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    TFC
    Earnings call· Jun 2026(Q2 FY26)

    TRUIST FINANCIAL Q2 FY26 earnings call TFC

    Jul 17, 2026 Source

    Executive summary

    Truist Financial Corporation Q2 FY26 — Strong Profitability and CEO Transition

    This quarter, Truist delivered strong profitability and improved returns, with diluted EPS up 37% year-over-year and ROTCE reaching 15.4%. The company is strategically optimizing its balance sheet by reducing less profitable loan portfolios, which is impacting net interest income but enhancing overall capital efficiency. With a planned CEO transition to Mike Lyons, the focus remains on accelerating performance and achieving long-term return targets.

    Highlights

    5

    • Net income available to common shareholders increased 37% year-over-year to $1.5 billion.

    • Diluted EPS increased 37% year-over-year to $1.23.

    • Return on tangible common equity (ROTCE) improved 310 basis points year-over-year to 15.4%.

    • Achieved over 300 basis points of year-over-year positive operating leverage.

    • Noninterest income increased 17% year-over-year, driven by investment banking and trading revenue up 72% and wealth management income up 8%.

    Concerns

    5

    • Net interest margin (NIM) decreased 4 basis points linked quarter to 2.98%.

    • Full-year 2026 revenue growth outlook reduced to 3.5%-4% from 4%.

    • Full-year 2026 Net Interest Income (NII) growth outlook reduced to 1%-1.5% from 2%-3%.

    • Deposit mix pressured by elevated rate-seeking behavior and migration into higher rate products.

    • Loan spreads compressed by 5-10 basis points year-over-year.

    Guidance & targets

    15
    CategoryTargetConfidence
    Q3 2026 Revenue
    increase 1%
    medium materiality
    High
    Q3 2026 Net Interest Income
    increase by approximately 1.5%
    medium materiality
    High
    Q3 2026 Noninterest Income
    remain relatively stable
    medium materiality
    High
    Q3 2026 Noninterest Expense
    increase by about 2%
    medium materiality
    High
    Full-year 2026 Revenue Growth
    3.5% to 4%
    high materiality
    High
    Full-year 2026 Net Interest Income Growth
    1% to 1.5%
    high materiality
    High
    Full-year 2026 Noninterest Income Growth
    approximately 10%
    medium materiality
    High
    Full-year 2026 GAAP Noninterest Expense Growth
    1.75%
    medium materiality
    High
    Full-year 2026 Net Charge-offs
    55 basis points
    medium materiality
    High
    Full-year 2026 Effective Tax Rate
    14.5%
    low materiality
    High
    Full-year 2026 Share Buybacks
    $5 billion
    high materiality
    High
    Full-year 2026 ROTCE
    above 14%
    high materiality
    High
    Medium-term ROTCE Target
    15%
    high materiality
    Medium
    Long-term ROTCE Target
    16% to 18%
    high materiality
    Medium
    CET1 Ratio Target
    10%
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Consumer and Small Business Banking (CSBB)
    Delivered a solid quarter consistent with strategy to drive profitability improvement. Consumer behavior remained resilient with stable liquidity, spending, and credit trends. Investments in Premier Banking are creating meaningful opportunities across the company.
    Average loans: up 2% YoYAverage nonmaturity deposits: up 2% YoYNew-to-bank deposit production: up 39%Premier Banking new deposit production balances: up 20% YoYPremier Banking adviser productivity: up 23%Premier Banking financial planning activities: up 9%Referrals from CSBB to Wealth Management: up 15% over H1 2025Active mobile users: up 4% YoY to $5.4 millionDigital transaction volume: up 7% to 93 million transactionsClient engagement with Truist Assist: up 60% YoY to nearly 2 million times
    		————
    Wholesale
    Delivered a strong quarter with continued momentum across loans, deposits, and fees, maintaining a disciplined focus on relationship returns and capital efficiency. Expanded client base and strengthened existing relationships, driving broader adoption of capabilities. Fee income growth continues to outpace balance sheet growth.
    Average deposits: up 6% YoY (excluding M&A-related deposits)Middle market deposits: up 12% YoYMiddle market deposits in legacy markets: up 9%Middle market deposits in expansion markets (Texas, Pennsylvania, Ohio): up 27%Average loans: up 8% YoYInvestment banking and trading revenue: up 72% YoYWealth management income: up 8% YoYAdvisory revenue: up 27% YTD
    		————

    Operational metrics

    10
    Positive operating leverage
    over 300YoY
    Q2 FY26

    Achieved through disciplined expense management and profitable growth.

    Loan production reduction
    40%relative to 2025 production levels
    FY26

    Expected reduction in loan production from less strategic and less profitable consumer lending units.

    DDA mix
    25%down from ~27% at beginning of year
    End of FY26

    Expected remix of noninterest-bearing deposits due to client preference for higher-rate products.

    Loans repriced per quarter
    $30 billion
    Quarterly

    Magnitude of loans subject to repricing, impacting loan spreads.

    Net effective swaps
    $26 billion
    Q1 FY26

    Effective swap position at the beginning of the year.

    Net effective swaps
    $40 billionup from $26B in Q1
    Q2 FY26

    Effective swap position for the current quarter.

    Net effective swaps
    $80 billionup from $40B in Q2
    Q3 FY26

    Projected effective swap position for the next quarter.

