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# Truist's Loan-Loss Reserve Drops To $4.1 Billion After Auto-Loan Sale Offsets Part Of $1.4 Billion Securities Hit
- URL: https://www.bullished.co/truists-loan-loss-reserve-drops-to-4-1-billion-after-auto-loan-sale-offsets-part-of-1-4-d9381a40/
- Published: 2026-10-28T21:31:01.000Z
- Updated: 2026-10-28T21:31:01.000Z
- Description: The bank's allowance fell from $4,983 million to $4,063 million in the third quarter, and a $7.7 billion LightStream loan sale is set to close.
- Author: Matteo Parrino
- Tags: Earnings, TFC, Industry: Financials

[Truist](https://www.bullished.co/tag/tfc/)'s [allowance for loan and lease losses fell to $4,063 million](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000129/tfc-20260930.htm?ref=bullished.co) at September 30, from $4,983 million at June 30, after the bank sold $5.5 billion of auto loans from its Regional Acceptance Corporation (RAC) unit, according to its 10-Q filed Wednesday. The sale produced a $581 million reserve recapture that cushioned a $1.4 billion loss on securities sales.

## The reserve release

Truist Financial, the Charlotte, North Carolina, bank behind Truist Bank, sold the RAC loans from its indirect auto portfolio for $5.2 billion of proceeds. The sale triggered a $581 million pre-tax reserve recapture, worth $0.36 per share, after held-for-sale charge-offs were recognized.

The allowance ratio dropped to 1.25% of loans held for investment, from 1.51% in the [prior quarter's filing](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000099/tfc-20260630.htm?ref=bullished.co). The bank booked a $253 million credit-loss benefit, against a $395 million provision in the second quarter.

The indirect-auto allowance shrank to $189 million from $1,034 million. Net charge-offs rose to $629 million, including $251 million recorded when the RAC loans moved to held for sale.

## A $1.4 billion securities loss

Common shareholders earned $684 million, or $0.56 a diluted share, a 49% drop from a year earlier. The bank sold $8.6 billion of longer-duration, lower-yielding agency mortgage bonds and bought $7.2 billion of shorter-duration, higher-yielding mortgage bonds and Treasuries, a trade that cost $1.4 billion pre-tax, or $0.90 per share.

The company says both moves lowered its exposure to credit risk, interest-rate risk and wholesale funding. Mike Lyons became president and CEO on August 31, and the filing describes the quarter as a reallocation of resources toward core businesses. In the [earnings release](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000108/ex991-3q26.htm?ref=bullished.co), Lyons said the actions "create greater capacity to invest in our best businesses."

## LightStream sale and buybacks

Truist agreed on October 14 to sell $7.7 billion of loans that make up substantially all assets of its LightStream unsecured lending platform. The bank estimates $7.2 billion of net proceeds, expects no material hit to net income, and anticipates a fourth-quarter 2026 close.

The bank returned $1.8 billion to shareholders in the quarter, including $629 million of dividends and $1.2 billion of buybacks. That left $6.5 billion of its $10.0 billion repurchase authorization at September 30, down from $7.7 billion at June 30.

If the LightStream deal closes on schedule, the fourth quarter will be the first to show its effect.

### Sources

- [10-Q Filing — Truist Financial (TFC)](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000129/tfc-20260930.htm?ref=bullished.co) — SEC EDGAR
- [10-Q Filing — Truist Financial (TFC), Q2 FY2026 filed 2026-07-31 (comparison basis)](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000099/tfc-20260630.htm?ref=bullished.co) — SEC EDGAR
- [Earnings release (8-K Item 2.02, ex991-3q26.htm) — Truist Financial, filed 2026-10-16](https://www.sec.gov/Archives/edgar/data/0000092230/000009223026000108/ex991-3q26.htm?ref=bullished.co) — SEC EDGAR
- [Truist Financial (TFC): buy, sell, or hold post Q3 earnings?](https://finance.yahoo.com/markets/stocks/articles/truist-financial-tfc-buy-sell-232647766.html?ref=bullished.co) — Yahoo Finance
- [Truist Financial (TFC) Expands Hyderabad AI Hub As India Team Tops 1,000](https://sg.finance.yahoo.com/news/truist-financial-tfc-expands-hyderabad-111243456.html?ref=bullished.co) — Yahoo Finance
- [Truist declares common and preferred stock dividends – Company Announcement - FT.com](https://markets.ft.com/data/announce/detail?dockey=600-202610271605PR%5FNEWS%5FUSPRX%5F%5F%5F%5FCL82481-1&ref=bullished.co) — Financial Times
- [Truist Financial Explores AFCO Credit Sale to Sharpen Strategic Focus](https://finance.yahoo.com/markets/stocks/articles/truist-financial-explores-afco-credit-140900893.html?.tsrc=rss&ref=bullished.co) — Yahoo Finance
- [Truist plans insurance premium financing unit sale amid efforts to unload noncore biz - report (TFC:NYSE) | Seeking Alpha](https://seekingalpha.com/news/4657480-truist-plans-insurance-premium-financing-unit-sale-amid-efforts-to-unload-noncore-biz---report?ref=bullished.co) — seekingalpha.com

### More on Truist Financial

- [Truist's New CEO Says Bank Fell Short Of Merger Goals, Puts 'No Sacred Cows' Review Ahead Of Lightstream Sale](https://www.bullished.co/truists-new-ceo-says-bank-fell-short-of-merger-goals-puts-no-sacred-cows-review-ahead-of-baded2fc/)
- [Truist's Consumer Banking Chief Dontá Wilson To Leave December 31 As Bank Hires Ex-BofA Vice Chair Pick](https://www.bullished.co/truists-consumer-banking-chief-donta-wilson-to-leave-december-31-as-bank-hires-ex-bofa-2168c49f/)
- [Truist's Reported Third-Quarter EPS Falls To $0.56 After $1.4 Billion Securities Loss And Auto Loan Sale](https://www.bullished.co/truists-reported-third-quarter-eps-falls-to-0-56-after-1-4-billion-securities-loss-and-64d78168/)

[All Truist Financial (TFC) coverage →](https://www.bullished.co/tag/tfc/)