Truist Financial Corporation
TFC · NYSE
Next quarter
Expected to report Jan 20, 2027 — estimated from last year’s reporting date.
Consensus is $1.22 EPS for Dec 2026 across 9 estimates, ranging $1.15 to $1.29.
TFC Sep 2026
- 0.85%
- $1.17
- $1.16
- —
- —
Reported results
- $799.00M
- $0.56
Highlights
- Adjusted earnings: EPS was $1.16, just below the $1.17 consensus, but up 12% year over year excluding the RAC sale and related securities repositioning; reported EPS was $0.56.
- Large one-time charges: The AFS repositioning and RAC-related items reduced reported EPS by a net $0.60, including $0.90 of securities losses and a $0.36 benefit from a RAC reserve release.
- Strategic exits: Truist completed the sale of its $5.5 billion RAC portfolio for $5.2 billion of net proceeds and agreed to sell $7.7 billion of LightStream loans, with closing expected in Q4.
- Deposit growth: Average deposits rose 1.4% linked quarter and 3.6% year over year, while average interest-bearing deposit costs increased 2 basis points to 2.12%.
- Loan contraction: Average loans held for investment fell $3.6 billion, or 1.1%, to $326 billion, primarily due to portfolio runoff and the RAC sale process; excluding RAC and LightStream sales, Truist still expects 3%-4% average loan growth in 2026.
- Underlying credit: Net charge-offs were 77 basis points including $317 million of RAC losses, but 38 basis points excluding RAC; the loan-loss provision was a $253 million benefit after a $581 million RAC reserve recapture.
- Capital and returns: CET1 was 10.7%, down 20 basis points linked quarter, after $1.8 billion of shareholder returns; adjusted ROTCE improved 100 basis points year over year to 14.6%.
- Strategic reset: New CEO Mike Lyons is redirecting Truist toward relationship banking, core deposits and investment in branch, digital, payments and wholesale capabilities, while reaffirming a 15% ROTCE target for 2027 and 16%-18% over the longer term.
Analysis
Truist’s third quarter was a strategic portfolio reset that obscured improving underlying earnings. Adjusted EPS of $1.16 was slightly below the $1.17 consensus, yet rose 12% from a year earlier excluding the RAC sale and associated AFS repositioning. Reported EPS was $0.56, versus $1.23 in Q2 2026 and $1.04 in Q3 2025; the strategic actions reduced this quarter’s EPS by a net $0.60. Reported net income available to common shareholders was $684 million. Adjusted ROTCE reached 14.6%, up 100 basis points year over year.
The quarter’s defining moves were exiting lending businesses judged non-core, reshaping funding and securities, and resetting the growth agenda under new CEO Mike Lyons. RAC’s $5.5 billion loan portfolio was sold, while Truist signed an agreement to sell $7.7 billion of LightStream loans. Average loans declined 1.1% linked quarter to $326 billion, even as average deposits grew 1.4%; core loan balances increased $0.8 billion. Taxable-equivalent net interest income rose 1.1% to $3.7 billion and NIM widened 2 basis points to 3.0%. Looking ahead, management expects Q4 revenue of about $5.35 billion and NII of $3.65 billion-$3.7 billion, and plans to provide a fuller strategic and financial outlook in early 2027.
Strategic portfolio exits
Truist is reviewing businesses, processes and expenses against strategic fit, returns and client or risk value. The RAC sale and LightStream agreement are the first clear applications of that review: management views both as non-core loan-only businesses with returns below its targets. It says the goal is to redirect capital and expense capacity toward relationship-based businesses, not to shrink the balance sheet simply to lift returns.
- RAC: Truist sold the $5.5 billion portfolio at quarter-end for $5.2 billion in net proceeds and used the proceeds to reduce borrowings. The sale generated about $1 billion, or 23 basis points of CET1 capital, and is expected to reduce annualized net charge-offs by 10 basis points.
- LightStream: The signed agreement covers $7.7 billion of loans and is expected to close in Q4, generating about $7.2 billion of net proceeds and $850 million, or 20 basis points, of CET1 capital. Management expects annual net charge-offs to decline by about 7 basis points and plans to use proceeds to repay wholesale funding.
- Securities repositioning: Alongside RAC, Truist sold $8.6 billion of lower-yielding agency MBS with a 2.67% book yield and bought $7.2 billion of securities yielding about 5.6%, with shorter duration. The repositioning generated a $1.4 billion loss recorded in the quarter, but management expects earnings and ROTCE benefits beginning in Q4.
