Truist Financial Corp. (TFC) Tops Q3 EPS by 8c, Revenues Beat

Truist Financial Corp. (NYSE: TFC) reported Q3 EPS of $0.97, $0.08 better than the analyst estimate of $0.89. Revenue for the quarter came in at $5.57 billion versus the consensus estimate of $5.44 billion.

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

"We are pleased to report strong performance for the quarter, particularly given the challenging environment," said Chairman and Chief Executive Officer Kelly S. King. "Our earnings reflect a modest build in our allowance for loan and lease losses, benefiting from our relatively stable asset quality. We also benefited from our diverse noninterest-income generating businesses and disciplined core expense control.

"Adjusted net income was $1.3 billion, or $0.97 per share, due to strong performances from wealth management, investment banking, retail banking and insurance. We experienced growth in service charges on deposit accounts and card and payment related fees due to some waiver abatement and increased activity from clients. In addition, we are selectively investing in our insurance, investment banking, residential mortgage and wealth teams to drive more client business.

"We also made progress in terms of our systems integration as we work to build out all the capabilities of Truist. In August, we completed the conversion of Truist Securities, integrating the corporate and investment banking businesses of BB&T and SunTrust. We were pleased with this very successful major client-facing systems conversion.

"We continue to actively support our communities during this time of need and were excited that our various foundations provided a donation of $40 million1 to help establish CornerSquare Community Capital, formed to support community development financial institutions focused on providing funding to racially and ethnically diverse small business owners, women and individuals in low- and moderate-income communities, with a particular focus on African American-owned small businesses. We also contributed $50 million to the Truist Charitable Fund to support future community giving.

"I continue to be very proud of and inspired by our teammates, who continue to live the Truist purpose and make a positive difference in the lives of their clients and in their communities."

For earnings history and earnings-related data on Truist Financial Corp. (TFC) click here.

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