Truist Doesn't Exactly Impress, But The Business Is On Track And The Valuation Is Reasonable

With most banks limited in what they can do to generate spread-based growth, the bullish argument for Truist (TFC) over the next few years rests significantly on this bank’s ability to generate better fee-based income and operating synergies from the BB&T-SunTrust combination. Although third quarter results did show okay fee-based revenue, the operating synergy number left a little to be desired, and it looks like the bank may have to pay more upfront to drive longer-term benefits.

I’m still a believer in the long-term benefits of the deal that created Truist, but there is definitely a “show me” element to this story and third quarter results don’t really help. With a fair value in the mid-$40’s, Truist has broadly the same return potential I see from JPMorgan (JPM) and/or PNC Financial (PNC), and those are arguably cleaner stories. I still own these shares myself, but I won’t say they’re inarguably the best pick among the large banks today.

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Truist Doesn't Exactly Impress, But The Business Is On Track And The Valuation Is Reasonable