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TFC Q3 Earnings Miss Estimates as Securities Losses, Higher Costs Hurt
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Key Takeaways
TFC's Q3 adjusted EPS rises 11.5% y/y but misses estimates amid securities losses and costs.
Truist's NII rises to $3.66B, while record wealth income and 3.6% deposit growth support results.
TFC returns $1.8B to shareholders and projects Q4 revenues of $5.35B, with NII of $3.65B-$3.70B.
Truist Financial’s (TFC - Free Report) third-quarter 2026 adjusted earnings of $1.16 per share rose 11.5% from the prior-year quarter. However, the bottom line missed the Zacks Consensus Estimate by a penny.
The reported quarter’s results excluded a pre-tax loss of $1.4 billion or 90 cents per share on the sale of available-for-sale securities, along with a pre-tax loan loss reserve recapture of $581 million or 36 cents per share and a pre-tax impact of $106 million or 6 cents per share from the Regional Acceptance Corporation (RAC) loan sale.
Third-quarter 2026 results benefited from higher net interest income (NII), record quarterly wealth management income and higher average deposits. Securities losses and higher non-interest expenses were the undermining factors.
After considering the non-recurring items, net income available to common shareholders was $684 million, or 56 cents per share, compared with $1.35 billion, or $1.04 per share, in the prior-year quarter.
TFC’s Revenue Mix Reflects Securities Losses
Total adjusted taxable-equivalent revenues were $5.30 billion, rising 1.3% from the prior-year quarter. GAAP revenues of $3.75 billion declined from $5.19 billion a year ago.
NII was $3.66 billion compared with $3.63 billion in the third quarter of 2025. Taxable-equivalent NII rose 0.7% year over year to $3.71 billion, driven by fixed asset and liability repricing, higher client deposit balances and higher loan balances, partly offset by lower loan spreads and unfavorable deposit mix.
The net interest margin (NIM) contracted 1 basis point year over year to 3.00%.
Non-interest income was $84 million, down substantially from $1.56 billion a year ago, primarily reflecting the securities losses and the RAC loan sale losses. Adjusted non-interest income increased 2.5% to $1.60 billion.
Wealth management income rose 8.8% year over year to $407 million, card and treasury management fees increased 2.1% to $347 million, and lending-related fees grew 16.5% to $120 million. Investment banking (IB) and trading income was $324 million, up 0.3%.
Truist Financial’s Cost Trends Show Higher Expenses
Non-interest expenses totaled $3.11 billion, up 3% from $3.01 billion a year ago. This was primarily due to higher personnel expenses, professional fees and outside processing costs. Adjusted non-interest expenses, excluding $40 million of RAC loan sale costs, were $3.07 billion, up 1.7%.
Profitability metrics weakened alongside reported earnings. Return on average common equity was 4.7% and return on average tangible common equity was 7.2% in the quarter compared with 9% and 13.6%, respectively, in the prior-year period.
The efficiency ratio deteriorated to 82.9% from 58.1% in the prior-year quarter.
TFC’s Credit Quality: A Mixed Bag
The company recorded a benefit for credit losses of $253 million against a provision of $436 million a year ago, reflecting a $581-million allowance release related to the RAC loan sale. The allowance for loan and lease losses was 1.25% of loans and leases held for investment, down from 1.54% a year ago.
Net charge-offs (NCOs) were $629 million, up from $385 million in the year-ago quarter. The NCO ratio of 0.77% of average loans and leases increased 29 basis points year over year. Excluding RAC, the NCO ratio was 0.38%.
Total non-performing assets were $1.34 billion as of Sept. 30, 2026, down from $1.63 billion a year earlier. Non-performing loans and leases were 0.40% of loans and leases held for investment, down 8 basis points year over year.
TFC’s Balance Sheet & Capital Returns Remain in Focus
Average loans and leases were $329.46 billion, up from $322.07 billion in the year-ago quarter. Average loans and leases held for investment were $325.52 billion, up 1.6% year over year. Period-end loans and leases held for investment were $323.93 billion.
Average deposits were $410.70 billion, increasing 3.6% from $396.60 billion a year earlier. End-of-period deposits were $413.23 billion, up from $394.91 billion a year ago.
The common equity Tier 1 ratio was 10.7% at the quarter-end, down 20 basis points sequentially and 30 basis points year over year.
