Truist Misses Q3 Estimates on Loan Sale, Agrees to Sell Lightstream Assets to Carlyle
Truist Financial Corporation (NYSE:TFC) reported third-quarter adjusted earnings of $1.16 per share on adjusted revenue of $5.30 billion, missing analyst expectations as results were weighed down by the sale of its Regional Acceptance Corp. loan portfolio. Total revenue fell to $3.75 billion when factoring in the portfolio disposition, primarily driven by a steep decline in noninterest income to $80 million. Despite the drag on headline figures, net interest income rose to $3.71 billion, slightly ahead of Wall Street forecasts.
Alongside earnings, the regional lender announced an agreement to sell $7.7 billion of unsecured consumer loans from its Lightstream platform to Carlyle Group Inc (NASDAQ:CG). The transaction is projected to yield $7.2 billion in net proceeds, boost Truist’s CET1 capital ratio by 20 basis points, and reduce annual net charge-offs by roughly 7 basis points. Management plans to use the capital to clear wholesale borrowings and simplify operations around its core banking client relationships.
Looking ahead to the fourth quarter, Truist expects adjusted revenue of approximately $5.35 billion, topping consensus estimates even after accounting for a $125 million reduction tied to the loan sale. The company also projects its net charge-off ratio to improve to roughly 0.45%, while planning $1 billion in share repurchases, down from $1.2 billion completed during the third quarter.
Key points
- Truist Financial Corporation (NYSE:TFC) reported Q3 adjusted EPS of $1.16 on $5.30 billion in adjusted revenue, missing consensus estimates due to loan sale impacts.
- Truist agreed to sell $7.7 billion of Lightstream unsecured consumer loans to Carlyle Group Inc (NASDAQ:CG), expecting $7.2 billion in net proceeds.
- The Lightstream transaction is projected to generate around $850 million in CET1 capital and lower annual net charge-offs by about 7 basis points.
- For Q4, Truist expects adjusted revenue of roughly $5.35 billion and plans to repurchase approximately $1 billion of its common stock.
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Why did Truist Financial miss Q3 earnings estimates?
Truist Financial missed Q3 estimates due to the financial impact from selling its Regional Acceptance Corp. loan portfolio, which sharply reduced noninterest income to $80 million.
What are the details of Truist's Lightstream loan sale to Carlyle Group?
Truist agreed to sell $7.7 billion in unsecured consumer loans from Lightstream to Carlyle Group Inc, expecting $7.2 billion in net proceeds and an $850 million boost to CET1 capital.
What is Truist's revenue outlook for Q4?
Truist expects Q4 adjusted revenue of approximately $5.35 billion, which is above consensus estimates despite a $125 million reduction from the Regional Acceptance Corp. loan sale.