Earnings of
Net income available to common shareholders was
Adjusted net income available to common shareholders was
"The successful completion of our merger was due to the hard work of thousands of
"This month, we continued to hit key milestones that will bring
Fourth Quarter 2019 Performance Highlights
- Earnings per diluted common share were
$0.75 - Adjusted diluted earnings per share were
$1.12 - ROA was 0.95 percent; adjusted ROA was 1.40 percent
- ROCE was 7.33 percent; adjusted ROCE was 10.84 percent
- ROTCE was 12.91 percent; adjusted ROTCE was 18.60 percent
- Completed merger of equals on
December 6, 2019 - Merged loans of
$154.0 billion , net of$4.5 billion mark - Merged deposits of
$170.7 billion , including an$83 million mark for time deposits - Assumed long-term debt of
$19.5 billion , including a$309 million mark - Recorded core deposit and other intangibles of
$2.5 billion - Restructured balance sheet to enhance credit quality and improve liquidity, interest-sensitivity and return on capital
- Sold
$33.2 billion of lower yielding securities to improve yield and lower premium amortization risk - Transferred
$17.9 billion of securities from HTM to AFS in response to changes in regulatory capital rules - Maintained more than
$10 billion in excess reserve balances for stronger liquidity and to meet LCR requirements under the new tailoring rule as aCategory III Bank - Identified
$4.2 billion of lending exposures to sell to reduce credit and interest-rate risk - Taxable-equivalent revenue was
$3.7 billion for the fourth quarter of 2019 - Fee income ratio was 38.6 percent, compared to 42.0 percent for fourth quarter 2018
- Net interest margin was 3.41 percent, up four basis points from the third quarter of 2019
- Core net interest margin was 3.14 percent, down 15 basis points from the third quarter of 2019
- Noninterest expense was
$2.6 billion for the fourth quarter of 2019 - Noninterest expense includes
$223 million of merger-related and restructuring charges and$101 million of incremental operating expenses related to the merger - GAAP efficiency ratio was 71.0 percent, compared to 60.7 percent for fourth quarter 2018
- Adjusted efficiency ratio was 57.5 percent, compared to 56.5 percent for fourth quarter 2018
- Asset quality remains strong; economic and political uncertainty presents risk
- Nonperforming assets were 0.14 percent of total assets; ratio benefited from pooled basis of accounting for PCI loans
- Loans 90 days or more past due and still accruing were 0.66 percent of loans held for investment, up from 0.27 percent for the prior quarter
- Excluding government guaranteed loans and PCI loans, loans 90 days or more past due and still accruing were 0.03 percent of loans held for investment
- Net charge-offs were 0.40 percent of average loans and leases, down one basis point compared to the prior quarter
- The allowance for loan and lease losses was 0.52 percent of loans and leases held for investment; merged loans were recorded at fair value with no initial allowance
- The allowance for loan loss coverage ratio was 3.41 times nonperforming loans and leases held for investment, versus 3.52 times in the prior quarter
- Capital levels remained strong compared to regulatory levels for well capitalized banks
- Common equity tier 1 to risk-weighted assets was 9.4 percent
- Tier 1 risk-based capital was 10.8 percent
- Total capital was 12.6 percent
Earnings Presentation and Quarterly Performance Summary
To listen to
The presentation, including an appendix reconciling non-GAAP disclosures, and
About
Capital ratios and return on risk-weighted assets are preliminary.
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in
- The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges and other selected items.
Truist's management uses this measure in their analysis of the Corporation's performance.Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. - Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally.
Truist's management uses these measures to assess the quality of capital and returns relative to balance sheet risk and believes investors may find them useful in their analysis of the Corporation. - Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The purchase accounting marks and related amortization for a) securities acquired from the
FDIC in theColonial Bank acquisition and b) loans, deposits and long-term debt from SunTrust, Susquehanna and National Penn are excluded to approximate their yields at the pre-merger and acquisition rates. Interest income for PCI loans adjusts the accretion, net of interest reversals, which approximates the interest received from the client.Truist's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities acquired provide investors with useful information related to the performance ofTruist's earning assets. - The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax.
Truist's management uses this measure in their analysis of the Corporation's performance.Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. - The adjusted operating leverage ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges and other selected items.
Truist's management uses this measure in their analysis of the Corporation's performance.Truist's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges. - The adjusted performance ratios are non-GAAP in that they exclude merger-related and restructuring charges, selected items and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets.
