Truist Financial Q2 Earnings Call Highlights
Key Points
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- Truist beat earnings expectations in Q2 2026, with net income of $1.5 billion and EPS of $1.23, up 37% year over year. Management said the bank is improving profitability and capital efficiency, and now expects ROTCE above 14% for 2026.
- Revenue and fee income were strong, led by a 17% jump in non-interest income from a year earlier and a 72% increase in investment banking and trading revenue. However, Truist lowered its full-year net interest income growth outlook to about 1% to 1.5% because of loan portfolio shifts, spread compression and a less favorable deposit mix.
- The bank is reshaping its lending business toward higher-quality commercial and relationship-based growth while exiting less strategic consumer lending categories such as marine, RV and parts of auto finance. Asset quality stayed stable, capital remained solid with a 10.9% CET1 ratio, and Truist continued its plan for about $5 billion in share buybacks in 2026.
Truist Financial (NYSE:TFC) reported higher second-quarter 2026 earnings and said it remains focused on improving profitability and capital efficiency, even as management lowered its full-year revenue and net interest income outlook.
The Charlotte-based bank reported net income available to common shareholders of $1.5 billion, or $1.23 per diluted share, for the quarter. Chief Executive Officer Bill Rogers said earnings per share rose 37% from the second quarter of 2025 and 13% from the first quarter of 2026.
Rogers said the results showed progress in Truist’s effort to become “a more earnings-efficient and more capital-efficient growth company.” He said the bank is making deliberate decisions about where to grow, where to invest and how to optimize its balance sheet, even if those choices create near-term trade-offs in certain growth metrics.
“While some of these choices may create near-term trade-offs in individual growth metrics, they’re producing the outcomes we intended and are driving stronger profitability and improved financial performance,” Rogers said.
Profitability Improves as Fee Income Rises
Chief Financial Officer Mike Maguire said total revenue increased 2.2% from the first quarter, primarily because of higher non-interest income. Compared with the second quarter of 2025, revenue rose 5.5%, led by investment banking and trading revenue and wealth management income.
Non-interest income increased 5.9% from the first quarter and 17% from the year-earlier quarter. Maguire said investment banking and trading revenue rose 72% from a year earlier, supported by stronger client activity, improved deal economics and momentum across Truist’s capital markets platform. Wealth management income increased 8%, helped by growth in client assets, advisor productivity and financial planning activity.
Non-interest expense increased 2.4% from the first quarter and 2.3% from the year-earlier period. Maguire said the linked-quarter increase primarily reflected higher incentive compensation tied to stronger business performance. The year-over-year expense growth remained below revenue growth, contributing to 320 basis points of positive operating leverage.
Rogers said Truist’s return on tangible common equity improved 310 basis points year-over-year to 15.4%. The company now expects to deliver ROTCE above 14% for 2026.
Loan Portfolio Shifts Toward Relationship-Based Growth
Average loans held for investment increased $2.1 billion, or 0.7%, from the first quarter to $329 billion. Maguire said the increase was driven by 1.3% growth in average commercial loans, partially offset by a decline in average consumer loans.
Rogers said commercial and industrial loans were up just under 8% year-over-year, with growth in areas where Truist has been intentional about investment. He also cited growth in home equity lines of credit and certain other consumer areas, including Sheffield and Service Finance.
At the same time, Truist is reducing exposure to less strategic consumer lending categories. Maguire said the company discontinued originations of marine and recreational vehicle loans during the quarter and significantly reduced originations in several other less strategic and less profitable consumer lending units, including prime and non-prime auto.
Those actions are expected to reduce 2026 loan production across the affected portfolios by approximately 40% compared with 2025 production levels. In response to an analyst question, Maguire said that represented about $7 billion to $8 billion of annual production coming out of the business in 2026 versus 2025. He described marine and recreational vehicle loans as a roughly $4 billion portfolio and said indirect auto included about $20 billion in prime auto and another $4 billion to $5 billion in the Regional Acceptance non-prime auto business.
Maguire said some of these portfolios add to net interest income and net interest margin but are “significantly dilutive” to Truist’s long-term ROTCE goals and are less aligned with its client-focused business model.
Net Interest Income Outlook Reduced
Taxable-equivalent net interest income rose 0.6% from the first quarter, or $23 million, due mainly to one additional day in the quarter and higher earning assets, partly offset by lower loan spreads. Net interest margin declined 4 basis points from the first quarter to 2.98%.
