TFC - Earnings call transcript Q3 2018 | Truist Financial Corporation

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Operator

Greetings, ladies and gentlemen, and welcome to the BB&T Corporation Third Quarterly 2018 Earnings Conference. Currently all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Mr. Relations Corporation. Investor of Greer, for BB&T Alan Please go ahead.

Alan Greer

Chairman morning, to us some fourth Daryl all you, King, On Andrea, review our Bible, provide Thanks results good and our Kelly Officer, have joining quarter. Thank our of Chief Officer; who and everyone. listeners the for call, the we thoughts Chief quarter Financial for and Executive today’s will and today. the for third

Clarke and also Chief Starnes, Chris and our Operating We in session. our President Officer, Q&A Chief participate have to Risk Officer; Henson, the

referencing call. the supplemental on be well financial the will as a copy as available are BB&T We slide website. presentation the presentation and information A during our release earnings of

predictions Let or me you public forecasts. BB&T remind that does not earnings provide

presentation be forward-looking course that the to may Please there may of in turn our or disclosures. BB&T’s on Page these And made management’s the reconciliations I’ll express filings. statements to GAAP. materially that to forward-looking actual note statements by statements. over the refer Please certain also X call differ presentation to contemplated expectations. information Please includes appendix for our results the beliefs in intentions, regarding non-GAAP of now, refer presentation appropriate cautionary our Kelly. it those this the and SEC from However,

Kelly King

with Hope quarter Thank expense control. you, great solid a having you’re great broad-based call. earnings much Alan. had loan morning strong our a revenue, Good morning, far. and joining everybody, very and driven thank for growth so We by you record

of second versus are Net annualized quarterly experience. billion, was and pleased which our profitability. investing to interest excluding creating we and the creates net revenue time, substantially platform, record quarter Regions XX% to million. tax continue was third largely a to in diversified fully million, a compared And Now outstanding $X due up XXXX, charges, Insurance, we on resilient merger-related same that execute X.X% strategies, quarter $XXX now, client income restructuring up income, banking. $XXX income – which equivalent XXXX. are numerous Very investment record Net for at digital the more was

Our also X.XX%, adjusted at $X.XX, XX% XXXX. respectively. record record XX.XX% versus $X.XX, XXXX XX.XX%, was versus ROCE diluted strong at EPS a ROA, up We the third and a and third returns up quarter really EPS was and with adjusted had ROTCE quarter XX.X%

strong was X.X% a More importantly, positive we leverage billion, operating with Loans net like-quarter on on more achieved for third three which averaged improving which efficiency two and held annualized. grooved core X.X% linked- basis billion, and on expense will very ratio Margin points, basis, and has basis margin at core strong a non-interest a up quarter operating and Adjusted totalled $XXX.X improved, investments margin give Daryl $X.X was you XXXX. slightly color a points, performance. Adjusted improving down, was basis XX.X%. versus net that. up

have However, exclude slightly. expenses if our down Regions would been you actually Insurance,

digital recognizing So investments what bank. call bank we’re I new substantial exhibiting discipline, the building in expense the even or excellent we’re that making

was way, completed will are dividend quarterly very increase some to very, and excellent, we that on per So X% detail and Credit controlling $X.XXX in did our Q&A. Clarke Regions give expenses share. was We quality did perspective acquisition the well. and that $XXX We market of give add Insurance, you our that you we on cultural Chris by a view. execution well, and from that Q&A has giant point a detail the on in share complete gone the million of both And repurchases. can on extraordinarily and a

by merger-related and of $XX that tax that $X.XX did on million have X, Page EPS $XX million see we negatively impacted after deck, If you’re following along charges and per pre-tax; restructuring share. the you’ll

loans, of think terms Page very I was at loan X, a it in quarter. good Looking

loans a dealer a mentioned Corporate very X.X%, strong performances. base minute average C&I ago. warehouse mortgage strong investment of grew was floor but held plan, had up finance, I space. Our broad Banking, Premium all as annualized, performance X.X% for in that

which portfolio leasing strong. very retail XX.X%, very high-quality high-yielding, was in residential a is Our mortgage up by mortgage XX.X%, Overall, strong was portfolios. some led

strong that Regional holding, And still terms is and acquisitions Our we a in of Acceptance that. the outstanding, good Sheffield. XX.X%. and Direct but our in off performance was bit, was turning, of we very direction are that performances with in little indirect feel

So a very, overall, economy an loans economy. well very in performing easy are good but not

Page Overall, growth core along, of deposits noninterest-bearing look following at X. we’ll deposit deposits a with healthy you’re on If X.X%.

from While relative feel in it very we that. the it’s very about good industry, what’s quarters, previous on and is to good some down going

percentage total six cost there. was XX.X% regard deposits deposits, we of X.XX%, from points versus versus seven up the nine better feel XX.X%. focusing improvement with core importantly, on up so expenses quarter, are to total and deposits our basis to basis And on of our increased So cost about which points, up of last good deposits, points XX basis that noninterest-bearing again the management of points for was X.XX%, Likewise, is interest-bearing basis which to up that. being

of it, the if holders, CD It’s implication savings everyone. for good, cut economy’s say of really tax is cetera. is think bank, the rising in It’s before don’t the been really overall, rising I investors, borrowers it the because is about is really, holders, course, think slowly, et good realized to So are solid. good push the rates economy you for Rates over has fully which Confidence good it’s I’d good. for for the high. economy. Daryl, We

good we the into the heavily investing we expenses by and can I even shareholders and our of is we’re that’s but but clearly and substantial we’re which though is a pruning time are thing. reduced that – our of reasonable aggressively to so And hold bank, relatively levels, clients our And there for slowly investments new being rising out really, expenses positive by we’re thing invest are as so new doing the for everybody. lot good rates well. for really building a bank call raising a what able to bank, spending good flat, old it Regulations importantly,

pass So over let to more for Daryl color. some it me

Daryl Bible

you, Thank excellent to quarter. talk good about excited morning, margins fourth I’m Today, quality, Kelly, expense record our and our everyone. effective control improving credit for and income, the and fee guidance

