Grade: B — Generally Healthy, Minor Concerns
Framework: Bank-specific credit quality analysis + Schilit principles (traditional manufacturing checks partially N/A for banks)
Data: SEC EDGAR 10-K (Filed 2026-02-24, FY ended December 31, 2025) + Yahoo Finance
Auditor: PricewaterhouseCoopers LLP — Unqualified opinion
One-line verdict: Truist's FY2025 marks a significant recovery year. Revenue surged 53% to $20.3B (the prior year was depressed by 2024 restructuring), net income grew to $5.31B, and diluted EPS of $3.82 rebounded from $3.36. NIM of 3.03% is stable. The net charge-off ratio improved to 0.54% (down 5bps). CFFO/NI of 1.08x confirms clean cash backing. Two watch items: cash of $36.4B covers only 57% of $64.3B in total debt, and goodwill + intangibles of $22.4B represent 34% of equity — legacy of the 2019 BB&T/SunTrust merger. Truist completed the sale of its insurance brokerage (Truist Insurance Holdings) in 2024, generating $4.9B in discontinued operations gains. ROTCE of 12.7%.
| Metric | Result |
|---|---|
| Red Flags | **0** |
| Watch Items | **2** (cash-to-debt 57%, goodwill 34% of equity) |
| Checks Completed | **11/18** (7 N/A — standard checks inapplicable to banks) |
| Beneish M-Score | **N/A** (model does not apply to financial institutions) |
| F-Score (Fraud Probability) | **1.79** (0.66% probability — low) |
| Altman Z-Score | **N/A** (not applicable to banks) |
| Auditor | PricewaterhouseCoopers LLP — Unqualified opinion |
| Fiscal Year | 2025 (ended December 31, 2025) |
| Report Date | 2026-04-05 |
The BB&T/SunTrust Merger Recovery
Per the 10-K, Truist is the sixth-largest U.S. commercial bank by assets, formed through the 2019 merger of BB&T and SunTrust. The company sold its insurance brokerage business in 2024 for a substantial gain. NIM of 3.03%, ROTCE of 12.7%.
| Metric | 2022 | 2023 | 2024 | 2025 | Trend |
|---|---|---|---|---|---|
| Total Revenue | $20.0B | $20.0B | $13.3B | **$20.3B** | +53.0% |
| Net Income | $6.26B | -$1.09B | $4.82B | **$5.31B** | +10.1% |
| Net Margin | 31.3% | -5.5% | 36.3% | **26.1%** | Recovery |
| ROE | 10.3% | -1.9% | 7.6% | **8.1%** | Improving |
| ROTCE | — | — | 13.3% | **12.7%** | Solid |
| Diluted EPS | — | -$1.09 | $3.36 | **$3.82** | +13.7% |
| CFFO | $11.1B | $8.63B | $2.16B | **$5.74B** | +165% |
| CFFO/NI | 1.77x | -7.91x | 0.45x | **1.08x** | Normalized |
| NIM (TE) | — | 2.98% | 3.03% | **3.03%** | Stable |
| Total Debt | $63.0B | $59.7B | $52.6B | **$64.3B** | +22.3% |
The 2023 net loss of -$1.09B included significant restructuring charges and the balance sheet repositioning (selling investment securities at a loss). FY2024's elevated net margin of 36.3% was inflated by the $4.9B insurance brokerage sale gain (discontinued operations). FY2025 represents normalized continuing operations.
Per the filing, the provision for credit losses was $1.9B, up $24M (+1.3%). Net charge-off ratio of 0.54% improved 5bps. NIM-TE held steady at 3.03%.
The 18-Point Screening
| # | Check | Result | Detail |
|---|---|---|---|
| A1 | DSO Change | PASS | DSO 29 days, improved -23 days |
| A2 | AR vs Revenue Growth | PASS | AR -14.7% vs revenue +53.0% |
| A3 | Revenue vs CFFO | PASS | Both growing strongly |
| B1 | Inventory vs COGS | PASS | No inventory |
| B2 | CapEx vs Revenue | N/A | Bank |
| B3 | SG&A Ratio | N/A | Bank |
| B4 | Gross Margin | N/A | Bank |
| C1 | CFFO vs Net Income | PASS | CFFO/NI = 1.08 |
| C2 | Free Cash Flow | PASS | FCF $5.74B |
| C3 | Accruals Ratio | PASS | -0.1% — near zero |
| C4 | Cash vs Debt | WATCH | Cash $36.4B covers 57% of $64.3B debt |
| D1 | Goodwill + Intangibles | WATCH | $22.4B = 34% of equity |
| D2 | Leverage | N/A | Bank |
| D3 | Soft Asset Growth | N/A | Bank |
| D4 | Asset Impairment | N/A | No data |
| E1 | Serial Acquirer FCF | PASS | Positive |
| E2 | Goodwill Surge | PASS | Flat YoY |
| F1 | Beneish M-Score | N/A | Bank |
Key Risks from the 10-K
1. Goodwill — $22.4B from BB&T/SunTrust Merger
Goodwill at 34% of equity is the largest concentration of intangible risk on Truist's balance sheet. The merger created substantial goodwill that would require impairment testing if the banking franchise underperforms. Per the filing, TBVPS of $33.48 vs book value per share of $47.74 — the $14.26 gap is almost entirely goodwill and intangibles.
2. Post-Divestiture Revenue Concentration
The sale of Truist Insurance Holdings removed a significant, diversified revenue stream. Truist is now more concentrated in traditional banking — NII and capital markets fees. This increases sensitivity to the credit and rate cycles.
3. Credit Quality Trends
The provision was $1.9B with NCO ratio of 0.54%. Per the filing, net charge-offs were "lower in the CRE and credit card portfolios, partially offset by increases in the commercial and industrial, indirect auto, and other consumer portfolios." The credit mix is shifting.
4. Total Debt Increase
Total debt jumped from $52.6B to $64.3B (+22.3%). Cash covers only 57% of debt. While this is typical for a large bank relying on deposits and wholesale funding, the direction warrants monitoring.
Summary
Grade: B. Generally healthy. Truist's earnings normalized in FY2025 after the restructuring and insurance divestiture. Clean cash flow quality with moderate balance sheet concerns.
Truist's CFFO/NI of 1.08x shows clean earnings. NIM is stable at 3.03%. NCO ratio improved to 0.54%. The watch items — goodwill at 34% of equity and cash covering 57% of debt — are structural features of a large merger-formed bank. EPS of $3.82 and ROTCE of 12.7% represent the normalized earnings power post-insurance sale. Watch credit quality trends (particularly C&I and auto) and the debt trajectory.
**Disclaimer**: This report is based on Truist Financial Corporation's fiscal year 2025 10-K filed with the SEC on February 24, 2026. This is NOT investment advice.
**About EarningsGrade**: We screen earnings reports for financial red flags using an 18-point forensic framework. Grade B means the company is generally healthy with minor concerns to monitor.