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Muted Loan Demand to Hurt Truist Financial (TFC) Q1 Earnings
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Truist Financial (TFC - Free Report) is slated to report first-quarter 2021 results on Apr 15, before market open. Per the Fed’s latest data, commercial and industrial loan balances (accounting for nearly 50% of the company’s total loans and leases held for investment) witnessed a decline in the quarter as overall lending activities remained muted mainly due to slow resumption of business activities.
The Zacks Consensus Estimate for average earning assets for the to-be-reported quarter is pegged at $436.7 billion, indicating a marginal decline from the prior quarter’s reported figure.
Despite steepening of the yield curve, soft loan demand is expected to have hurt Truist Financial’s net interest margin (NIM) and net interest income (NII) growth. Management expects reported NIM to be down 2-4 basis points (bps) and core NIM to be flat sequentially.
The consensus estimate for NII for the to-be-reported quarter of $3.26 billion indicates a 3.2% decline sequentially.
Other Major Factors at Play
Non-interest Income: The consensus estimate for insurance commission is pegged at $588 million, indicating a rise of 7.9% sequentially. The improvement seems to be driven by the company’s efforts to strengthen insurance business.
Also, the Zacks Consensus Estimate for service charges on deposits of $269 million suggests a rise of 1.1% from the prior quarter. Further, the consensus mark for income from bank-owned life insurance is $59 million, suggesting 34.1% increase from the previous quarter’s reported number.
However, the consensus estimate of investment banking and brokerage fees and commissions of $271 million indicates a 12% fall from the prior quarter. Also, lower consumer confidence during the quarter is likely to have hurt Truist Financial’s card business. The Zacks Consensus Estimate for card and payment related fees of $194 million implies a 4.4% decline.
Historically low rates are likely to have aided Truist Financial’s mortgage banking business. However, as the rates gradually rose during the quarter, demand for refinancing activities modestly fell. Thus, the consensus estimate for mortgage banking income of $184 million suggests 4.7% decline sequentially.
The consensus estimate for total non-interest income of $2.22 billion implies a 2.8% decline on a sequential basis.
Expenses: While the company has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and merger integration, management anticipates core non-interest expenses (excluding merger costs and amortization) for the quarter to be down 2-4%.
Further, as the company planned to close 226 branches in the first quarter, this is likely to have offered some support in managing overall expenses.
Asset Quality: With gradual economic improvement following the coronavirus mayhem last year, Truist Financial is likely to have recorded a decline in provision for credit losses in first-quarter 2021.
The Zacks Consensus Estimate for non-performing assets is pegged at $1.89 billion, indicating a rise of 36% from the last quarter. Likewise, the consensus estimate for total non-accrual loans and leases of $1.34 billion suggests a modest increase.
Management expects net charge-offs to be between 40 bps and 60 bps.
Earnings & Sales Expectations
The Zacks Consensus Estimate for earnings of $1.10 per share has moved 1.9% higher over the past 30 days. The figure indicates a rise of 26.4% from the year-ago reported number.
Nevertheless, the consensus estimate for sales is pegged at $5.49 billion, indicating a fall of 2.2%.
Notably, management expects taxable-equivalent revenues (excluding one-time security gains) to be down 3-5% sequentially, largely owing to purchase accounting loss and fewer days.
Truist Financial Corporation Price and EPS Surprise
According to our quantitative model, chances of Truist Financial beating the Zacks Consensus Estimate this time are low. This is because it doesn’t the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Truist Financial is -3.20%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Major Banks That Warrant a Look
Here are major bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Wells Fargo (WFC - Free Report) is +5.32% and it carries a Zacks Rank of 3, at present. The company is scheduled to report quarterly numbers on Apr 14.
Citigroup (C - Free Report) is slated to report quarterly results on Apr 15. The company has an Earnings ESP of +4.48% and currently carries a Zacks Rank of 3.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Muted Loan Demand to Hurt Truist Financial (TFC) Q1 Earnings
Truist Financial (TFC - Free Report) is slated to report first-quarter 2021 results on Apr 15, before market open. Per the Fed’s latest data, commercial and industrial loan balances (accounting for nearly 50% of the company’s total loans and leases held for investment) witnessed a decline in the quarter as overall lending activities remained muted mainly due to slow resumption of business activities.
