The Top Regional Banking Stock - Experts Weigh in - InvestingChannel

The Top Regional Banking Stock – Experts Weigh in

Proprietary Data Insights

Financial Pros’ Top Regional Banking Stock Searches in the Last Month

Rank Ticker Name Searches
#1 TFC Truist Financial Corp 19
#2 HBAN Huntington Banc 9
#3 FITB Fifth Third 8
#4 OZK Bank Ozk 6
#5 PNC PNC Bank 6
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The Top Regional Banking Stock – Experts Weigh in

Last year’s banking crisis toppled Silicon Valley Bank… and made regional banking stocks incredibly cheap.

Financial pros have anxiously been awaiting this earnings season.

And they’ve made their pick.

Truist Financial Corp (TFC) was by far the most searched regional banking stock according to our TrackStar data.


Truist Financial’s Business

Formed from the merger of BB&T Corporation and SunTrust Banks in 2019, Truist became one of the largest regional banks in the Southeastern U.S. 

The over 2,000 branches cater to individuals, businesses, and municipalities. 

Trust operates three main segments:

  • Consumer Banking and Wealth (52% of income): Offers retail banking, mortgage banking, wealth management, and other consumer finance services to individuals and small businesses.
  • Corporate and Commercial Banking (32% of income): Provides services like corporate and investment banking, commercial real estate, treasury, payment solutions, and specialized lending to corporations, government entities, and non-profits.
  • Insurance Holdings (16% of income):  Delivers a range of insurance products and services through Truist Insurance Holdings, Inc., one of the world’s largest insurance brokers.

Truist faces challenges with its loan and asset portfolio like many regional banks.

Net charge offs, provision for credit losses, and non-performing loans have all ticked higher over the last year.

Asset quality

Source: Truist Q4 2023 Investor Relations

Although commercial real estate is a worry, it makes up a fraction of Truist’s loans for investment, and an even smaller fraction of that is tied to office buildings.

CRE Spotlight

Source: Truist Q4 2023 Investor Relations

Overall, Truist holds a high quality portfolio, has a diverse deposit base, and a solid foothold in its markets.



Source: Stock Analysis

Truist’s latest quarterly earnings included a one-time non-cash goodwill impairment of $6.1 billion which they explained as:

“…due to the continued impact of higher interest rates and discount rates, and a sustained decline in banking industry share prices, including Truist’s.”

This is an annual assessment conducted by the bank on October 1st.

It has no real impact other than reducing retained earnings for the bank.

Excluding this item, Truist would have again turned a healthy profit for the quarter.

The company has seen a decline in deposits, but nothing huge. And it’s likely to reverse as interest rates drop.

As of now, the company is on healthy financial footing and pays a hefty 5.6% dividend yield.



Source: Seeking Alpha

Right now, all regional banks trade at a discount to historical valuations.

However, we like the price-to-cash flow for Truist compared to its peers including heavyweight regionals like Huntington Banc (HBAN) and PNC (PNC).

Truist also trades at less than 1x book value, indicating investors believe its assets may have less value than its peers.



Source: Seeking Alpha

Revenue growth hasn’t been a bright spot for Truist for several years. It’s plodded along, with its 5-year growth rate juiced by the merger.

Compared to peers like Bank OZK (OZK), Truist isn’t showing much life. And if a recession is on the horizon, that doesn’t bode well for the stock.



Source: Seeking Alpha

As we noted earlier, Truist’s margins were hurt by the one-time impairment. Excluding that, Truist’s net income margin is closer to 19%.

That’s still not as good as many of its peers.

However, its cash from operations blows all the others out of the water.


Our Opinion 7/10

Truist Financial trades at a multi-year discount.

But is it the best one out there?

We’re not so sure.

The company’s asset quality is fantastic, and it’s unlikely to see a deposit flight like the one that took place last April.

But we are concerned about the lack of growth, especially in a geographic region that’s seeing a population boom.

You can’t go wrong with Truist in your portfolio. However, we’d keep shopping around for a better bargain.

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