Truist lowered its full-year net interest income growth outlook to approximately 1% to 1.5%, down from its previous forecast of 2% to 3%. Maguire said the revised outlook reflects several factors:
- Optimization of lower-return lending portfolios that reduce near-term NII and margin but improve ROTCE.
- Reallocation of capital from higher-yielding consumer loans into higher-quality but lower-yielding commercial loans.
- Broad market-driven compression in loan spreads.
- A less favorable deposit mix, with clients continuing to move into higher-rate products.
Maguire said the deposit mix shift was the largest of the NII headwinds. Truist continues to see healthy deposit production, he said, but more client preference for higher-rate products. Average total deposit costs increased 1 basis point from the first quarter to 1.56%, while average interest-bearing deposit costs increased 1 basis point to 2.10%.
Average deposits increased 1.5% from the first quarter and 1.1% year-over-year. Maguire said Truist expects low-single-digit deposit growth for the year, around 3%, with demand deposit account balances potentially moving from roughly 27% of deposits at the start of the year toward about 25% by year-end.
Consumer, Wholesale and Digital Trends
Rogers said consumer behavior remained resilient in the quarter, with stable liquidity, spending and credit trends within the company’s expectations. Average consumer and small business loans were up 2% from the second quarter of 2025, while average non-maturity consumer and small business deposits also increased 2%.
Premier Banking, which serves clients with $100,000 to $1 million in combined deposits and investments and represents more than half of consumer and small business banking deposits, remained a source of strength, Rogers said. The segment posted a 20% year-over-year increase in new deposit production balances, a 23% increase in advisor productivity and a 9% increase in financial planning activity. Referrals from consumer and small business banking to wealth management increased 15% in the first half of 2026 compared with the first half of 2025.
Digital engagement also continued to grow. Rogers said active mobile users increased 4% year-over-year to 5.4 million, while digital transaction volume rose 7% to 93 million transactions. Clients engaged with Truist Assist nearly 2 million times during the quarter, up 60% year-over-year.
In wholesale banking, average deposits increased 6% year-over-year excluding the effect of certain large M deposits in the second quarter of 2025. Middle market deposits rose 12%, with 9% growth in legacy markets and 27% growth in expansion markets such as Texas, Pennsylvania and Ohio. Average wholesale loans increased 8% from the prior-year quarter.
Credit, Capital and Leadership Transition
Asset quality remained stable, according to Maguire. Net charge-offs declined 11 basis points from the first quarter to 50 basis points. The provision for credit losses totaled $395 million, modestly below net charge-offs of $414 million. The allowance for loan losses declined 2 basis points from the prior quarter to 1.51% of total loans.
Non-performing loans held for investment increased 1 basis point from the first quarter to 51 basis points of total loans. Maguire said higher indirect auto problem loans were partially offset by improvement in the commercial portfolio. He attributed the increase in indirect auto non-performing loans primarily to a change in non-accrual criteria in the Regional Acceptance non-prime auto business, not to deterioration in underlying credit trends.
Truist’s CET1 ratio increased 10 basis points from the first quarter to 10.9%. The company repurchased $1.2 billion of common stock during the quarter and continues to target approximately $5 billion of share repurchases in 2026.
For the third quarter, Truist expects revenue to increase 1% from second-quarter revenue of $5.3 billion, net interest income to increase approximately 1.5%, non-interest income to remain relatively stable and non-interest expense to rise about 2% from $3.1 billion in the second quarter.
For full-year 2026, Truist now expects revenue growth of 3.5% to 4%, compared with its previous outlook for 4% growth. The company raised its non-interest income growth outlook to approximately 10%, up from a prior estimate of high single digits. Truist maintained its expectations for GAAP non-interest expense growth of 1.75%, net charge-offs of 55 basis points, an effective tax rate of 14.5% and $5 billion in share buybacks.
The call also marked Rogers’ final earnings call as CEO. Truist announced during the quarter that Mike Lyons will become president and chief executive officer on Sept. 1. Rogers will transition to executive chair until his planned retirement in April 2027. Rogers said Lyons has the board’s mandate to lead Truist as a high-performing company and said the leadership transition comes as the company is building momentum toward improved returns.
About Truist Financial (NYSE:TFC)
Truist Financial Corporation is an American bank holding company that provides a broad range of financial services through its primary subsidiary, Truist Bank, and other operating units. The company offers traditional retail banking products and services such as deposit accounts, consumer and residential mortgage lending, and credit and debit card services. Truist also serves commercial clients with middle-market and corporate lending, treasury and payment solutions, and specialty finance products.
Beyond core banking, Truist operates wealth management, asset management, insurance and capital markets businesses.
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