Truist reported profit of $958 million for the quarter ending June 30, up 8.2% from the $885 million it reported as BB&T last year. The bank's Q2 earnings, which it released Thursday, is Truist's third earnings report since the bank was formed by the merger of BB&T and SunTrust in December.
The Charlotte, North Carolina-based bank added $844 million to its loan loss reserves, in addition to the $893 million it set aside last quarter, as the firm continues to prepare for bad loans as a result of the coronavirus pandemic.
"I am pleased with our overall performance and Truist's actions to support all our stakeholders in this challenging and ever-changing operating environment," Truist CEO Kelly King said in a statement accompanying the earnings release. "I remain proud of our teammates, who continue to work hard to meet the immediate and long-term needs of our clients."
Merger-related and restructuring charges represented $209 million of the bank’s total $3.1 billion noninterest expenses during the quarter.
Noninterest expenses increased $447 million quarter over quarter, including a $157 million jump in merger-related charges and operating expenses "due to elevated professional services associated with integration projects, as well as higher severance charges," the bank reported.
In terms of the bank's timeline for cost savings related to the $28 billion BB&T-SunTrust merger, Truist CFO Daryl Bible provided a more optimistic pace compared to the previous quarter, when King said the coronavirus crisis could affect the timeline of the bank’s $1.6 billion savings goal.
"We now believe we can accomplish 40% of the $1.6 billion in net cost savings by the fourth quarter this year, up from 30% we previously shared," Bible said during a call with analysts Thursday.
The bank still plans to hit its goal by the end of 2022.
Truist, however, is reassessing its timeline for its core banking conversion in light of the pandemic's impact.
"When all of this hit, we had to focus on what was the most important at the moment," said King, who added the bank's COVID-19 response required a strategic reallocation of resources.
Many of the bank’s IT resources were reallocated to the Paycheck Protection Program (PPP), as well as efforts to prepare and assist employees with the transition to remote work, King said.
During the process, the bank experienced "some critical vendor disruptions that hampered our conversion activities," he said.
Truist expects its core banking conversion will be completed in the first half of 2022 rather than the second half of 2021, King said.
King also indicated the bank may take a more aggressive approach to its post-merger consolidation plans.
"We've got a ton of buildings, as you might expect, duplicated buildings, some small, some large," he said. "We've got a major task force working on that. We've decided to be very aggressive in terms of consolidating and eliminating a lot of those buildings, and that's pretty immediate cost reductions when you do that.”
Ahead of the merger last year, BB&T and SunTrust said the combination would result in 740 branches located within two miles of one another.
The bank said Thursday it has closed 42 branches in non-overlapping markets over the past quarter.