The Zacks Consensus Estimate for average earning assets for the to-be-reported quarter is pegged at $436.7 billion, indicating a marginal decline from the prior quarter’s reported figure.
Despite steepening of the yield curve, soft loan demand is expected to have hurt Truist Financial’s net interest margin (NIM) and net interest income (NII) growth. Management expects reported NIM to be down 2-4 basis points (bps) and core NIM to be flat sequentially.
The consensus estimate for NII for the to-be-reported quarter of $3.26 billion indicates a 3.2% decline sequentially.
Other Major Factors at Play
Non-interest Income: The consensus estimate for insurance commission is pegged at $588 million, indicating a rise of 7.9% sequentially. The improvement seems to be driven by the company’s efforts to strengthen insurance business.
Also, the Zacks Consensus Estimate for service charges on deposits of $269 million suggests a rise of 1.1% from the prior quarter. Further, the consensus mark for income from bank-owned life insurance is $59 million, suggesting 34.1% increase from the previous quarter’s reported number.
However, the consensus estimate of investment banking and brokerage fees and commissions of $271 million indicates a 12% fall from the prior quarter. Also, lower consumer confidence during the quarter is likely to have hurt Truist Financial’s card business. The Zacks Consensus Estimate for card and payment related fees of $194 million implies a 4.4% decline.
Historically low rates are likely to have aided Truist Financial’s mortgage banking business. However, as the rates gradually rose during the quarter, demand for refinancing activities modestly fell. Thus, the consensus estimate for mortgage banking income of $184 million suggests 4.7% decline sequentially.
The consensus estimate for total non-interest income of $2.22 billion implies a 2.8% decline on a sequential basis.
Expenses: While the company has been witnessing a continued rise in overall expenses over the past several quarters because of investments in technology upgrades and merger integration, management anticipates core non-interest expenses (excluding merger costs and amortization) for the quarter to be down 2-4%.
Further, as the company planned to close 226 branches in the first quarter, this is likely to have offered some support in managing overall expenses.
Asset Quality: With gradual economic improvement following the coronavirus mayhem last year, Truist Financial is likely to have recorded a decline in provision for credit losses in first-quarter 2021.
The Zacks Consensus Estimate for non-performing assets is pegged at $1.89 billion, indicating a rise of 36% from the last quarter. Likewise, the consensus estimate for total non-accrual loans and leases of $1.34 billion suggests a modest increase.
Management expects net charge-offs to be between 40 bps and 60 bps.
Earnings & Sales Expectations
The Zacks Consensus Estimate for earnings of $1.10 per share has moved 1.9% higher over the past 30 days. The figure indicates a rise of 26.4% from the year-ago reported number.
Nevertheless, the consensus estimate for sales is pegged at $5.49 billion, indicating a fall of 2.2%.
Notably, management expects taxable-equivalent revenues (excluding one-time security gains) to be down 3-5% sequentially, largely owing to purchase accounting loss and fewer days.
Truist Financial Corporation Price and EPS Surprise
Truist Financial Corporation price-eps-surprise | Truist Financial Corporation Quote
Earnings Whispers
According to our quantitative model, chances of Truist Financial beating the Zacks Consensus Estimate this time are low. This is because it doesn’t the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: The Earnings ESP for Truist Financial is -3.20%.
Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).
Major Banks That Warrant a Look
Here are major bank stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
The Earnings ESP for Wells Fargo (WFC - Free Report) is +5.32% and it carries a Zacks Rank of 3, at present. The company is scheduled to report quarterly numbers on Apr 14.
JPMorgan (JPM - Free Report) is slated to report quarterly earnings on Apr 14. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +0.33%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Citigroup (C - Free Report) is slated to report quarterly results on Apr 15. The company has an Earnings ESP of +4.48% and currently carries a Zacks Rank of 3.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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