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Truist Sees Solid Earnings in First Quarter

By Dave Kovaleski - Updated Apr 20, 2020 at 12:27PM

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But the nation's newest big bank saw lower EPS as a result of merger-related costs and a higher provision for credit losses.

In its first full quarter since it was formed in the merger of SunTrust and BB&T, Truist Financial (TFC -1.59%) reported $986 million of net income, a 31% increase compared to what the two banks reported individually in the first quarter of 2019. Revenue was $5.6 billion, up from $2.9 billion.

Truist's diluted earnings per share (EPS) was $0.73, a 24.7% decrease. The figure was dragged down by merger-related expenses and a spike in the provision for credit losses.

The bank's provision of credit loss in the first quarter was $893 million, up from $171 million for the prior year's quarter. The provision of credit losses is due to the recognition of an economic downturn and an increase in loans due to the COVID-19 pandemic.

The front of a bank with the word "bank" across the front with buildings in the background

Image source: Getty Images

"As a well-capitalized institution with a strong liquidity position, we have seen significant growth in loans as our commercial clients drew down their lines of credit and have also seen a flight to quality as many of our clients move funds out of the financial markets and into deposit accounts," Truist Chairman and CEO Kelly King said.

Truist has $350.2 billion in total deposits, up from $334.7 billion at the end of the fourth quarter and $319.2 billion in loans, up from $299.8 billion at the end of 2019.

The bank also has a liquidity coverage ratio (LCR) of 117%, which is well above the minimum standard of 85%. LCR is a stress test that measures a bank's ratio of high-quality liquid assets to meet its obligations.  

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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