TFC Q4 Earnings Beat Despite Y/Y Rise in Expenses, Stock Dips

Truist Financial’s TFC fourth-quarter 2025 adjusted earnings of $1.12 per share surpassed the Zacks Consensus Estimate of $1.09. In the prior-year quarter, the company posted earnings of 91 cents.

Shares of Truist lost almost 2% in the pre-market trading despite better-than-expected results. A full day’s trading performance will depict a clearer picture. 

Results were primarily aided by a rise in net interest income (NII) and higher fee income. Further, a higher average loan balance offered support. However, an increase in expenses and higher provisions were the undermining factors. 

Results in the reported quarter excluded an incremental accrual related to executing a settlement agreement in a specific legal matter of 8 cents per share and charges related to severance of 4 cents per share. Including these, net income available to common shareholders (GAAP basis) was $1.29 billion, up 6% from the prior-year quarter.

For 2025, earnings per share of $3.82 missed the Zacks Consensus Estimate of $3.92. The bottom line increased 13.7% from the previous year. Net income available to common shareholders was $4.97 billion, up 11.2% from 2024.

TFC’s Revenues Improve, Expenses Rise

Total revenues in the quarter were $5.25 billion, up 3.7% year over year. The top line missed the Zacks Consensus Estimate of $5.27 billion.

Full-year revenues were $20.32 billion, up 53% year over year. The top line missed the Zacks Consensus Estimate of $20.38 billion.

Quarterly tax-equivalent NII increased 3% year over year to $3.75 billion. 

The net interest margin (NIM) remained unchanged from the prior-year quarter at 3.07%. 

Non-interest income was $1.55 billion, up 5.2% year over year. The rise was driven by an increase in card and treasury management fees, investment banking and trading income, mortgage banking income, wealth management income, and lending-related fees.

Non-interest expenses were $3.17 billion, up 4.4% year over year. The increase was mainly due to higher personnel expenses and other expenses. 

The adjusted efficiency ratio was 54.9%, down from 57.7% in the prior-year quarter. A fall in the efficiency ratio indicates improvement in profitability.

As of Dec. 31, 2025, total average deposits were $396 billion, down marginally on a sequential basis. Average loans and leases held for investment of $324.8 billion rose 1.3% from the previous quarter.

TFC’s Credit Quality: A Mixed Bag

Provision for credit losses was $512 million, up 8.7% from the prior-year quarter. As of Dec. 31, 2025, total non-performing assets (NPAs) were $1.63 billion, up 10.6% from a year ago.

However, net charge-offs were 0.57% of average loans and leases, down 2 bps from the prior-year quarter. The allowance for loan and lease losses was 1.53% of total loans and leases held for investment, which declined 6 bps year over year.

TFC’s Profitability & Capital Ratios Solid

At the end of the reported quarter, the return on average common equity was 8.5% compared with 8.4% in the fourth quarter of 2024.

As of Dec. 31, 2025, the Tier 1 risk-based capital ratio was 11.9% compared with 12.9% in the prior-year quarter. The common equity Tier 1 ratio was 10.8% as of Dec. 31, 2025, down from 11.5% as of Dec. 31, 2024.

TFC’s Share Repurchases

In the reported quarter, Truist Financial repurchased shares worth $750 million.

Our Take on Truist Financial

Decent loan demand and TFC’s business restructuring/expansion initiatives are expected to continue supporting its top line. A solid balance sheet position is another positive. However, elevated expenses, given a tough operating environment, is a major headwind.

Truist Financial Corporation Price, Consensus and EPS Surprise

 

Truist Financial Corporation price-consensus-eps-surprise-chart | Truist Financial Corporation Quote

Truist Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of TFC’s Peers

The PNC Financial Services Group, Inc.’s PNC fourth-quarter 2025 earnings per share of $4.88 surpassed the Zacks Consensus Estimate of $4.23. In the prior-year quarter, the company reported EPS of $3.77.

PNC’s results were aided by record revenue growth, driven by a rise in net interest income and fee income. Rising loan and deposit balances, along with a decline in provisions for credit losses, were other positives. However, an increase in expenses acted as a spoilsport.

KeyCorp’s KEY fourth-quarter 2025 adjusted earnings per share from continuing operations of 41 cents outpaced the Zacks Consensus Estimate of 38 cents. The bottom line reflected a 7.9% rise from the prior-year quarter.

KEY’s results primarily benefited from higher net interest income and non-interest income. The rise in average loans and deposit balances was another positive. However, higher expenses and a jump in provisions were the undermining factors.

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This article originally published on Zacks Investment Research (zacks.com).

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