Truist(US:TFC) ZACKSยท2025-08-20 13:55Core Insights - Truist Financial (TFC) is experiencing steady loan growth, with average loans and leases held for investment reaching $312.6 billion as of June 30, 2025, marking a 2% year-over-year increase [1][11] Loan Growth and Earnings - The improvement in average loan balance has led to higher average earning assets for TFC in the first half of 2025, despite a decline in yield on the average total loan portfolio to 5.99%, down 42 basis points from the prior year [2] - Truist's net interest income (NII) for the first half of 2025 was $7.09 billion, reflecting a 3% year-over-year growth, with net interest margin improving by 7 basis points to 3.02% [3][11] Management Outlook - Management is optimistic about NII growth, projecting an increase of approximately 3% in 2025, supported by low single-digit average loan growth and anticipated reductions in the Fed funds rate [4] - Truist plans to reprice around $27 billion of fixed-rate loans and investment securities in the second half of 2025, with new fixed-rate loans expected to have a run-on rate of about 7% compared to a current run-off rate of nearly 6.4% [4] Future Projections - The company expects modest loan growth, favorable loan repricing, and strategic balance sheet management to counteract Fed rate cuts, with NII projected to grow by 2.8%, 3.1%, and 4.5% in 2025, 2026, and 2027, respectively [5] - The projected net interest margin (NIM) for 2025, 2026, and 2027 is estimated to be 3.05%, 3.14%, and 3.25%, respectively [5] Peer Comparison - PNC Financial has seen a five-year CAGR of 5.6% in total loans from 2019 to 2024, with a positive outlook for loan demand due to expected interest rate cuts in 2025 [6] - U.S. Bancorp has also experienced strong loan growth, with a five-year CAGR of 5.1% and a focus on expanding customer relationships [8]