Earnings and revenue
Underlying results improved from a year earlier, while reported earnings were dominated by the repositioning charge. Adjusted non-interest income also faced softer investment banking and trading activity late in the quarter, which management attributed partly to market volatility and delayed deal revenue.
- Reported versus adjusted: Net income available to common shareholders was $684 million, or $0.56 per diluted share. Strategic actions reduced EPS by a net $0.60: $0.90 from AFS securities losses and $0.06 of RAC-related costs and losses, partly offset by a $0.36 RAC reserve-release benefit. Adjusted EPS was $1.16, up 12% year over year.
- Net interest income: Taxable-equivalent NII increased $40 million, or 1.1%, linked quarter to $3.7 billion. NIM rose 2 basis points to 3.0%, reflecting fixed-rate asset repricing and a slightly smaller balance sheet.
- Fees and expenses: Adjusted non-interest income fell 2.9% linked quarter to $1.6 billion, though wealth income set a quarterly record at $407 million. Adjusted expenses rose 0.3% linked quarter to $3.1 billion; excluding RAC-related severance, they increased 1.7% year over year.
Loans, deposits and credit
Balance-sheet trends reflected deliberate runoff of lower-return exposures as well as continued client deposit growth. Excluding the RAC sale and other strategic runoff, core loans grew, but elevated commercial paydowns and lower originations weighed on reported balances. The RAC exit also makes headline credit comparisons less representative of continuing portfolios.
- Loans: Average loans held for investment declined $3.6 billion, or 1.1%, linked quarter to $326 billion. Strategic runoff accounted for about $2.7 billion and transferring RAC to held for sale reduced average balances by another $1.7 billion; core loans grew $0.8 billion.
- Deposits and funding: Average deposits grew 3.6% year over year, including a $16 billion increase in client deposits and a $2 billion decline in other treasury and corporate-managed deposits. Average total borrowings fell $4.5 billion, or 6.6%, year over year.
- Credit quality: Reported net charge-offs were $629 million, or 77 basis points, including $317 million of RAC losses. Excluding RAC, charge-offs were $312 million, or 38 basis points. NPLs fell 11 basis points linked quarter to 40 basis points of loans, partly due to the RAC sale.
Growth strategy and leadership
Lyons, in his first earnings call as CEO, said Truist will concentrate on relationship businesses where it has a competitive advantage and can deepen client relationships. In consumer banking, that means prioritizing core deposits and primary banking relationships; in wholesale, management sees room to expand treasury management, sales coverage and selected lending products. Truist plans to identify sources of expense capacity through its strategic review and sequence investments rather than make a sudden step-change in spending.
- Consumer investment: Priorities include strengthening branches and ATMs, modernizing technology and mobile banking, and building capabilities in payments and credit cards. Truist says its strategy is to grow in-footprint relationships, including credit cards, home lending and unsecured loans tied to client relationships.
- Wholesale opportunities: Truist cited low penetration in treasury management and opportunities in middle-market banking, rates and FX, wealth advisory, asset-based lending and equipment finance. It recently added more than 40 commercial middle-market bankers.
- Leadership: Steve Boland will join as vice chair; Shimna Sameer, previously announced to lead Wealth, will become chief consumer banking officer; and Jeff Warner will join as chief small business banking officer. Dontá Wilson is leaving the bank.
- Returns and review timing: Management reaffirmed its 15% ROTCE target for 2027 and 16%-18% over the longer term, previously framed as a three-to-five-year goal. Truist expects to finish its strategic review by year-end and provide a fuller outlook in early 2027.
Fourth-quarter outlook
Management expects the recently completed RAC sale to reduce Q4 NII, partly offset by the securities repositioning, with lower expenses and credit costs also helping offset the lost RAC revenue. The LightStream sale is not included in the stated Q4 outlook.
- Revenue and NII: Q4 revenue is expected to be about $5.35 billion and taxable-equivalent NII $3.65 billion-$3.7 billion. The NII outlook includes an estimated $125 million reduction from RAC and about $40 million of benefit from the AFS repositioning.
- Expenses and credit: Reported non-interest expense is expected to increase about 2.5% linked quarter, including roughly $25 million of RAC servicing costs. Net charge-offs are forecast at 45 basis points.
- Capital returns: The Q4 outlook assumes about $1 billion of share repurchases, compared with $1.2 billion in Q3. Truist returned $1.8 billion to shareholders in Q3 through $632 million of common dividends and $1.2 billion of repurchases.
