Truist Financial (TFC) to Close 4% of its Branches by March
As a part of its cost savings plan, Truist Financial TFC will be shuttering approximately 4% of its branch network by March. This was first reported by American Banker.
Per the data from the Federal Deposit Insurance Corporation, Truist Financial had 2,006 branches across 17 states and Washington, DC, as of Dec 29, 2023.
Though TFC hasn’t publicly revealed branch locations that will be closed, the most recent list of closure applications filed with the North Carolina Commission of Banks shows imminent shuttering across several states, including Georgia, Kentucky, Alabama, Maryland, North Carolina and West Virginia.
The primary reasons behind branch closures, as stated by Truist Financial spokesperson, are lower branch traffic and transaction volume. The spokesperson also noted that nine branches in North Carolina and seven in the Washington, DC, metropolitan area are slated to close by March.
In late December 2023, the Atlanta Business Chronicle reported that TFC will shutter eight branches in Georgia, including four in Atlanta.
Subsequent to closures, the company will operate more than 1,900 branches. The company did not reveal the number of jobs that will be cut as a result of these initiatives.
Last September, CEO Bill Rogers, at the Barclays Financial Services Conference, unveiled the strategic expense saving program, which will result in approximately $750 million of gross savings (excluding one-time severance charges) to be realized over 12 to 18 months.
As part of this program, TFC is planning "sizable reductions" in the workforce through consolidation of redundant/similar functions, geographical simplification of operations and business restructuring. These efforts commenced in the third quarter of 2023 and will continue till the first quarter of 2024 and are expected to lead to roughly $300 million in cost savings.
Rogers further added, “Other cost savings initiatives include aggressively managing third-party spend, further reducing our corporate real estate footprint and rationalizing tech spend.” These will, in aggregate, result in almost $450 million in expense savings.
Driven partially by these initiatives, Truist Financial expects adjusted non-interest expenses in 2024 to be relatively stable or rise nearly 1%. For 2023, the company projects the metric to grow almost 7%.
Shares of TFC have lost 16.8% in the past year against the industry’s rally of 8.9%.
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Currently, Truist Financial carries a Zacks Rank of 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Banks That Cut Jobs to Save Costs
Wells Fargo’s WFC CEO, Charlie Scharf, at the Goldman Sachs U.S. Financial Services Conference in early December 2023, stated that the company is expected to incur $750 million to less than $1 billion as severance expenses in the fourth quarter of 2023.
The exact number of job cuts was not mentioned. The elimination of job positions will reduce expenses at WFC amid a tough operating backdrop for revenue growth. Elucidating on the job cuts, Scharf added, “We're focused on efficiency, we're focused on just our processes, and how we can eliminate duplication and simplify the company.”
At the same conference, State Street STT announced plans to trim around 4% or 1,500 of its workforce as part of its “multiyear transformation journey to drive increased productivity and create efficiencies.”
As a result, STT is expected to incur $175-$200 million as a repositioning charge in the fourth quarter of 2023. Though the company added employees “in distinct areas and business functions,” now, given the challenging backdrop and for the long-term success of the business, it is streamlining its operations. Nonetheless, the company is planning to redeploy employees “internally in order to limit the impact of the reductions.”
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