10-QPeriod: Q1 FY2018

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 30, 2018For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corp. (TFC), formerly BB&T Corporation, reported solid financial results for the first quarter of 2018, demonstrating an increase in net income available to common shareholders to $745 million, up significantly from $378 million in the prior year's quarter. Diluted EPS rose to $0.94 from $0.46, reflecting improved profitability. Total revenues on a taxable-equivalent basis reached $2.8 billion, a slight increase year-over-year. The company successfully managed its net interest margin at 3.44%, closely mirroring the previous year's 3.46%. Despite a modest increase in nonperforming assets, overall asset quality remained strong with a stable provision for credit losses and net charge-offs. Key operational highlights include a significant reduction in noninterest expense, largely due to the absence of a large debt extinguishment loss recorded in the prior year, alongside effective expense control measures. The company's capital position remains robust, with a CET1 capital ratio of 10.2% at quarter-end. Truist also announced its intention to acquire Regions Insurance, a strategic move aimed at expanding its insurance network. The company's proactive capital management, including a dividend increase and share repurchases, underscores its commitment to shareholder value.

Financial Highlights

36 data points
Beta

Net Income

$791.00M

EPS (Diluted)

$0.94

Total Assets

$220.73B

Cash & Equivalents

$3.11B

Free Cash Flow

$308.00M

Financial Statements
Beta
Interest Expense$288.00M
Net Income$791.00M
EPS (Basic)$0.96
EPS (Diluted)$0.94
Shares Outstanding (Basic)779.62M
Shares Outstanding (Diluted)791.00M

Key Highlights

  • 1Net income available to common shareholders increased to $745 million from $378 million in Q1 2017.
  • 2Diluted EPS rose to $0.94 from $0.46 in Q1 2017.
  • 3Total revenues on a taxable-equivalent basis were $2.8 billion, a slight increase year-over-year.
  • 4Net interest margin remained stable at 3.44% compared to 3.46% in Q1 2017.
  • 5Noninterest expense decreased significantly year-over-year, driven by the absence of a large debt extinguishment loss in the current period and expense control.
  • 6Common dividends declared increased by 13.6% to $0.375 per share.
  • 7The company announced plans to acquire Regions Insurance to expand its insurance business.

Frequently Asked Questions

The significant increase in net income available to common shareholders from $378 million in Q1 2017 to $745 million in Q1 2018 was primarily due to the absence of a substantial loss of $392 million on the early extinguishment of debt that was recognized in the prior year's quarter. Additionally, improved profitability in various segments and effective expense management contributed to the overall increase.

Asset quality remained strong overall. While nonperforming assets saw a slight increase of $42 million from the prior quarter, primarily related to CRE lending and leasing, they represented a manageable 0.42% of total loans and leases held for investment. The provision for credit losses remained stable, and net charge-offs were consistent with the prior year's quarter.

The company announced plans to acquire Regions Insurance, which is expected to enhance its retail insurance network in its core markets and expand into new ones. This acquisition, expected to close in Q3 2018, signals a strategic focus on growing its insurance business, a significant contributor to noninterest income.

Noninterest expense decreased by $416 million compared to the prior year's quarter, largely due to the absence of the large debt extinguishment loss. Excluding this, and merger-related charges, noninterest expense was down $16 million, reflecting tight expense control and operational efficiencies, such as reduced FTEs and lower IT service costs.