How did the COVID-19 pandemic impact Truist's financial results in Q1 2020?

The COVID-19 pandemic significantly impacted Truist's Q1 2020 results, leading to a substantial increase in the provision for credit losses ($893 million) due to anticipated economic downturn and loan growth from clients drawing on credit lines. The company also experienced increased expenses related to client and teammate support and launched various relief programs. While noninterest income grew, the overall economic uncertainty prompted increased reserves and a decrease in net income compared to the prior year.

What is the impact of the adoption of CECL on the company's financial statements?

Truist adopted the Current Expected Credit Losses (CECL) methodology on January 1, 2020. This resulted in a $3.1 billion increase to the Allowance for Loan and Lease Losses (ALLL) and a $2.1 billion decrease in Retained Earnings (after tax effects). This adoption is intended to provide a more forward-looking estimate of credit losses.

How is the merger with SunTrust impacting Truist's financial performance?

The merger with SunTrust, completed in December 2019, significantly influenced Q1 2020 results. Total assets, loans, and deposits increased substantially due to the combination. Noninterest income and noninterest expense also saw significant increases, largely reflecting the combined entity's operations and merger-related expenses. The company is actively working towards achieving its stated cost savings targets.

How is Truist managing its capital and liquidity in the current environment?

Truist maintained strong capital and liquidity positions as of March 31, 2020, with a CET1 ratio of 9.3% and an average Liquidity Coverage Ratio (LCR) of 117%, well above regulatory requirements. The company also had a substantial liquid asset buffer. Truist took actions to increase liquidity, including issuing long-term debt and redeeming preferred stock. Capital ratios are closely monitored, and the company has suspended its share repurchase program until capital levels improve.

TRUIST FINANCIAL CORP 10-Q Quarterly Report Q1 FY2020

Summary

Truist Financial Corporation (TFC) reported its first quarter 2020 results, a period significantly impacted by the onset of the COVID-19 pandemic and the ongoing integration of the merger with SunTrust. Total assets grew to $506.2 billion from $473.1 billion at year-end 2019, largely driven by increased loans and deposits as clients drew on credit lines and retained cash. Net income available to common shareholders was $986 million, or $0.73 per diluted share, a decrease from the prior year's $798 million, or $0.97 per diluted share. The significant increase in the provision for credit losses to $893 million from $155 million in the prior year reflects the economic downturn and the adoption of the Current Expected Credit Losses (CECL) methodology, which added $3.1 billion to the allowance for loan and lease losses. Noninterest income saw substantial growth, driven by merger-related activities and strong performance in residential mortgage banking and insurance. Despite the challenging economic environment, Truist maintained strong capital and liquidity ratios, with a CET1 ratio of 9.3% and an average LCR of 117%. The company actively supported clients through payment relief programs and participation in government initiatives like the Paycheck Protection Program. Merger integration activities continued, including brand launch and headquarters relocation, alongside efforts to achieve cost savings. Management is closely monitoring the evolving impact of COVID-19 and has implemented qualitative adjustments to its credit loss estimates to account for the significant uncertainty.

Financial Highlights

39 data points

Beta

Net Income

$1.06B

EPS (Diluted)

$0.73

Total Assets

$506.23B

Cash & Equivalents

$36.35B

Free Cash Flow

$4.16B

Financial Statements

Beta

Interest Expense	$776.00M
Net Income	$1.06B
EPS (Basic)	$0.73
EPS (Diluted)	$0.73
Shares Outstanding (Basic)	1.34B
Shares Outstanding (Diluted)	1.36B

Key Highlights

1Total assets increased to $506.2 billion as of March 31, 2020, up from $473.1 billion at December 31, 2019, driven by loan growth and increased deposits.
2Net income available to common shareholders decreased to $986 million ($0.73 per diluted share) for Q1 2020, compared to $798 million ($0.97 per diluted share) for Q1 2019.
3Provision for credit losses surged to $893 million in Q1 2020 from $155 million in Q1 2019, reflecting the economic impact of COVID-19 and the adoption of CECL.
4The adoption of CECL resulted in a $3.1 billion increase in the Allowance for Loan and Lease Losses (ALLL).
5Noninterest income significantly increased by 63.1% to $1,961 million, primarily due to merger synergies and growth in insurance and residential mortgage income.
6Despite balance sheet growth, capital ratios remained strong, with CET1 at 9.3% and an average LCR of 117%.
7Truist provided significant client support through payment relief programs and participated in government initiatives like the Paycheck Protection Program in response to COVID-19.

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2020

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions