Third quarter 2022 GAAP earnings
of $1.5 billion, or $1.15 per diluted share
Third quarter 2022 Adjusted
earnings of $1.7 billion, or
$1.24 per diluted share
Results reflect strong loan growth and
expanded NIM given higher rates and strong deposit
franchise
Fee revenues tempered by market
conditions
Capital, liquidity, and credit quality remain
strengths
CHARLOTTE, N.C., Oct. 18, 2022 /PRNewswire/ -- Truist Financial
Corporation (NYSE: TFC) today reported earnings for the third
quarter of 2022.
Net income available to common shareholders of $1.5 billion was down 5.0% from the third quarter
of 2021. Earnings per diluted common share were $1.15, a decrease of 4.2% compared with the same
period last year. Results for the third quarter produced an
annualized return on average assets (ROA) of 1.19%, an annualized
return on average common shareholders' equity (ROCE) of 10.7%, and
an annualized return on tangible common shareholders' equity
(ROTCE) of 23.5%.
Adjusted net income available to common shareholders was
$1.7 billion, or $1.24 per diluted share, excluding merger-related
and restructuring charges of $62
million ($48 million
after-tax) and incremental operating expenses related to the merger
of $90 million ($69 million after-tax). Adjusted results produced
an annualized ROA of 1.28%, an annualized ROCE of 11.5%, and an
annualized ROTCE of 25.1%.
"Truist's third-quarter performance reflected strong progress in
many areas of the business, as we delivered strong broad-based loan
growth, significant margin expansion and continued exceptional
asset quality. Overall financial results were mixed, however, as
the challenging market environment impacted our capital markets
related revenue," said Chairman and CEO Bill Rogers.
"Our company purpose continues to drive our actions to care for
our teammates, clients and the communities we serve, and this was
even more apparent in the aftermath of Hurricane Ian, when our
teammates acted quickly to support each other and our local
communities through humanitarian aid and volunteer efforts. We were
able to quickly deploy a $1.25
million philanthropic donation from the Truist Foundation to
support the communities most impacted, and we'll continue to care
for these communities as they rebuild and recover from this deadly
and disastrous storm."
"More broadly, I continue to remain highly confident in Truist's
trajectory given the diversity of our business mix, our strong
markets, conservative risk culture, and the substantial
opportunities that lie ahead post integration."
Third Quarter 2022 Performance
Highlights
- Earnings per diluted common share for the third quarter of 2022
were $1.15
-
- Adjusted diluted earnings per share were $1.24, up $0.04 per
share, or 3.3%, compared to second quarter 2022 and down
$0.18 per share, or 13%, compared to
third quarter 2021
-
- Decline compared to third quarter 2021 impacted by a reserve
release in the prior quarter
- ROA was 1.19%; adjusted ROA was 1.28%
- ROCE was 10.7%; adjusted ROCE was 11.5%
- ROTCE was 23.5%; adjusted ROTCE was 25.1%
- Pre-provision net revenue (PPNR) for the third quarter of 2022
was $2.3 billion, up 8.0% compared to
second quarter 2022 and 24% compared to third quarter 2021
-
- Adjusted PPNR was up 4.9% compared to second quarter 2022 and
8.3% compared to third quarter 2021
- GAAP operating leverage was 920 basis points compared to the
third quarter of 2021 and 540 basis points year-to-date 2022
compared to 2021
- Adjusted operating leverage was 260 basis points compared to
the third quarter of 2021 and (50) basis points year-to-date 2022
compared to 2021
- Taxable-equivalent revenue for the third quarter of 2022 was
$5.9 billion, up 3.6% compared to
second quarter 2022 and up 4.6% compared to third quarter 2021
-
- Taxable-equivalent net interest income was up 10% compared to
second quarter 2022 and up 16% compared to third quarter 2021
-
- The increase compared to second quarter 2022 was primarily due
to higher market interest rates coupled with well controlled
deposit costs and loan growth, partially offset by lower purchase
accounting accretion
- Noninterest income was down 6.5% compared to second quarter
2022 and down 11% compared to third quarter 2021
-
- The decline compared to the second quarter of 2022 was
primarily due to seasonally lower insurance revenues and lower
investment banking revenues due to continued challenging capital
markets conditions
- The decline compared to the third quarter of 2021 was primarily
due to lower residential mortgage, investment banking and other
income, partially offset by growth in insurance revenues
- Net interest margin was 3.12%, up 23 basis points from second
quarter 2022
-
- Core net interest margin was 3.02%, up 30 basis points from
second quarter 2022, driven by higher market interest rates coupled
with well controlled deposit costs
- Noninterest expense for the third quarter of 2022 was
$3.6 billion, up 0.9% compared to
second quarter 2022 and down 4.8% compared to third quarter
2021
-
- Adjusted noninterest expense was $3.3
billion, up $83 million, or
2.6%, compared to second quarter 2022 due to higher professional
fees, personnel expenses, and operational losses
- Adjusted noninterest expenses increased $64 million, or 2.0%, compared to third quarter
2021 primarily due to higher operational losses, professional fees
and marketing costs, partially offset by lower equipment,
personnel, and software expenses
- GAAP efficiency ratio was 61.8%, compared to 63.3% for second
quarter 2022
- Adjusted efficiency ratio was 56.4%, compared to 57.0% for
second quarter 2022
- Average loans and leases held for investment for the third
quarter of 2022 were $309.4 billion,
up $12.7 billion, or 4.3%, compared
to the second quarter of 2022
-
- Average commercial loans were up $6.3
billion, or 3.7%, driven by broad based growth within the
commercial and industrial portfolio
- Average consumer loans were up $6.3
billion, or 5.3%, with growth across all portfolios except
student lending
- Asset quality remains excellent, reflecting Truist's prudent
risk culture and diverse portfolio
-
- Net charge-offs were 0.27% of average loans and leases, up five
basis points compared to second quarter 2022
- The ALLL ratio was 1.34% compared to 1.38% for second quarter
2022
-
- The ALLL coverage ratio was 4.98X annualized net charge-offs,
versus 6.54X for second quarter 2022
- Capital and liquidity levels remained strong; deployed capital
through organic loan growth, dividends, and acquisition
-
- Common equity tier 1 to risk-weighted assets was 9.1%
- Increased common dividend of 8% for the third quarter 2022
- Acquired BenefitMall, the nation's largest benefits wholesale
general insurance agency, effective September 1, 2022
- Consolidated average LCR ratio was 111%
Earnings Presentation and Quarterly Performance
Summary
To listen to Truist's live third quarter 2022 earnings
conference call at 8 a.m. ET today,
please call 855-303-0072 and enter the participant code 100038. A
presentation will be used during the earnings conference call and
is available on our website at
https://ir.truist.com/events-and-presentation. Replays of the
conference call will be available for 30 days by dialing
888-203-1112 (access code 100038).
The presentation, including an appendix reconciling non-GAAP
disclosures, and Truist's Third Quarter 2022 Quarterly Performance
Summary, which contains detailed financial schedules, are available
at https://ir.truist.com/earnings.
About Truist
Truist Financial Corporation is a purpose-driven financial
services company committed to inspiring and building better lives
and communities. Truist has leading market share in many
high-growth markets in the country, and offers a wide range of
products and services through our retail and small business
banking, commercial banking, corporate and investment banking,
insurance, wealth management, and specialized lending businesses.
Headquartered in Charlotte, North
Carolina, Truist is a top 10 U.S. commercial bank with total
assets of $548 billion as of
September 30, 2022. Truist Bank, Member FDIC. Learn more at
Truist.com.
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 United States of America ("GAAP").
Truist's management uses these "non-GAAP" measures in their
analysis of the Corporation's performance and the efficiency of its
operations. Management believes these non-GAAP measures provide a
greater understanding of ongoing operations, enhance comparability
of results with prior periods and demonstrate the effects of
significant items in the current period. The Corporation believes a
meaningful analysis of its financial performance requires an
understanding of the factors underlying that performance. Truist's
management believes investors may find these non-GAAP financial
measures useful. These disclosures should not be viewed as a
substitute for financial measures determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance
measures that may be presented by other companies. Below is a
listing of the types of non-GAAP measures used in this news
release:
- Adjusted Efficiency Ratio - 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.
- Adjusted Operating Leverage - 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.
- Pre-Provision Net Revenue (PPNR) - Pre-provision net revenue
is a non-GAAP measure that adjusts net income determined in
accordance with GAAP to exclude the impact of the provision for
credit losses and provision for income taxes. Adjusted
pre-provision net revenue is a non-GAAP measure that additionally
excludes securities gains (losses), merger-related and
restructuring charges, amortization of intangible assets, and other
selected items. Truist's management believes these measures provide
a greater understanding of ongoing operations and enhances
comparability of results with prior periods.
- Tangible Common Equity and Related Measures - 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 NIM - 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 loans, deposits, and long-term debt from SunTrust and other
acquisitions 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 of Truist's earning assets.
- Adjusted Diluted EPS - 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.
- Performance Ratios - 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 enhance comparability of
results with prior periods, as well as demonstrate the effects of
significant gains and charges.
- Insurance Holdings Adjusted EBITDA - 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 the Corporation'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 as a Percentage of Gross Loans and Leases - Allowance
for loan and lease losses and unamortized fair value mark as a
percentage of gross loans and leases is a non-GAAP measurement of
credit reserves that is calculated by adjusting the ALLL 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 each of these non-GAAP measures to the
most directly comparable GAAP measure is included in the appendix
to Truist's Third Quarter 2022 Earnings Presentation, which is
available at https://ir.truist.com/earnings.
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 Truist. Words such as
"anticipates," "believes," "estimates," "expects," "forecasts,"
"intends," "plans," "projects," "may," "will," "should," "would,"
"could" and other similar expressions are intended to identify
these forward-looking statements.
