Despite the ongoing challenges of the pandemic as well as the costs of what has been dubbed “the first large bank merger of the digital age,” Truist Financial announced Thursday (Jan. 21) it had delivered a 20 percent increase in its fourth quarter earnings.
The nation’s sixth-largest commercial bank, which was formed and finalized in December 2019 through the merger of BB&T and SunTrust, credited its record $1.6 billion profit to strong performance from its insurance, investment banking and commercial real estate businesses, according to the release.
“In a year of unprecedented challenges for our nation and the financial services industry, I’m extremely proud of our teammates and their rapid and sustained response to meet the needs of our clients and communities,” said Chairman and CEO Kelly King in the release. “Despite this difficult environment, our performance was very strong in 2020 and we closed the year on a high point with our best quarter yet in terms of financial performance.”
Given these results, King said in the release that Truist plans to continue to invest in the future via its “client-first strategy” that is aimed at supporting the lender’s overall growth and diversification, including the addition of five insurance brokerages last quarter, which are expected to boost insurance revenues by $110 million annually.
Strong Economic Snapback
“We fully expect that we are most likely to see a stronger snap back in the economy than most people expect,” King told analysts on the company’s conference call. “When we talk to our clients and prospects, they are really pretty upbeat, and they are saying things like, ‘It’s time to get on with it.’ ‘We’re ready to go.’ ‘We’re making investments.'”
The bank’s upbeat attitude and outlook were partly the result of the fact that the economic downturn has been dramatically different from what we’ve experienced in the past, including the commercial real estate crisis, the technology bubble in 2000 and the residential real estate bubble in 2008.
“There was no bubble here,” King said. “There was nothing fundamentally wrong with the economy. In fact, we had 10 years of robust growth and very, very low inflation. We just shut it all off.”
Like most businesses — and individuals — Truist is also eager to see the benefits of more widespread uptake of the COVID-19 vaccine, with King saying it will reduce fear and increase confidence.
“People are ready to live again, people are ready to invest and ready to run their businesses,” Kelly said. “So, I fully expect by the time we head towards the fall and end of the year, you’re going to be really surprised in terms of how robust this economy is.”
A Technology Project on Steroids
With 1,800 branches, 37,000 employees and over 10 million consumer household relationships in its portfolio, consolidating and modernizing the newly formed Truist is something that at one point in the call King called a “technology project on steroids.” In addition to its projected investment into its insurance unit, Truist said it is also investing selectively in “digital and agile capabilities” to meet the evolving needs of its clients.
According to Truist President and Chief Operations Officer Bill Rogers, although the big conversion is still in the works, the bank is already seeing increased digital adoption as measured by several key metrics.
“In November, we experienced a 26 percent increase in digital sales, 12 percent growth in active mobile users, 22 percent increase in mobile check deposits, and a 5 percent increase in statement suppression,” Rogers told analysts.
While the company is using personalized financial insights, artificial intelligence (AI)-driven chatbots, and other client centric enhancements, the mega-migration of two side-by-side platforms into one is targeted to start in the second quarter and be finished by the end of 2021.
“We’re going to pilot both platforms in the second quarter, and then we’ll begin migration and ways in the third quarter, a complete full migration to premiere Truist experience for our digital clients by year-end,” he said.