Turning to Slide X.

points five This the asset Our million, driven year. Consumer totaled excellent. basis Net last in quality flat to remains compared $XXX seasonal charge-offs by increases was portfolio. up but

continue charge-offs XXXX, basis Our NPLs. loans. historically in be X.XXx allowance ratios level coverage primarily is by XX the NPA of This ratio a X, decline is remain CRE to on points. NPAs X.XXx Slide driven since for lowest with and low, Continuing nonperforming quarter of at for net from net million, charge-offs and flat build. hurricanes. an our strong second for of allowance allowance million We modest potential to at losses recent to allowance from loans $XXX We was to last quarter. a reported $XX ratio compared now our million reflect $XX million disasters, The a provision natural to provided $XXX X.XX%, of for

deposits accounts. risks. XX basis Slide deposits three business we grow X.XX%, reflect X, up sensitivity XX was increases up nine two points. points, basis X.XX%, points. basis last reported interest-bearing to margin up are higher Turning continue was Core asset The versus net retail Both as basis short-term margin to up interest and quarter. was of Noninterest-bearing points cost to

for liability total beta increased points. XX%. the result, XX% only six beginning interest-bearing the basis beta, this As was was almost costs basis from the a deposit quarter. costs deposits, of was deposit Interest-bearing deposit The total rate XX%, points. the deposit flat XX noninterest-bearing only Since last beta cycle, and increased including quarter

Asset fixed was on shorter funding XX, re-pricing rate than terms. Continuing record mix more Slide $X.X a noninterest assets sensitivity – billion. more to shorter plus declined grew than income assets, as floating-rate more changed

due acquisition $XX was million, to was to fee Our The Insurance really Insurance is $XX It income million XX.X%. going income ratio slightly down seasonality. revenue. contributed in Regions well. down mostly

are what million, reflecting to last primarily margins. up you Mortgage than was Regions, X.X% gain-on-sale income due growth. banking when We income declining modeled. better seeing Even insurance we include $XX from declined have organic improved year, performance

a Turning to expenses. Insurance added you X.X% When to continues with the year over FTEs and ago. were a billion, strong. expenses $X charges, expense restructuring came merger from in XXX $X that, to noninterest down you deal. just for management Slide and from ago million $XX added million be When and Regions year million expense Regions exclude Regions quarter. down We XX, last XXX. were adjust from our $X.X Adjusted up FTEs

and year, excluding the for the investments Regions down all are Insurance expenses acquisition. the charges, merger-related Excluding

Common that a on are Slide last equity job one and year. We liquidity controlling XX.X%. to at and remain our capital XX, operating contributed good was expenses strong. Continuing last versus doing and quarter Tier leverage positive

our and total XX% dividend XX%. ratio ratio Our was payout payout was

of plan acquiring million the repurchased In $XXX repurchase to we quarter. addition million We to Regions worth shares. $XXX Insurance, in common fourth

our on partially mortgage improvement driven on beginning by cards. Now Slide $XX segment retail Community This Higher $XXX let’s by results, million at XX. income Consumer offset growth and net credit spreads The loan and mortgage, banking Finance was million. was auto in deposits. look is Bank income. lower

and We continue to XX to close controlling isn’t just close We we closed more quarter. makes about branches this next about plan nine strategy sense. expenses. This branches quarter, where it

in to increased loans loans. in by increase the decline these prime a in our digital auto XX, experience. mostly to $XXX the billion, near Deposit a Continuing portfolio. as high-quality reinvesting on mortgage checking. increased bank driven are prime up Noninterest-bearing and loan client X.X% interest average from and decreased We drove The ago. year areas such funds due retain Slide originations million, strategy across balances DDA $X.X

offset increase by on Commercial XX, Slide cost. by growth, partially $XXX $XX capitalized driven was higher million. to The this Turning higher from deposit and lower million employee income personnel deposits spreads net community Banking resulting was expense was

down primarily to Our increased savings Continuing loans quarter. and Deposits commercial accounts. $XXX flat. Slide average million, market was from money were pipeline XX, on last due

and increase Banking, by income. and loans XX, finance million. Corporate Deposits and on was Slide average improving net income deposit services Turning banking The was investment record wealth. million, consumer million. and Slide finance by to driven $XXX equipment growth, up spreads up XX, were brokerage $XXX Continuing loan were $XXX financial driven

to XX, will by a offset Finance casualty and Turning X.X%, in pricing. decline business from mostly by was Premium Slide our net partially was up seasonality was to you The $XX see due new Insurance $XX and income outlook. On Insurance. property and and Regions improved increase driven X% growth totaled organic XX, Slide income million Like-quarter million.

held the Looking loans quarter, the in for we linked to portfolios. annualized, due Warehouse Lending, growth premium quarter. expected fourth X% decline is investment guidance total to seasonal be and finance up Mortgage to expect Sheffield X% Slower to

to the net XX We charge-offs provision basis net points. to loan expected range expect The match XX charge-offs be loan-loss of growth. plus to in is

up slightly, up we X% expenses income quarter be are to We And and versus X% effective expect margin fee to to XX%. GAAP versus tax like to an and be core expected like to finally, rate X% of be X% up expect quarter.

