Truist's New CEO Says Bank Fell Short Of Merger Goals, Puts 'No Sacred Cows' Review Ahead Of Lightstream Sale
Mike Lyons said capital was spread too thin and that anything failing three tests will go, with a fuller outlook promised for early 2027.
Truist CEO Mike Lyons, speaking on his first earnings call as chief executive, said the bank has "not performed up to our potential over the last several years," including falling short of the financial goals set at the time of the merger. He announced a deal to sell $7.7 billion of Lightstream loans on the same call.
What Lyons said on the call
Lyons said every business, process and decision is being run through three questions: Is it core to the strategy, is it generating targeted returns, and is it protecting the bank or helping clients? Anything that fails gets its resources redirected to growth investments. In answer to a Goldman Sachs analyst, he said "No sacred cows."
He said the bank found capital spread across areas that neither support its core strategy nor carry a clear right to win. He named Marine and RV, RAC and Lightstream as examples of nationally focused, standalone single-product businesses that diverted attention and resources from growing core deposits.
The sale of RAC, the bank's auto loan portfolio, and the Lightstream deal came directly from that process, Lyons said. He added that the bank is aiming to finish the evaluation by the end of the year, with more detail in early 2027 on its outlook and path to becoming a top performing bank.
As an early investment step, Lyons said Truist recently added more than 40 bankers to its commercial middle market business.
The numbers behind the sales
CFO Mike Maguire said Truist closed the sale of its $5.5 billion RAC portfolio at the end of the third quarter, with net proceeds of $5.2 billion used to reduce borrowings. He said the sale cut non-performing loans by 28%.
The Lightstream sale covers $7.7 billion of loans, substantially all of its assets. Maguire said Truist expects it to close in the fourth quarter, with net proceeds of $7.2 billion and $850 million of added common equity capital.
Third-quarter reported earnings were $0.56 per diluted share. Adjusted earnings were $1.16 per share, up 12% from the third quarter of 2025, and adjusted return on tangible common equity was 14.6%.
Balance sheet and returns
The Goldman Sachs analyst asked how far the balance sheet would shrink and whether sales would erode tangible book value. Lyons said the RAC sale combined with the securities repositioning adds to tangible book value, and that "this isn't about taking a big charge."
He also said the strategy "is not about shrinking to achieve higher returns." Lyons reiterated return targets of 15% in 2027 and 16% to 18% over the long term; Maguire said the long-term target was originally a three-to-five-year goal and that Truist is not changing that outlook.
On costs, Maguire said management does not expect a "seismic shift" in its expense trajectory, and Lyons said existing expenses can be reallocated to fund key investments for at least the next couple of years.
Management has promised a fuller strategic and financial outlook in January, including specific performance indicators for each business, and Lyons said the Lightstream sale is expected to close in the fourth quarter.
