10-QPeriod: Q1 FY2023

TRUIST FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 1, 2023For Securities:TFCTFC-POTFC-PRTFC-PI

Summary

Truist Financial Corporation (TFC) reported a solid first quarter of 2023, demonstrating resilience in a challenging banking environment. Net income available to common shareholders rose by 6.3% year-over-year to $1.4 billion, with diluted EPS increasing to $1.05. The company's net interest income saw a significant 22% increase driven by higher interest rates and loan growth, though this was partially offset by rising funding costs. Noninterest income also grew, primarily fueled by insurance and mortgage banking activities. Asset quality remained strong with nonperforming loans stable at 0.36% of total loans. The company maintained robust capital and liquidity positions, with a CET1 ratio of 9.1% and an average LCR of 113%. A key strategic move during the quarter was the sale of a 20% stake in Truist Insurance Holdings for $1.95 billion, announced shortly after the quarter's end, which is expected to enhance strategic and financial flexibility.

Financial Highlights

36 data points
Beta

Net Income

$1.51B

EPS (Diluted)

$1.05

Total Assets

$574.35B

Cash & Equivalents

$36.60B

Free Cash Flow

$118.00M

Financial Statements
Beta
Operating Income$1.41B
Interest Expense$1.92B
Net Income$1.51B
EPS (Basic)$1.06
EPS (Diluted)$1.05
Shares Outstanding (Basic)1.33B
Shares Outstanding (Diluted)1.34B

Key Highlights

  • 1Net income available to common shareholders increased by 6.3% to $1.4 billion, or $1.05 per diluted share.
  • 2Net interest income grew significantly by 22% to $3.87 billion, driven by higher interest rates and loan growth, with Net Interest Margin (NIM) expanding to 3.17%.
  • 3Noninterest income increased by 4.3% to $2.23 billion, supported by strong performance in insurance (up 11.8%) and mortgage banking (up 17.4%).
  • 4Asset quality remained strong with nonperforming loans (NPLs) flat at 0.36% of total loans, and the Allowance for Loan and Lease Losses (ALLL) ratio increasing slightly to 1.37% due to increased economic uncertainty.
  • 5Capital and liquidity remained robust, with a Common Equity Tier 1 (CET1) ratio of 9.1% and an average Liquidity Coverage Ratio (LCR) of 113%.
  • 6The company announced the sale of a 20% stake in Truist Insurance Holdings for $1.95 billion shortly after the quarter end, which is expected to improve strategic and financial flexibility.

Frequently Asked Questions

Truist Financial Corporation's net income available to common shareholders increased by 6.3% to $1.4 billion for the first quarter of 2023, translating to diluted earnings per share of $1.05, up from $0.99 in the prior year's first quarter.

The significant 22% increase in Net Interest Income to $3.87 billion was primarily driven by higher short-term interest rates, strong loan growth, and well-controlled deposit costs. The Net Interest Margin (NIM) also expanded by 41 basis points to 3.17%.

Asset quality remained strong, with nonperforming loans holding steady at 0.36% of total loans. The Allowance for Loan and Lease Losses (ALLL) ratio increased slightly to 1.37% to reflect increased economic uncertainty. While the provision for credit losses increased due to this uncertainty, the company's prudent risk management and strong ALLL coverage indicate a stable outlook for loan quality.

A significant event was the sale of a 20% minority stake in Truist Insurance Holdings, LLC, completed on April 3, 2023, for $1.95 billion. This move is expected to enhance strategic and financial flexibility for both Truist and its insurance subsidiary. The company also continues to focus on integrating its operations post-merger and improving client experience.