Earnings

Truist Branch Conversions Delayed Due To Regulators, Digital Tech

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With a “merger of equals” that resulted in the formation of Truist Financial Corporation early last month, the financial services firm reported fourth-quarter results that reflected the “heritage” of BB&T before the merger and both BB&T and SunTrust from the merging closing date forward. The merger was completed on Dec. 6, according to the firm’s fourth fourth-quarter earnings announcement.

Truist Chairman and Chief Executive Officer Kelly King said on a call with analysts on Thursday (Jan. 30) that the rollout of the Truist brand, colors and logo went well. But he noted branch conversions were delayed partly because of the agreement the firm reached with regulators and partly because the firm wanted to ensure it had a digital value proposition in place.

The firm, he said, is still very confident in its net $1.6 billion in cost savings, with the company expected to achieve that figure in savings through 2022, and it had “taken just a little bit longer to make sure we do it and do it right.” He also noted that nearly all clients will not experience any changes with their account numbers. He also noted that the merger-related restructuring charges were $223 million, pretax. And King noted that security losses due to its balance sheet restructuring were $116 million.

The firm also has some expenses that King said are not technically seen as related to the merger from an accounting perspective but are incremental operating expenses that do have future benefits that are not a part of the ongoing run rate. The company had non-interest-bearing deposits of approximately $92 billion and total deposits of about $335 billion.

In looking at the overall market, King said he has been consulting with the firm's market and regional presidents, and thinks the outlook is fairly good. “CEOs are confident in their businesses,” he said, but noted that they are worried about macro issues — the trade war, the coronavirus and Iran. The executive also pointed out that the economy is about 10-plus years into recovery.

And, while the company doesn’t expect a recession in the near term, he acknowledged this is a “nervous period,” in terms of the economy. King, however, noted that is one of the reasons that Truist remains strong in terms of capital and liquidity in case those existential factors do make an interruption in terms of ongoing business.

Truist Financial Corporation’s fourth-quarter earnings came out ahead of expectations while top-line results fell slightly short, with reported revenues of $3.63 billion and adjusted earnings per share of $1.12. Analysts, by contrast, had expected revenues of $3.69 billion and earnings per share of $1.03 for the fourth quarter.

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