While that the full are guidance the we guidance. dropped table, in from changes year no there

positive quality excellent of the We record expenses, positive continue than leverage. our earnings resulting growth, earnings, was revenue strong to resulting strong, excellent, and quarterly summary, loan operating in grow broad-based quality faster operating expense quarter management. In leverage, very in credit this

turn me Kelly it closing remarks to let and back Now for Q&A. over

Kelly King

Daryl. Thanks,

it’s So quarter. in a lovely, summary, great

scenario same important. what call said, are outstanding strategies There and regulations rising, in very manner. designed And for banking. we are have more resilient critical is in creating execution there, huge I create And to plenty to opportunities for improving. we’re challenges is That’s The or the I new had platform the being which rates good, at excellent bank old new diversified nurturing are profitability, out we bank. As our record a expenses experiences, digital of economy build excellent good which our our client an pretty Daryl is the investing earnings, are are substantially managed while but have bank, of future. think very, time, that we

for we’ve strategies We of have working huge a on years. opportunities that to fees from and in been realize number revenues organic growth

conference investor just would of all our to I to Finally, you day. invite like attend

hope you will We’re about it, very come. excited and

bit about strategies. long-term and culture. get We’re about of going a feel our good time you’d the essence to of good talking a as for BB&T current a we’ll spend lot Hope talk

on I We are forward time. our the having to good and November so and at a look over you’ll XX Institute, meeting us. on join come XX We Leadership hope having

I’ll ahead. all now feel for reasons, of turn our are So we adamantly these days to over it best Alan.

Alan Greer

Andrea, you, you back at participate time, if and this our line question-and-answer session. Great, thank listeners how would in on the Kelly. come the can explain

Operator

go Please first our question now from sir. ahead McDonald take John will from We Instructions] Mr. [Operator Bernstein.

John McDonald

Hi, growth. ask good about morning guys. I wanted the to loan

if a and loan wondering side could good bit Commercial showed quarter, it the and between You growth side. break the just Consumer more little down you this I’m

And on basis, on down. Specifically, balances of Commercial, been I to your have did notice peers running were C&I paydowns. your elevated some period-end a

So you’re loan what then growth I’m were factors like just some mortgage And a the there? mortgage was seeing side, resi seemed driver on of What wondering of the this there. quarter. it big

Clarke Starnes

that. commercial growth we I’ll drivers, C&I side, Kelly was John, mentioned positive. pretty on or this is the broad-based the take Corporate Clarke. have Banking a earlier,

dealer small general think in we leasing, plan, areas. ticket different C&I warehouse, takeaway a mortgage so Sheffield number Our floor the of Finance, our our I leasing our Premium got and was component, it

accelerated about some seeing the although paydowns, play we to as on just rates side end, We clients, going did also up, are there certainly example, the secondary lines well. did point payouts To and as both we we out are not CRE solely more middle-market have as stabilized the are your quarter as properties, taking hard traditional upon for market. dependent C&I,

We’re tech also seeing things are coming companies, sponsors some those of buying paying middle-market out. in, like

we diversified of the helped set So think forward. have as us we challenges, look have that paydown we overcome certainly, we but platforms

in the tight; very are – hold and we the as area to out side, super retail high margins really very high-quality jumbos had side. correspondent conforming correspondent chose are improvement these We you’re our I On card right nice a but our as We a of some also would We we’re our products high-quality, this outstanding outstanding growth. getting set in new had clients. Kelly in our of had introduced assets. results indirect high-yielding quarter reception and we from mention growth mentioned. resi platforms

think I us. overall, So it’s diversification for a story

John McDonald

Okay.

Kelly King

to want made, two points just I very, mean important. as this that stress Clarke the John, and very of Yes, was I

around just strategy. That’s in we’ve years this got strategy we’re looks in diversified working great; the single particular lending that so terms today, on think, doesn’t is been we’ve when focus because in soft. good for a we good it but developing So category environment lending of look it’s

to strategy, other try I the multifaceted do. to thing the up. then we we get the of loan performance the so have which all is paydowns, XX-year about people but think And we spike a best can And categories, key saw out the asset these

up. qualified. out think taking these are It’s temporary think of just are right going people They’re so they’re I where tipping probably they kind rates – a market and a the it’s they’re phenomenon. on fairly on to point, portfolios

that Next increase good, substantial one And or two solid have quarters, see you’ll that subside. good, will with loan growth. solid production in – companies production

John McDonald

wanted then a in like, Kelly, And great. leverage Okay, operating ask, Daryl year. just and acceleration to it nice, seems you’ve this got

quarters, that those on First XXX XXXX? year-over-year or points. the been to points in your basis further operating quarter, more thoughts XXX can you’ve get you The about think last level Just widen Is that. right those two it’s basis you that expand even want leverage. like maybe hold jaws,

Kelly King

that One into more just can mean, Daryl and thoughts I multifaceted operating revenues. positive things. detail. on some have Insurance if at focusing on just look our strategy, are very expenses. And that strategies by day. loan controlling strong of our business, and fees you different energy are getting we number strategies approach we to, of get leverage But continue a we I not because you the it’s two our better give can I’ll alluded wealth we intense are think producing our

in a are Now lot doing, et et of up. allowing investing that to which we’re expenses we our cetera, heavily are digital, not people drive but cetera,

We’re holding ourselves accountable. simply

things. we’ve expense company we set those with We’re on ways have better the finding branches like expense And bank, to fronts. lot a closing to in this do cost new new, to investments, in the and of going make got and regard saying, management yes, better multifaceted – to have prune but on old we a

of am color, I in So Daryl? leverage. terms personally very Any operating confident positive

Daryl Bible

Yes.

on make I the have the more think, of flexibility lot John, as changes we side said, expense a kind we as bank. Kelly traditional the financial on

in we’re – be much flat at this reallocating continue to adjusted year, you are it, expenses flat to try expenses, that pretty we’re XXXX. ended expenses into $X.X pretty year-over-year. When look from billion We which I feel hope forecasting to XXXX. at good think we is and

portfolios we Auto is have run-off On we the don’t had growing. the prior growing. is Mortgage revenue in year. that side, the

couple in turning close We’re the quarters. next direct getting real to retail of the fees

we So loan feel good will an that be revenue growth engine growth. for

are it’s margins growing rates go pressure Our slightly, to continue as on revenue so there. up, positive

nicely. strong. really continue grow core under mortgage income, mortgage should fee businesses is quite be should our know I stress quarter, to this think fee but next I commercial income

organically. but If Service that, you up. charges that’s nicely at on can Chris growing comment look Insurance, are

record higher then brokerage And now. investment revenue. record banking a having going We’re right on had growth account and

So on optimistic about cylinders revenue. of most I think think – right we’re starting very now, to and our we’re feel hit I

John McDonald

Thanks guys.

