10-KPeriod: FY2013

TRUIST FINANCIAL CORP Annual Report, Year Ended Dec 31, 2013

Filed February 26, 2014For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corporation (TFC), formerly BB&T Corporation, reported strong financial performance in 2013, characterized by record income before taxes and significant improvements in credit quality. Net income available to common shareholders was $1.56 billion, with diluted EPS of $2.19. The company saw a notable increase in non-interest income, driven by robust performance in insurance, investment banking, brokerage, and bankcard services. Furthermore, BB&T benefited from a more favorable deposit mix, with a substantial increase in non-interest-bearing deposits, and a reduction in the average cost of interest-bearing deposits. Despite a challenging low-interest-rate environment and increased regulatory costs, BB&T demonstrated resilience. The bank maintained strong capital ratios, exceeding regulatory well-capitalized levels, and made strategic progress in various business lines, including acquisitions within its insurance segment. The company's focus on organic growth and strategic acquisitions positions it for continued development. Management anticipates that ongoing efforts to control non-interest expenses and expand non-interest income will further enhance profitability.

Financial Highlights

37 data points
Beta

Net Income

$1.56B

EPS (Diluted)

$2.19

Total Assets

$183.01B

Cash & Equivalents

$2.17B

Free Cash Flow

$5.31B

Financial Statements
Beta
Interest Expense$891.00M
Net Income$1.56B
EPS (Basic)$2.22
EPS (Diluted)$2.19
Shares Outstanding (Basic)703.04M
Shares Outstanding (Diluted)714.36M

Key Highlights

  • 1Record pre-tax income of $3.1 billion, a 11.9% increase year-over-year.
  • 2Improved credit quality with non-performing assets (excluding covered assets) down 31.4% and net charge-offs as a percentage of average loans decreasing to 0.67%.
  • 3Strong growth in non-interest income driven by record revenues in insurance, investment banking, brokerage, and bankcard fees.
  • 4Enhanced deposit mix with a 17.3% increase in average non-interest-bearing deposits, representing 26.4% of total average deposits.
  • 5Robust regulatory capital ratios, with Tier 1 risk-based capital increasing to 11.8% and Total Capital to 14.3%, well above regulatory minimums.
  • 6Diluted Earnings Per Share (EPS) of $2.19, with an adjusted EPS of $2.91 excluding tax adjustments.
  • 7Year-end total assets of $183.0 billion and shareholders' equity of $22.8 billion.

Frequently Asked Questions

Truist's (BB&T's) 2013 performance was primarily driven by record pre-tax income, improved credit quality metrics (lower non-performing assets and net charge-offs), and strong growth in non-interest income from insurance, investment banking, and brokerage services. A favorable shift in deposit mix towards non-interest-bearing accounts and a lower cost of interest-bearing deposits also contributed positively.

The company acknowledged the ongoing implementation of the Dodd-Frank Act and its associated rulemaking activities. It noted that compliance with these regulations could result in higher costs and potentially impact revenues. BB&T was subject to additional regulations due to its size, including 'living will' requirements, and participated in the Federal Reserve's Comprehensive Capital Analysis and Review (CCAR) program, with no objection to its revised capital plan in August 2013. The company also highlighted that further rulemaking related to mortgage origination and servicing could increase regulatory and compliance costs.

Management expected NIM to decline approximately five basis points in the first quarter of 2014. This projected decline was attributed to an increase in the relative size of the securities portfolio and lower earning asset yields, partially offset by lower funding costs.

Truist (BB&T) maintained strong capital ratios throughout 2013, with Tier 1 risk-based capital increasing to 11.8% and Total Capital to 14.3% at year-end, both well above regulatory standards for well-capitalized institutions. The company's internal capital guidelines also exceeded regulatory minimums. The increase in capital was primarily driven by net income exceeding dividends and proceeds from the issuance of preferred stock.