Truist Financial (TFC) recorded a $253 million credit-loss benefit in the third quarter of 2026, compared with a $395 million provision in the second quarter. The swing included a $581 million allowance release following the transfer of RAC loans to held-for-sale status.

The sale also changed the credit-quality picture. The annualized net charge-off ratio rose 27 bps to 0.77% from 0.50%, with RAC accounting for 39 bps of the third-quarter ratio. Meanwhile, nonperforming loans fell to 0.40% of loans held for investment from 0.51%, an 11 bps decline primarily reflecting the sale.

The reduction in lending extended across commercial and consumer portfolios. Average loans held for investment fell 1.1 percent quarter over quarter to $325.5 billion from $329.2 billion, with commercial and industrial balances declining and the Regional Acceptance Corporation sale reducing indirect auto balances. Residential mortgage growth partially offset the consumer-loan decline.

Despite lower loan balances, taxable-equivalent net interest income increased $40 million to $3.707 billion from $3.667 billion in the second quarter. An additional day and fixed asset and liability repricing supported the increase. Taxable-equivalent net interest margin widened 2 bps to 3.00% from 2.98%, following the second quarter's 4 bps contraction.

Fee businesses provided a mixed contribution. Wealth management income rose 8.5% to a quarterly record of $407 million from $375 million, primarily reflecting favorable market performance. Investment banking and trading income declined to $324 million from $352 million, primarily because of lower trading income.

Capital distributions continued alongside the balance-sheet changes. Preliminary common equity Tier 1 capital fell 20 bps to 10.7% from 10.9%, primarily reflecting shareholder distributions and the available-for-sale securities repositioning, partly offset by earnings and RAC-related benefits. Truist repurchased $1.2 billion of common stock, matching the second-quarter amount, and declared a dividend of $0.52 a share.

The securities repositioning also weighed on reported earnings. Diluted earnings were $0.56 a share, while adjusted earnings were $1.16 a share. The adjustments excluded a $1.4 billion pretax securities-sale loss, the RAC reserve recapture and other RAC sale impacts.

The consumer-lending reduction continued beyond quarter-end: Truist signed an agreement to sell $7.7 billion of unsecured consumer loans representing substantially all LightStream assets to Carlyle Group Inc. Chief Executive Mike Lyons said Truist remains confident in its near- and long-term return-on-tangible-common-equity targets, with resources directed toward selected businesses and capabilities.

*Source: Truist third-quarter 2026 earnings release and quarterly performance summary; second-quarter 2026 earnings release.*