The trust's loan income misses estimates as deposit costs are weighted

(Bloomberg) — Trust Financial Corp. posted a lower-than-expected first-quarter loan profit as it forced customers to pay higher interest rates and the bank cut its earnings guidance for the rest of the year.

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The Charlotte, North Carolina-based lender reported net interest income of $3.43 billion on a tax-equivalent basis, down from the prior-quarter level and missing analysts' average estimate of $3.47 billion for NII, or the amount banks make by lending. Pay the deposit.

“Loan demand remains muted and deposit costs remain under pressure,” CEO Bill Rogers said in a statement. The NII is expected to reach its trough in the second quarter and improve modestly later in the year, executives said on a conference call with analysts on Monday.

Shares were down 0.8% at $36.52 at 9:37 a.m. in New York, down 0.9% this year.

Investors are closely watching how banks are performing as the Federal Reserve holds off on interest rate cuts as inflation remains above policymakers' targets and borrowing costs remain high for a long period of time. While elevated rates allow banks to charge borrowers more, they also increase the cost of deposits as customers demand more for their savings. JPMorgan Chase & Co. and Wells Fargo & Co. The participating banks missed the NII estimates when they announced their first quarter results this month.

Also read: Bull cases for big banks to make high returns on lending

At Trust, revenue on a taxable equivalent basis from continuing operations for the first quarter was $4.87 billion.

With the new guidance excluding the impact of interest income earned from continuing operations and sales of its insurance unit, Truist expects equivalent revenue to decline 4% to 5% from last year's $20.2 billion. – Sheet transfer. The bank previously guided for a 1% to 3% decline in revenue from $23.6 billion last year.

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The company said it plans to resume share buybacks later this year, depending on factors including market conditions.

During the quarter, Truist announced a highly anticipated deal to sell the remainder of Truist Insurance Holdings to a group led by Stone Point Capital and Clayton Duplier & Rice. The transaction valued the insurance-brokerage unit at $15.5 billion, and Trust said it was considering options for capital deployment. The sale is expected to close in the second quarter, executives said on the call.

Read more: Trustee agrees to sell remaining insurance arm to Stonepoint, CD&R

Last week, the firm told its investment-banking employees that they would be in the office five days a week starting in June.

Read more: Trust Investment Bank calls employees into office five days a week

2019 BB&T Corporation and SunTrust Banks Inc. Truist was created by the merger of Last year, it shrunk its team to align with industry insiders. It underperformed peers last year, making it one of the worst-performing companies in the KBW Bank Index, with its shares down 14% in 2023.

(The NII forecast, stocks, and insurance deal details begin in the third column. An earlier version of this story has been corrected to remove unmatched analysts' estimates for earnings.)

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