How much will the balance sheet shrink, and what is the impact on tangible book value? How confident are you in the reiterated ROTCE targets?

Mike Lyons stated that divestitures like RAC and LightStream are accretive to tangible book value when combined with AFS repositioning. The strategy is not about shrinking for returns but creating a stronger foundation for sustainable growth. The 15% ROTCE target for 2027 and 16-18% long-term target are reiterated, driven by clear strategy, focused investments, better execution, and opportunities in underpenetrated areas. “This isn't about shrinking to achieve higher returns. It's about creating a stronger foundation for both sustainable growth and higher returns over time.”

How do you balance the near-term costs (e.g., AFS sales) with long-term benefits when reallocating capital?

Mike Lyons emphasized building a high-quality balance sheet with strong through-the-cycle capital. The approach is not financial engineering. CFO Mike Maguire added that pairing capital creation events (like RAC sale) with balance sheet duration improvement is sensible, especially with Basel III in focus. There's an estimated $17B-$18B of actionable AFS securities for further duration reduction. “We do think it is, and as we've demonstrated with RAC, a sensible thing to sort of pair these capital creation events with our ambition to improve the duration of the balance sheet.”

What attractive lending businesses is Truist not currently participating in, and how quickly can production show up?

Mike Lyons identified opportunities in small business lending (underpenetrated), consumer lending (home equity, direct auto, credit card, unsecured for relationships), wealth lending (very low penetration), and wholesale (more salespeople, treasury management, FX, REITs, middle market, asset-based platforms, equipment finance, private equity relationships). He noted commercial side investments have a much shorter cycle than retail. “You go nationally, we're less than 3% share of commercial lending. So I feel good about all the opportunities to put money to work there.”

TFC

Truist (TFC) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Sep 2026 (Q3 FY26)· Financials· Oct 16, 2026

Source: earnings call transcript

Executive summary

Truist Q3 FY26 — Strategic Review Underway with Divestitures and Balance Sheet Repositioning

New CEO Mike Lyons outlined a strategic review focused on relationship-based businesses, aiming to simplify operations and reallocate capital. The company executed the sale of its RAC auto loan portfolio and announced the sale of LightStream, using proceeds to reduce borrowings and reposition its securities portfolio. These actions aim to enhance balance sheet composition, reduce credit risk, and fund strategic investments in core areas like branches, technology, and client-facing talent, with a commitment to long-term ROTCE targets.

Highlights

Adjusted EPS increased 12% year-over-year to $1.16 per share.
Wealth Management income reached a record $407 million for the quarter.
Average deposits grew 1.4% quarter-over-quarter and 3.6% year-over-year.
The sale of the RAC auto loan portfolio improved credit risk, reducing nonperforming loans by 28% and expected annualized net charge-offs by 10 basis points.
AFS securities repositioning is expected to be accretive to EPS and ROTCE starting in Q4.

Concerns

Investment banking revenue was pushed out late in the quarter due to broader market volatility.
Loan balances declined due to a sharper focus on risk-adjusted returns in wholesale and higher-than-expected paydowns.
Reported GAAP EPS of $0.56 was significantly impacted by $0.90 per share of losses from AFS securities repositioning and $0.06 per share of RAC-related costs.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 average loan growth (excluding sales)	3% to 4% medium materiality	FY26	High
Q4 2026 Net Interest Income	$3.65 billion to $3.7 billion high materiality	Q4 · FY26	High
Q4 2026 Adjusted Noninterest Income growth	about 5% linked quarter growth medium materiality	Q4 · FY26	High
Full-year 2026 Adjusted Noninterest Income growth	about 10% medium materiality	FY26	High
Q4 2026 Noninterest Expense growth	approximately 2.5% linked quarter medium materiality	Q4 · FY26	High
Q4 2026 Net Charge-offs	45 basis points medium materiality	Q4 · FY26	High
Q4 2026 Effective Tax Rate	13.5% low materiality	Q4 · FY26	High
Q4 2026 FTE Tax Rate	15.5% low materiality	Q4 · FY26	High
Q4 2026 Share Repurchases	approximately $1 billion high materiality	Q4 · FY26	High
2027 Return on Tangible Common Equity (ROTCE)	15% high materiality	FY27	High
Long-term Return on Tangible Common Equity (ROTCE)	16% to 18% high materiality	Long-term	High

