- Key insights: The trust’s profit for the fourth quarter was impacted by $130 million due to legal costs and an additional $63 million in severance payments.
- What’s going wrong: The bank has committed to a $240 million payout as part of a settlement concerning a lawsuit over overdraft fees.
- Future outlook: Trust Chief Financial Officer Mike Maguire mentioned that while severance costs will persist, restructuring expenses are expected to be “slightly lower in 2026.”
The company disclosed on Wednesday that its recent settlement, aimed at resolving a longstanding legal issue, negatively influenced its fourth-quarter profits.
Quarterly results fell short of Wall Street forecasts, also facing setbacks from a $63 million expense tied to employee retirement plans.
The settlement, pending court approval, introduces a cap of 15 years for class action claims regarding overdraft fees from the bank’s predecessor.
A plaintiff, who passed away in 2014, argued that the overdraft fees charged by SunTrust Bank, based in Atlanta, were effectively interest and should adhere to Georgia’s maximum interest rate law. Their claim included a request for up to $452 million in refunds for disputed fees.
Earlier this month, the U.S. Supreme Court opted not to review the case, which arose from a Georgia Supreme Court ruling. SunTrust had contested that this case should not be considered a class action.
The settlement added $130 million to the trust’s fourth-quarter expenses, wiping out earnings of 12 cents per share for that quarter and 18 cents per share for the year.
The bank, with assets amounting to $542 billion, chose not to provide further comments on the settlement, which will be submitted for preliminary court approval.
Overall, noninterest expenses during the fourth quarter reached $3.17 billion, marking a roughly 4% rise compared to the same period in 2024. Throughout 2025, total expenses were $12.08 billion, a modest increase of about 0.5% from the previous year, according to the bank’s guidance for that period.
Cost of Staff Reduction
Retirement benefits saw a reduction of 4 cents. The reported earnings per share for the fourth quarter reflect ongoing restructuring efforts, costing the bank a total of $358 million over the last two years. These restructuring charges also encompass severance payments, along with fees related to occupancy and professional services.
Maguire informed analysts that while severance payments will continue, there’s an expectation for a gradual reduction in restructuring costs in 2026. The bank has been dealing with elevated operational costs for years and initiated restructuring in late 2023, aiming to cut costs by $750 million over the upcoming 12 to 18 months.
Delving into employee numbers, there’s been fluctuation over the past year. By the end of December 2024, the workforce stood at 37,661 full-time employees, which increased to 38,534 by the end of September 2025. However, the count then slightly dipped to 38,062 by December 2025, marking a decline of roughly 1.2% from the earlier quarter.
The CFO noted that changes in employee count reflect a transition away from temporary workers towards more permanent staffing. He added, “We could see a rise in full-time employees throughout the year,” yet acknowledged that managing this transition could lead to cost savings.
For the quarter ending December 31st, the company reported earnings per share of $1.00, which is 9 cents short of analysts’ expectations, as per S&P Capital IQ. Net income for the quarter reached $1.35 billion, a 6.1% increase from the same quarter the previous year. Net interest income rose by 3.06% year-over-year to $3.7 billion, supported by higher loan amounts and a reduction in deposit costs. Additionally, fee income saw a 5.17% increase to $1.55 billion, attributed to higher investment banking, trading, and wealth management revenues.
Total revenue climbed to $5.25 billion, up from $5.06 billion during the same quarter in 2024.
During a call on Wednesday, CEO Bill Rogers reiterated the bank’s aim to achieve a 15% return on tangible common equity by 2027. The profitability index for 2025 was 12.7%.
When pressed for insights on the outlook for return on tangible common equity post-2027, Rogers chose not to provide a definitive response, citing uncertainty about the company’s capital status and potential economic shifts at that time.
The bank also announced plans to execute a larger stock buyback this year compared to the last, aiming for roughly $4 billion in total, with about $1 billion allocated for the first quarter.
In 2025, the bank repurchased $2.5 billion in common stock. The Board of Directors subsequently authorized a buyback totaling up to $10 billion without an expiration limit.
