Truist CFO Mike Maguire suggested that a wide-ranging revamp of the company’s organizational structure will be key to realizing $750 million in cost savings.

“Avoidance of any sort of siloed or inefficient decision making … will create productivity, but also will help guide a lot of the decisions we're making around just organizational design,” he said Friday at the BancAnalysts Association of Boston Conference. “Some of the other work that we talked about was just rationalizing the investments that we're making, or spend that we have on the technology side of the business.”

Through a comprehensive cost control effort, the bank is on course to prioritize initiatives to continue, defer or stop while it consolidates facilities, vendors and medical providers.

“We feel very good about the progress we're making there and in the commitment that we've made around managing expense control next year,” Maguire said. 

At the same time, the CFO acknowledged that some vendor costs may increase, while the company invests in onboarding, lead generation, client acquisition and promotional marketing.

Prospects unclear for insurance business sale

Despite reports Truist is in talks to sell the rest of its insurance brokerage Truist Insurance Holdings to private-equity firm Stone Point Capital for about $10 billion — Stone Point bought 20% of Truist Insurance Holdings for $1.95 billion in a deal announced in February — Maguire did not suggest a sale was imminent.

“We've been pretty straightforward that there are a lot of trade-offs to consider in terms of the journey forward with insurance,” he said. “The objectives that we laid out initially are still intact. We feel like having that option is a distinct advantage for Truist.”  The bank, in its third-quarter earnings call, reported $55 million of TIH independence readiness costs for 2023.

Significant job cuts

Truist announced its plan to realize $750 million in cost savings over 12 to 18 months during the Barclays Global Financial Services Conference in September. At the time, CEO Bill Rogers said the company would make “sizable reductions” to its workforce over the next three quarters centered around a restructuring that included consolidated business lines, fewer layers of management and a scaled-back branch footprint. 

During the company’s third-quarter earnings call in October, Rogers said the cost savings would include $300 million from workforce reductions, $250 million from restructuring and an additional $200 million from technology expense cuts. The bank was on course to reduce redundant functions, restructure certain business units and simplify its geographic footprint, he said.

Truist has streamlined its commercial and community banking regions from 21 to 14; realigned overlapping units into a unified commercial real estate business; merged its consumer payments and wholesale payments businesses into a single enterprise payments unit; and undertaken a number of team consolidations within consumer and small business banking lines of business, Rogers said during the third-quarter earnings call. 

High-profile departures

Since the bank announced its cost savings plan, a number of high-profile executives have left the firm. Last month, Vinoo Vijay, who served as Truist’s chief marketing officer since 2020, announced he was leaving the bank. Lindsay Holden, a co-founder and CEO of the gamified finance app Long Game — which Truist bought in May 2022 — is no longer working at Truist. The bank had tapped Holden to lead Truist Foundry when it launched in October 2022. The Foundry, which launched the bank’s first gamified finance app in May, has now been folded into a larger innovation initiative.

Despite an ambitious cost-cutting effort throughout 2023, the bank said it intends to continue to scrutinize costs over the long term.

“You constantly have a focus on identifying and eliminating waste and managing costs,” Maguire said. “Some of this stuff is maybe faster, lower hanging fruit, but there are other horizons as well. It could be how you better leverage automation and those types of tools to drive efficiency.”