TFC operating KPIs by quarter

TFC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	This call Sep 2026 Q3 FY26	Change vs prior quarter
Common equity tier 1 ratio (CET1)	11.5% Our CET1 capital ratio finished the year at 11.5%, which is up 140 basis points versus 2023 due to the gain on the sale of Truist Insurance Holdings and 2024 earnings, partially offset by the strategic balance sheet repositioning completed in May, and $3.8 billion of capital we returned to shareholders through our common dividend and the repurchase of $1 billion of our common stock. Source: earnings call transcript	11.3% On a linked-quarter basis, our CET1 ratio declined 20 basis points to 11.3% as the payment of our common dividend, our $500 million share buyback, growth in our balance sheet and the final CECL phase-in more than offset current period earnings. Source: earnings call transcript	11% On a linked quarter basis, our CET1 ratio declined 30 basis points to 11% as balance sheet growth, $750 million of share repurchases, and the payment of our common dividend more than offset our period earnings. Source: earnings call transcript	11% Our CET1 capital ratio remained stable at 11% and our CET1 ratio, including AOCI, improved by 10 basis points to 9.4%. Source: earnings call transcript	10.8% Our CET1 capital ratio declined 20 basis points to 10.8% and our CET1 ratio including AOCI increased 10 basis points linked quarter to 9.5%. Source: earnings call transcript	10.8% Our 10.8% CET ratio was stable with the fourth quarter. Source: earnings call transcript	10.9% Asset quality metrics remained strong and our CET1 ratio increased by 10 basis points linked quarter to 10.9%. Source: earnings call transcript	10.7% Our CET1 ratio declined 20 basis points linked quarter to 10.7% and driven by capital return to shareholders and the AFS securities repositioning, partially offset by earnings and the RAC loan sale. Source: earnings call transcript	-0.2 pt
Net interest margin	3.07% Our net interest margin decreased by 5 basis points on a linked-quarter basis to 3.07% due primarily to the previously mentioned beta lag and a larger investment securities portfolio. Source: earnings call transcript	3.01% Our net interest margin decreased 6 basis points on a linked-quarter basis to 3.01%. Source: earnings call transcript	3.02% Our net interest income or margin increased 1-basis-point on a linked quarter basis to 3.02%. Source: earnings call transcript	3.01% Our net interest margin declined 1 basis point linked quarter to 3.01%. Source: earnings call transcript	3.07% Our net interest margin increased 6 basis points linked quarter to 3.07%. Source: earnings call transcript	3.02% Our net interest margin decreased by 5 basis points linked quarter to 3.02%, driven primarily by that same seasonal change in deposit mix. Source: earnings call transcript	2.98% Our net interest margin decreased 4 basis points linked quarter to 2.98%, driven by slightly higher deposit costs lower loan spreads and a slightly larger balance sheet. Source: earnings call transcript	3% Net interest margin increased 2 basis points to 3%, driven by fixed rate asset repricing and a slightly smaller balance sheet. Source: earnings call transcript	0 pt
Common equity tier 1 ratio (CET1) including the impact of AOCI	—	9.6% Our CET1 capital ratio, including the impact of AOCI, declined 10 basis points linked quarter to 9.6%, reflecting the aforementioned factors, partially offset by a $500 million decrease in AOCI due to the increase in longer-term interest rates experienced during the quarter. Source: earnings call transcript	9.3% Our CET1 capital ratio, including the impact of AOCI, declined 30 basis points linked quarter to 9.3%, reflecting the aforementioned factors. Source: earnings call transcript	9.4% Our CET1 capital ratio remained stable at 11% and our CET1 ratio, including AOCI, improved by 10 basis points to 9.4%. Source: earnings call transcript	9.5% Our CET1 capital ratio declined 20 basis points to 10.8% and our CET1 ratio including AOCI increased 10 basis points linked quarter to 9.5%. Source: earnings call transcript	—	—	—	+0.1 pt
Return on tangible common equity (ROTCE)	—	—	—	13.6% In summary, our third quarter results were strong as the combination of improved revenue, disciplined expense and credit management and robust capital return drove 130 basis points sequential improvement in our ROTCE to 13.6%. Source: earnings call transcript	—	13.8% As a result of this execution in managing our capital through share repurchases, return on tangible common equity improved by 150 basis points to 13.8% compared to the first quarter of 2025, representing meaningful progress towards our full year 2027 ROTCE target of 15%. Source: earnings call transcript	15.4% In addition, combined with disciplined capital deployment, our return on tangible common equity improved 310 basis points year-over-year to 15.4%. Source: earnings call transcript	—	+1.6 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Undisclosed buyer Sale of RAC auto loan portfolio $5.5B (portfolio value), $5.2B (net proceeds)

Completed at the end of Q3 FY26. Proceeds used to reduce borrowings and reposition AFS securities.

Undisclosed buyer Sale of LightStream unsecured personal loans $7.7B (portfolio value), $7.2B (net proceeds)

Represents substantially all assets of LightStream. Proceeds to repay wholesale funding. Company will evaluate potential uses of incremental capital, including repositioning additional AFS securities.

Risks & headwinds

Investment banking revenue volatility Q3 FY26

Some revenue pushed out late in Q3.

Lower loan balances Q3 FY26

Declined due to sharper focus on risk-adjusted returns and higher paydowns.

Mitigation:Strategic shift to core lending areas, focus on relationship-based growth.