    Net effective swaps
    $85 billionup from $80B in Q3
    Q4 FY26

    Projected effective swap position for the end of the fiscal year.

    Swaps peak
    high $90s
    Q1 FY27

    Expected peak in the effective swap portfolio.

    CLNs in prime auto portfolio
    $11 billion
    Q2 FY26

    Completion of credit-linked notes (CLNs) to improve ROTCE profile of prime auto assets.

    Industry KPIs

    12
    MetricValueDetails
    Loans$329 billionUSD
    Deposits—
    Rotce ROE15.4%
    Cet1 ratio10.9%
    Capital returns$1.2 billionUSD
    Fee income lines—
    Allowance reserves1.51%
    Net interest income$3.86 billionUSD
    Net interest margin2.98%
    Net charge offs npls50bps
    Provision for credit losses$395 millionUSD
    Efficiency ratio operating leverage—

    Product announcements

    1
    ProductTypeDetails
    Marine and Recreational Vehicle Loansdiscontinuation

    Risks & headwinds

    4
    Unfavorable deposit mixFY26

    DDA balances expected to remix from ~27% to ~25% by year-end

    Mitigation: Focus on onboarding new clients and defending existing relationships, growing client deposits.

    Loan spread compressionFY26

    Loan spreads down 5-10 basis points year-over-year

    Mitigation: Remixing and reallocating capital from less profitable portfolios into higher-quality commercial loans; continuous search for capital efficiency.

    Reduced Net Interest Income (NII) growthFY26

    Full-year 2026 NII growth outlook reduced to 1%-1.5% from 2%-3%

    Mitigation: Offset by increased noninterest income growth (10% outlook) and strong expense discipline to maintain EPS trajectory and ROTCE targets.

    AI-related market impactsLong-term

    Unquantified, potential for secondary and tertiary impacts

    Mitigation: Employing a 'DVD' (Diversity, Velocity, Discipline) framework to ensure portfolio diversity, maintain trading velocity, and adhere to established limits and targets.

    Q&A highlights

    7

    Asked about the trade-offs being made in loan growth, specifically the incremental changes under the hood in each loan category, and the balance between focusing on returns versus growing the company.

    Management explained that C&I loans are up almost 8% YoY, and other consumer areas like HELOC, Sheffield, and Service Finance continue to grow. Indirect auto production is significantly down. The focus is on relationship-based, profitable growth that clears profitability hurdles, setting the stage for efficient long-term growth with higher returns and capital efficiency.

    “I think our team is doing a good job staying focused on the things that are accrete over time. And to your other question, I mean, it's also setting the stage and setting the platform for growth.”

    asked by Ryan Nash · answered by William Rogers

    2 min read5 chapters

    Detailed Narrative

    01

    CEO Transition and Leadership

    Truist announced that Mike Lyons will become the next President and CEO on September 1, 2026, with current CEO Bill Rogers transitioning to an Executive Chair role until his planned retirement in April 2027. The Board selected Mr. Lyons for his proven ability to drive growth, improve performance, and create long-term shareholder value, emphasizing his strong knowledge of technology and payment systems. This transition is seen as a strategic move to accelerate the company's path to becoming a high-performing institution.

    02

    Strategic Balance Sheet Optimization

    The company is making deliberate choices to optimize its balance sheet and improve capital efficiency. This includes discontinuing the origination of marine and recreational vehicle loans and significantly reducing originations in less strategic consumer lending units like prime and nonprime auto. These actions are expected to reduce 2026 loan production across these portfolios by approximately 40% relative to 2025 levels, representing $7 billion to $8 billion in annual production, aiming to improve overall profitability and ROTCE.

    03

    Digital Engagement and Efficiency

    Digital channels continue to be a key growth engine, with active mobile users increasing 4% year-over-year to $5.4 million and digital transaction volume up 7% to 93 million. Approximately 85% of client logins now occur through mobile, highlighting its central role. Increased digital engagement improves client experience and economics, as digital active clients generate higher revenue and profitability. Self-service adoption is also improving efficiency, with clients engaging Truist Assist nearly 2 million times, up 60% year-over-year.

    04

    Wholesale Business Momentum

    The wholesale segment delivered a strong quarter with continued momentum across loans, deposits, and fees. Average wholesale deposits increased 6% year-over-year (excluding M&A-related deposits), driven by broad-based growth and focus on payments and liquidity solutions. Middle market deposits grew 12% year-over-year, with 27% growth in expansion markets. Average wholesale loans increased 8% year-over-year, reflecting prioritized high-quality, relationship-driven growth. Fee income continues to outpace balance sheet growth, led by investment banking and trading (up 72% YoY) and wealth management (up 8% YoY).

    05

    Asset Quality and Capital Strength

    Asset quality remained strong with stable credit performance. Net charge-offs declined 11 basis points linked quarter to 50 basis points, reflecting lower losses across portfolios. The provision for credit losses totaled $395 million, modestly below net charge-offs. The Allowance for Loan Losses (ALLL) decreased 2 basis points linked quarter to 1.51% of total loans. The CET1 ratio increased 10 basis points linked quarter to 10.9%, driven by strong capital generation and balance sheet optimization efforts that improved RWA density.

    AI-generated summary of the company’s earnings call. Not investment advice.