01—Abstract
Summary
Summary of the 10-K filed February 25, 2016. Cited figures are marked; the original filing is the authoritative source.
Truist Financial Corporation (TFC), formerly BB&T Corporation, reported net income available to common shareholders of $1.936 billiona for 2015, a slight decrease from $1.983 billion in 2014.
This translated to diluted earnings per share of $2.56b, down from $2.72 in the prior year. The company experienced a decline in return on average assets to 1.08% and return on average common equity to 8.34%. The increase in noninterest expense was primarily driven by merger-related and restructuring charges associated with acquisitions, notably Susquehanna Bancshares, Inc., and The Bank of Kentucky Financial Corporation.
The bank's strategy continues to focus on organic growth and strategic acquisitions. Management highlighted intense competition within the financial services industry and the pressure from new technologies and evolving consumer preferences as key challenges.
Despite these challenges, the company maintained a strong capital position, with its Tier 1 risk-based capital ratio at 11.8% and total risk-based capital ratio at 14.3% as of December 31, 2015. The company also paid a quarterly dividend of $0.27c per share, continuing its history of dividend payments since 1903.
02—Key points
Key Highlights
- Net income available to common shareholders decreased by 2.4% to $1.936 billion.
- Diluted earnings per share declined to $2.56 from $2.72 in the prior year.
- Return on average assets decreased to 1.08%, and return on average common equity decreased to 8.34%.
- Acquisitions, including Susquehanna Bancshares and The Bank of Kentucky, contributed to higher assets and deposits but also increased merger-related and restructuring charges.
- Net interest income increased by 4.0% to $5.7 billion, but the net interest margin (NIM) compressed to 3.32% from 3.42% due to lower loan and security yields.
- Noninterest income saw a record $4.0 billion, driven by insurance income, mortgage banking, and operating leases, although insurance income itself slightly declined.
- Total noninterest expense increased by 7.1% primarily due to higher personnel costs and merger-related charges.
- Asset quality improved, with nonperforming assets (NPAs) declining 9.0% and net charge-offs decreasing by 19.0%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 25, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Interest Expense | $735.00M$768.00M | −4.3% |
| Net Income | $2.12B$2.21B | −3.8% |
| EPS (Basic) | $2.59$2.76 | −6.2% |
| EPS (Diluted) | $2.56$2.72 | −5.9% |
| Shares Outstanding (Basic) | 748.01M718.14M | +4.2% |
| Shares Outstanding (Diluted) | 757.76M728.37M | +4.0% |
05—Questions
Frequently Asked Questions
What was the company's net income and EPS performance in 2015?
Truist Financial Corporation (formerly BB&T) reported net income available to common shareholders of $1.936 billion in 2015, a slight decrease from $1.983 billion in 2014. Diluted earnings per share were $2.56 in 2015, down from $2.72 in the prior year.
How did the company's acquisitions impact its financial results?
In 2015, the company completed acquisitions of Susquehanna Bancshares, Inc., and The Bank of Kentucky Financial Corporation, along with 41 retail branches from Citigroup. These acquisitions contributed to asset and deposit growth but also led to an increase in merger-related and restructuring charges, impacting overall profitability and increasing noninterest expenses.
What were the key drivers of the company's net interest income and net interest margin?
Net interest income increased by 4.0% to $5.7 billion, driven by higher interest income from acquisitions and organic loan growth. However, the net interest margin (NIM) compressed from 3.42% in 2014 to 3.32% in 2015. This compression was primarily due to lower yields on new loans and securities, partially offset by a decrease in funding costs.
How did the company manage its loan portfolio and asset quality?
Asset quality showed improvement in 2015. Nonperforming assets (NPAs) decreased by 9.0%, and net charge-offs declined by 19.0%. The company's allowance for loan and lease losses (ALLL) to nonperforming loans ratio was 2.53x at year-end 2015, indicating a solid reserve position relative to problem loans.
06—Continue