TFC Truist Financial
Near-1x book for a ~10% ROE bank; asset pruning and buybacks are the free turnaround option.
The story
Truist is a top-10 U.S. regional bank with a strong Southeast deposit franchise still earning a below-hurdle trailing ROE of 9.2% versus a ~10% cost of equity. Management is simplifying the balance sheet — the TIH sale and the new $5.5B auto-loan sale fund buybacks and higher-yielding redeployment, supporting the path toward management's mid-11s ROTCE target. At ~0.98x book, the market pays nothing for that turnaround.
Trailing 9.2% ROE is depressed by restructuring noise; a normalized 10.2% through-the-cycle ROE is unchanged and now modestly supported by the accretive auto-loan sale and buybacks. Book growth of 3.5% rising to 3.8% terminal (below the 5% risk-free cap) reflects mid-single-digit earning-asset growth partially offset by repurchases; beta and 2% failure risk are unchanged for a well-capitalized G-SIB-adjacent regional.
Value drivers
| Return on equity (normalized) | 10.2% |
| Book-value growth (Y1) | 3.5% |
| Terminal book growth | 3.8% |
| Beta | 1.10 |
| Failure probability | 2.0% |
| Cost of equity | 9.9% |
Valuation bridge
| PV of excess returns | 1.07B |
| PV of terminal excess | 1.37B |
| Equity value | 61.46B |
| ÷ shares → per share | $50.31 |
News
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Projected excess returns on equity
| Yr | Book equity | ROE | Excess return | PV |
|---|---|---|---|---|
| 1 | 60.27B | 10.2% | 151.89M | 138.15M |
| 2 | 62.38B | 10.2% | 157.20M | 130.04M |
| 3 | 64.59B | 10.2% | 162.76M | 122.46M |
| 4 | 66.89B | 10.2% | 168.56M | 115.35M |
| 5 | 69.30B | 10.2% | 174.63M | 108.69M |
| 6 | 71.82B | 10.2% | 180.98M | 102.45M |
| 7 | 74.45B | 10.2% | 187.61M | 96.59M |
| 8 | 77.20B | 10.2% | 194.55M | 91.10M |
| 9 | 80.09B | 10.2% | 201.82M | 85.96M |
| 10 | 83.10B | 10.2% | 209.42M | 81.12M |
Key risks
- NIM compression as deposit costs stay sticky while the Fed cuts
- Office CRE and C&I charge-offs eroding the credit cycle
- ROE turnaround stalls if sale proceeds are not redeployed at accretive yields
Catalysts
- Buybacks from TIH/auto-loan proceeds lifting EPS and tangible book per share
- NIM expansion as non-core runoff is redeployed into higher-yielding loans