Truist shares edge down on revenue miss despite earnings beat

Investing.com -- On Friday, Truist Financial Corp. (NYSE: TFC) reported third quarter adjusted earnings per share of $1.16, beating analyst estimates of $1.14.

The Charlotte-based bank’s stock declined 2.53% in pre-market trading following the results.

Revenue came in at $3.79 billion on a taxable-equivalent basis, and fell short of the $5.35 billion consensus.

The bank posted adjusted net income available to common shareholders of $1.42 billion for the quarter ended September 30, up 12% from $1.35 billion in the prior year period. However, reported revenue of $3.75 billion missed expectations, impacted by a $1.45 billion loss on the sale of available-for-sale securities and a $66 million loss related to the Regional Acceptance Corporation loan sale. Excluding these items, adjusted revenue was $5.30 billion, down 0.1% from the second quarter.

Net interest income on a taxable-equivalent basis increased 1.1% to $3.71 billion compared to the prior quarter, while rising 0.7% YoY. The net interest margin expanded two basis points to 3.00%. Revenue declined 27.8% YoY when including the securities losses.

"We delivered a solid quarter while also taking decisive actions to better position Truist for the future," said CEO Mike Lyons. "These actions strengthen our risk, liquidity, and funding profile and create greater capacity to invest in our best businesses."

The bank completed the sale of its Regional Acceptance Corporation loan portfolio during the quarter and signed an agreement on October 14 to sell $7.7 billion of unsecured consumer loans from its LightStream platform to Carlyle Group Inc. Average loans and leases held for investment decreased 1.1% to $325.5 billion, while average deposits increased 1.4% to $410.7 billion.

Asset quality improved following the RAC loan sale, with nonperforming loans declining to 0.40% of total loans from 0.51% in the prior quarter. The net charge-off ratio was 0.77%, which included 39 basis points related to RAC.

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