Truist is exiting the near-prime auto lending business, including a $5.5 billion loan portfolio that makes up nearly all of the assets of its subsidiary, Regional Acceptance Corp., the Charlotte, North Carolina-based bank said Tuesday. The decision represents a move away from noncore business and is an outcome of a broader strategic review that is ongoing at the $556 billion-asset bank. The move matters because it signals that new CEO Mike Lyons is applying what CFO Mike Maguire described as "a lot of urgency and intensity" to reshaping the bank's portfolio, with an emphasis on relationship-based lending and profitability hurdles rather than scale for its own sake.
The transaction is set to generate $5.2 billion in net proceeds and a $535 million loan loss reserve recapture, according to the lender. The sale is also expected to create $945 million of common equity tier 1 capital, and Truist will reposition some of its available-for-sale securities portfolio to offset that, Maguire said. The transaction is expected to close late in the third quarter or early in the fourth. The bank did not disclose the buyer of the loan portfolio. Truist sees the RAC sale strengthening its balance sheet and improving its credit risk profile, with the transaction providing "modest" return on tangible common equity and earnings accretion in 2027.
The evidence comes from a single full-text report by Banking Dive, a secondary trade publication, citing remarks Maguire made Tuesday at a Barclays investor conference and a Truist conference presentation. Maguire said RAC was "essentially break-even," and that although marine and RV lending is profitable, it is "not to the degree that it would be accretive to our long-term profit objectives." He described RAC as "typically a loan-only, loan-first national business, where our opportunity to really have a meaningful relationship with these clients beyond that single loan product is extremely limited." The report also notes that during the second quarter, Truist stopped originating marine and recreational vehicle loans and "significantly reduced" originations in other "less strategic and less profitable" lending segments such as prime and nonprime auto.
The sector implication is that Truist is prioritizing balance-sheet quality and capital efficiency over breadth of lending products. Maguire said the bank is assessing strategic fit and economic contributions of its products and portfolios, and that the review is likely to result in Truist focusing on fewer things that leverage its strengths. "We want to get back to a place where we're growing our earning assets in a profitable, strategic way, and that we're funding that growth with good, core client deposit growth," he said. The RAC exit follows the earlier sale of the insurance business, which Maguire said was "a pretty big swing" at repositioning the available-for-sale securities portfolio, though the bank was not able to address it all at that time.
Several limitations and unknowns remain. The buyer of the loan portfolio was not disclosed, and the report does not provide the sale price relative to book value, the exact timing of the close beyond a late-third-quarter or early-fourth-quarter window, or the specific financial impact on near-term earnings beyond the stated 2027 accretion. Maguire indicated there may be further opportunity for such choices, and that Lyons is eager to "get us, frankly, back into growth mode," saying, "He didn't come to Truist to shrink to greatness." What to watch is whether additional portfolio exits follow, and whether Lyons changes the scale and speed of branch-building and other growth initiatives, as Maguire suggested he might.