Truist's management uses these measures in their analysis of the Corporation's performance.Truist's management believes these measures provide a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in the appendix to
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of
Forward-looking statements are not based on historical facts but instead represent management's expectations and assumptions regarding
- risks and uncertainties relating to the merger of BB&T and SunTrust, including the ability to successfully integrate the companies or to realize the anticipated benefits of the merger;
- expenses relating to the merger and integration of BB&T and SunTrust;
- deposit attrition, customer loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;
- changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark, that could adversely affect
Truist's revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity;
- volatility in mortgage production and servicing revenues, and changes in carrying values of
Truist's servicing assets and mortgages held for sale due to changes in interest rates;
- management's ability to effectively manage credit risk;
- inability to access short-term funding or liquidity;
- loss of customer deposits, which could increase
Truist's funding costs;
- changes in
Truist's credit ratings, which could increase the cost of funding or limit access to capital markets;
- additional capital and liquidity requirements that will result from the merger of BB&T and SunTrust;
- regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on
Truist's business activities, reputational harm, or other adverse consequences;
- risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases;
- failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions;
- risks relating to
Truist's role as a servicer of loans, including an increase in the scope or costs of the servicesTruist is required to perform without any corresponding increase inTruist's servicing fee, or a breach ofTruist's obligations as servicer;
- negative public opinion, which could damage
Truist's reputation;
- increased scrutiny regarding
Truist's consumer sales practices, training practices, incentive compensation design and governance;
- competition from new or existing competitors, including increased competition from products and services offered by non-bank financial technology companies, may reduce
Truist's customer base, causeTruist to lower prices for its products and services in order to maintain market share or otherwise adversely impactTruist's businesses or results of operations;
Truist's ability to introduce new products and services in response to industry trends or developments in technology that achieve market acceptance and regulatory approval;
Truist's success depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, which could be exacerbated asTruist continues to integrate the executive management teams of BB&T and SunTrust, or if we are unable to hire and retain qualified personnel,Truist's operations and integration activities could be adversely impacted;
- legislative, regulatory or accounting changes may adversely affect the businesses in which
Truist is engaged;
- evolving regulatory standards, including with respect to capital and liquidity, and results of regulatory examinations, may adversely affect
Truist's financial condition and results of operations;
- accounting policies and processes require management to make estimates about matters that are uncertain;
- general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, slower deposit or asset growth, a deterioration in credit quality or a reduced demand for credit, insurance or other services;
- risk management measures and management oversight functions may not identify or address risks adequately;
- unfavorable resolution of legal proceedings or other claims or regulatory or other governmental investigations or inquiries could result in negative publicity, protests, fines, penalties, restrictions on
Truist's operations or ability to expand its business or other negative consequences, all of which could cause reputational damage and adversely impactTruist's financial condition and results of operations;
- competitors of
Truist may have greater financial resources or develop products that enable them to compete more successfully thanTruist and may be subject to different regulatory standards thanTruist ;
- failure to maintain or enhance
Truist's competitive position with respect to technology, whether because it fails to anticipate customer expectations or because its technological developments fail to perform as desired or are not rolled out in a timely manner or for other reasons, may causeTruist to lose market share or incur additional expense;
- fraud or misconduct by internal or external parties, which
Truist may not be able to prevent, detect or mitigate;
- operational or communications systems, including systems used by vendors or other external parties, may fail or may be the subject of a breach or cyber-attack that, if successful, could adversely impact
Truist's financial condition and results of operations;
- security risks, including denial of service attacks, hacking, social engineering attacks targeting
Truist's employees and customers, malware intrusion or data corruption attempts, and identity theft could result in the disclosure of confidential information, adversely affectTruist's business or reputation or create significant legal or financial exposure;
- natural or other disasters, including acts of terrorism, could have an adverse effect on
Truist , including by materially disruptingTruist's operations or the ability or willingness of customers to accessTruist's products and services;
- widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact
Truist's financial condition and results of operations;
- accounting policies and processes requiring management to make estimates about matters that are uncertain;
- depressed market values for
Truist's stock and adverse economic conditions sustained over a period of time may require us to write down all or some portion ofTruist's goodwill; and
- new tax guidance or differences in interpretation of tax laws and regulations.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation,
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