TRUIST FINANCIAL CORP (TFC) stock intrinsic value fair value estimate & owner earnings analysis

Truist Financial is one of the largest US regional banks ($556 billion of assets at June 30, 2026), formed in December 2019 by the merger of BB&T and SunTrust. It takes deposits ($400 billion at year-end 2025) from consumers and businesses across the Southeast and Mid-Atlantic, lends them out ($324 billion of loans), invests the remainder in securities, and earns fees from wealth management, investment banking and markets, card and deposit services. Its earnings are driven by the spread between what it earns on loans and securities and what it pays depositors (net interest margin was 3.03% in 2025), by credit losses, and by expense control. In May 2024 it sold its insurance brokerage, Truist Insurance Holdings, so the business today is a pure bank. How we measured earnings. For a bank, deposits and borrowings are the raw material of the business rather than financing, so interest is treated as an operating cost and we do not subtract the bank's debt from its value. We measure owner earnings as net income available to common shareholders (after preferred dividends), adding back the non-cash amortization of acquired intangibles and one-time non-cash write-downs, and treating loan-loss provisions as a real operating cost. Two large one-off items were reversed: the $6.1 billion 2023 goodwill write-down on the SunTrust acquisition, and the roughly $5.1 billion after-tax loss in 2024 from selling low-yielding securities to reinvest at higher rates (against which we removed the $4.8 billion gain on the insurance sale). Spending on branches and equipment is no longer disclosed separately, so we assume it equals depreciation. On this basis earnings per share were $4.80 in 2021, $4.76 in 2022, $3.78 in 2023, $3.77 in 2024 and $4.00 in 2025. Starting level. We use the years since the merger integration settled, 2022 through 2025, and strip out the sold insurance business: continuing owner earnings were about $5.79 billion, $4.47 billion, $4.97 billion and $5.21 billion, a median of about $5.1 billion. That window covers both the 2022 rate-rise windfall and the 2023 squeeze when deposit costs jumped and the FDIC levied a special assessment. 2020 (pandemic reserve build and merger costs) and 2021 (a large reserve release) are excluded as distorted. One sobering fact: 2025 owner earnings per share ($4.00) are no higher than BB&T earned on its own in 2018 ($4.04), so the SunTrust merger has not yet created per-share value, which is consistent with the 2023 goodwill write-down. Near-term path. Owner earnings grew 4.8% in 2025 (7.2% per share, helped by buybacks). The first half of 2026, reported in the 10-Q filed July 31, 2026, shows net income to common up 24% year on year ($2.90 billion versus $2.34 billion): fee income up 14.5%, lower credit costs, lower preferred dividends, and an unusually low 13% tax rate versus 18% a year earlier. Because two reported quarters already show the improvement, the base case allows 2026 to reach about $5.6 billion (up 7.4% on 2025), but does not annualize the first-half pace (about $6.0 billion), since the low tax rate and strong investment-banking fees may not repeat. Base case, about $73 per share. 2026 owner earnings of $5.6 billion, then about $5.4 billion a year, roughly midway between the four-year median and the recent run rate, held flat with no growth credited. Truist's loans have grown only about 2% a year since 2020 and deposits about 1%, so there is no demonstrated record of growth to credit. The franchise is kept going indefinitely because deposit-gathering banks like BB&T and SunTrust have earned through every cycle for over a century; that durable deposit base is the named driver for value beyond year ten. Discounted at 6%, the business is worth about $90 billion, or $72.79 per share on 1.239 billion diluted shares. The steadily declining amortization of acquired deposit intangibles ($290 million in 2025, $127 million in the first half of 2026) is too small to need a separate charge, and the flat path already gives no credit for growth. Bear case, about $58 per share. A recession in 2027-2028 roughly doubles credit costs to around 1.2% of loans, as in past downturns (Truist's provision was $2.3 billion in 2020, and BB&T's earnings per share fell by roughly 60% from 2007 to 2009). Owner earnings drop to about $2.8 billion in each of those two years, recover to $3.8 billion in 2029, and then settle permanently at $4.5 billion, the weak 2023 level, reflecting continued deposit competition and a merger that has not delivered per-share gains. The business is worth about $72 billion. Leverage is the main threat here: equity of $64 billion supports $556 billion of assets, so a severe loss cycle would force Truist to keep earnings rather than pay them out. Capital is adequate: the common equity tier 1 ratio was 10.8% at year-end 2025 against a 7.0% requirement (including a 2.5% stress capital buffer that runs to September 30, 2027). Bull case, about $85 per share. 2026 matches the first-half pace at $5.9 billion, then earnings grow 2% a year to 2035, supported by the 7.3% loan growth reached in 2025 and by older fixed-rate loans and securities continuing to reprice at higher yields, a driver Truist cites in its 2025 10-K. Truist keeps about 15% of earnings each year as capital to fund that growth. After 2035 earnings hold flat. The business is worth about $106 billion. Debt and preferred stock. Truist's $43 billion of long-term debt and its deposits are part of its banking operations, and their cost is already deducted from the earnings above, so no debt is subtracted. The $5.4 billion of preferred stock ranks ahead of common shareholders, and its dividends are already deducted from earnings available to common. Change since our previous analysis. In August 2026 we estimated $30, $57 and $86 per share with a $40 margin-of-safety price. That valuation deducted stock-based pay that had already been counted in net income, discounted at rates of 8.5% to 12%, and added a rough estimate of excess capital. We now use a single long-term 6% rate for every company and express risk only through the spread between the cases, and we have added the first-half 2026 results. The bear case rises the most; the bull case is little changed. Margin-of-safety price. Truist pays $2.08 a year in dividends. From $42, the base case implies 20% a year if the shares reach the base value within about three years (about $79 including dividends, against the $72.60 that a 20% annual return over three years requires), and the bear case implies roughly 20% a year if the shares reach only the bear value within two years. Because a bank's results can swing with the credit cycle, the price is set nearer the bear value than the base. What would make this wrong: a credit downturn deeper than in 2009 or 2020 (commercial real estate is the obvious candidate); a sharper squeeze on deposit margins, as in 2023; or further acquisitions that destroy value. We could not see the cause of the low 2026 tax rate because the quarterly report narrative was not available, so we did not count on it.