Operator

question from go now from Please will take We Ms. our Graseck Betsy next Morgan Stanley. ahead ma’am.

Betsy Graseck

morning. Good Hi.

Daryl Bible

Hey Betsy.

Betsy Graseck

part? questions. couple a quarter had, on strong on Could expectation have that. the color this of LQA as just very outlook give conservatism us X% you’re little X% a loan loan to you here of kind on Maybe for why but to some your deceleration is bit you anticipating the quarter. growth obviously, you just on us give dig so a that because just Okay, in you growth that noticed next or One, can wanted a to I sense LQA

Kelly King

the think, we paydowns Betsy, in as being slowdown So have, forecast. you fourth. our I these expecting two little we a And are seasonal into the conservative, its And do but that’s built well generally, continue. things. know, are, We to

and seasonality if than Now that lift. us we give subside earlier But were could exaggerated positive paydowns paydowns. expect, basically to the it’s a

Daryl Bible

our was aided by seasonality. portfolios, we Yes, out the if talked seasonal X.X% you quarter about, that this Betsy, back

think. that we fourth factor becomes rundown and to you to I closer back into to would if X% in X% like that So in X% be would portfolios. in X.X%, if those maybe to have quarter, our the X.X% And didn’t mid-Xs, X% the really

So bit, seeing we’re a not just seasonality. really only slowing growth what of because little down you’re there, as much loan as

Betsy Graseck

Got it.

give on how then And you maybe CECL. and some us helpful. question been thinking color the about how developments. can some steady. that’s also this holding us for reserving, Okay, give AOLR thoughts you’re ratio AOLR ratio There’s is outlook have about industry on that is can around I thinking credit the separate just well. some news The recently you topic, secondly, some fantastic about you’re that and as quality quarter Maybe

Clarke Starnes

Betsy. we take where stab Daryl Yes, This CECL. on Clarke, I’ll at is then chip a will today, are and in

we’re long-term So our obviously ratios cycle. at It’s the but X.XX%, now, got and perspective very in right very we’ve coverage is good. we’re think I good long been

We’re new of a the seasoning. abnormal all lot leaning into in areas

us, think reserves. time But not to have quality, outlook’s be very excellent now given we to we So the the mean, performance. releasing to solid very is stable credit I should still positive, the

rate releases. in view, a big think, looks like build. any I it more Definitely our So stable no versus reserve

Daryl Bible

from ready working in early sometime we’re I part perspective, the go XXXX. to think of parallel a along of lines modeling Yes, being

basically and twice earnings just just being Mnuchin we study that downturn through, as U.S., impact the if had We if for And the know with our models FSOC, be ability for models we worse CCAR of lend that and them how went the which seen that out the cyclical, and is pro economy the as we I procyclicality. a capital FASB very of the saw of in pause of have And regulators, to CECL. impact studies top modified Institute ask last banks Greg basically a most economy. Secretary concern the we finding because don’t to but because the and a to for chaired is analysis on have Baer, is because the that CECL. through asking on shows for a by Bank the that are representing went all would which our the we what accounting have letter, the it, we’ve the accounted is Policy you using distortion on we’re yesterday, XX what are that sent the of

hopeful prepare of could FASB the that something So and small of that could it forward we’ll united would we more for that and be in hopeful and from maybe regulators up such the in regulators banks economy it. right the listen do what’s feel the the But the all that that have our those reality impact clients. to we’re is also right seems to But banks, lending, industry then largest go the that reflects both positive capital for; way to with and be we’re accounting pretty FASB the a relief. now, change and

Kelly King

It’s be into to It’s effect to now And to stress business. the is entire right for the really mean, listening, for if able big this problem is, bad it it but this I thing projected, the banks it’s bad audience for deal. really really want the just bad goes economy. survive really I a consumers. do. the not as for is It will

FASB asking breath, the are see we carefully to likely, let’s some are a and slow let’s and study this down, adjustments. make impacts let’s so what take real And

negative effort the look this a we So how the Secretary to bring Mnuchin, will the Oversight at will systemic lead we believe organizations view. from point through be to Council have together Stability all Financial he and of

Anybody of talk this and your momentum. chance a put So is get changed has proper word congressional our to into regulators, good now there in for a that time out to a to put light. people and/or it please lot listening because more it

Betsy Graseck

in the ahead run with right? parallel next is And Okay. that moving year, are meantime, the you

Daryl Bible

projections on in under I’ll tend pretty hit have but to is retail, Investor XX% won’t especially give our commercial, CECL XX% finalized times. you since impact. next Day month, Yes. consumer the the But diversified It Since you Betsy, give yet, stress portfolio be some hard I’ll get some projections. we portfolios

with we higher you we and the that you We’ll really be would volatility. the probably is able pro all won’t the to dependent allowance show more cyclicality finalized show we’re when it on really until But the have next be on Our going what economy. concerned else, that. have it’s the than it on middle allowance. but really we’ll of but changes now, in also year probably But exact what’s anything get economy,

Betsy Graseck

it. Got

Okay. Thank you.

Operator

next now Ms. [Operator from will ma’amortization. our take ahead Najarian from Instructions] question of Please We Bank America. Erika go

Erika Najarian

morning. Good Hi.

Daryl Bible

Good morning.

