10-QPeriod: Q1 FY2011

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 6, 2011For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corporation (TFC), formerly BB&T Corporation, reported a solid first quarter in 2011, with net income available to common shareholders rising 19.7% year-over-year to $225 million, or $0.32 per diluted share. This growth was driven by an improved net interest margin and a significant reduction in the provision for credit losses, reflecting better credit quality trends. The company continued its balance sheet deleveraging strategy, leading to a decrease in average earning assets but a higher net interest margin of 4.01%. Despite a decline in noninterest income, largely due to specific asset disposition strategies and a reduction in FDIC loss share income, underlying noninterest income remained relatively flat. Noninterest expenses saw a moderate increase, primarily due to higher personnel costs. Asset quality showed signs of improvement, with nonperforming assets declining for the fourth consecutive quarter. Capital ratios remained robust and well above regulatory requirements, underscoring the company's strong financial position.

Financial Highlights

39 data points
Beta

Net Income

$225.00M

EPS (Diluted)

$0.32

Total Assets

$157.04B

Cash & Equivalents

$2.20B

Free Cash Flow

$1.98B

Financial Statements
Beta
Interest Expense$391.00M
Net Income$225.00M
EPS (Basic)$0.32
EPS (Diluted)$0.32
Shares Outstanding (Basic)695.31M
Shares Outstanding (Diluted)704.10M

Key Highlights

  • 1Net income available to common shareholders increased 19.7% to $225 million ($0.32 per diluted share) compared to the prior year quarter.
  • 2Net interest margin improved by 13 basis points to 4.01%, driven by a more favorable funding mix and lower cost of funds.
  • 3The provision for credit losses decreased significantly by 40.9% to $340 million, reflecting improving credit trends and outlook.
  • 4Nonperforming assets declined by 2.7% to $3.9 billion (excluding covered assets), marking the fourth consecutive quarterly reduction.
  • 5Total deposits increased by 3.5% to $103.6 billion, with a positive shift towards lower-cost, noninterest-bearing deposits.
  • 6Capital ratios remained strong, with the Tier 1 common ratio at 9.3% and total risk-based capital ratio at 15.8%, well above regulatory minimums.
  • 7The company announced an increase in its quarterly common stock dividend to $0.16 per share, reflecting confidence in its financial performance.

Frequently Asked Questions

The primary driver of the increase in net income was a combination of an improved net interest margin and a significant reduction in the provision for credit losses, reflecting better credit quality trends and an improved economic outlook.

The loan portfolio showed signs of improving asset quality. Nonperforming assets declined for the fourth consecutive quarter, and the provision for credit losses decreased due to better credit trends. While some loan categories saw declines, such as commercial real estate, others like residential mortgages and specialized lending experienced growth.

Truist Financial Corporation maintained strong capital ratios, with the Tier 1 common ratio at 9.3% and the total risk-based capital ratio at 15.8%. These ratios were well above regulatory standards, indicating a solid capital base.

The company reclassified approximately $8.3 billion of securities from 'available for sale' to 'held to maturity' to mitigate potential negative impacts on regulatory capital under Basel III standards. The average securities balance decreased significantly year-over-year due to a previous deleveraging strategy.