Truist culls some consumer loans, cites long-term strategy

• Key insight: Truist Financial is no longer originating marine and recreational vehicle loans, and it has significantly reduced originations in other books, including indirect auto lending.
• What’s at stake: The remix, which comes ahead of a CEO transition, is Truist’s latest effort  to improve profitability and efficiency. 
• Forward look: Observers will be watching to see what changes are in store under incoming CEO Mike Lyons, who takes over on Sept. 1.

Three months after setting higher profitability targets, Truist Financial said it has begun taking steps to wind down certain consumer loan portfolios — moves that will have a negative near-term impact, but should ultimately lead to deeper customer relationships and higher returns.

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During the second quarter, the $556 billion-asset bank stopped originating loans for marine and recreational vehicles and “significantly reduced originations in several other less strategic and less profitable consumer lending units,” including prime and non-prime indirect auto lending, Chief Financial Officer Mike Maguire said Friday during the bank’s quarterly earnings call.

The move comes ahead of a major leadership transition at Charlotte, North Carolina-based Truist. Mike Lyons, a 30-year industry veteran who previously served as president of PNC Financial Services Group, will take over as Truist’s CEO on Sept. 1. Bill Rogers, Truist’s CEO since 2021, will become executive chairman of the board, with a planned retirement date of April 2027.

The switch marks the first time Truist will be led by an outsider since it was formed in 2019 through a merger of equals between two Southeast regionals, BB&T and SunTrust Banks. Since the merger, Truist has struggled to fulfill some of the financial expectations it established at the outset.

“Over the last several quarters, we’ve been clear about the actions we’re taking to drive stronger returns, improve efficiency and allocate capital to the highest-value opportunities across the company,” Rogers said during his final earnings call as CEO. “We continue to make deliberate choices about where we grow, where we invest and how we optimize our balance sheet.”

On Friday, Truist maintained a key profitability target it set in April. The bank said it still expects to achieve a return on tangible common equity of 16%-18% over the next three to five years. For the second quarter, that metric, which helps measure a bank’s overall performance, came in at 15.4%. It is aiming for a 15% return on tangible common equity for all of 2027.

The pullback in marine/RV lending and auto lending contributed to Truist’s decision to make small downward revisions to its full-year guidance on both revenue and net interest income. Revenues for 2026 are now expected to grow 3.5%-4% year over year, compared with the 4% forecasted earlier this year. Net interest income is now seen as likely to improve by 1%-1.5%, down from the 2%-3% growth that the bank predicted in January.

The bank expects loan production in both marine/RV lending and indirect auto lending to decline by 40% compared with last year’s figures, Maguire noted on the call. The marine/RV portfolio totals about $4 billion, while auto lending is roughly $25 billion, he added.

Truist executives tried to assure investors that while stepping away from such loans may reduce net interest income growth in the near term, it should eventually result in higher profitability. They also said they’re evaluating similar future actions to increase returns and improve capital efficiency.

“I would just say it’s a continuous search … to make sure we’re allocating capital in the absolute most efficient way. And by the way, it’s not entirely in consumer,” Maguire said. “There are things that we’ve done and we’ll continue to do in wholesale [lending], around client selection, around pricing, around product design, rebalancing, that are all intended to create more profitability and efficiency. … We’re going to make smart choices.”

According to Michael Rose, an analyst at Raymond Janes, Truist’s revised outlook demonstrates that the bank “faces greater-than-peer downside risk”to net interest margin, net interest income and pre-provision net revenue in a “higher-for-longer” interest-rate environment.

“While reiterating its commitment to achieving a 15% ROTCE in 2027 and 16%-18% longer term, we believe the path has become more challenging and expect investors to remain focused on both the timing of improvement and whether incoming CEO Mike Lyons ultimately modifies Truist’s strategic priorities,” Rose wrote Friday in a research note.

Truist’s second-quarter results were solid. The bank reported net income of $1.55 billion for the period ending June 30, up 25% from the same quarter last year. Earnings per diluted share were $1.23, beating analysts’ consensus prediction by 15 cents, according to S&P Capital IQ.

Firmwide revenues were $5.27 billion, up about 5.6% from the same quarter in 2025. Average total loans grew about 6% year over year to around $332 billion, while average total deposits rose about 1% from the year-ago period to approximately $405 billion.

Net interest income totaled $3.6 billion for the quarter, rising less than 1% from the year-ago quarter. Fee income of $1.6 billion rose 17% year over year. Similar to other banks this earnings season, investment banking and trading income was a large driver of higher fee income. It rose 71% during the quarter.

Noninterest expenses of $3 billion were up 2.3% year over year, due to higher personnel costs.

During Friday’s call, analysts prodded Rogers for insight into how Lyons may run the bank and what changes could be forthcoming. Rogers said Lyons, who after his stint at PNC briefly served as the CEO of Fiserv, brings a lot to the table, including deep experience in the payments space.

“Mike came in here to lead and run a high-performing company. And I don’t think there’ll be any doubt about that, relative to the investments that need to be made in the journey and the place that we go, he’ll have the requisite flexibility to think about how to achieve efficiencies and how to invest,” Rogers said.