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Truist Financial Corp TFC

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Solid Quarter for Truist as Strong Fee Growth Shines

Eric Compton, CFA Senior Equity Analyst

Analyst Note

| Eric Compton, CFA |

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.

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Company Profile

Business Description

Based in Charlotte, North Carolina, Truist is the combination of BB&T and SunTrust. Truist is a regional bank with a presence primarily in the Southeastern United States. In addition to commercial banking, retail banking, and investment banking operations, the company operates several nonbank segments, the primary one being its insurance brokerage business.

214 North Tryon Street
Charlotte, NC, 28202
T +1 336 733-2000
Sector Financial Services
Industry Banks - Regional
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 54,982


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