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TFC Still Trails Its 2019 Merger Targets: Can the New CEO Change That?
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Key Takeaways
Truist Financial still trails its 2019 merger goals despite stronger earnings and improved ROTCE in 2026.
TFC's assets rose 18% since the merger, but loans grew about 10%, and shares fell 7.2% since December 2019.
TFC targets modest 2026 NII growth as credit risks, rising costs and weaker digital sales test Lyons.
Truist Financial’s (TFC - Free Report) new president and CEO, Mike Lyons, is taking charge at a critical point for the bank. Lyons, who assumed the role on Sept. 1, brings more than 30 years of financial-services experience spanning banking, payments and technology. Former CEO Bill Rogers has moved to executive chair until his planned April 2027 retirement.
Nearly 7 Years After the Merger, TFC Still Trails Its Ambitions
Lyons inherits a bank whose profitability is improving, but the numbers highlight how far Truist remains from the aspirations set when BB&T and SunTrust completed their merger of equals in December 2019. The deal targeted a 22% return on average tangible common equity (ROTCE) and a 51% efficiency ratio, along with $1.6 billion of annual run-rate cost synergies by 2022.
In the first half of 2026, Truist’s earnings jumped 30% year over year, and ROTCE improved to 14.6% from 12.3% at June 2025-end. Yet that remains roughly 740 basis points (bps) below the merger-era 22% return target. The efficiency ratio was 58.0%, about 700 bps above the original 51% goal. TFC’s current long-term ROTCE target of 16-18% is also below the return profile envisioned in 2019.
ROTCE Outlook
Image Source: Truist Financial Corporation
Truist’s Scale is Yet to Produce Strong Organic Growth
Truist ended 2019 with $473 billion of assets, $299.8 billion of loans held for investment (LHI) and $334.7 billion of deposits. By June 2026, assets had risen to $556 billion, while LHI was about $329.8 billion and deposits $409.4 billion. While assets expanded roughly 18% since the merger, LHI grew only about 10%, an annualized pace of roughly 1.5%.
That is a modest payoff from a franchise created to lead attractive Southeast and Mid-Atlantic markets and form the sixth-largest U.S. bank. TFC’s share price also underscores muted value creation. Since December 2019, the company’s shares are down 7.2%, lagging the industry’s rally of 45.1%. Its close peers, PNC Financial Services (PNC - Free Report) and M&T Bank (MTB - Free Report) , have gained 58.2% and 42.9%, respectively, over the same time frame.
Price Performance
Image Source: Zacks Investment Research
Over the past seven years, PNC Financial and M&T Bank have expanded their capabilities and geographic reach through acquisition and partnership. Further, these two banks are taking steps to expand their branch network across high-growth markets.
Shareholder payouts also highlight Truist’s relatively sluggish post-merger progress. Truist’s annual common dividend increased from $1.71 per share in 2019 to $2.08 in 2025 and has remained unchanged since 2023. In contrast, PNC Financial’s dividend climbed from $4.20 to $6.60, and M&T Bank’s rose from $4.10 to $5.70 over the same period.
Moreover, while Truist continues to pay 52 cents quarterly in 2026, PNC Financial and M&T Bank have lifted their latest quarterly payouts to $2.00 and $1.50, respectively.
TFC: NII, Credit Risks and Digital Execution Will Test Lyons
Truist must address the subpar net interest income (NII) growth while managing credit risks that could limit profitability. Taxable-equivalent revenues rose 5% year over year in the first six months of 2026, but net interest margin (NIM) slipped 2 bps to 3%, underscoring pressure on spread income. The company projects a modest 1-1.5% NII growth for 2026.
5-Quarter NII and NIM Trend
Image Source: Truist Financial Corporation
To improve NII and NIM, Lyons will need to restructure the bank’s bond portfolio, improve asset repricing and deposit-cost discipline. He may even consider divesting non-strategic businesses such as subprime auto lending to improve balance sheet productivity.
Commercial lending represents another important headwind. Truist’s commercial loan book totaled approximately $201.6 billion as of June 30, 2026, or about 61% of its loan portfolio. This makes asset quality and credit costs particularly sensitive to weak property values, elevated vacancies and refinancing pressures. Though these loans have floating interest rates and shorter durations, Lyons will have to maintain strict underwriting standards, increase reserves where necessary and actively manage criticized and non-performing assets as economic pressure weighs on commercial borrowers.
5-Quarter LHI Trend
Image Source: Truist Financial Corporation
Digital banking will also be central to Lyons’ efforts to strengthen customer engagement and improve operating efficiency. Digital transactions represented 71% of Consumer and Small Business Banking transactions in the second quarter, but digital sales accounted for only 29% of total sales and fell nearly 480 bps year over year. Better digital origination, personalization and cross-selling could improve customer acquisition and deepen relationships, helping offset slower balance sheet growth.
Truist’s cost base has stabilized from the elevated post-merger levels, but non-interest expenses rose in 2025 and the first half of 2026, driven by higher personnel costs and continued investments in technology and digital capabilities, including AI-enabled tools. While these investments will likely support productivity over the longer term, continued reinvestment may limit operating leverage and constrain bottom-line growth.
Truist’s solid capital position provides Lyons with meaningful strategic flexibility. The bank ended June with a 10.9% CET1 ratio and returned $1.8 billion to shareholders during the quarter. The bigger challenge is deploying that capital effectively, converting technology investments and franchise scale into stronger loan growth, improved NII, disciplined credit costs and returns that move closer to the ambitions set at the time of the 2019 merger.
