Truist Financial Corporation

Q3 2026 results: EPS up, but GAAP hit by repositioning charges - Reported GAAP EPS: $0.56 (GAAP net income $684M), reduced by actions taken in the quarter. - Adjusted EPS: $1.16, +12% YoY (excluding impact of the RAC sale + related AFS repositioning). - Adjusted ROTCE: 14.6% (up 100 bps YoY), driven by higher earnings and continued capital return. - Negative surprise/drag: market volatility delayed some investment banking revenue to later in the quarter; revenues also weighed by lower loan balances and higher paydowns.

Capital/balance-sheet “remix” accelerated (RAC completed; LightStream agreed; AFS repositioning) - RAC sale completed: sold $5.5B auto loan portfolio for $5.2B net proceeds (end of Q3). - Expected to reduce credit risk; reduced consolidated NPLs by 28% and expected annual net charge-offs by 10 bps. - Generated ~$1B (~23 bps CET1), used to reposition AFS securities. - AFS repositioning: sold $8.6B book of lower-yield agency MBS (2.67% book yield, 5.8 yrs duration) and bought $7.2B higher-yield securities (effective ~5.6%, 2.3 yrs duration, adjusted for pay-fix swaps). - LightStream (direct unsecured loans) to be sold: signed agreement to sell $7.7B loans (substantially all), expected to close in Q4. - Estimated $7.2B net proceeds, create $850M / 20 bps CET1, and reduce consolidated annual net charge-offs by ~7 bps. - Proceeds mainly to repay wholesale funding; may also further shorten AFS duration and increase U.S. Treasuries mix. - Investor implication (good + tradeoff): mgmt says actions are tangible-book accretive and improve stressed credit loss profile, but GAAP EPS is temporarily pressured by repositioning losses.

Balance sheet & credit: deposits strong; loans down due to runoff/sales; asset quality largely improving - Loans: average loans down $3.6B (-1.1% linked quarter) largely due to strategic runoff and RAC transfer; mgmt noted RAC drove another - $1.7B in average balances, with full effect expected in Q4. - Deposits: average deposits +1.4% QoQ and +3.6% YoY, driven primarily by higher client interest checking; positive net checking growth; wholesale deposit strength referenced. - Capital: CET1 10.7%, -20 bps QoQ (dividends/buybacks + AFS repositioning offset by earnings/RAC sale). - Credit metrics: reported net charge-offs 77 bps vs 50 bps (Q2), but RAC-related losses were separated—adjusted net charge-offs: 38 bps. - ALL coverage of NPLs improved to ~3.1x (from 2.9x QoQ).