Truist says expenses could rise slightly in 2025

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Truist Financial on Friday reported higher adjusted noninterest expenses during the fourth quarter and predicted that its spending would slightly increase in the coming year.

The Charlotte, North Carolina-based company said adjusted noninterest expenses totaled $3 billion for the three-month period ended Dec. 31, up 8.4% from the year-ago quarter. Adjusted expenses exclude several one-time items, such as a goodwill impairment charge, a special Federal Deposit Insurance Corp. fee and costs related to organizational restructuring.

For 2025, executives said expenses, on an adjusted basis, will likely rise about 1.5% from last year.

The topic of expenses — and more specifically, reining them in — have been a touchy subject for years at the $531 billion-asset Truist, which was formed by the December 2019 merger of BB&T and SunTrust Banks. Cost savings were a major selling point of the deal.

In the fall of 2023, Chairman and CEO Bill Rogers and other executives pledged to keep expense growth low in 2024, aiming to cap it to no more than 1% for the full year. Noninterest expenses came in at $12 billion on an unadjusted basis, the company said Friday. 

In a press release announcing Truist’s quarterly results, Rogers called 2024 “an important year” for the company. He ticked off several items, such as adding new clients, investing in Truist’s core banking business, improving its technology and risk infrastructure and maintaining credit discipline. He also noted the sale of Truist’s insurance brokerage unit, which was completed in May, and the subsequent repositioning of the company’s balance sheet.

“These actions increased our capital and further enhanced our ability to support the growth needs of clients, while also returning capital to shareholders,” he said. “Our dedication to our purpose, along with a clear strategy, deep expertise, seamless teamwork, and client focus positions us to drive our performance and increased profitability in 2025 and beyond.”

The bank swung to a profit of $1.28 billion, or 91 cents per share, from a loss of $5.09 billion, or $3.87 per share, during the year-ago period. Analysts polled by S&P Capital IQ predicted earnings per share would be 89 cents per share.

Revenue totaled $5.1 billion, up from $4.9 billion in the same quarter last year.

Truist has been focused on improving its financial performance. In September, it reset its expectations for a key profitability metric, return on tangible common equity, saying that it is aiming to achieve a mid-teens return on tangible common equity over the next three years.

That’s several basis points lower than what the company set out to achieve when it was formed in 2019 by the merger between BB&T and SunTrust Banks. Resetting firmwide ROTCE expectations was a necessary step due to selling Truist Insurance Holdings, and the subsequent capital infusion that Truist received from the deal, executives have said.

For the fourth quarter, ROTCE was 12.9%. For all of 2024, it was 13.3%.

In October, executives said they expect to achieve positive operating leverage in 2025. That would mean revenues outpace expenses. Truist hasn’t had firmwide positive operating leverage since 2022.

On Monday, Truist said its chief operating officer, Hugh “Beau” Cummins III, resigned and won’t be replaced. Cummins, who was also Truist’s vice chair, left the company following the “completion of several strategic initiatives” he helped move forward, Truist said in a filing.

Cummins’ exit is the latest high-ranking personnel change at Truist. In November, the company promoted Brad Bender to the role of chief risk officer following the pending retirement of Clarke Starnes III. Starnes, who was also a vice chair, plans to retire in April of this year, Truist said.