Truist Financial‘s indirect auto net charge-off rate climbed in the third quarter as the bank completed the sale of its Regional Acceptance portfolio and continued reducing exposure to lower-return lending businesses.
The Charlotte, N.C.-based bank completed the Regional Acceptance Corp. (RAC) sale at the end of September, Chief Financial Officer Mike Maguire said during the bank’s earnings call today. The company was a lender specializing in subprime and near-prime auto financing through dealerships.
“RAC was a roughly break-even business,” he said. “While the sale reduces net interest income, we also expect lower associated non-interest expense and credit costs to provide an offset to lower net interest income.”
The transaction reduced consolidated nonperforming loans and is expected to lower Truist’s annualized net charge-off ratio, Maguire said.
Relationship-based lending
Truist discontinued marine and RV loan originations in the second quarter and significantly reduced production in prime auto and other lower-return lending businesses, Maguire said. Those actions contributed to loan runoff across the bank’s consumer and commercial portfolios.
Despite selling RAC, Chief Executive Mike Lyons identified indirect auto lending as an opportunity for growth as the bank concentrates on existing customer relationships.
“We see opportunity to grow home equity for our clients, indirect auto for our clients, certainly credit card for our clients,” he said.
The bank also announced it agreed on Oct. 14 to sell its LightStream unsecured consumer lending portfolio to investment management firm Carlyle Group, a transaction expected to close in the fourth quarter, Lyons said during the call.
“Our strategy is not about shrinking to achieve higher returns,” he said. “It’s about creating a stronger foundation for both sustainable growth and higher returns over time.”
Truist was the 19th-largest auto lender by outstandings at yearend 2025, according to the latest Big Wheels rankings data.
Watching credit performance
Truist’s Q3 credit performance reflects charge-offs associated with transferring RAC loans to held-for-sale status before completing the portfolio sale, according to today’s earnings release.
Jefferies analysts led by David Chiaverini characterized the quarter as mixed in a research note today, but viewed the portfolio sales as evidence of an accelerating turnaround.
By the numbers
Key indirect auto portfolio figures from Truist’s Q3 earnings release and an Auto Finance News analysis include:
- Net charge-offs at 6.23%, up 424 basis points (bps) year over year and 450 bps quarter over quarter;
- Outstandings down 33% YoY and 28.3% QoQ to $17.1 billion;
- Average yield at 6.81%, down 48 bps YoY and 25 bps QoQ;
- 30- to 89-day delinquencies at 1.2%, down 120 bps YoY and 96 bps QoQ; and
- The bank’s allowance for indirect auto credit losses sat at a coverage ratio of 2.09%, up 151 bps YoY and 153 bps QoQ.
Shares of Truist Financial Corp. [NYSE: TFC] were trading up 1.1% to $47.07 at market close today. The bank has a market capitalization of $57.5 billion.
