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Shares of Truist Financial TFC rose 1.6% in the pre-market trading session on better-than-expected earnings. The company’s first-quarter 2025 adjusted earnings of 87 cents per share beat the Zacks Consensus Estimate by a penny. However, the figure declined 3.3% year over year.
Results benefited from higher net interest income (NII). Further, lower provisions and higher average deposit and loan balances acted as tailwinds. On the other hand, lower non-interest income and higher adjusted non-interest expenses were undermining factors.
Results in the reported quarter excluded pre-tax restructuring charges of roughly $38 million. After considering those, net income available to common shareholders (GAAP basis) was $1.16 billion compared with $1.09 billion in the prior-year quarter. Our estimate for net income was $1.13 billion.
TFC’s Revenues Rise, Expenses Fall
Total quarterly revenues of $4.90 billion grew 1.7% year over year. The top line, however, missed the Zacks Consensus Estimate of $4.92 billion.
Tax-equivalent NII increased 3.8% to $3.56 billion. The rise was driven by balance sheet repositioning undertaken in the second quarter of 2024. Our estimate for NII (FTE) was $3.57 billion.
Net interest margin (NIM) grew 13 basis points (bps) to 3.01%. We had projected the metric to be 3.06%.
Non-interest income was $1.40 billion, down 3.7%. The fall was due to a decline in almost all the components except service charges on deposits, mortgage banking income and other income. We had expected this metric to be $1.43 billion.
Non-interest expenses were $2.91 billion, down 1.6%. The decline was mainly attributable to lower personnel expenses and regulatory costs, equipment expenses, and restructuring charges. Excluding certain non-recurring items, adjusted non-interest expenses rose 1.5% to $2.87 billion. Our estimate for adjusted non-interest expenses was $2.86 billion.
The adjusted efficiency ratio was 56.4%, up from 56.2% in the prior-year quarter. A rise in the efficiency ratio indicates a decline in profitability.
As of March 31, 2025, total average deposits were $392.2 billion, up marginally on a sequential basis. Average loans and leases held for investment of $306.4 billion rose 1.1%.
TFC’s Credit Quality: Mixed Bag
Net charge-offs were 0.60% of average loans and leases, down 4 bps. Provision for credit losses was $458 million in the first quarter, down 8.4% from the prior-year quarter. Our estimate for provisions was $470.1 million.
On the other hand, the allowance for loan and lease losses was 1.58% of total loans and leases held for investment, which increased 2 bps.
As of March 31, 2025, total non-performing assets (NPAs) were $1.62 billion, up 9.6%. We had expected NPAs to be $1.41 billion.