.2 %
|
|
9.4 %
|
Tier 1
|
10.6
|
|
10.5
|
|
10.7
|
|
10.8
|
|
11.0
|
Total
|
12.6
|
|
12.4
|
|
12.6
|
|
12.6
|
|
13.0
|
Leverage
|
8.5
|
|
8.5
|
|
8.5
|
|
8.6
|
|
8.6
|
Supplementary
leverage
|
7.3
|
|
7.3
|
|
7.3
|
|
7.3
|
|
7.3
|
Capital ratios remained strong compared to the regulatory
requirements for well capitalized banks. Truist declared common
dividends of $0.52 per share during
the first quarter of 2023. The dividend payout ratio for the first
quarter of 2023 was 49%. Truist did not repurchase any shares in
the first quarter of 2023.
Truist CET1 ratio was 9.1% as of March 31, 2023. The
increase since December 31, 2022
represents organic capital generation, partially offset by the CECL
phase-in. Truist closed the sale of the minority stake in TIH on
April 3, 2023, which adds
approximately 30 basis points and 25 basis points to the risk-based
regulatory capital ratios and leverage ratios, respectively.
Truist's average consolidated LCR was 113% for the three months
ended March 31, 2023, compared to the regulatory minimum of
100%. Truist has significant and strong access to liquidity with
$166 billion of available liquidity
as of March 31, 2023.
Asset
Quality
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
3Q22
|
|
2Q22
|
|
1Q22
|
Total nonperforming
assets
|
$
1,261
|
|
$
1,250
|
|
$
1,240
|
|
$
1,173
|
|
$
1,135
|
Total loans 90 days
past due and still accruing
|
1,361
|
|
1,605
|
|
1,709
|
|
1,787
|
|
1,914
|
Total loans 30-89 days
past due
|
1,805
|
|
2,267
|
|
1,957
|
|
2,091
|
|
2,101
|
Nonperforming loans and
leases as a percentage of loans and leases held for
investment
|
0.36 %
|
|
0.36 %
|
|
0.35 %
|
|
0.36 %
|
|
0.36 %
|
Loans 30-89 days past
due and still accruing as a percentage of loans and
leases
|
0.55
|
|
0.70
|
|
0.62
|
|
0.69
|
|
0.72
|
Loans 90 days or more
past due and still accruing as a percentage of loans and
leases
|
0.42
|
|
0.49
|
|
0.54
|
|
0.59
|
|
0.66
|
Loans 90 days or more
past due and still accruing as a percentage of loans and leases,
excluding
government guaranteed
|
0.04
|
|
0.04
|
|
0.04
|
|
0.04
|
|
0.04
|
Allowance for loan and
lease losses as a percentage of loans and leases held for
investment
|
1.37
|
|
1.34
|
|
1.34
|
|
1.38
|
|
1.44
|
Net charge-offs as a
percentage of average loans and leases, annualized
|
0.37
|
|
0.34
|
|
0.27
|
|
0.22
|
|
0.25
|
Ratio of allowance for
loan and lease losses to net charge-offs, annualized
|
3.7x
|
|
4.1x
|
|
5.0x
|
|
6.5x
|
|
5.8x
|
Ratio of allowance for
loan and lease losses to nonperforming loans and leases held for
investment
|
3.8x
|
|
3.7x
|
|
3.8x
|
|
3.8x
|
|
4.0x
|
Nonperforming assets totaled $1.3
billion at March 31, 2023, relatively stable compared
to December 31, 2022. Nonperforming loans and leases held for
investment were 0.36% of loans and leases held for investment at
March 31, 2023, unchanged compared to December 31,
2022.
Loans 90 days or more past due and still accruing totaled
$1.4 billion at March 31, 2023,
down $244 million, or seven basis
points as a percentage of loans and leases, compared with the prior
quarter primarily due to declines in government guaranteed student
loans and government guaranteed residential mortgages. 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 March 31, 2023, flat from December 31,
2022.
Loans 30-89 days past due and still accruing of $1.8 billion at March 31, 2023 were down
$462 million, or 15 basis points as a
percentage of loans and leases, compared to the prior quarter
primarily due to a seasonal decrease in the consumer portfolios
coupled with a decline in the commercial and industrial
portfolio.
