Truist on Thursday reported profit of $1.33 billion for the first quarter of 2021, a 35% increase from $986 million it posted in last year’s comparable quarter.
Truist CEO Kelly King attributed the bank’s net income growth to the performance of the bank’s insurance and investment-banking arms, in addition to the lower provision for credit losses. Investment-banking and trading revenues jumped $32 million, King said.
The Charlotte, North Carolina-based bank set aside $48 million for credit losses during the quarter, a significantly lower provision compared with the $893 million it set aside at the start of the coronavirus pandemic in 2020's first quarter. Truist also released $190 million of its reserves this quarter, a move the bank said reflects lower loan balances and a better economic outlook.
Truist’s Insurance Holdings division reported a 400% increase in net income for the quarter — to $131 million from $26 million in 2020's comparable time frame.
Recent acquisitions in the insurance space have helped propel that arm to a strong quarter. The bank announced in December that Truist Insurance Holdings completed its acquisition of insurtech Wellington Risk Holdings.
The bank last quarter also completed purchases of Irvine, California-based Brown & Associates Property & Casualty; Specialty Risk Associates, a Shreveport, Louisiana-based firm; and Program Insurance Management of Sarasota, a Florida-based underwriter with specialized programs for industrial chemical manufacturers and distributors.
"Insurance is a key business for Truist, and one we will continue to grow," King said in December.
Truist, which was formed after BB&T’s $28 billion acquisition of SunTrust in 2019, continues to execute on its branch consolidation plan and closed 126 branches in the first quarter. The bank said it is on target to hit 800 total closures by the first quarter of 2022.
To date, the bank has paid $2.1 billion in merger-related costs, and said it anticipates it will hit $1.6 billion in annual net merger-related savings by the fourth quarter of 2022.
As the bank continues to consolidate BB&T and SunTrust’s legacy systems, it announced the completion of several merger-related priorities.
The bank said it has completed its Truist Securities and wealth brokerages conversions and has completed testing protocols for its core bank conversion.
On the consumer-facing side, the bank said it will soon roll out a new "digital straddle" strategy, which allows the bank to incrementally add its heritage clients in waves to its new Truist-branded digital platform. The bank said the strategy will avoid a one-time digital conversion in February 2022, "reducing risk, and giving clients the best conversion experience."
The bank said it expects to migrate its customers in a series of waves during the third and fourth quarters of this year.
Truist reported it had 3.65 million active mobile users in Q1, an increase of 11% compared to 2020's second quarter.
During a call with analysts Thursday, King said he had an optimistic outlook regarding the pace of the economy’s recovery from the pandemic and resulting shutdowns.
"It's a very interesting and challenging time, but things are getting better. COVID is getting better. It's too soon to declare that it's over, but hospitalization rates are down, infection rates are down and vaccines are getting out really fast, so we're encouraged by that,” he said. "The economy is clearly improving ... We believe, as we head into the second half, we will have a snapback economy."