Erika Najarian

to, the reminding just what There’s like, you of give the Commercial us first, wanted thank about in particularly of been diversity for of and I if So wondering talk And your you us structure. middle-market of portfolio. whether traditional continues or lot sense premium are And get dynamics? are emergence really competitive at nonbanks the on businesses competitive and in a those if could Corporate growth lending. like trying nonbanks I’m be year a be is different dynamics economy factor those a of a defensible. flavor to is in loan finance and given defensible, perhaps next that Sheffield more I’m good more Banking, continue perhaps to BB&T’s what the to And competitive dynamics

Kelly King

don’t it’s have. commercial the for we to be be do it taking risk. factor. to structure to clearly that’s It lot question, not tougher good low-risk credit driving into. is the they’re are very down competitive we take a a still we’re we the it a you’re aren’t washed have driving insightful and the will portfolio And to very true market. and see really nonbanks and And really not but a out out of to say banks very, commercial that They extreme to substantially that today, just and make. go view cycle, point, down is going good, able and down, are than are they trying into returns to they they’ll we’ve But ever a to that’s penetrating that of it’s making say them further going is are take Yes, Erika, own an try business, been when compete our rates aggressive enormous of in hard, they’re they’ll they thing. that My the

The focused and get has premium been years and have. point, that, so more these areas areas like that’s and we XX like last your into BB&T to developing over So don’t they finance Sheffield defensible. diversified why are on strategies, that the nonbanks

don’t saying have not but not we there, I’m competition you’re these the nonbanks. from kind of So seeing competition it’s

terms that so I in portfolio relatively to much whole in of growth competition. whole would position say that And we’re together moving our you competition compared and if aggregate stronger – put some portfolio relative to others, a forward

So be the general then by our more competitor. would versus impacted any growth specific relatively economy

Erika Najarian

Got just it. to question your response to And clarify John’s question leverage. my follow-up is, operating wanted on

XXXX, billion possible that As other? of expenses expects? little can each should bit think it the is relative revenues better about we what and think about Or to a are maintained, level $X.X revenues we if perhaps expenses than be consensus even

Kelly King

expense really, are we’ve the [indiscernible]. last, couple Erika, that to So of on saying been years, for regard we intensely focused being with disciplined

that. You can’t just say

expenses are intervention. any to because naturally absent a You going lot up, your it do have

well hard been really little it’s And year strategies. so just strategies. And on over we’ve working really, multifaceted for a not

big We have strategies.

are new have sure very next all reconceptualization years. We the we successful about we bank it’s the company. foundation so And have the across projects the large going on XXX and for that and building laid being

very, We so the bank. building And all seriously. new that take very we it call

allowing that’s expenses to so And us flattish. hold relatively

year we certainly to As revenue And we we said, carry over a that’ll expect into increase. we ago, delivered; think XXXX.

up. many have fee going improving, We loan But to rates businesses have as are are we in opportunity. growth margins so have addition expect great such that decent to that,

strategies strategy, job, John our Howard, up businesses. President. multifaceted it its not a that wealth income business but our card opportunities Across Insurance doing into has and is But credit have really coming our the and interest is fee own improvement great Chris we is – in Our on huge board, are with just driving income. terms of

for these confident operating all feel very leverage. about reasons, we positive So

Erika Najarian

Okay. Got it. Thank you.

Operator

Stephen from take now Scouten O’Neill. our will Sandler sir. go ahead, question We from Mr. next Please

Stephen Scouten

Or I morning. curious good end the to XQ? $X speak about just about slides average I’m billion like you into there’s in any move we it move of the down if if was reversal ratios might I in XXXX? face if looks we’re But loan-to-deposit you deposits. Hi, could higher deposits. wondering period, quarter-over-quarter. end-of-period you talking have think you know as expected

Daryl Bible

is is our liquidity core would funding and Yes, Daryl. strong. this really tell Steve, I you

the categories or probably the the worth not of it source our into of goes national funding were time deposit We funding end at One but that a that billion. to totals. it’s we past client was billion That’s use Eurodollar the quarter, $X market out bank that pretty of fund deposits. This a quarter. source, much is $X

forth. how We also just have when and back move on deposits some seasonality

So really what nicely. – the comp and core deposits see I really look our of previous average in ebb, that like year I deposits you periods seasonality are the over think that’s at growing can is because the

noninterest-bearing over Our grew strong in now. which is this environment right X%, really a deposits rate little

feel from of deposit perspective. we a very So public out attrition see did a But little you good some deposits.

move three hotly is But some rate did was very funding to much strong. sources growth tend quarter, competed deposit the clients core driven; that be those out. During But in our situations.

is growth, we’re niche down the our been the it’s our account channels, our growth had it’s that focus think in haven’t we growth branches that XXX over as getting there, our system, through on direct right we and out we have highest years that deposits. account are channels, account now through growth, XX account coming digital branches look in that businesses you Our at you have that – when we our

would organic say long deposits long, really the growth been is on in best and a that strong, time. all is I it’s So

Kelly King

substantial the that is fact And improvement we from driven clients. in all that of client having are our satisfaction by

our really we’re virtual things are doing the in off. of terms of paying banking, All digital centers call

good. as is so driving net is up And which growth, really which, account satisfaction’s said, Daryl

Stephen Scouten

Okay. then about gap the Euro these that that funding maybe XX% get ratio, in it about of costs we less we what think some NIM getting may the impact guess you’re away to, XXXX, with borrowings outlook on rate Do loan-to-deposit how deposits helpful. into short-term heading we really think and to That’s the if that hikes say, upside as I looks term, you as think XX%, from into into can does like, move least I and moving your if XXXX? fund further see see? near do at that you Or we And gap could I XXXX? with, a

Daryl Bible

really we don’t funding have I gap. Steve, a think Yes,

our will loan think deposits grow I sync in growth. our core with

nonclient funding. that will growth augment We through

goes of and seasonality because comes deposits. that Now in just

could into add back still a I decision, we quarter. core that. From we term, over on grow are It’s But deposits a funding making long sure outlook, cost accomplish this really very can decision. So margin Eurodollars think we loans, think focused we and sensitive. with we asset are the

still going rates couple think points. our As go up is rise, basis to core a we

Our purchase only out accounting system, pretty there’s much basis our of and XX is left. points

only we’re maybe quarter losing So really that basis a point now away. fades as one

basis slightly should to as margining be So reported up a rise. on I think as continue rates well,

Stephen Scouten

the for closings color Thanks to growth. branch great. account that. on the versus appreciate Okay, the know, I That’s good

Operator

We Rose will from Michael go sir. question now take Mr. James. Please Raymond from our next ahead,

Michael Rose

Hey, good morning guys.

