10-QPeriod: Q2 FY2018

TRUIST FINANCIAL CORP Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 27, 2018For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

TRUIST FINANCIAL CORP (TFC), formerly BB&T Corporation, reported solid financial results for the second quarter of 2018. Net income available to common shareholders reached $775 million, or $0.99 per diluted share, a notable increase from the prior year's second quarter. This growth was supported by stable net interest income and noninterest income, coupled with effective expense management that saw noninterest expense decrease year-over-year, even excluding restructuring charges. The company maintained strong capital ratios and demonstrated a commitment to returning capital to shareholders through dividends and share repurchases. The provision for credit losses remained consistent, and net charge-offs saw a reduction, indicating stable asset quality. The company also benefited from a lower effective tax rate due to recent tax reform. Overall, TFC presented a financially healthy picture, with improvements in key profitability and efficiency metrics, demonstrating resilience in its core banking operations and insurance segments.

Financial Highlights

36 data points
Beta

Net Income

$822.00M

EPS (Diluted)

$0.99

Total Assets

$222.68B

Cash & Equivalents

$3.05B

Free Cash Flow

$1.12B

Financial Statements
Beta
Interest Expense$337.00M
Net Income$822.00M
EPS (Basic)$1.00
EPS (Diluted)$0.99
Shares Outstanding (Basic)775.84M
Shares Outstanding (Diluted)785.75M

Key Highlights

  • 1Net income available to common shareholders increased to $775 million ($0.99 per diluted share) for Q2 2018, up from $631 million ($0.77 per diluted share) in Q2 2017.
  • 2Return on average assets improved to 1.49% (annualized) and return on average common shareholders' equity increased to 11.74% (annualized) in Q2 2018, compared to 1.22% and 9.30% respectively in Q2 2017.
  • 3Total revenues on a taxable-equivalent (TE) basis were stable at $2.9 billion for Q2 2018, with flat net interest income and noninterest income.
  • 4Noninterest expense decreased by $22 million to $1.7 billion in Q2 2018 compared to Q2 2017, reflecting effective expense control measures.
  • 5The effective tax rate decreased significantly to 19.7% in Q2 2018 from 31.1% in Q2 2017, due to federal tax reform.
  • 6Provision for credit losses remained stable at $135 million in Q2 2018, and net charge-offs decreased to $109 million from $132 million in Q2 2017.
  • 7Total assets grew slightly to $222.7 billion as of June 30, 2018, from $221.6 billion as of December 31, 2017, while total deposits increased to $159.5 billion from $157.4 billion.

Frequently Asked Questions

TFC's profitability improved significantly in the second quarter of 2018. Net income available to common shareholders increased to $775 million, or $0.99 per diluted share, from $631 million, or $0.77 per diluted share, in the same period of the prior year. This was reflected in higher annualized returns on average assets (1.49% vs. 1.22%) and common shareholders' equity (11.74% vs. 9.30%).

The new federal tax legislation, enacted in December 2017, resulted in a lower effective tax rate for TFC. The effective tax rate for the second quarter of 2018 was 19.7%, a substantial decrease from 31.1% in the second quarter of 2017. This reduction in tax expense contributed positively to net income.

TFC demonstrated effective expense management. Noninterest expense decreased by $22 million to $1.7 billion in the second quarter of 2018 compared to the prior year. Excluding merger-related and restructuring charges, noninterest expense was down $36 million, indicating ongoing efforts to control operational costs through measures such as optimizing occupancy and equipment expenses and managing personnel count.

Asset quality appears stable. The provision for credit losses remained consistent at $135 million year-over-year. Net charge-offs decreased to $109 million in the second quarter of 2018 from $132 million in the prior year's second quarter. Nonperforming assets also decreased, and the ratio of nonperforming loans to total loans held for investment remained low.