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Truist Financial missed Wall Street’s expectations for second-quarter earnings, but reported a decrease in year-over-year expenses along with solid loan growth in consumer and small business banking.
The Charlotte, North Carolina-based regional bank on Friday reaffirmed its full-year 2025 expense outlook, which predicts adjusted expense growth of 1%. Keeping expenses in check is a focal point for the $537.1 billion-asset Truist this year after several years of rising costs.
“We remain on track to achieve our annual expense growth target, which includes continued investments in talent and technology,” Truist Chairman and CEO Bill Rogers said in a press release announcing the company’s latest quarterly results. Rogers previously told analysts that the spending plan includes hiring in certain growth markets and enhancing digital capabilities.
For the quarter ending June 30, Truist reported net income of $1.2 billion, an improvement compared with the same quarter last year when net income was $922 million. Earnings per share were $0.90, shy of analysts’ $0.92 expectation, according to S&P Capital IQ.
Revenue was about $5 billion, a sharp reversal from the same quarter last year when Truist reported a revenue loss of $1.68 billion, due primarily to losses in its securities portfolio.
Analysts polled by S&P Capital IQ had predicted revenue of $5.025 billion.
Major banks reporting earnings this week have mostly posted strong results despite economic uncertainty.
Read more about Truist here: https://www.americanbanker.com/organization/truist-financial
Net interest income rose 1.7% year over year. Fee income was up $6.6 billion, largely as a result of the securities losses recorded last year and higher “other” income, the bank said.
Noninterest expenses totaled nearly $3 billion, down about 3.5% from the year-ago quarter. The reduction reflects a charitable contribution of $150 million that was made in the same quarter of last year and a special Federal Deposit Insurance Corp. assessment adjustment of $13 million.
Average loans and leases were $313.8 billion in the quarter, up from $307.6 billion in the year-ago period. Regarding consumer and small business banking, there was “strong loan growth across all consumer portfolios,” which was due to new loan production of approximately $13 billion for the quarter, “a significant year-over-year increase of $5.5 billion,” the bank said.
Average deposits were $400.5 billion, compared with $388 billion year over year.
In April, the company reduced its full-year revenue expectations, citing a material slowdown in investment banking and capital markets activity and the anticipation of less net interest income. It still anticipates that its revenue will grow by 1.5%-2.5% year over year, compared with the 3%-3.5% growth projection that executives shared with investors at the beginning of the year.
Despite lowering its revenue projections, the company at the time said it still expected its revenues to outpace spending this year. Achieving positive operating leverage has been a perennial focus for Truist executives since the 2019 merger that created the company.
In its second-quarter earnings presentation, the company said that “driving positive operating leverage through revenue growth and expense discipline” remains one of its strategic priorities for this year.
Truist hasn’t achieved full-year positive operating leverage — when revenues outpace spending — since 2022.
Read more about bank earnings here: https://www.americanbanker.com/earnings
During the second quarter, Truist bought back $750 million of its common shares. In total, the company, which has excess capital due to last year’s sale of its insurance subsidiary, repurchased $1.25 billion of its common shares in the first half of the year.
On Friday, it said it plans to buy back $500 million more during the third quarter.
Following the release of the latest stress test results in June, Truist said it would maintain its current quarterly common stock dividend of $0.52 per share, subject to approval by its board.
During the quarter, Truist announced the hiring of Charles Alston to lead its new nonprofit hospital, higher education and government banking team. Alston joined Truist from Bank of America, also based in Charlotte, where Alston worked for more than 25 years, according to his LinkedIn profile. Most recently, he was the market executive for BofA’s health care, higher education and not-for-profit business in the Southeast, according to Truist’s press release.
It also added Jonathan Pruzan to the board of directors. Pruzan, a former Morgan Stanley executive, brings the board size back to 13. He will sit on Truist’s risk committee.