$XXX repurchased you I know color Just get the on a wanted purchased share – quarter. to million this repurchases. little

million. I said $XXX think Daryl

lag $X.X we is for of Any the think couple the about authorization next Your billion. quarters? reason as

Daryl Bible

capital just manage We’re trying really to ratio. our

we want and any keep consistent pretty up ratios to more company all said along, our the we really now. not right As lever

you we’re the back sheet that spend growth amount much grows. you slides CETX five to we at And just That’s to look come range. keep why that whole what up billion buying have based giving how upon is if that at balance really we keep depends the think really it do, quarter-to-quarter. is and going – XX.X% our same we the number. $X.X at we’re balance the it’ll in quarters, the So for last sheet Whether trying there, on our that we’re

Michael Rose

know any talk a where M&A maybe guys’ you been have going you I around Consent Order And slides the to on M&A the of lot Thanks. follow-up. helpful. then And deck. there’s Very want thoughts of with I strategy, stand out see forward. just guys a come the and

Kelly King

required in With of reported our BSA/AML us the terms of that done is before, we’re Order, we’ve Consent as moving along, program. we all effectively

We the leg the that completed an end the year. of are by up automation be finishing will final of project

know, will head – not Order that state. if Fed the conform the state. had we the FDIC the FDIC before, into you as with first as expect and We So fully already quarter, the we with the Consent and both we

just it’s our when and every issue in of timing there, of terms we cross matter expectations dot with certain every no the automation So BSA/AML I program. actually a and there’s of of of aspects regard T regulators to

very, going all that’s So very well.

As I said, growth. we are on organic laser focused

and We can can TSRs excited we think increase this focused have for are company grow on. that’s earnings EPS, laser in going very We things shareholders on. which will control in what terms about expenses, we We and can we’re all improved revenues. result of we the of our that

Michael Rose

All question. my right. Thanks taking for

Operator

O��Connor now will take We question go Mr. from next Matt Bank. ahead. Deutsche Please our from

Matt O’Connor

of was on follow capital of questioning I guess would are there. last your question I levels be, kind And track hoping strong. my very up the to

SunTrust, the why think peers, sure Some I’m can’t down they’re of you’ve capital away. bring on X.X% and not about your the USB like organic has less those though your that medium X% deals. And levels? addressed you just on focused as fact growth getting down an you target; right But to you’re to more X%. obviously, term

So are in so accelerates what’s in on keeping you case that want some CCAR a especially loan well that capital cushion hopeful process thought downturn? you Do performed you considering of Or the process? the how much? high, just growth

Kelly King

is opportunity, our So think you an about that company. if

you’ve conservative, irrational are We we’re that, either. but got start with not to

It’ll to being today terms if it, is little capital, because capital dry cost raise conservative. in in because feel they place can a bit the about CECL to you products tell at we get So One to want but you [ph] our good future the little lot and a marketplace. on potentially out having lot to what a but better there bit can a be impact very we’re out plays have there’s that. up underlying out read want going from of We economy. powder cost a this capital we to end [indiscernible] are pull where nobody we time. are you of you a don’t the why at such just of And opportune multifaceted ever be. want an moment we Banks, reasons the so see projected in on thing world holding how

holding so today. for the capital we because of those extra little deals, And wouldn’t if reasons, in M&A. – companies interested or a of two well a wouldn’t were that would capitalized huge holding We kind extra be them we we’re capital say be to amount we’re anyway. of I do any

think that’s don’t big issue. I a So

honest, growth. to recently Independent and lot and we will to level. be a discussions been movement billion $XXX some to in there’s regard the So $XXX Washington around with at of between M&A, of – margin billion point get

lot And but right so a of there’s – now. movement

– above Quarles You’ve looking some that billion. of looking at speeches aggressively talked heard from has Chairman Vice the about $XXX

it’s not additional even have would self-evident to billion. that So above have we capital $XXX

for when of all lower around the relationships. you there’s our to some see clarity capital those So factors, clearly opportunity us

Matt O’Connor

there that us Regions Okay. But And to slightly this are margin earnings business? separately, as think still opportunity saves what cost you acquisition, breakeven, the is obviously, then remind Insurance just roughly come. the it to was the accretive quarter. Can about we

Chris Henson

Yes, Matt, it’s Chris.

– expect two-year model. a we So actually year we full had the

three times the about than to expect full we be what better We expected. year actually

as XX% even kind expect to depending in $XX the bump first faster see to in on be should some able of And we So here. up year. synergies, harvest timing. the improvement $XX It to the margin margin really – from you million could are million expect little we a we this about

overall the our actually so margin. should be to accretive margin of And that insurance group

we go We So to had very be great it integration, to through. helpful retention. expect

think I company. is strong very lost up to November very, real we we’ve across had expect coming whole so X, and go we’ve and conversion kind of the Systems one that producer, retention smoothly.

we synergies, margin. as to So the the we drive get think it’s very helpful,

Matt O’Connor

Okay. you. Thank

Operator

Cassidy next take from will We question Instructions] Capital Gerard Markets. from Mr. [Operator our RBC now

Gerard Cassidy

best can Clarke Daryl, monitoring is in low any credit indicators your this the opening of you today a following XXXX, Obviously, is and pointed this industry’s out, the develop cracks are to second, strong extremely I One I quality struck quality And for what we as Again, BB&T to Maybe remarks, by base. off know on questions. of since is to may that very couple for credit look your quality. XXXX comment credit quality. credit that coming in quality? start credit all it’s address you industry. the what happened and guys for was know then A

we great for years? credit over next the out I’m and trying what could look that next to So get cause my around the is as arms industry issue the two

