Truist Financial (TFC)

Financial services company Truist Financial (NYSE:TFC) reported Q3 CY2025 results topping the market’s revenue expectations, but sales were flat year on year at $5.19 billion. Its non-GAAP profit of $1.35 per share was 35.9% above analysts’ consensus estimates.

Company Overview

Born from the 2019 merger of BB&T and SunTrust in one of the largest banking combinations since the 2008 financial crisis, Truist Financial (NYSE:TFC) is a bank holding company that offers a wide range of financial services including consumer and commercial banking, wealth management, insurance, and lending solutions.

At their core, diversified banks take in deposits and engage in various forms of lending, which means revenue is generated through interest rate spreads (difference between loan and deposit rates) and fees. Other revenue comes from adjacent services such as wealth management, card and account fees, and products such as annuities. These institutions benefit from rising interest rates that improve NIMs (net interest margins), digital transformation reducing operational costs, and expanding wealth management services as populations age. However, they face headwinds including fintech competition disrupting traditional models (how disruptive is crypto?), stringent regulatory requirements increasing compliance costs, and cybersecurity threats requiring substantial technology investments. Economic downturns also pose risks through potential loan defaults and compressed margins during accommodative monetary policy periods.

Truist Financial competes with other major U.S. banks including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), and PNC Financial Services (NYSE:PNC), as well as regional banks like Fifth Third Bancorp (NASDAQ:FITB) and Regions Financial (NYSE:RF).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Unfortunately, Truist Financial struggled to consistently increase demand as its $20.24 billion of revenue for the trailing 12 months was close to its revenue five years ago. This wasn’t a great result and is a sign of lacking business quality.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Truist Financial’s recent performance shows its demand remained suppressed as its revenue has declined by 2.8% annually over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Truist Financial’s $5.19 billion of revenue was flat year on year but beat Wall Street’s estimates by 0.7%.

Net interest income made up 55.1% of the company’s total revenue during the last five years, meaning Truist Financial’s growth drivers strike a balance between lending and non-lending activities.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Investors focus on efficiency ratio changes rather than absolute levels, understanding that expense structures vary by revenue mix. Counterintuitively, lower efficiency ratios indicate better performance since they represent lower costs relative to revenue.

Over the last five years, Truist Financial’s efficiency ratio has swelled by 7.1 percentage points, going from 68.1% to 59.3%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

Truist Financial’s efficiency ratio came in at 58.1% this quarter, falling short of analysts’ expectations by 132.3 basis points (100 basis points = 1 percentage point). This result was in line with the same quarter last year.

For the next 12 months, Wall Street expects Truist Financial to rein in some of its expenses as it anticipates an efficiency ratio of 55.7%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Truist Financial’s unimpressive 1.3% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Truist Financial, its two-year annual EPS declines of 1.3% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q3, Truist Financial reported adjusted EPS of $1.35, up from $0.97 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Truist Financial’s full-year EPS of $4.04 to grow 6.7%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

This is why we consider tangible book value per share (TBVPS) the most important metric to track for banks. TBVPS represents the real, liquid net worth per share of a bank, excluding intangible assets that have debatable value upon liquidation. EPS can become murky due to acquisition impacts or accounting flexibility around loan provisions, and TBVPS resists financial engineering manipulation.

Truist Financial’s TBVPS grew at a mediocre 4.6% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 32.1% annually over the last two years from $18.67 to $32.57 per share.

Over the next 12 months, Consensus estimates call for Truist Financial’s TBVPS to grow by 4.8% to $34.15, paltry growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Truist Financial has averaged a Tier 1 capital ratio of 11%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Truist Financial has averaged an ROE of 4.8%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

It was good to see Truist Financial beat analysts’ EPS expectations this quarter. We were also happy its tangible book value per share outperformed Wall Street’s estimates. On the other hand, its net interest income slightly missed. Overall, we still think this was a solid quarter with some key areas of upside. The stock traded up 1.2% to $41.55 immediately after reporting.

Updated: December 4, 2025 at 11:45 PM EST

Are you wondering whether to buy Truist Financial or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Truist Financial falls short of our quality standards. To begin with, its revenue growth was weak over the last five years. And while its improving efficiency ratio shows the business has become more productive, the downside is its weak EPS growth over the last five years shows it’s failed to produce meaningful profits for shareholders. On top of that, its net interest income growth was weak over the last five years.

Truist Financial’s P/B ratio based on the next 12 months is 1x. At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $50.55 on the company (compared to the current share price of $47.40).