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Truist accelerates cost-cutting steps with jobs, branches, office space

Truist accelerates cost-cutting steps with jobs, branches, office space

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Truist Financial Corp. may be taking a deliberate approach toward a mid-2022 completion of integrating the BB&T Corp. and SunTrust Banks Inc. branch network and operational systems.

It's also continuing to step on the gas in its churning of jobs, branches and office space amid a pivotal digital transformation.

Truist, the nation’s sixth-largest bank, debuted Dec. 6, 2019, following BB&T’s $33.5 billion purchase of SunTrust. Truist’s community/retail banking hub is in Winston-Salem, while the headquarters is in Charlotte.

"2021 is going to be an intense year of focus on expenses, from the perspective of transforming our structures, so that we’re doing the right things in terms of investments and expense allocations," Kelly King, Truist's chairman and chief executive, told analysts Thursday.

King plans to retire as chief executive on Sept. 12 — his 73rd birthday. King will become executive chairman for six months before stepping down from that role on March 12, 2022.

William Rogers Sr., SunTrust's former chairman and chief executive and Truist's president and chief operating officer, will replace King in both roles.

"We’ll complete our wealth brokerage conversion, we'll have our mortgage conversion, sales force conversion," King said.

"We'll be implementing digital first migration, supporting our key three concepts in terms of meeting our client's needs on a seamless basis, integrating technology and touch to yield a high level of trust."

King has said the bank "remains on track" to complete core branch conversions in the first half of 2022, rather than by August 2021. The Carolinas would be included in the core branch category.

The combined bank began its corporate life with about 59,000 employees.

When the stunning megadeal was announced in February 2019 — the largest since the Great Recession of 2008-11 — the banks projected saving $1.6 billion by 2022 by getting rid of duplicated jobs, facilities and vendors.

In July 2020, King told analysts that Truist has “a very aggressive personnel rationalization plan in process. The plans are well developed and it’s just a matter of executing the plans.”

Truist is making good on King's jobs pledge — and then some.

The bank disclosed during Thursday's fourth-quarter earnings report that it eliminated 8% of its overall workforce, or between 3,611 and 3,811 job positions, during fiscal 2020.

It had 53,693 full-time equivalent employees as of Dec. 31 following the cutting of 1,307 positions during the fourth quarter.

At last count, BB&T had 2,134 employees in Forsyth County, according to a 2018 workforce report to Forsyth County Board of Commissioners. It also has about 1,700 employees at its Triad Corporate Center complex in Greensboro.

Cantey Alexander, Truist's regional president for the Triad, said in December the bank has about 3,800 employees in the region.

'Job regrading'

Even as Truist eliminated 8% of its workforce in just more than 12 months, for many remaining Truist employees, the fourth quarter proved beneficially from a pay, benefits and responsibilities perspective.

The bank spent an additional $60 million on personnel expenses during the quarter for what it called a one-time "job regrading" initiative.

Truist described job regrading as "an exercise to formally integrate and align the heritage BB&T and SunTrust compensation and performance/benefits structure into a new one for Truist."

"This allowed us to create a new, consistent, equitable and best-in-class teammate compensation and total rewards program that’s aligned with the highly competitive market and that allows us to attract and retain talent across the organization."

King told analysts that "we importantly did a huge amount of work on appropriate job re-grading for our teammates."

"This was a very important process, in terms of making sure that our teammates through the year knew that we were going to do the right thing in terms of looking into the new responsibilities, establishing the right talent, job and appropriate compensation.

"We chose to make that retroactive for them during 2020 because that was the right thing to do."

Shrinking branch network

Truist began its existence with a combined 2,957 BB&T and SunTrust branches.

It ended 2020 with 2,781 branches — a net closing of 136, along with the selling of 30, including nine in the Winston-Salem area, to First Horizon Corp. to help gain federal regulatory approval of the megadeal.

Truist initially projected closing about 740 branches during integration, mostly BB&T and SunTrust branches that were within two miles of each other.

The latest plan is to close at least 800 branches by the first quarter of 2022.