Impact of AFS securities repositioning losses on reported EPS Q3 FY26

Reduced reported EPS by $0.90 per share.

Mitigation:Strategic action to improve balance sheet duration and future earnings, expected to be accretive to EPS and ROTCE from Q4.

RAC-related costs and losses on reported EPS Q3 FY26

Reduced reported EPS by $0.06 per share.

Mitigation:Strategic exit from a non-core, lower-return business, improving credit risk profile.

What to watch in Q4 FY26

LightStream sale completion and capital deployment

Q4 FY26

Current Agreement signed, expected to close Q4 FY26.

Target Transaction closed, proceeds used to repay wholesale funding, decision on AFS repositioning.

Why it matters

This divestiture further reduces credit risk, generates capital, and aligns with the new strategic focus, impacting Q4 financials and future balance sheet composition.

The transaction, which we expect to close during the fourth quarter is estimated to generate net proceeds of $7.2 billion, create $850 million or 20 basis points of CET1 capital and reduced consolidated annual net charge-offs by approximately 7 basis points.

Find out whether TFC delivers this. Inve re-checks your case every morning.

Q&A highlights

What other areas might be divested, where will investments be focused (especially DDA growth), and how will costs be reallocated?

CEO Mike Lyons stated the review is ongoing, looking at every process and operation with a lens of strategic fit, financial returns, and client/bank protection. Divestitures like RAC and LightStream are early examples. Investments will focus on branches, ATMs, technology, mobile, digital, credit cards, treasury management, and adding salespeople in wholesale. The goal is to create incremental capacity within the existing expense base by stopping non-core activities.

“We found capital spread to a lot of areas that don't either support our core strategy or areas where we have a clear right to win.”

asked by Ryan Nash · answered by Michael Lyons

2 min read 6 chapters

Detailed narrative

New CEO's Strategic Vision

Mike Lyons, in his first earnings call as CEO, outlined a clear strategy to narrow Truist's focus to relationship-based businesses where it holds competitive advantages. The overarching goal is to become the most important financial partner to clients, which will be achieved by investing deliberately and consistently in core areas while divesting non-core assets.

This strategic shift involves simplifying operations, reconfiguring the balance sheet, and reallocating expenses to drive growth and enhance shareholder value.

Balance Sheet Optimization and Divestitures

Truist completed the previously announced sale of its $5.5 billion RAC auto loan portfolio, generating $5.2 billion in net proceeds and $1 billion (23 basis points) in CET1 capital. These proceeds were utilized to reposition $8.6 billion of lower-yielding AFS securities.

Additionally, the company announced an agreement to sell $7.7 billion of LightStream unsecured personal loans, a transaction expected to generate $7.2 billion in net proceeds and $850 million (20 basis points) in CET1 capital upon its anticipated Q4 FY26 close.

These actions are designed to improve balance sheet composition, reduce credit risk, and enhance funding profiles.

Investment Priorities and Growth Areas

Strategic investments will be directed towards strengthening critical client touchpoints and capabilities. Key areas include enhancing the branch and ATM networks, modernizing technology (with a focus on AI capabilities), expanding client-facing talent, and building out digital and payments platforms such as mobile banking, treasury management, and credit cards.

These investments aim to deliver a more inviting branch experience, consistent service, resilient technology, broader product offerings, and simpler operations, ultimately supporting sustainable growth.

Leadership Changes in Consumer and Small Business Banking (CSBB)

To bolster execution of its growth plan, Truist announced significant leadership appointments within its Consumer and Small Business Banking (CSBB) segment. Steve Boland will join Truist as Vice Chair, bringing extensive consumer banking experience. Shim Samir, previously head of Truist Wealth Management, will transition to Chief Consumer Banking Officer.

Jeff Warner will join to lead Small Business Banking. These changes are intended to flatten the organization, add experienced leaders, and drive focused execution of strategic initiatives.

Q3 Financial Performance Highlights

Truist reported adjusted EPS of $1.16, marking a 12% increase year-over-year, and an adjusted ROTCE of 14.6%, a 100 basis point improvement from Q3 FY25. Average deposits demonstrated strength, growing 1.4% quarter-over-quarter and 3.6% year-over-year, primarily driven by client deposits.

Wealth Management income achieved a record $407 million. Net interest margin expanded by 2 basis points to 3.00%, reflecting fixed-rate asset repricing and a slightly smaller balance sheet.

Credit Quality and Risk Profile Improvement

The sale of the RAC loan portfolio significantly enhanced Truist's credit risk profile, resulting in a 28% reduction in consolidated nonperforming loans and a 10 basis point decrease in expected annualized net charge-offs. Adjusted net charge-offs for the quarter stood at 38 basis points, excluding RAC-related losses.

While the allowance for loan losses declined to 1.25%, ALLL coverage of nonperforming loans improved from 2.9x to 3.1x on a linked-quarter basis, indicating stronger coverage.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.