Truist Financial Corporation — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter earnings release; the supplied filing text does not provide a clear set of Q4-only income and profit results. Dollar amounts are U.S. dollars.
Business context
Truist is a top-10 U.S. commercial bank headquartered in Charlotte, North Carolina, with consumer and wealth, corporate and commercial banking, and insurance businesses. At year-end it operated 2,123 banking offices. Management characterized 2022 as a shift from merger integration toward execution and purposeful growth.
Financial results and condition
| Metric | 2022 | Comparison / context |
|---|---|---|
| Revenue (GAAP) | $23.0 billion | Up 3.3% from $22.3 billion in 2021 |
| Net income available to common shareholders | $5.927 billion | Down 1.8% from $6.033 billion |
| Diluted EPS | $4.43 | Compared with $4.47 in 2021 |
| Net interest income, taxable-equivalent | $14.458 billion | Up $1.344 billion; higher rates and loan growth were partly offset by lower purchase-accounting accretion and PPP revenue |
| Net interest margin, taxable-equivalent | 3.01% | Up 15 basis points |
| Noninterest income | $8.719 billion | Down 6.1%; insurance growth was offset by lower investment banking and mortgage banking income |
| Noninterest expense | $14.589 billion | Down 3.5%; adjusted expense excluding specified items and intangible amortization increased 3.0% |
| Provision for credit losses | $777 million | Versus an $813 million benefit in 2021 |
| Return on average assets / common equity | 1.15% / 10.4% | 2021: 1.23% / 9.7% |
- Balance sheet: Assets were $555.3 billion, up 2.6%. Loans and leases were $327.4 billion, up 11.2% from $294.3 billion; deposits were $413.5 billion, down $3.0 billion.
- Credit quality: Net charge-offs were $823 million, or 0.27% of average loans, versus $697 million and 0.24% in 2021. Nonperforming loans were 0.36% of loans, down 2 basis points. The allowance for loan and lease losses was $4.377 billion, or 1.34% of held-for-investment loans, compared with 1.53% a year earlier.
- Funding and liquidity: Year-end short-term borrowings were $23.4 billion, up $18.1 billion; long-term debt was $43.2 billion, up $7.3 billion. Average LCR was 112%, with average eligible HQLA of $89.4 billion; Truist reported NSFR compliance. Available secured borrowing capacity and eligible Federal Reserve cash totaled $171.0 billion, down from $232.7 billion.
- Capital: Truist’s CET1 ratio was 9.0%, down from 9.6%; Truist Bank’s was 10.6%. The holding-company ratio decline reflected loan growth, acquisitions, and CECL transition relief phase-in. Year-end shareholders’ equity was $60.5 billion, down $8.7 billion, including a $12.0 billion reduction in AOCI. Book value per common share fell to $40.58 from $47.14.
- Cash flows: Net cash from operating activities was $11.1 billion; investing activities used $30.0 billion, including net loan originations and purchases; financing activities provided $20.0 billion. Cash and cash equivalents ended at $21.4 billion.
Material changes versus 2021
- Rising interest rates and loan growth increased taxable-equivalent net interest income by 10% and lifted NIM by 15 basis points. Average interest-bearing deposit cost rose to 0.42% from 0.06%; average total deposit cost rose to 0.27% from 0.04%.
- Noninterest income fell, notably investment banking and trading income (down 31%) and mortgage banking income (down 37%); insurance income rose 16%, supported by acquisitions and organic growth.
- Credit-loss expense shifted from a benefit to a provision as prior-year reserve releases did not repeat and loans grew. The allowance ratio declined, while net charge-offs increased.
- Truist transferred $59.4 billion of available-for-sale securities to held-to-maturity in Q1. Securities totaled $129.5 billion at year-end, down $25.1 billion; rising rates contributed to a $12.27 billion gross unrealized loss on AFS securities and significant AOCI deterioration.
- Acquisitions included BankDirect Capital Finance, BenefitMall, and Kensington Vanguard National Land Services. BankDirect added approximately $3.1 billion of loans.
- Merger-related and restructuring charges declined to $513 million from $822 million, but merger integration costs and acquired-business expenses remained material.
Outlook, risks, contingencies, and unusual items
- Outlook: No quantified earnings or balance-sheet guidance is provided in the supplied filing text. Management’s near-to-medium-term priorities include execution, integrated relationship management, digitization and process simplification, and teammate development. Management reported strong capital and liquidity and adequate current funding sources.
- Rate, deposit, and economic risks: Management highlighted inflation, further rate changes, deposit migration to higher-yielding alternatives, possible higher wholesale funding costs, slower growth, and potential credit deterioration. The year-end gradual rate sensitivity analysis showed a 0.11% projected NII decline under +100 basis points and a 1.29% decline under -100 basis points; outcomes depend on assumptions, including deposit behavior.
- Legal matters: Truist estimated reasonably possible losses in excess of accruals of up to approximately $200 million at year-end; this is not a maximum exposure. The filing discusses, among other matters, a Georgia overdraft-fee class action scheduled for trial in 2024 and USAA patent litigation over mobile remote deposit capture, also scheduled for trial in 2024. The company says it believes the underlying overdraft claims are without merit and denies infringement in the patent case.
- Other exposures: Off-balance-sheet commitments to extend, originate, or purchase credit totaled $216.8 billion; letters of credit totaled $6.0 billion. These are commitments, not funded balances. Deposits exceeding the FDIC insurance limit were $189.6 billion.
- Unusual items and subsequent events: 2022 included $71 million of net securities losses, a $74 million gain on redemption of a noncontrolling interest, and a $39 million gain on early debt extinguishment. On February 16, 2023, Truist agreed to sell a 20% stake in Truist Insurance Holdings for $1.95 billion, with closing expected in Q2 2023 subject to approvals and customary conditions. The FDIC’s 2-basis-point assessment increase is expected to raise Truist’s premiums by approximately $100 million annually beginning in 2023.
Most important facts for investors to verify
- Whether deposit outflows and deposit repricing accelerate, and how they affect funding costs and NIM.
- Whether consumer and commercial credit performance weakens; monitor charge-offs, delinquencies, nonperforming assets, and reserve coverage.
- How the securities portfolio’s unrealized losses and AOCI affect capital, and whether Truist can hold HTM securities as intended.
- Capital and liquidity trends, including CET1, LCR, borrowing capacity, and the effect of continued loan growth and distributions.
- Completion and proceeds from the announced Truist Insurance Holdings stake sale, and the final operating and governance arrangements.
- Developments in the disclosed litigation and regulatory matters, including whether losses exceed recorded accruals.
- Future expenses from FDIC assessments, merger integration, technology investment, and acquired businesses.