10-QPeriod: Q2 FY2017

TRUIST FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2017

Filed July 28, 2017For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corp. (TFC), formerly BB&T Corporation, reported solid financial results for the second quarter and first half of 2017. Net income available to common shareholders increased year-over-year to $631 million for the quarter and $1,100 million for the first half. Diluted EPS was $0.77 for the quarter and $1.23 for the first half. The company demonstrated improved profitability with an annualized return on average common shareholders' equity of 9.30% in Q2 2017. Total revenues increased driven by a $90 million rise in noninterest income, supported by higher insurance income and bankcard fees. Net interest margin also saw a modest improvement to 3.47% in Q2 2017, benefiting from higher earning asset yields and a more favorable funding cost structure. Asset quality showed improvement with a decline in nonperforming assets and net charge-offs compared to the prior quarter, although net charge-offs increased year-over-year. The company also announced significant capital actions, including a dividend increase and an accelerated share repurchase agreement, signaling confidence in future performance.

Financial Highlights

37 data points
Beta

Net Income

$674.00M

EPS (Diluted)

$0.77

Total Assets

$221.19B

Cash & Equivalents

$3.43B

Free Cash Flow

$1.33B

Financial Statements
Beta
Interest Expense$189.00M
Net Income$674.00M
EPS (Basic)$0.78
EPS (Diluted)$0.77
Shares Outstanding (Basic)808.98M
Shares Outstanding (Diluted)819.39M

Key Highlights

  • 1Net income available to common shareholders increased to $631 million in Q2 2017 ($1,100 million year-to-date), up from $541 million in Q2 2016.
  • 2Diluted EPS was $0.77 in Q2 2017, an increase of $0.11 from $0.66 in Q2 2016.
  • 3Net interest margin improved to 3.47% in Q2 2017 from 3.41% in Q2 2016, driven by higher asset yields and lower funding costs.
  • 4Noninterest income increased by $90 million year-over-year in Q2 2017, primarily due to higher insurance income and bankcard fees.
  • 5Nonperforming assets (NPAs) decreased to $690 million at June 30, 2017, from $813 million at December 31, 2016.
  • 6The company announced capital actions including a quarterly dividend increase to $0.33 and an accelerated share repurchase agreement for $920 million.
  • 7Total assets grew slightly to $221.2 billion as of June 30, 2017, from $219.3 billion at December 31, 2016.

Frequently Asked Questions

In the second quarter of 2017, Truist Financial Corp. reported net income available to common shareholders of $631 million, an increase of $90 million compared to the second quarter of 2016. Diluted EPS was $0.77, up from $0.66 in the prior year's second quarter. The annualized return on average common shareholders' equity was 9.30%.

The Net Interest Margin (NIM) improved to 3.47% in the second quarter of 2017, compared to 3.41% in the second quarter of 2016. This improvement was driven by higher average earning asset yields and a decrease in interest expense, partly due to lower long-term debt costs following the early extinguishment of FHLB advances.

Asset quality showed improvement during the quarter. Nonperforming assets (NPAs) decreased to $690 million at June 30, 2017, from $813 million at December 31, 2016. Net charge-offs increased year-over-year in the second quarter to $132 million, but the ratio of net charge-offs to average loans and leases (0.37%) was an improvement compared to the first quarter of 2017. The allowance for loan and lease losses (ALLL) remained stable relative to loans held for investment.

Truist Financial Corp. announced its Board of Directors approved capital actions including an increase in the quarterly dividend to $0.33 per share and cumulative share buybacks of up to $1.88 billion from the third quarter of 2017 through the second quarter of 2018. Additionally, the company entered into an accelerated share repurchase agreement for $920 million of its common stock, expected to be completed in the third quarter of 2017.