Truist Financial Corp TFC

Narrow-moat-rated Truist Financial reported solid second-quarter results, beating FactSet consensus EPS of $0.98 with reported EPS of $1.16. These results equate to a return on average tangible equity of 18.9%. Adjusted for items such as merger-related restructuring, ROTCE would have been 24.7%. While most peers have found the bottom for net interest income), Truist’s NII remains under pressure due to purchase accounting accretion, which will continue for some time. Fees had a strong performance, with adjusted noninterest income up 11% sequentially and 13% year over year, despite the second quarter of 2020 being a record quarter for the bank. Truist also released reserves of just under $600 million, which was even better than last quarter. This led to a provisioning benefit during the quarter. Expenses continue to be elevated due to merger-related items, but the bank remains on track to meet its expense-saving goals. Overall, we thought results were good for the bank, with fee income coming in strong and expenses remaining on track. After incorporating these results, we are maintaining our $61 fair value estimate.