Truist Financial Corp. said it swung to a fourth-quarter loss due to a noncash impairment while delivering stronger-than-expected revenue.
The bank also reported a fourth-quarter drop in adjusted expenses from the previous quarter as it shed about 1,000 jobs to an average of 50,905 employees in its effort to streamline operations.
Truist Financial
TFC,
said it swung to a fourth-quarter loss of $5.17 billion, or $3.85 a share. In the year-ago period, it earned $1.07 billion, or 80 cents a share.
Adjusted fourth-quarter net income was 81 cents a share.
The bank was expected to earn 68 cents a share, according to FactSet consensus estimates.
Truist Financial’s stock dropped by 1.4% on Thursday after moving higher earlier in the session.
The bank’s fourth-quarter loss included a noncash goodwill impairment of $6.1 billion, or $4.53 a share, which the bank attributed primarily to “the continued impact of higher interest rates and discount rates, and a sustained decline in banking industry share prices.”
The bank also disclosed $507 million, or 29 cents a share, for a special assessment by the Federal Deposit Insurance Corp. related to bank failures in 2023. The assessment was $387 million after taxes.
Truist Financial said the charge has no impact on its regulatory capital ratios, liquidity, dividend payments or ability to provide services to its clients.
“Underlying results were positive as our transformation into a simpler, more efficient and profitable company is well under way,” Chief Executive Bill Rogers said.
Fourth-quarter revenue at the Charlotte, N.C.-based bank fell to $5.76 billion from $6.26 billion in the year-ago quarter, ahead of the analyst consensus estimate of just under $5.7 billion.
Adjusted expenses fell by 4.5% or $160 million to $3.4 billion, compared to the third quarter.
Citi analyst Keith Horowitz reiterated a buy rating on Truist, saying the bank beat the analyst consensus estimate for preprovision net revenue by 8 cents a share.
Truist Financial also chalked up stronger-than-expected net interest income, which is the profit banks make from loans minus the money they pay out for deposits.
Net interest margin also increased by 0.03% to 2.98% and beat the estimate for expenses by 4 cents a share.
Its projected 2024 performance for preprovision net revenue implies an upside of 4 cents a share as the bank pares expenses, Horowitz said.
Preprovision net revenue, a key metric for banks, reflects net interest income plus non-interest income, minus operational risk losses and expenses from other real estate owned, according to Investopedia.
Including Thursday’s moves, Truist Financial’s stock is down 23.5% in 2023, compared with a 22% gain by the S&P 500
SPX.
Truist Financial was formed in 2020 from the merger of SunTrust Robinson Humphrey and BB&T Capital Markets.
Also read: Truist raising $1.75 billion in bond offering, making it the latest bank to raise capital
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