"You can see we're at the high-end of that original estimate," Daryl Bible, the bank's chief financial officer, told analysts.

King said in October that the decision to slow down branch conversions was influenced in large part from the impact of the COVID-19 pandemic on customer accounts and expanded technological shifting of more employees working from home.

"Once we get our branches and client-service activities back to normal, then we will be more ready to return to more closings," King said at that time.

A total of 104 closings came during the fourth quarter, with Virginia (30), Pennsylvania (23), Georgia (13) and North Carolina (11) taking the brunt of those reductions, according to Truist filings with its primary regulator, the N.C. Banking Commission.

The bank announced plans to close another 226 branches during the first quarter and 400 for fiscal 2021.

The banking commission lists 23 pending first-quarter branch closing in North Carolina, including its Stokesdale location and Greensboro branches at 3521 N. Elm St. and 3318 W. Friendly Ave.

The remaining breakdown by states: 67 in Florida; 41 in Virginia; 36 in Georgia; 24 in Maryland; 16 in South Carolina; 15 in Tennessee; three in Alabama; and one in Washington, D.C.

"We can have more branch closures than we've anticipated," King said. "We're not predicting that at this moment, but that's certainly a possibility."

Truist is not alone in pledging to radically reduce its branch network.

Wells Fargo & Co. has dropped from about 6,600 branches in 2009, when it acquired a collapsing Wachovia Corp. and gained an East Coast presence, to 5,032 as of Dec. 31. The 2020 branch closings reduced the bank's branch workforce by 20%.

Wells Fargo plans to close another 250 branches during 2021.

US Bancorp, which is just ahead of Truist in total assets, plans to close another 400 branches by early 2021 to lower its network to about 2,300 branches.

Office space shrinking

Another prime target area for reduction is office space.

Bible said in October that Truist had 29 million square feet in branches and non-branches.

"We'll be close to 20 million square feet probably by the end of 2021 in our company," Bible said at that time. "We're taking action very aggressively, very quickly."

Truist said Thursday it reached by Dec. 31 the halfway mark of its goal of eliminating 4.8 million square feet of non-branch office space. It plans to exit the remaining 2.4 million square feet by July 1.

Among the space Truist has exited its former Winston-Salem headquarters building in favor of three lower-profile sites it owns in the city.

The bank is projecting $144 million in gross savings from the purging of office space, based on a $30 per square foot estimation.

"On corporate real estate, even before COVID when you put these two companies together, we have huge duplication all throughout the Mid-Atlantic and Southeast," Bible said Thursday.

"So just going through and rationalizing that space, I’ll tell you COVID has helped us in a number of ways, and that it emptied out the buildings, so we can move quicker in a consolidation.

"My guess is as we continue to make these combinations that we may actually exceed what we originally estimated in real corporate, real estate consolidations, because of COVID and just a bunch of people working at home," Bible said.

Wells Fargo said in its fourth-quarter report it plans to reduce its 46 million square feet of office space by up to 20%, or by 9.2 million square feet, by the end of 2024.

Bible said there will be system conversions in several key divisions in the first half of 2021.

As that occurs, Truist will consolidate from four data centers into two by 2022, Bible said.

2021 outlook

King has a well-earned reputation as one of the most optimistic chief executives in the banking industry.

No matter the current economic conditions and climate, King tends to end his formal remarks to analysts and at investor presentation by expressing confidence that BB&T's, and now Truist's best days are ahead of it.

King said that as the COVID-19 vaccine becomes available to the majority of Americans in the second half of 2021, he projects that "fear goes down, confidence grows up."

"People are ready to live again, people are ready to invest, are ready to run their businesses."

"So, I fully expect by the time we head towards the fall and end of the year, you're going to be really surprised in terms of how robust this economy is."

King said one example "that will show up in terms of our commercial loan activity in a very big way."

"You're likely to see more residential loan growth than we would have expected in the slower economy, and certainly you'll see in terms of our insurance activity as well."

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"2021 is going to be an intense year of focus on expenses, from the perspective of transforming our structures, so that we’re doing the right things in terms of investments and expense allocations"

Kelly King

Truist's chairman and chief executive

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