Truist Financial returned $1.8 billion to shareholders during the quarter through $0.6 billion of common dividends and $1.2 billion of share repurchases.
TFC Provides Q4 Projections
For the fourth quarter of 2026, management expects taxable-equivalent revenues of $5.35 billion and NII of $3.65-$3.70 billion. The NII outlook reflects a $125-million reduction from the RAC loan sale and a $40-million increase from the securities repositioning.
Non-interest expenses are projected to rise 2.5% sequentially. The company estimates an NCO ratio of 0.45% and an effective tax rate of 13.5%.
Management expects $1 billion in share repurchases in the fourth quarter. The outlook excludes the impacts of potential strategic actions.
Our Take on Truist Financial
Higher NII, growth in average deposits and record wealth management income supported Truist Financial’s adjusted quarterly results. However, securities losses and increased non-interest expenses weighed on reported performance. The completed RAC loan sale improved asset quality metrics, while the planned LightStream loan sale represents a further portfolio action.
Truist Financial Corporation Price, Consensus and EPS Surprise
Bank of America’s (BAC - Free Report) third-quarter 2026 adjusted earnings of $1.08 per share missed the Zacks Consensus Estimate of $1.11. In the prior-year quarter, the company reported earnings of $1.04.
Bank of America witnessed dismal trading performance this time around due to weaker fixed-income trading. Similarly, amid weakness in advisory and debt underwriting activities, BAC’s IB business performance was not good.
While BAC’s capital markets business performance was not impressive this time, year-over-year growth in NII drove total revenues. Provisions declined in the quarter on a year-over-year basis, which was a positive, but non-interest expenses increased, creating another major headwind.
JPMorgan’s (JPM - Free Report) third-quarter 2026 adjusted earnings of $5.75 per share missed the Zacks Consensus Estimate of $5.94. After considering the net investment securities losses of 18 cents, earnings were $5.57 per share, up 9.9% from a year ago.
JPM’s reported net revenues of $50.17 billion rose 8% year over year. Strong equity trading performance, IB activity and loan growth supported revenues, while the fixed income trading business was subdued. While JPMorgan recorded a year-over-year rise in expenses in the quarter, it witnessed a decline in provisions, which aided the results to some extent.
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TFC Q3 Earnings Miss Estimates as Securities Losses, Higher Costs Hurt
Key Takeaways
Truist Financial’s (TFC - Free Report) third-quarter 2026 adjusted earnings of $1.16 per share rose 11.5% from the prior-year quarter. However, the bottom line missed the Zacks Consensus Estimate by a penny.
The reported quarter’s results excluded a pre-tax loss of $1.4 billion or 90 cents per share on the sale of available-for-sale securities, along with a pre-tax loan loss reserve recapture of $581 million or 36 cents per share and a pre-tax impact of $106 million or 6 cents per share from the Regional Acceptance Corporation (RAC) loan sale.
Third-quarter 2026 results benefited from higher net interest income (NII), record quarterly wealth management income and higher average deposits. Securities losses and higher non-interest expenses were the undermining factors.
After considering the non-recurring items, net income available to common shareholders was $684 million, or 56 cents per share, compared with $1.35 billion, or $1.04 per share, in the prior-year quarter.
TFC’s Revenue Mix Reflects Securities Losses
Total adjusted taxable-equivalent revenues were $5.30 billion, rising 1.3% from the prior-year quarter. GAAP revenues of $3.75 billion declined from $5.19 billion a year ago.
NII was $3.66 billion compared with $3.63 billion in the third quarter of 2025. Taxable-equivalent NII rose 0.7% year over year to $3.71 billion, driven by fixed asset and liability repricing, higher client deposit balances and higher loan balances, partly offset by lower loan spreads and unfavorable deposit mix.
The net interest margin (NIM) contracted 1 basis point year over year to 3.00%.
Non-interest income was $84 million, down substantially from $1.56 billion a year ago, primarily reflecting the securities losses and the RAC loan sale losses. Adjusted non-interest income increased 2.5% to $1.60 billion.
Wealth management income rose 8.8% year over year to $407 million, card and treasury management fees increased 2.1% to $347 million, and lending-related fees grew 16.5% to $120 million. Investment banking (IB) and trading income was $324 million, up 0.3%.
