Truist Financial Sells $5.5B Auto Loan Portfolio, Reaffirms Outlook

The U.S. Federal Reserve plans to raise asset thresholds for stricter bank oversight, according to sources. Current thresholds are $100B, $250B, and $700B. The Fed may reindex these, potentially benefiting banks like U.S. Bancorp, Capital One, and PNC. Changes could spur consolidation and reduce regulatory burdens.

The US Federal Reserve plans to raise asset thresholds for stricter oversight of big banks, according to sources. Current thresholds are $100B, $250B, and $700B. The Fed may reindex these, potentially benefiting banks like U.S. Bancorp, Capital One, and PNC Financial. Changes could spur consolidation among mid-size lenders and increase competition, but critics argue it may reduce consumer benefits and increase systemic risks.

Truist Financial (NYSE:TFC) is selling $5.5B in auto loans to focus on more profitable businesses like wealth and investment banking, aiming to improve earnings quality and reduce consumer-credit risk. The sale may boost shareholder returns but could pressure near-term revenue if capital is not redeployed effectively.

Apollo Global Management (APO) is in advanced talks to acquire DePuy Synthes from Johnson & Johnson and plans to buy $5.5 billion in auto loans from Truist Financial. These deals aim to broaden Apollo's healthcare and consumer credit activities. Apollo has a market value of about $74.4 billion and focuses on credit, private equity, and real estate investments.

Major U.S. banks, including JPMorgan, Bank of America, and others, raised their prime lending rate to 7% after the Federal Reserve's quarter-point rate hike. The move increases borrowing costs for consumers and businesses. Bank stocks fell, with BofA down 2.7%, Citi 2.4%, and JPMorgan 1%. Rate hikes may boost bank earnings but could also slow economic activity and impact credit quality.

Truist Financial sold $5.5B in near-prime auto loans, generating $5.2B in net proceeds, recapturing $535M in loan loss reserves, and adding $945M in CET1 capital. CEO Michael Lyons, former Fiserv CEO, aims to accelerate strategic transformation, with more divestitures expected. The sale is not expected to impact near-term earnings but is projected to be accretive to earnings and tangible book value by 2027. Truist's Q2 2026 diluted EPS was $1.23, up 37% YoY, with a 15.4% return on tangible commo