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Saturday, May 18, 2024

Truist reports 2023 loss of $1.45B, marred by $6B goodwill charge

Truist Financial reported a $5.2 billion loss in the fourth quarter, or $3.85 per share, as it wrote off $6.1 billion in a goodwill impairment charge.

Excluding that and other one-time impacts, Charlotte-based Truist said it had adjusted quarterly net income of $1.1 billion, or 81 cents per share. That compared with a profit of $1.7 billion in the year-earlier quarter.

Shares rose in early trading after the bank said its first-quarter revenue will top average analyst estimates of $5.6 billion. Instead, Truist expects to achieve as much as $5.8 billion.

Shares gained about 2% to $36.50 in early trading. The stock has declined about 22% in the past year, compared with a 17% dip in the S&P Regional Banking ETF.

For all of 2023, Truist lost $1.45 billion, or $1.08 per share, compared with a profit of $5.9 billion, or $4.43 per share, in 2022. When adjusted on a non-GAAP basis, the bank earned $4.8 billion last year, compared with $6.8 billion in 2022. (GAAP refers to generally accepted accounting principles.)

For the full year of 2024, Truist expects revenue to decline as much as 3% to about $23 billion compared with 2023, while expenses should be flat. Charge-offs for bad loans are expected to increase modestly. The bank is seeking to cut $750 million through reduced spending on projects, office closings and staff reductions.

“Underlying results were positive as our transformation into a simpler, more efficient, and profitable company is well underway,” said CEO Bill Rogers in a release. “This transformative work was evident in our fourth quarter results given the sequential decline in adjusted expense and improvement in revenue.”

Net interest income was $3.6 billion in the quarter, compared to $4.03 billion a year ago. The bank cited “lower earning assets and higher funding costs.” The net interest margin was 2.9% versus 3.2% a year ago.

The $6.1 billion impairment charge reflects the reduced value of company assets. The bank also was hit by a FDIC special assessment of $507 million and merger and restructuring costs of $183 million.

Truist was formed in the 2019 merger of Atlanta-based SunTrust and Winston-Salem-based BB&T. The merger created the sixth-largest U.S. bank, giving Truist more heft to compete with the nation’s four megabanks. But hopes for increased profits haven’t met initial expectations and Truist shares have underperformed many peers. It ranked as ninth largest as of Sept. 30 with $543 billion in assets.

Average total deposits fell to $395 billion from $401 billion in the third quarter. Loans and leases also declined by about $5 billion to $313 billion during the quarter.

Truist said its 2024 priorities are to deepen client relationships; grow market share by leveraging a more efficient platform; limit expense growth to 1% or less; increase capital ratios and risk controls; and improve clients’ experience through “touch plus technology.”

 

 

 

 

 

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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