The allowance for credit losses was $4.8
billion and includes $4.5
billion for the allowance for loan and lease losses and
$282 million for the reserve for
unfunded commitments. The ALLL ratio was 1.37%, up three basis
points compared with December 31, 2022 primarily due to
increased economic uncertainty. The ALLL covered nonperforming
loans and leases held for investment 3.8X compared to 3.7X at
December 31, 2022. At March 31, 2023, the ALLL was 3.7X
annualized net charge-offs, compared to 4.1X at December 31,
2022.
Provision for Credit
Losses
|
|
Quarter
Ended
|
|
Change
|
(Dollars in
millions)
|
1Q23
|
|
4Q22
|
|
1Q22
|
|
Link
|
|
Like
|
Provision for credit
losses
|
$
502
|
|
$
467
|
|
$
(95)
|
|
$
35
|
|
7.5 %
|
|
$ 597
|
|
NM
|
Net
charge-offs
|
297
|
|
273
|
|
178
|
|
24
|
|
8.8
|
|
119
|
|
66.9
|
Net charge-offs as a
percentage of average loans and leases
|
0.37 %
|
|
0.34 %
|
|
0.25 %
|
|
3 bps
|
|
|
|
12 bps
|
|
|
The provision for credit losses was $502
million compared to $467
million for the fourth quarter of 2022.
- The increase in the current quarter provision expense primarily
reflects increased economic uncertainty.
- The net charge-off ratio for the current quarter was up
compared to the fourth quarter of 2022 primarily driven by higher
charge-offs in the commercial and industrial portfolio.
The provision for credit losses was $502
million compared to a benefit of $95
million for the first quarter of 2022.
- The increase in the current quarter provision expense primarily
reflects increased economic uncertainty in the current period,
whereas the earlier quarter included a reserve release due to the
improving credit environment during that period.
- The net charge-off ratio was up compared to the first quarter
of 2022 driven by higher charge-offs in the indirect auto and other
consumer portfolios due to normalizing trends, as well as an
increase in the commercial and industrial portfolio.
Earnings Presentation and Quarterly Performance
Summary
Investors can access a live audio webcast of the first quarter
2023 earnings conference call at 8 a.m.
ET today and view the news release and presentation
materials at https://ir.truist.com under "Events &
Presentations." The conference call can also be accessed by dialing
855-303-0072 and using passcode 100038. A replay of the call will
be available on the website for 30 days.
The presentation, including an appendix reconciling non-GAAP
disclosures, and Truist's First Quarter 2023 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. Truist has leading market share in many
high-growth markets in the country, and offers a wide range of
products and services through our retail and small business
banking, commercial banking, corporate and investment banking,
insurance, wealth management, and specialized lending businesses.
Headquartered in Charlotte, North
Carolina, Truist is a top 10 U.S. commercial bank with total
assets of $574 billion as of
March 31, 2023. Truist Bank, Member
FDIC. Learn more at Truist.com.
Glossary of Defined
Terms
|
Term
|
Definition
|
ACL
|
Allowance for credit
losses
|
ALLL
|
Allowance for loan and
lease losses
|
BVPS
|
Book value (common
equity) per share
|
CEO
|
Chief Executive
Officer
|
CET1
|
Common equity tier
1
|
EBITDA
|
Earnings before
interest, taxes, depreciation, and amortization
|
FDIC
|
Federal Deposit
Insurance Corporation
|
GAAP
|
Accounting principles
generally accepted in the United States of America
|
LCR
|
Liquidity Coverage
Ratio
|
LIBOR
|
London Interbank
Offered Rate
|
Like
|
Compared to First
quarter of 2022
|
Link
|
Compared to Fourth
quarter of 2022
|
NCO
|
Net
charge-offs
|
NIM
|
Net interest margin,
computed on a TE basis
|
NM
|
Not
meaningful
|
PPNR
|
Pre-provision net
revenue
|
PPP
|
Paycheck Protection
Program, established by the Coronavirus Aid, Relief, and Economic
Security Act
|
ROCE
|
Return on average
common equity
|
ROTCE
|
Return on average
tangible common equity
|
SBIC
|
Small Business
Investment Company
|
TBVPS
|
Tangible book value per
common share
|
TE
|
Taxable-equivalent
|
TIH
|
Truist Insurance
Holdings
|
Non-GAAP Financial Information
This news release contains financial information and
performance measures determined by methods other than in accordance
with 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 Performance Measures -The adjusted performance
measures, including adjusted diluted earnings per share, return on
average tangible common shareholders' equity, adjusted efficiency
ratio, adjusted operating leverage, and adjusted noninterest
expense, are non-GAAP in that they exclude merger-related and
restructuring charges, other selected items, and amortization of
intangible assets, as applicable to tangible measures. 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.
