10-QPeriod: Q1 FY2021

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 3, 2021For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corporation (TFC) reported solid financial results for the first quarter of 2021, demonstrating resilience and progress in its post-merger integration. Net income available to common shareholders increased by 35.3% year-over-year to $1.3 billion, translating to diluted EPS of $0.98. Total revenue stood at $5.5 billion, a slight decrease from the prior year primarily due to a drop in net interest income, which was partly offset by a significant increase in noninterest income. The bank saw substantial growth in deposits, driven by government stimulus programs, reaching $395.6 billion. The company is making significant strides in its merger integration efforts, reaffirming its commitment to achieve $1.6 billion in net cost savings and successfully completing key transitions in wealth management and mortgage operations. Truist also highlighted its commitment to clients, teammates, and communities, including its role in PPP lending, employee diversity initiatives, and issuing its first social bond. Asset quality remained stable, with nonperforming assets at 0.25% of total assets, and capital ratios remained strong, with a CET1 ratio of 10.1%.

Financial Highlights

39 data points
Beta

Net Income

$1.47B

EPS (Diluted)

$0.98

Total Assets

$517.54B

Cash & Equivalents

$32.13B

Free Cash Flow

-$132.00M

Financial Statements
Beta
Interest Expense$209.00M
Net Income$1.47B
EPS (Basic)$0.99
EPS (Diluted)$0.98
Shares Outstanding (Basic)1.35B
Shares Outstanding (Diluted)1.36B

Key Highlights

  • 1Net income available to common shareholders increased 35.3% year-over-year to $1.3 billion.
  • 2Diluted Earnings Per Share (EPS) was $0.98, up from $0.73 in the prior year quarter.
  • 3Total revenue was $5.5 billion, with noninterest income showing strong growth (+12.0%) driven by investment banking, insurance, and other fees, partially offsetting a decrease in net interest income.
  • 4Total deposits grew significantly to $395.6 billion, an increase of $14.5 billion from the prior quarter, supported by government stimulus.
  • 5Merger integration is progressing well, with Truist reaffirming its $1.6 billion cost savings target and completing key system and operational transitions.
  • 6Asset quality remained stable with nonperforming assets at 0.25% of total assets. The Allowance for Loan and Lease Losses (ALLL) to total loans and leases was 1.94%.
  • 7Common Equity Tier 1 (CET1) capital ratio remained strong at 10.1%, exceeding regulatory requirements.

Frequently Asked Questions

Truist's net interest income was $3.285 billion for the first quarter of 2021, a decrease of $374 million compared to the first quarter of 2020. This decline was primarily attributed to a lower net interest margin (NIM) of 3.01%, down 57 basis points year-over-year, driven by lower yields on loans and securities in a lower interest rate environment, despite a significant increase in average earning assets.

Truist reported significant progress in its merger integration. The company reaffirmed its commitment to achieving $1.6 billion in net cost savings by Q4 2022. Key milestones achieved in the first quarter included completing wealth brokerage and trust transitions, continuing the mortgage transition, activating an integrated relationship management approach, and completing core bank transition testing. These efforts aim to streamline operations and deliver a unified client experience.

Truist's asset quality remained stable, with nonperforming assets (NPAs) at 0.25% of total assets as of March 31, 2021. The provision for credit losses was significantly lower ($48 million) compared to the prior year ($893 million), reflecting improving economic conditions and a decrease in the allowance for credit losses. Net charge-offs were also down year-over-year. The ALLL to loans and leases ratio was 1.94%, and the ALLL covered nonperforming loans and leases held for investment 4.84 times. The company continues to monitor vulnerable industries and manage its loan portfolio cautiously.

Truist maintained a strong capital position with a Common Equity Tier 1 (CET1) ratio of 10.1% as of March 31, 2021, exceeding regulatory requirements. The company also has remaining authorization for $1.5 billion in share repurchases. During the quarter, Truist redeemed $950 million of preferred stock and declared a common dividend of $0.45 per share. Future capital deployment will consider economic and regulatory conditions, capital position, and strategic priorities.