Truist Financial’s Cost Trends Show Higher Expenses
Non-interest expenses totaled $3.11 billion, up 3% from $3.01 billion a year ago. This was primarily due to higher personnel expenses, professional fees and outside processing costs. Adjusted non-interest expenses, excluding $40 million of RAC loan sale costs, were $3.07 billion, up 1.7%.
Profitability metrics weakened alongside reported earnings. Return on average common equity was 4.7% and return on average tangible common equity was 7.2% in the quarter compared with 9% and 13.6%, respectively, in the prior-year period.
The efficiency ratio deteriorated to 82.9% from 58.1% in the prior-year quarter.
TFC’s Credit Quality: A Mixed Bag
The company recorded a benefit for credit losses of $253 million against a provision of $436 million a year ago, reflecting a $581-million allowance release related to the RAC loan sale. The allowance for loan and lease losses was 1.25% of loans and leases held for investment, down from 1.54% a year ago.
Net charge-offs (NCOs) were $629 million, up from $385 million in the year-ago quarter. The NCO ratio of 0.77% of average loans and leases increased 29 basis points year over year. Excluding RAC, the NCO ratio was 0.38%.
Total non-performing assets were $1.34 billion as of Sept. 30, 2026, down from $1.63 billion a year earlier. Non-performing loans and leases were 0.40% of loans and leases held for investment, down 8 basis points year over year.
TFC’s Balance Sheet & Capital Returns Remain in Focus
Average loans and leases were $329.46 billion, up from $322.07 billion in the year-ago quarter. Average loans and leases held for investment were $325.52 billion, up 1.6% year over year. Period-end loans and leases held for investment were $323.93 billion.
Average deposits were $410.70 billion, increasing 3.6% from $396.60 billion a year earlier. End-of-period deposits were $413.23 billion, up from $394.91 billion a year ago.
The common equity Tier 1 ratio was 10.7% at the quarter-end, down 20 basis points sequentially and 30 basis points year over year.
Truist Financial returned $1.8 billion to shareholders during the quarter through $0.6 billion of common dividends and $1.2 billion of share repurchases.
TFC Provides Q4 Projections
For the fourth quarter of 2026, management expects taxable-equivalent revenues of $5.35 billion and NII of $3.65-$3.70 billion. The NII outlook reflects a $125-million reduction from the RAC loan sale and a $40-million increase from the securities repositioning.
Non-interest expenses are projected to rise 2.5% sequentially. The company estimates an NCO ratio of 0.45% and an effective tax rate of 13.5%.
Management expects $1 billion in share repurchases in the fourth quarter. The outlook excludes the impacts of potential strategic actions.
Our Take on Truist Financial
Higher NII, growth in average deposits and record wealth management income supported Truist Financial’s adjusted quarterly results. However, securities losses and increased non-interest expenses weighed on reported performance. The completed RAC loan sale improved asset quality metrics, while the planned LightStream loan sale represents a further portfolio action.
Truist Financial Corporation Price, Consensus and EPS Surprise
Truist Financial Corporation price-consensus-eps-surprise-chart | Truist Financial Corporation Quote
Truist Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Major Banks
Bank of America’s (BAC - Free Report) third-quarter 2026 adjusted earnings of $1.08 per share missed the Zacks Consensus Estimate of $1.11. In the prior-year quarter, the company reported earnings of $1.04.
Bank of America witnessed dismal trading performance this time around due to weaker fixed-income trading. Similarly, amid weakness in advisory and debt underwriting activities, BAC’s IB business performance was not good.
While BAC’s capital markets business performance was not impressive this time, year-over-year growth in NII drove total revenues. Provisions declined in the quarter on a year-over-year basis, which was a positive, but non-interest expenses increased, creating another major headwind.
JPMorgan’s (JPM - Free Report) third-quarter 2026 adjusted earnings of $5.75 per share missed the Zacks Consensus Estimate of $5.94. After considering the net investment securities losses of 18 cents, earnings were $5.57 per share, up 9.9% from a year ago.
JPM’s reported net revenues of $50.17 billion rose 8% year over year. Strong equity trading performance, IB activity and loan growth supported revenues, while the fixed income trading business was subdued. While JPMorgan recorded a year-over-year rise in expenses in the quarter, it witnessed a decline in provisions, which aided the results to some extent.