Clarke Starnes

remind good are long-term I’ll even and I it. that you Gerard, banks assets couple losses this probably all at question. of operating stab A I with very nonperforming a would low take a just very levels, is risk That’s trend taking. all Clarke. of at things, stable below think levels

cycle. So a good I think of part just in economy, end long that we’ve is been of credit very the

at It’s mindful it just historical that. when – of to be So trying to level. normalize of very more some point, will a we’re matter

at, of any seasoning early increasing watching shock certainly characteristics things the economy think our or I very important. risk the of we’re any about borrower in have some or looking an But deterioration really portfolios, just there think, effect. careful we would any in is trying change So obviously, to be

look forward-looking You To you point, can’t metrics. just risk management. look your have at current at performance to

the lot taking. digital lot I got before. to into banking a of things think risk the now, going pushing of areas people coming You’ve industry in through are of third bigger A that like testing. lenders of unseasoned lots stress do new, out areas disruptors, risk right they And haven’t for people parties, into of been unsecured open

now not these are appreciating the the people you’re taking be think of I would my fact and may to opinion, it a portfolios crack going in realize. fully more in be a than unseasoned future, that So if risk see lot

the banks. The other we’re is thing say C&I like by in clearly seeing higher I would areas smaller taking traditional risk

what institutions see regionals large smaller the of risk some banks think you than mid I clearly taking the are or more take.

Kelly King

Gerard, think about. another to thing here’s interesting So

today be is through patterns, of very we been think of which think process tend This trying is patterns, all maybe all to we’ve XX-year rational. terms challenge think us in I traditional and the we’re to back unusual. XX, have to XX-year resort might I not

that recessions have are deep. typically, know, we you as relatively So

then been improvements, the have a another a asset has based recovery, may have longer of the time. methodical may lead we We it expect; from kind lead, very not like We of which to pattern a, a on bottom have slow, raise this Clarke, [ph]. that my steep booms, thinking. and buys than don’t recovery And credit and that’s correction. we’re feels to based steep negative most people on I’m with but b, This it

in a continued expecting. just environment terms trying just I there – of reasonable I in is This so market and patterns. challenge of not And chance self new substantial new a in my credit to thinking will years, which up everybody world, of may relatively a type I’m steady know slow, terms own for a a a end which of number cycle, that see we is is

Gerard Cassidy

Very helpful, Kelly.

was the happen of to Chase, of pretty dreamed compare Speaking out three severe you some or see two consolidation, get we would consolidation anybody so, But in XXXX. And at banks, which we when and $XX don’t the which, billion had debacle, one got of to $XXX a going? Kelly, as happened. do to end what billion Manny Hanny you if has in together? into XXXX, the as where went and I out get have and patterns, becoming JPMorgan XXXX, great course, decade, recovery that when think what future biggest bank look bank view, a of billion billion all a bank $XXX coming even we of to point amongst Chemical, $XXX big our of years, further, your you through catalyst clock kind some and that in incredible led the XXXX back debacle, to just turning recall, banking we the

Kelly King

lived had as more the huge commercial profit it diversified; then real a estate. it, I are driven as us, not debacle, right but phenomenon. was I XXXX We most banks in are and today. are a and estate-driven some of as much diversified. Most were them We maybe had kind back run-up they of commercially lending, middle that of in – was George, called you the real commercial much the remember, most it larger than of

not totally commercially as we’re dependent. So

risk commercial I back don’t number then. have the one, had think we to build So that tendency we up

as corrections don’t to one of may So really I to That be big as on honest, organizations At to that be expect see the not did, have that there et time I credit cycles to and mergers. will cetera, earnings. extent obviously extent I it comparison. portfolios, will be contemplate their quite you But a pressure in lot that to But today. a don’t. there be good to but expect futures. will cause strategic M&A, really big I to I bank that put will see think know, don’t the

I unit size. and per get differently think scale beginning all you to down to I to about to you little had yourself. – relatively your a your and it’s out to this because pattern, cause systems scale get of cost recent all is what’s a these in happening least phenomenon, and again, Historically, – terms of thought and build had me and at think

build We’re ourselves. now where looking improvements systems have some we’re to at it to going not

the where utility – for unit the a to organizations and We’re concept our shared so to providers looking inside outside movement shared possible a and into to a necessary it’s use to cost scale per at industry get plug have there’s inherently real have utility not down.

on House, all will Clearing utility some advantage. will certain The Bank the industry the and In fact, and Policy banks have maximum the through our activities banking scale Institute all are shared own where today, concepts working

operating potentially tap of So getting in need down high the there’s I’m will that that happy some scale for real good terms now really about decisions. interesting movements

Gerard Cassidy

it. you, Thank Kelly. Appreciate

Operator

take next Mr. from ahead. Please question go We Saul now from will our Martinez UBS.

Saul Martinez

movement to related prudential Kelly, follow-up opposed of model complexity based on a But S.XXXX he banks not to makes about which a I $XXX banks, the and comments wanted to the move lot there’s to Then Quarles as been environment. on Chair mentioned Vice that size. has you that you billion focus think to – thinks $XXX billion. billion your should sense, clear I given regulatory Fed’s of very $XXX regulation on in above

are we to that $XXX next you point, – that how I’m cross So, towards banks whether which benefit and obviously, you extent move years. could the how some curious out eventually will, what and will above at model couple over that of billion, play and optimistic do

