Truist Posts $0.56 Quarterly EPS as $1.4 Billion Securities Loss Weighs on Profit

Truist Financial reported third-quarter 2026 diluted earnings of $0.56 per share on Friday, down from $1.04 a year earlier, as a $1.447 billion pretax loss from securities sales weighed on profit. The Charlotte, North Carolina-based bank also reported adjusted diluted earnings of $1.16 per share, up 12% from the year-earlier quarter.

The difference between the two earnings figures reflects a series of balance-sheet changes, including the sale of loans from its Regional Acceptance Corporation (RAC) auto finance operation and a subsequent repositioning of available-for-sale securities. The securities loss reduced reported earnings, while the RAC sale also released credit reserves that benefited the quarter’s results.

Net income was approximately $800 million, compared with $1.55 billion in the second quarter and $1.45 billion in the third quarter of 2025. Adjusted net income available to common shareholders was about $1.42 billion. That adjusted measure excludes selected items and is not a substitute for profit calculated under generally accepted accounting principles.

Securities sales cut reported revenue

In its earnings release filed with the Securities and Exchange Commission, Truist reported $1.447 billion of losses on the sale of available-for-sale securities. The bank also recorded a $66 million loss related to the RAC loan sale. The securities repositioning followed completion of that loan disposal, according to Truist’s quarterly disclosures.

Those losses drove noninterest income down to $84 million from $1.64 billion in the second quarter and $1.56 billion a year earlier. Excluding the securities and RAC sale losses, Truist calculated adjusted noninterest income of approximately $1.60 billion, down modestly from the previous quarter but above the year-earlier level. The sharp fall in the reported figure therefore does not describe the trend across every fee-generating business.

Total reported revenue fell to $3.75 billion from $5.27 billion in the preceding quarter. On a taxable-equivalent, adjusted basis, Truist put revenue at about $5.3 billion and characterized it as stable. Its reconciliation is important: adjusted figures exclude items management identifies as unusual, but investors still bear the economic effect of losses recognized in reported results.

The earnings adjustments were not all favorable to the reported result. Truist recognized a $581 million pretax credit-reserve release associated with RAC and reported $106 million in other pretax effects tied to the loan sale, including expenses. The reserve release lifted reported income, partly offsetting the effect of the securities losses. This is why the $0.60 gap between reported and adjusted EPS cannot be explained simply by adding back one securities-loss figure.

Outside the portfolio changes, wealth management income reached $407 million, up from $375 million in the second quarter, which Truist described as a quarterly record. Investment banking and trading income declined to $324 million from $352 million, primarily because of lower trading revenue. These movements offer a clearer view of the bank’s underlying businesses than the unusually low headline noninterest-income total.

Noninterest expense rose to $3.11 billion from $3.06 billion a quarter earlier. The latest figure included $40 million of RAC loan sale costs; excluding those costs, adjusted expenses were almost flat quarter over quarter. Truist said professional fees and outside processing costs increased as it continued investing in technology infrastructure.

Interest income and deposits offer a steadier picture

Net interest income, the difference between interest earned on loans and other assets and the interest paid to depositors and creditors, increased to $3.66 billion from $3.62 billion in the second quarter. It was also above the $3.63 billion recorded a year earlier. Taxable-equivalent net interest margin was 3.00%, an increase of two basis points from the preceding quarter and broadly unchanged from the prior year.

Truist attributed the quarterly increase in taxable-equivalent net interest income partly to an additional day in the reporting period and the repricing of assets and liabilities, with lower loan balances providing an offset. Its average yield on loans was 5.71%, while the average cost of total deposits was 1.59%, up three basis points from the second quarter. These details show that ordinary interest-earning operations were much less volatile than the securities-sale accounting impact.

Average deposits increased $5.8 billion from the preceding quarter to $410.7 billion, driven by growth in interest checking. Deposits at September 30 stood at $413.2 billion, up $3.9 billion from June 30. Average noninterest-bearing deposits made up 25.1% of total deposits, compared with 25.6% in the second quarter, indicating some shift in funding mix even as overall balances rose.

Loans and leases held for investment totaled $323.9 billion at quarter-end, a decline of $5.9 billion. Truist attributed approximately $5.5 billion of that reduction to the RAC loan sale, making it difficult to read the aggregate decline as a straightforward measure of changing customer demand. Average loans and leases held for investment were $325.5 billion, down 1.1% from the previous quarter.

RAC sale reshapes credit figures as another loan sale approaches

The RAC disposal also complicates the quarter’s credit-quality readings. Truist recorded a $253 million benefit for credit losses, compared with provisions of $395 million in the second quarter and $436 million a year earlier. The latest benefit included the $581 million reserve release following the transfer of RAC loans to held-for-sale status. A provision benefit of this size should not be mistaken for a broad improvement in loan repayments across the entire bank.

Net charge-offs increased to $629 million from $414 million, and the annualized charge-off ratio rose to 0.77% from 0.50%. Truist said the third-quarter rate included 39 basis points associated with RAC. At the same time, nonperforming assets declined by $410 million to $1.34 billion, primarily because of the RAC sale, while nonperforming loans and leases fell to 0.40% of loans held for investment from 0.51%. The shifting loan portfolio affected several of these comparisons.

Capital was another part of the quarterly picture. Truist reported a preliminary common equity Tier 1 capital ratio of 10.7% at September 30, versus 10.9% at June 30. It attributed the decline chiefly to capital returned to shareholders and its securities repositioning, partly offset by earnings and the RAC sale. The bank repurchased $1.2 billion of common stock during the quarter and declared a common dividend of $0.52 per share.

A separate portfolio exit is still pending. Truist said it signed an agreement on October 14 to sell approximately $7.7 billion of unsecured consumer loans representing substantially all assets of its LightStream lending platform to Carlyle. Carlyle’s October 16 announcement describes the loans as primarily fixed-rate, fully amortizing obligations to prime and super-prime borrowers.

Unlike the completed RAC sale, the LightStream loan sale had not closed when the third-quarter results were issued. Carlyle expects it to close in the fourth quarter of 2026, subject to customary conditions. Its eventual effect on Truist’s loan balances and financial results will therefore be a separate development from the securities loss and RAC-related entries recorded for the quarter ended September 30.