Earnings of
Net income available to common shareholders was
Adjusted net income available to common shareholders was
"We are pleased to report strong performance for the quarter, particularly given the challenging environment," said Chairman and Chief Executive Officer
"Adjusted net income was
"We also made progress in terms of our systems integration as we work to build out all the capabilities of
"We continue to actively support our communities during this time of need and were excited that our various foundations provided a donation of
"I continue to be very proud of and inspired by our teammates, who continue to live the
Third Quarter 2020 Performance Highlights
- Earnings per diluted common share were
$0.79 - Adjusted diluted earnings per share were
$0.97 - ROA was 0.91 percent; adjusted ROA was 1.11 percent
- ROCE was 6.87 percent; adjusted ROCE was 8.50 percent
- ROTCE was 13.31 percent; adjusted ROTCE was 16.08 percent
- Taxable-equivalent revenue was
$5.6 billion ; includes$104 million of securities gains - Fee income ratio was 39.7 percent, compared to 41.3 percent for second quarter 2020; excluding securities gains, fee income ratio was 38.5 percent for the current quarter
- Net interest margin was 3.10 percent, down three basis points from second quarter 2020
- Core net interest margin was 2.72 percent, up 5 basis points from second quarter 2020
- Noninterest expense was
$3.8 billion - Noninterest expense includes
$236 million of merger-related and restructuring charges,$152 million of incremental operating expenses related to the merger, and$50 million for a charitable contribution - GAAP efficiency ratio was 67.4 percent, compared to 66.1 percent for second quarter 2020
- Adjusted efficiency ratio was 57.3 percent, compared to 55.8 percent for second quarter 2020
- Asset quality ratios remain relatively stable
- Nonperforming assets were 0.26 percent of total assets, up 1 basis point from the prior quarter
- Loans 90 days or more past due and still accruing were 0.39 percent of loans held for investment, up from 0.34 percent for the prior quarter
- Excluding government guaranteed loans, loans 90 days or more past due and still accruing were 0.03 percent of loans held for investment
- Net charge-offs were 0.42 percent of average loans and leases, up three basis points compared to the prior quarter
- The allowance for loan and lease losses was 1.91 percent of loans and leases held for investment compared to 1.81 percent for second quarter 2020
- Provision for credit losses was
$421 million for the third quarter of 2020, which includes a modest build in the allowance for credit losses - The allowance for loan and lease loss coverage ratio was 5.22 times nonperforming loans and leases held for investment, versus 5.24 times in the prior quarter
- Active client accommodations related to the CARES Act declined significantly; 98.0 percent and 94.5 percent of commercial and consumer clients, respectively, that have exited accommodation programs are current on their loans
- Capital and liquidity levels improved
- Common equity tier 1 to risk-weighted assets was 10.0 percent
- Tier 1 risk-based capital was 12.2 percent
- Total risk-based capital was 14.6 percent
$925 million of preferred stock was issued to further strengthen capital- Consolidated average LCR ratio was 117 percent
1 The |
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. - 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,National Penn and Colonial Bank are excluded to approximate the yields paid by clients.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 performance ratios, including adjusted return on average assets, adjusted return on average common shareholders' equity and adjusted return on average tangible common shareholders' equity, 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. - EBITDA is a non-GAAP measurement of operating profitability that is calculated by adding back interest, taxes, depreciation and amortization to net income.
Truist's management also adds back merger-related and restructuring charges, incremental operating expenses related to the merger and other selected items.Truist's management uses this measure in its analysis of theCorporation's Insurance Holdings segment.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. - Allowance for loan and lease losses and unamortized fair value mark, and allowance for credit losses and unamortized fair value mark, as a percentage of gross loans and leases are non-GAAP measurements of credit reserves that are calculated by adjusting the ALLL or ACL, and loans and leases held for investment by the unamortized fair value mark.
Truist's management uses these measures to assess loss absorption capacity.
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 ("Merger"), 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 heritage BB&T and heritage SunTrust;
- deposit attrition, client 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, which 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 client 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;
- 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 client 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 replacementsTruist's operations and integration activities could be adversely impacted. This could be exacerbated asTruist continues to integrate the management teams of heritage BB&T and heritage SunTrust, or if the organization is unable to hire and retain qualified personnel;- 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 requirements, 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 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 it fails to anticipate client 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 clients, 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; - the COVID-19 pandemic has disrupted the global economy, adversely impacted
Truist's financial condition and results of operations, including through increased expenses, reduced fee income and net interest margin and increases in the allowance for credit losses, and continuation of current conditions could worsen these impacts and also adversely affectTruist's capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets; - natural or other disasters, including acts of terrorism and pandemics, could have an adverse effect on
Truist , including a material disruption ofTruist's operations or the ability or willingness of clients 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; and - depressed market values for
Truist's stock and adverse economic conditions sustained over a period of time may require a write down to goodwill.
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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