10-QPeriod: Q1 FY2019

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 30, 2019For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corporation (TFC), formerly BB&T Corporation, reported solid financial results for the first quarter of 2019. The company demonstrated steady performance with a slight increase in diluted Earnings Per Share (EPS) to $0.97 from $0.94 in the prior year's quarter. Net interest income saw a healthy increase, driven by higher interest rates and loan growth, contributing to an improved net interest margin. Noninterest income also showed growth, largely due to a significant increase in insurance income, partially offset by a decline in mortgage banking income. The company's balance sheet remained robust, with total assets growing to $227.7 billion. Deposits showed a slight decrease quarter-over-quarter, but overall funding remained stable. The provision for credit losses was managed effectively, with net charge-offs remaining low relative to average loans. A significant event highlighted in the filing is the announced merger of equals with SunTrust Banks, Inc., expected to close in late 2019, which is poised to create a leading financial institution. Overall, TFC presented a stable financial picture, with key improvements in net interest income and insurance revenue. The upcoming merger with SunTrust represents a major strategic development for investors to monitor, promising significant scale and potential synergies.

Financial Highlights

37 data points
Beta

Net Income

$798.00M

EPS (Diluted)

$0.97

Total Assets

$227.68B

Cash & Equivalents

$2.72B

Free Cash Flow

-$745.00M

Financial Statements
Beta
Interest Expense$477.00M
Net Income$798.00M
EPS (Basic)$0.98
EPS (Diluted)$0.97
Shares Outstanding (Basic)764.13M
Shares Outstanding (Diluted)774.07M

Key Highlights

  • 1Diluted EPS increased to $0.97 from $0.94 year-over-year.
  • 2Net interest income increased by $64 million year-over-year, driven by higher interest rates and loan growth, leading to an improved net interest margin of 3.51%.
  • 3Total noninterest income increased by $22 million year-over-year, primarily boosted by a $74 million increase in insurance income, partially offset by a decline in mortgage banking income.
  • 4Total assets grew to $227.7 billion as of March 31, 2019.
  • 5The company announced a significant merger of equals with SunTrust Banks, Inc., expected to close in late 2019.
  • 6Provision for credit losses was $155 million, and net charge-offs were 0.40% of average loans and leases, indicating stable asset quality.
  • 7Shareholders' equity increased to $30.9 billion, with book value per common share rising to $36.26.

Frequently Asked Questions

The merger with SunTrust, announced in February 2019, is a significant event. While the financial results presented are for the standalone BB&T Corporation (prior to the merger's completion), merger-related and restructuring charges of $80 million were recognized in the first quarter of 2019, primarily due to the announced merger of equals. The merger is expected to close in late 2019 and will create a combined entity with substantial scale.

Net interest income on a taxable-equivalent (TE) basis increased by $64 million to $1.7 billion compared to the first quarter of 2018. This was driven by higher interest income from loans and securities, despite an increase in interest expense due to higher funding costs. The net interest margin (NIM) improved by seven basis points to 3.51% due to higher yields on earning assets outpacing the increase in funding costs.

Noninterest income grew by $22 million year-over-year, reaching $1.2 billion. The primary driver of this growth was a substantial increase in insurance income, up $74 million, attributed to higher production and the acquisition of Regions Insurance. However, this was partially offset by a decrease in mortgage banking income, down $36 million, due to lower loan sales volumes.

Asset quality remained stable. Nonperforming assets (NPAs) were $584 million, essentially flat compared to the prior quarter. Nonperforming loans and leases (NPLs) as a percentage of loans and leases held for investment remained at 0.35%. The provision for credit losses was $155 million, and net charge-offs were 0.40% of average loans and leases on an annualized basis, indicating a well-managed loan portfolio.