More than three years after the legal close of the gargantuan merger that created Truist Financial, the Charlotte, North Carolina-based company says that it has incurred the last of its merger-related expenses and checked off all the boxes on its lengthy integration to-do list.
But this year's continued shift to execution mode includes one unanswered question: will Truist decide to sell a sizable portion of its large insurance brokerage subsidiary?
While CEO Bill Rogers on Thursday talked up the business — highlighting its role in generating fee income, pointing out its ability to grow organically as well as through acquisitions and noting that it has been around for 100 years — he didn't exactly close the door on a possible sale.
"We love the insurance business," Rogers said during the company's fourth-quarter earnings call. At the same time, "it is a consolidating business [and] we want to make sure that we've got all the flexibility and capability to create capital and support all of our businesses and their growth."
Speculation about the future of Truist Insurance Holdings began swirling last month after The Insurer, an industry publication,
Four days later, Rogers
"Keep in mind we're the only institution that can do it of scale … and that's just an advantage that we don't want to compromise," Rogers said at the time.
The size of Truist Insurance Holdings makes it an outlier in the U.S. banking industry. It is the nation's sixth-largest insurance broker and accounts for about 9% of the company's net income, 14% of its revenue and 34% of its fee income, according to a presentation Truist gave in November.
Since 2019, the year that BB&T and SunTrust Banks
The BankDirect deal added $3.1 billion of low-risk, variable-rate loans to Truist's loan book and helped boost average commercial loans by 4.4% for the quarter, the company said Thursday.
During the fourth quarter, Truist's insurance revenue grew 15% compared to the same quarter in 2021. The uptick, which stemmed from organic growth and acquisitions, helped offset Truist's fourth-quarter decline in total fee income, which fell 4.1% year over year, the company said.
Just like last month, Rogers on Thursday declined to comment on the reports of a potential sale.
But some analysts figure that what Rogers did say was just as important as what he didn't say.
Executives may "want to communicate that if [a sale] doesn't transpire, they still really like the business and they're content to keep building it," Piper Sandler analyst Stephen Scouten said in an interview.
"But I don't get the feeling that it's dead in the water either, that a sale won't happen," he added.
Analyst Mike Mayo of Wells Fargo Securities agreed, comparing the Truist franchise to a Corvette and saying the insurance business is like "an exotic ornament" on the hood.
"They're saying they're going to keep polishing, adding and likely highlighting this premium feature," Mayo said in an interview. "But they didn't close the door [on a sale]. They didn't say no."
