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Trust Financial benefited from a recovery in investment banking in the third quarter, with its fees rising 80% year over year, boosting the bank’s profits.
The Charlotte, North Carolina-based company on Thursday reported investment banking and trading revenue of $332 million for the period ended Sept. 30, up from $185 million in the year-ago period. Trust said in a press release that total fee income increased approximately 11% year-over-year due to increased debt and equity originations and increased structured real estate income.
Investment banking revenues are gaining momentum across the industry, including at Trust Co., which has seen such fees rise in each quarter of this year so far.
This boost contributed to the profits of super regional banks. Net income increased to $1.4 billion, or 99 cents per share, from $1.2 billion, or 80 cents per share, in the year-ago period. Earnings per share beat the 92 cents per share expected by analysts surveyed by S&P.
Sales totaled $5.1 billion, up from $4.9 billion in the same period last year.
According to Trust, expenses decreased 5.4% from the previous year due to reductions in areas such as personnel costs and restructuring costs. The company has slightly revised its full-year 2024 forecast for adjusted expenses, saying it is expected to be “less than flat” compared to the previous year. The company said adjusted costs exclude amortization of intangible assets, restructuring costs and other selected items.
The trust reiterated its full-year guidance that adjusted sales are expected to increase by 0.5% to 1.5% for the full year. Adjusted income includes gains and losses on securities.
Allowance for credit losses decreased 9.9% to $448 million. “The decrease in provision expense in the quarter primarily reflected lower provision builds, partially offset by additional provisions related to Hurricane Helen,” the company said.
The trust, which had $519 billion in assets through the end of September, said its core banking business “continued to be strong during the third quarter,” as evidenced by strong year-over-year growth in investment banking and trading revenue. We are showing momentum and will maintain expense discipline,” CEO Bill Rogers said in a press release.
Truist has been on a path to improved performance for several quarters. In September, the company announced that it would reset its forecast for return on tangible common stock, an important profit indicator, and aim to achieve a return on tangible common stock in the mid-10% range over the next three years.
That’s lower than the goal the company was aiming to achieve when it was formed in 2019 through the merger of BB&T Bank and SunTrust Bank. At the time, the company was aiming for a return on tangible common capital in the low 20% range, but in the following years it only exceeded 20% once, in 2022.
Executives said the reset was necessary due to the completion of the sale of Trust Insurance Holdings earlier this year and the subsequent capital injection that Trust received from that deal.
Trust’s third quarter return on tangible common equity was 13.8%. This compares to 10.4% in the second quarter, 16.3% in the first quarter, and 18.9% in 2023 as a whole.
Trust shares rose after falling in premarket trading. The stock price has increased about 21% since the beginning of the year.