- PPNR - Pre-provision net revenue is a non-GAAP measure that
adjusts net income determined in accordance with GAAP to exclude
the impact of the provision for credit losses and provision for
income taxes. Adjusted pre-provision net revenue is a non-GAAP
measure that additionally excludes securities gains (losses),
merger-related and restructuring charges, amortization of
intangible assets, and other selected items. Truist's management
believes these measures provide a greater understanding of ongoing
operations and enhances comparability of results with prior
periods.
- 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 profitability, returns relative to balance sheet
risk, and shareholder value.
- 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 loans, deposits, and long-term debt from SunTrust and other
mergers and acquisitions 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.
A reconciliation of each of these non-GAAP measures to the
most directly comparable GAAP measure is included in the appendix
to Truist's First Quarter 2023 Earnings Presentation, which is
available at https://ir.truist.com/earnings.
Forward Looking Statements
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, 2022 and in Truist's subsequent filings
with the Securities and Exchange Commission:
- changes in the interest rate environment, including the
replacement of LIBOR as an interest rate benchmark, 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;
- Truist is subject to credit risk by lending or committing to
lend money, 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,
and may suffer losses if the value of collateral declines in
stressed market conditions;
- inability to access short-term funding or liquidity, loss of
client deposits or changes in Truist's credit ratings could
increase the cost of funding, limit access to capital markets, or
negatively affect Truist's overall liquidity or
capitalization;
- Truist may be impacted by the soundness of other financial
institutions, including as a result of the financial or operational
failure of a major financial institution, or concerns about the
creditworthiness of such a financial institution or its ability to
fulfill its obligations, which can cause substantial and cascading
disruption within the financial markets and increased expenses,
including FDIC insurance premiums;
- general economic or business conditions, either globally,
nationally or regionally, may be less favorable than expected,
including as a result of supply chain disruptions, inflationary
pressures and labor shortages, and instability in global
geopolitical matters, including due to an outbreak or escalation of
hostilities, 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;
- the monetary and fiscal policies of the federal government
and its agencies, including in response to higher inflation, could
have a material adverse effect on the economy and Truist's
profitability;
- the effects of COVID-19 adversely impacted the Company's
operations and financial performance and similar adverse impacts
resulting from pandemics could occur in future periods;
- risk management oversight functions may not identify or
address risks adequately, and management may not be able to
effectively manage credit risk;
- there are risks resulting from the extensive use of models
in Truist's business, which may impact decisions made by management
and regulators;
- deposit attrition, client loss or revenue loss following
completed mergers or acquisitions may be greater than
anticipated;
- Truist could fail 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 or compliance costs, 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 could damage Truist's reputation and
adversely impact business and revenues;
- regulatory matters, litigation or other legal actions may
result in, among other things, costs, fines, penalties,
restrictions on Truist's business activities, reputational harm,
negative publicity, or other adverse consequences;
- Truist faces substantial legal and operational risks in
safeguarding personal information;
- evolving legislative, accounting and regulatory standards,
including with respect to climate, capital, and liquidity
requirements, which may become more stringent in light of recent
bank failures, and results of regulatory examinations may adversely
affect Truist's financial condition and results of
operations;
- increased scrutiny regarding Truist's consumer sales
practices, training practices, incentive compensation design, and
governance could damage its reputation and adversely impact
business and revenues;
- 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;
- Truist faces 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;
- there are 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
teammates, and if these individuals leave or change roles without
effective replacements, Truist's operations could be adversely
impacted, which could be exacerbated in the increased
work-from-home environment as job markets may be less constrained
by physical geography;
- Truist's operations rely on its ability, and the ability of
key external parties, to maintain appropriate-staffed workforces,
and on the competence, trustworthiness, health and safety of
teammates;
- Truist faces the risk of 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, cyberattacks, which have increased in frequency with
geopolitical tensions, identity theft, ransomware attacks, and
physical security risks, such as natural disasters, environmental
conditions, and intentional acts of destruction, 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, including physical risks, such as
more frequent and intense weather events, and risks related to the
transition to a lower carbon economy, such as regulatory or
technological changes or shifts in market dynamics or consumer
preferences, 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.
View original
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SOURCE Truist Financial Corporation