10-QPeriod: Q2 FY2009

TRUIST FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 10, 2009For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

BB&T Corporation (now Truist Financial Corporation) reported a significant decrease in net income for the second quarter and first six months of 2009 compared to the prior year. This decline was primarily driven by a substantial increase in the provision for credit losses, reflecting the ongoing deterioration in housing-related credits and consumer real estate portfolios, particularly in Georgia, Florida, and the Washington D.C. metropolitan area. Despite the rise in nonperforming assets and net charge-offs, BB&T experienced growth in its insurance and residential mortgage banking businesses. The company also successfully repaid its preferred stock to the U.S. Treasury and completed a common stock offering, which improved its capital ratios, including tangible common equity and Tier 1 common equity, to levels well above regulatory requirements. However, the company's stock ratings were downgraded by major credit agencies due to concerns about asset quality and earnings pressure in the challenging economic environment.

Financial Highlights

39 data points
Beta

Net Income

$121.00M

EPS (Diluted)

$0.20

Total Assets

$152.40B

Cash & Equivalents

$2.23B

Free Cash Flow

$3.90B

Financial Statements
Beta
Interest Expense$502.00M
Net Income$121.00M
EPS (Basic)$0.20
EPS (Diluted)$0.20
Shares Outstanding (Basic)602.73M
Shares Outstanding (Diluted)608.80M

Key Highlights

  • 1Net income for the second quarter of 2009 decreased by 51.7% to $208 million compared to $431 million in the second quarter of 2008.
  • 2Diluted earnings per common share fell to $0.20 from $0.78 year-over-year for the second quarter.
  • 3The provision for credit losses increased significantly, reaching $701 million in Q2 2009 compared to $330 million in Q2 2008, driven by deterioration in housing and consumer real estate loans.
  • 4Nonperforming assets more than doubled, from $2.0 billion at year-end 2008 to $3.3 billion at June 30, 2009.
  • 5BB&T repaid $3.1 billion of preferred stock to the U.S. Treasury and raised $1.7 billion in a common stock offering, improving capital ratios.
  • 6Total assets remained relatively stable at $152.4 billion, while total deposits increased by 3.6% to $102.2 billion.
  • 7Residential mortgage banking and insurance services segments showed strong performance, with mortgage originations reaching a record $8.5 billion in Q2 2009.

Frequently Asked Questions

The primary driver for the decrease in net income was a significant increase in the provision for credit losses, which rose from $330 million in Q2 2008 to $701 million in Q2 2009. This increase reflects the deteriorating credit quality in housing-related and consumer real estate portfolios.

BB&T repaid $3.1 billion of preferred stock issued to the U.S. Treasury and raised $1.7 billion through a common stock offering. These actions improved key capital ratios, such as tangible common equity and Tier 1 common equity, to levels considered strong by management and regulators.

Both the residential mortgage banking and insurance services segments performed strongly. Residential mortgage originations reached a record $8.5 billion in Q2 2009, and insurance income saw significant growth, driven by property and casualty, credit, and employee benefit insurance commissions.

The challenging economic environment led to a significant increase in nonperforming assets, which more than doubled from $2.0 billion at year-end 2008 to $3.3 billion at June 30, 2009. Net charge-offs also rose substantially, particularly in the residential real estate, acquisition, development and construction, and consumer real estate portfolios.