Truist reported profits of $ 958 million for the quarter ended June 30, 8.2% more than the $ 885 million reported as BB&T last year. The bank’s Q2 results, released Thursday, are Truist’s third Results report since the bank was founded in December through the merger of BB&T and SunTrust.
The Charlotte, North Carolina-based bank added $ 844 million to its loan loss reserves, on top of the $ 893 million it provided last quarter as the company continued to focus on bad loans as a result of the coronavirus Pandemic prepared.
“I am delighted with our overall performance and efforts by Truist to support all of our stakeholders in this challenging and ever-changing operating environment,” said Kelly King, Truist CEO, in a statement accompanying the results. “I remain proud of our teammates who continue to work hard to meet the immediate and long-term needs of our customers.”
Merger and restructuring charges accounted for $ 209 million of the bank’s total noninterest expenses of $ 3.1 billion for the quarter.
Noninterest expenses increased $ 447 million quarterly, including a $ 157 million increase in merger-related fees and operating expenses “due to increased professional services related to integration projects and higher severance payments,” the bank reported.
Truist CFO Daryl Bible was at a more optimistic pace than King on the bank’s timeline for cost savings related to the $ 28 billion merger of BB&T and SunTrust said The coronavirus crisis could impact the bank’s $ 1.6 billion savings target on schedule.
“We now believe we can achieve 40% of the net cost savings of $ 1.6 billion by the fourth quarter of this year, up from 30% we previously shared,” Bible said during a phone call with analysts Thursday.
The bank wants to achieve its goal by the end of 2022.
However, Truist is re-examining its core banking switchover schedule in light of the impact of the pandemic.
“When all of this hit, we had to focus on what was most important right now,” said King, who added that the bank’s COVID-19 response requires a strategic reallocation of resources.
Much of the bank’s IT resources have been allocated to the Paycheck Protection Program (PPP) as well as efforts to prepare and help employees transition to remote work, King said.
During the process, the bank experienced “some critical supplier disruptions that hampered our conversion activities,” he said.
Truist expects the core banking transition to be completed in the first half of 2022, rather than the second half of 2021, King said.
King also hinted that the bank could take a more aggressive approach to its post-merger consolidation plans.
“We have a lot of buildings as you might expect, duplicated buildings, some small, some large,” he said. “We have a large task force working on this. We have chosen to be very aggressive in consolidating and removing many of these buildings, and that means cutting costs pretty much immediately.”
Leading up to the merger last year, BB&T and SunTrust said the combination would result in 740 branches located within two miles of each other.
The bank announced Thursday that it closed 42 branches in non-overlapping markets in the past quarter.