Truist Financial Sells $5.5 Billion Auto Loan Portfolio
Truist Financial has announced the sale of its $5.5 billion near-prime auto loan portfolio and plans to exit its Regional Acceptance Corporation (RAC) business, which was nearly break-even despite high yields on loans. The transaction is expected to modestly improve earnings per share, return on tangible common equity, and tangible book value while reducing credit risk metrics like charge-offs and non-performing loans by over 10 basis points. The sale will generate approximately $950 million in capital but reduce the bank’s net interest margin by four to five basis points. Truist reaffirmed its financial outlook for Q3, including a 1.5% increase in net interest income and full-year growth of between 1% and 1.5%. The company also reiterated plans for $5 billion in share repurchases this year. New CEO Mike Lyons is accelerating the bank’s broader portfolio review with an emphasis on relationship banking, commercial lending, payments, wealth management, and potentially credit cards or home equity products.
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