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TFC Still Trails Its 2019 Merger Targets: Can the New CEO Change That?
Key Takeaways
Truist Financial’s (TFC - Free Report) new president and CEO, Mike Lyons, is taking charge at a critical point for the bank. Lyons, who assumed the role on Sept. 1, brings more than 30 years of financial-services experience spanning banking, payments and technology. Former CEO Bill Rogers has moved to executive chair until his planned April 2027 retirement.
Nearly 7 Years After the Merger, TFC Still Trails Its Ambitions
Lyons inherits a bank whose profitability is improving, but the numbers highlight how far Truist remains from the aspirations set when BB&T and SunTrust completed their merger of equals in December 2019. The deal targeted a 22% return on average tangible common equity (ROTCE) and a 51% efficiency ratio, along with $1.6 billion of annual run-rate cost synergies by 2022.
In the first half of 2026, Truist’s earnings jumped 30% year over year, and ROTCE improved to 14.6% from 12.3% at June 2025-end. Yet that remains roughly 740 basis points (bps) below the merger-era 22% return target. The efficiency ratio was 58.0%, about 700 bps above the original 51% goal. TFC’s current long-term ROTCE target of 16-18% is also below the return profile envisioned in 2019.
ROTCE Outlook
Image Source: Truist Financial Corporation
Truist’s Scale is Yet to Produce Strong Organic Growth
Truist ended 2019 with $473 billion of assets, $299.8 billion of loans held for investment (LHI) and $334.7 billion of deposits. By June 2026, assets had risen to $556 billion, while LHI was about $329.8 billion and deposits $409.4 billion. While assets expanded roughly 18% since the merger, LHI grew only about 10%, an annualized pace of roughly 1.5%.
That is a modest payoff from a franchise created to lead attractive Southeast and Mid-Atlantic markets and form the sixth-largest U.S. bank. TFC’s share price also underscores muted value creation. Since December 2019, the company’s shares are down 7.2%, lagging the industry’s rally of 45.1%. Its close peers, PNC Financial Services (PNC - Free Report) and M&T Bank (MTB - Free Report) , have gained 58.2% and 42.9%, respectively, over the same time frame.
Price Performance
Image Source: Zacks Investment Research
Over the past seven years, PNC Financial and M&T Bank have expanded their capabilities and geographic reach through acquisition and partnership. Further, these two banks are taking steps to expand their branch network across high-growth markets.
Shareholder payouts also highlight Truist’s relatively sluggish post-merger progress. Truist’s annual common dividend increased from $1.71 per share in 2019 to $2.08 in 2025 and has remained unchanged since 2023. In contrast, PNC Financial’s dividend climbed from $4.20 to $6.60, and M&T Bank’s rose from $4.10 to $5.70 over the same period.
Moreover, while Truist continues to pay 52 cents quarterly in 2026, PNC Financial and M&T Bank have lifted their latest quarterly payouts to $2.00 and $1.50, respectively.
TFC: NII, Credit Risks and Digital Execution Will Test Lyons
Truist must address the subpar net interest income (NII) growth while managing credit risks that could limit profitability. Taxable-equivalent revenues rose 5% year over year in the first six months of 2026, but net interest margin (NIM) slipped 2 bps to 3%, underscoring pressure on spread income. The company projects a modest 1-1.5% NII growth for 2026.
5-Quarter NII and NIM Trend
Image Source: Truist Financial Corporation
To improve NII and NIM, Lyons will need to restructure the bank’s bond portfolio, improve asset repricing and deposit-cost discipline. He may even consider divesting non-strategic businesses such as subprime auto lending to improve balance sheet productivity.
Commercial lending represents another important headwind. Truist’s commercial loan book totaled approximately $201.6 billion as of June 30, 2026, or about 61% of its loan portfolio. This makes asset quality and credit costs particularly sensitive to weak property values, elevated vacancies and refinancing pressures. Though these loans have floating interest rates and shorter durations, Lyons will have to maintain strict underwriting standards, increase reserves where necessary and actively manage criticized and non-performing assets as economic pressure weighs on commercial borrowers.
5-Quarter LHI Trend
Image Source: Truist Financial Corporation
Digital banking will also be central to Lyons’ efforts to strengthen customer engagement and improve operating efficiency. Digital transactions represented 71% of Consumer and Small Business Banking transactions in the second quarter, but digital sales accounted for only 29% of total sales and fell nearly 480 bps year over year. Better digital origination, personalization and cross-selling could improve customer acquisition and deepen relationships, helping offset slower balance sheet growth.
Truist’s cost base has stabilized from the elevated post-merger levels, but non-interest expenses rose in 2025 and the first half of 2026, driven by higher personnel costs and continued investments in technology and digital capabilities, including AI-enabled tools. While these investments will likely support productivity over the longer term, continued reinvestment may limit operating leverage and constrain bottom-line growth.
Truist’s solid capital position provides Lyons with meaningful strategic flexibility. The bank ended June with a 10.9% CET1 ratio and returned $1.8 billion to shareholders during the quarter. The bigger challenge is deploying that capital effectively, converting technology investments and franchise scale into stronger loan growth, improved NII, disciplined credit costs and returns that move closer to the ambitions set at the time of the 2019 merger.
At present, TFC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.