Truist Financial shares moved higher Monday despite reporting lower profit in the second quarter.
The Charlotte-based bank reported profit of $826 million, or 62 cents a share, compared with $1.23 billion, or 92 cents, a year earlier. The company benefited from a $6.9 billion gain from the sale of its Truist Insurance brokerage business, while it reported $6.7 billion in securities losses as it repositioned its balance sheet. The latter losses involved part of its available-for-sale investment securities.
For the first half of the year, Truist said its adjusted net income was $2.45 billion, versus $2.64 billion in the same period last year.
Shares gained more than 3% in midday trading to about $43.75. After briefly trading for less than $27 in May 2023, Truist shares are now at their highest level since early 2023. Over the past five years, shares have declined about 14%, compared with a 2% gain in the S&P regional bank ETF and an 80% surge in the S&P 500 Index.
The quarter included completion of the sale of Truist’s remaining 80% stake in its insurance unit, which it had built to be among the largest U.S. brokerages over recent decades. The move improves Truist’s capital position, enabling it to announce plans to repurchase $5 billion of shares over several years.
“In recognition of the incredibly long-term positive impact of our insurance business, we utilized a portion of the gain to make a $150 million charitable contribution to the Truist Foundation to further our purpose-driven work across our banking footprint for years to come,” CEO Bill Rogers said.
It will also focus on growth opportunities in its core businesses, while maintaining tight cost controls, CEO Bill Rogers said.
During the quarter, the bank said it sold nearly $28 billion of investment securities that were yielding an average of 2.8%. Then, it repurchased $18.7 billion of shorter-duration securities yielding 5.27%, and reinvested $39.4 billion at a blended rate of 5.22%.
The bank’s average loans were $306 billion in the quarter, down from $326 billion a year earlier. The loans yielded 6.44% on average, versus 6.07% last year. Meanwhile, average deposits totaled $388 billion, with a cost of 2.09%, compared with1.53% a year earlier, reflecting increasing rates and competition. Overall, the net interest margin increased to 3.03% vs $2.9% last year.
The bank’s provision for credit losses declined to $451 million from $538 million in the year-ago period. Net charge-offs were little changed at about $442 million.
