The loans represent substantially all assets of the bank’s national auto finance company affiliate, Regional Acceptance Corporation, and the transaction is expected to close in the third or fourth quarter, subject to customary closing conditions, Truist said in an exhibit included in a Tuesday filing with the Securities and Exchange Commission.
With this loan sale, Truist aims to sharpen its strategic focus by exiting a non-core, less profitable business. The move follows Truist’s discontinuation of its marine and recreational vehicle loan business and is part of a broader strategic review that remains ongoing, according to the exhibit.
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The sale also strengthens Truist’s balance sheet by enhancing its liquidity and funding profile, improves its credit risk profile by reducing non-performing loans by more than 10 basis points as of June 30 and net charge-offs by about 10 basis points annually, and enhances shareholder value by improving capital efficiency, the exhibit said.
RAC’s pre-tax earnings were approximately breakeven through the six months ended June 30, per the exhibit.
Truist will use the proceeds from the loan sale to repay wholesale borrowings, the exhibit said.
Truist executives said during a July earnings call that the bank was narrowing its lending focus. They said the bank was reducing its exposure to marine, RV and selected auto loans, while directing more capital toward commercial borrowers, where an initial loan can lead to deposits, payments, liquidity services and capital markets work.
Truist’s review also extends to wholesale banking, Chief Financial Officer Mike Maguire said during the call.
“There are things that we’ve done and will continue to do in wholesale around client selection, around pricing, around product design, rebalancing, that are all intended to create more profitability and efficiency,” Maguire said.
It was reported in June that the number of consumers who refinanced their auto loan in the first quarter nearly doubled compared to the same period two years earlier. The surge in refinancing resulted from auto refinance rates falling faster than rates for vehicle purchases since the Federal Reserve began cutting interest rates in 2024.
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