Forward-looking statements are not based on historical facts
but instead represent management's expectations and assumptions
regarding Truist's business, the economy, and other future
conditions. Such statements involve inherent uncertainties, risks,
and changes in circumstances that are difficult to predict. As
such, Truist's actual results may differ materially from those
contemplated by forward-looking statements. While there can be no
assurance that any list of risks and uncertainties or risk factors
is complete, important factors that could cause actual results to
differ materially from those contemplated by forward-looking
statements include the following, without limitation, as well as
the risks and uncertainties more fully discussed under Part I, Item
1A-Risk Factors in our Annual Report on Form 10-K for the year
ended December 31, 2021 and in Truist's subsequent filings
with the Securities and Exchange Commission:
- residual risks and uncertainties relating to the Merger of
heritage BB&T and heritage SunTrust, including the ability to
realize the anticipated benefits of the Merger;
- expenses relating to the Merger and application and data
center decommissioning;
- deposit attrition, client loss or revenue loss following
completed mergers or acquisitions may be greater than
anticipated;
- the COVID-19 pandemic disrupted the global economy and
adversely impacted Truist's financial condition and results of
operations, including through increased expenses, reduced fee
income and net interest margin, decreased demand for certain types
of loans, and increases in the allowance for credit losses; a
resurgence of the pandemic, whether due to new variants of the
coronavirus or other factors, could reintroduce or prolong these
negative impacts and also adversely affect Truist'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;
- Truist is subject to credit risk by lending or committing to
lend money, and may have more credit risk and higher credit losses
to the extent that loans are concentrated by loan type, industry
segment, borrower type or location of the borrower or
collateral;
- 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;
- inability to access short-term funding or liquidity, loss of
client deposits or changes in Truist's credit ratings, which could
increase the cost of funding or limit access to capital
markets;
- risk management oversight functions may not identify or
address risks adequately, and management may not be able to
effectively manage credit risk;
- risks resulting from the extensive use of models in Truist's
business, which may impact decisions made by management and
regulators;
- failure to execute on strategic or operational plans,
including the ability to successfully complete or integrate mergers
and acquisitions;
- increased competition, including from (i) new or existing
competitors that could have greater financial resources or be
subject to different regulatory standards, and (ii) products and
services offered by non-bank financial technology companies, may
reduce Truist's client base, cause Truist to lower prices for its
products and services in order to maintain market share or
otherwise adversely impact Truist's businesses or results of
operations;
- failure to maintain or enhance Truist's competitive position
with respect to new products, services and technology, whether it
fails to anticipate client expectations or because its
technological developments fail to perform as desired or do not
achieve market acceptance or regulatory approval or for other
reasons, may cause Truist to lose market share or incur additional
expense;
- negative public opinion, which could damage Truist's
reputation;
- increased scrutiny regarding Truist's consumer sales
practices, training practices, incentive compensation design, and
governance;
- 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,
negative publicity, or other adverse consequences;
- evolving legislative, accounting and regulatory standards,
including with respect to climate, capital, and liquidity
requirements, and results of regulatory examinations may adversely
affect Truist's financial condition and results of
operations;
- the monetary and fiscal policies of the federal government
and its agencies, including in response to rising inflation, could
have a material adverse effect on the economy and Truist's
profitability;
- accounting policies and processes require management to make
estimates about matters that are uncertain, including the potential
write down to goodwill if there is an elongated period of decline
in market value for Truist's stock and adverse economic conditions
are sustained over a period of time;
- general economic or business conditions, either globally,
nationally or regionally, may be less favorable than expected,
including as a result of supply chain disruptions, inflationary
pressures and labor shortages, and instability in global
geopolitical matters or volatility in financial markets could
result in, among other things, slower deposit or asset growth, a
deterioration in credit quality, or a reduced demand for credit,
insurance, or other services;
- 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;
- risks relating to Truist's role as a loan servicer,
including an increase in the scope or costs of the services Truist
is required to perform, without any corresponding increase in
servicing fees or a breach of Truist's obligations as
servicer;
- Truist's success depends on hiring and retaining key
teammates, and if these individuals leave or change roles without
effective replacements, Truist's operations and integration
activities could be adversely impacted, which could be exacerbated
in the increased work-from-home environment caused by the COVID-19
pandemic as job markets may be less constrained by physical
geography;
- fraud or misconduct by internal or external parties, which
Truist may not be able to prevent, detect, or mitigate;
- security risks, including denial of service attacks,
hacking, social engineering attacks targeting Truist's teammates
and clients, malware intrusion, data corruption attempts, system
breaches, cyber-attacks, which have increased in frequency with
current geopolitical tensions, identity theft, ransomware attacks,
and physical security risks, such as natural disasters,
environmental conditions, and intentional acts of destruction,
could result in the disclosure of confidential information,
adversely affect Truist's business or reputation or create
significant legal or financial exposure; and
- widespread outages of operational, communication, or other
systems, whether internal or provided by third parties, natural or
other disasters (including acts of terrorism and pandemics), and
the effects of climate change, including physical risks, such as
more frequent and intense weather events, and risks related to the
transition to a lower carbon economy, such as regulatory or
technological changes or shifts in market dynamics or consumer
preferences, could have an adverse effect on Truist's financial
condition and results of operations, lead to material disruption of
Truist's operations or the ability or willingness of clients to
access Truist's products and services.
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, Truist undertakes no obligation to revise or update any
forward-looking statements.
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