Kelly King

my BB&T think on number a talked So, risk including I’m gets do BB&T have this, that above Vice of really more him, him that he directly a has not globally are systemically that Quarles meetings. of good some larger, understands He but to as gets institutions. in – kind are I and I’ve there institutions, of speaking issue. the not that. billion handle – this really same the opinion for like $XXX him institutions He important Chair heard and that’s

that kind terms a or moving be in of assets Fed the matrix they’ve a versus of And card been XX risk It’s a at been so at of above regulatory years – that number that and the towards prudential looks number scoring internally years. institutions meaningless modifying the across is very optimistic using actually that’s they’ve $XXX just for I’m going billion. has a look broad for using and the standards he institution – to the base, risk eight and

of like a that. thing mindful up of institutions about scores has that like XX largest range And XXX if is from at the BB&T of X so on XXX. BB&T, But that or know some XXX. XXX he or for you to example, I that, score look have and the

important really of think Chair here. gets the Vice And So order magnitude I is that. Quarles

So it well four regulatory whenever optimistic terms or think we is terms above of see regulate issue or in most that years we is organically three us. billion, move likely how a whether this very not they when of do material $XXX – when very I in I’m we changes may then

Saul Martinez

the on think Okay. you trends, little exclude I optimism trends And just are? Regions, kind pricing think the you you guys how of going us But if if give the curious, growth can be gears glide But I’m switch just if expressed No is bit But for how we Chris. around year-on-year about in can would volume that business, the what color on business, forward the that’s more insurance maybe on and should X.X%. I and deal and little have I expectations that – is Regions about can bit. revenue your comment a helpful. Maybe one’s this just there helpful. going. pleasure a just environment path

Chris Henson

core for be commissions One our you for are Regions, And growth, I’d you’re X% from to. actually contingent, drivers. of Pricing, sort recently, organic Sure. certain the it’s everything happy And Actually, we’ve year-to-date. mean, in auto in, right, quarter X.X%. and about is transportation, about like if seems is exclude three the got there composite about commercial at to I’ve as that’s is X% rate high composite settling as read X.X%. but and X.X%. be things I the of pricing.

or those wildfires, environment, a got healthy billion pricing et and storms that’s losses $XXX year’s So really last you’ve heels created. of and the on in that three cetera, four

having and that’s north generally years. best-in-class, driver. for and Our It’s just of exposure business. is really wholesale And client consistent excited the our then that’s XX%, industry production, a I’m and driving the commented Daryl that about business retention new strong economy, a Also new been leading is also the really units. one solid on very in most economy

new the employee they extension they they if building benefits. hire new new their on an need So or coverage need and employees, business adds

exposure as improves, economy the grow. units the So

For there. it’s since up it we’ve kind XX%. was a It’s had XX% X%. numbers example, quarter, this long Year-to-date, up time of been

growth I for X.X% at were So like X%, – looking it’s core overall to I would said year. we driving think of growth organic organic we something and the X% last quarter,

very We’re really very, for that I’ve reasons X% X% – the like to mentioned. We looking X.X% more now. all and feel positive

$XX I going addition which activities $XX a to going, of systems where a a We’ve of of is things we’re to that we’ve that, benefits that’s robotics, got the actually driver. number also cost lot we’ve mentioned number got Backroom on, business, synergies taking In backroom alluded deal. our it million applying to the out employee big we’re business, a Kelly big million earlier. a in Regions, reconceptualizing other done and of things

think in way to of about unlike it of – is forward, the used kind markets bonds going fresh thing. this that pretty you capital pricing now through If consistently and the the It cash yes capital be. industry way receives

stable to X.X% property up X%, and and say, of And are I erratic it large a, in X%, about last X%, So and serves we’re think property kind instead up accounts. X% for down kind we’re us, a we’re that more slanted of less X% small of But a pricing range. and market. to scenario provide in towards disproportionately total and small the medium-sized accounts year, and

think a we I benefit there So bit well. as

Saul Martinez

That’s great. Thanks so much. good That’s color.

Operator

last take We our will go question from Mr. now ahead Evercore Please from Pancari John sir. ISI.

John Pancari

Good morning.

Kelly King

Good morning.

Daryl Bible

morning. Good

John Pancari

back M&A just to Kelly, your commentary.

know happened has look you there a your main – Just definitely on that that bank play? how something changed Is scale? the deck is changed else changed out bit you over but coming I view at deals months M&A. you’re that less your issue it know tone mentioned the little now. into the that scale you interest What now around put months a thing Is in that past a few I or your few parameters emphasizing talking from about whole slide only ago?

Kelly King

with about talked be issues laser Nothing are and revenue comments were extensively long talked context. John, a most I’ve truth changed growth, that, whole it views thing is that issue. things. my other out two my my on So I the told, of regard to of this scale with time been definitely now. focused the taken And there changed regard One to view. about have for I’ve is has

the reaction did referring you’re was of I that And last to to out pursuing. intend some context. we quarter, so to not convey actively were it if taken

phone calls regard with true. hadn’t I In any think in I mergers which fact, several to I is said years, made

growth, and it’s that’s So on understood. I hope we focused are my organic message, and laser

John Pancari

Kelly. Got you I it. a right. And on question clarifying, separately expectations. have XXXX then – All on just Thank for

or about real loan know said quarter. you can the still you’re the X% But should I then growth XXXX, color. just think efficiency side, the quick It’s little for know in Is X% – X% areas on And is you quarter bit but XX% growth? at two your If fourth better how the we to for you’re of to guidance loan give expense I ratio separately a XXXX. with? side. comfortable I X% something on Thanks. for on previously. looking that know for

Kelly King

weeks. Investor a in Greensboro few come we our down Conference for hope John, So you’ll to

on including at about, give Investor – We’re some color number a you going you to the Day of conference. in areas, ones good our asked

So answered and down we question hope visit. that that you have come enough eager on to will be to

John Pancari

Do you dangle the carrot?

Kelly King

exactly. Yes,

John Pancari

right. All Fine. you. right, Thank all

Kelly King

Thanks.

Operator

you Ladies your call. and this participation. conference today’s gentlemen, for Thank concludes

You disconnect. may now

Truist Financial (TFC) 18 Oct 182018 Q3 Earnings call transcript