10-KPeriod: FY2010

TRUIST FINANCIAL CORP Annual Report, Year Ended Dec 31, 2010

Filed February 25, 2011For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corp (formerly BB&T Corporation) reported its 2010 fiscal year results, navigating a challenging economic environment marked by the aftermath of a deep global recession. The company achieved record revenues of $9.4 billion on a fully taxable-equivalent basis, a 5.8% increase over 2009, driven primarily by a 9.9% growth in net interest income. This was supported by an expansion in the net interest margin from 3.66% to 4.03%, attributed to higher yields on assets from the Colonial Bank acquisition and lower deposit costs. Despite record revenues, consolidated net income saw a slight decrease of 2.6% to $854 million compared to 2009, with diluted earnings per share at $1.16. Credit costs remained elevated, with a provision for credit losses of $2.6 billion and net charge-offs of $2.5 billion. However, the company successfully implemented a nonperforming asset disposition strategy, leading to a 9.6% decline in nonperforming assets (excluding covered assets) by year-end 2010. The company also strengthened its balance sheet by deleveraging its securities portfolio and reducing its duration. The report highlights the significant impact of the Dodd-Frank Act, which introduced sweeping reforms to the financial services industry, potentially leading to higher costs and reduced revenues in the near term, though management anticipates minimizing long-term negative financial impacts through product and service adjustments. The company maintained strong capital ratios, well above regulatory standards for well-capitalized banks, and continued its commitment to a stable dividend payout.

Financial Highlights

40 data points
Beta

Net Income

$816.00M

EPS (Diluted)

$1.16

Total Assets

$157.08B

Cash & Equivalents

$2.09B

Free Cash Flow

$2.47B

Financial Statements
Beta
Interest Expense$1.79B
Net Income$816.00M
EPS (Basic)$1.18
EPS (Diluted)$1.16
Shares Outstanding (Basic)692.49M
Shares Outstanding (Diluted)701.04M

Key Highlights

  • 1Achieved record fully taxable-equivalent revenues of $9.4 billion, a 5.8% increase over 2009.
  • 2Increased net interest margin from 3.66% in 2009 to 4.03% in 2010, benefiting from higher yields on acquired assets and lower deposit costs.
  • 3Successfully executed a nonperforming asset disposition strategy, reducing nonperforming assets (excluding covered assets) by 9.6% by year-end.
  • 4Strengthened the balance sheet through a deleveraging strategy, reducing the securities portfolio by approximately $8 billion and its duration.
  • 5Maintained strong capital adequacy ratios, with a Tier 1 common ratio of 9.1% and total risk-based capital ratio of 15.5%, well above regulatory requirements.
  • 6Recorded consolidated net income of $854 million, a slight decrease of 2.6% from 2009, with diluted earnings per share at $1.16.
  • 7Experienced elevated credit costs, with a $2.6 billion provision for credit losses and $2.5 billion in net charge-offs.

Frequently Asked Questions

In 2010, Truist Financial Corp (BB&T) achieved record fully taxable-equivalent revenues of $9.4 billion, a 5.8% increase year-over-year. The company also saw an expansion in its net interest margin from 3.66% to 4.03% and successfully executed a strategy to reduce nonperforming assets by 9.6%.

Credit quality remained a challenge in 2010, with a provision for credit losses of $2.6 billion and net charge-offs of $2.5 billion. To address this, BB&T implemented a nonperforming asset disposition strategy, which led to a significant reduction in nonperforming assets by year-end and involved transferring problem loans to 'loans held for sale'.

The Dodd-Frank Act, enacted in 2010, introduced significant regulatory changes to the financial services industry. While BB&T anticipates some higher costs and reduced revenues in the near term due to certain provisions, management expects to minimize long-term negative financial impacts by adjusting products and services. The company's size means it may be subject to additional regulations as a 'systemically significant' institution.

The acquisition of Colonial Bank, completed in August 2009, contributed positively to revenue and net interest income in 2010 through higher yields on acquired assets. It also increased the company's footprint and deposit base. However, integrating the acquisition also involved significant systems conversion costs and some operational challenges, though management reported the conversion was successfully executed.