How Mike Lyons, Truist’s new CEO, is plotting a turnaround

• Key insight: Mike Lyons, who took the CEO reins at Truist last month, announced several changes Friday that he said will make the bank more successful.
• What is at stake: The long-struggling superregional bank will have to act relatively quickly to satisfy its shareholders, who have been waiting for years for the underperforming bank to deliver on the promises it made seven years ago.

The new general director of Truist Financial on Friday shared his vision for what he thinks the underperforming super-regional bank can become, and outlined the first steps it is taking as part of that evolution.

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In his first public remarks since his arrival Truist Just over six weeks ago, CEO Mike Lyons told investors that Truist has “all the raw materials to become one of the most successful banks in the country”. Achieving that goal, he said, is “goal No. 1” for the $554 billion-asset bank.

Lyon also recognized The turbulent history of Truistsaying that although it has “exceptionally strong foundations,” the Charlotte, North Carolina-based company has failed to realize its potential since its creation seven years ago through a much-criticized merger of equals.

Now is the time to change, starting with new leadership in consumer banking and a reallocation of resources from underperforming companies to those with higher returns, Lyons said. The bank reaffirmed its intention to achieve a key profitability target next year – a return on tangible equity of 15% – and said it was still committed to reaching 16-18% over the long term.

“While I believe history and context are important and we have learned from them, we are where we are today and we know we can do better,” Lyons said during the bank’s third-quarter earnings conference call. “We are now firmly focused on the future and have the chance to move forward with enormous strengths. Above all, we do not need to reinvent Truist to win from here.”

Analysts who cover Truist were quick to point out a change in tone with Lyons as CEO.

“From a strategic standpoint, I love the tonal contrast at the top,” Mike Mayo, an analyst at Wells Fargo Securities, told American Banker. “This is clearly a much more shareholder-oriented CEO,” whose early message focused on simplification, execution and growth to create shareholder value, he said.

Still, Lyons and his management team find themselves in a difficult situation, at least in the short term, Mayo said.

“Financially, progress will be difficult,” Mayo predicted. “They haven’t been in growth mode, and now they’re in contraction mode. So I think there will be some earnings headwinds.”

Changes in progress

On Friday, the bank announced that it had hired two experienced executives to oversee consumer and small business banking, a move intended to increase accountability in each of those segments, and that the former head of consumer and small business banking was leaving the company.

It also announced it would sell almost all of the assets of LightStream, the unsecured lending platform it acquired in 2012, to the Carlyle Group, marking the bank’s latest move away from non-core lending.

The LightStream deal, which includes $7.7 billion in non-core loans, is expected to be finalized by the end of the year. It will generate $7.2 billion in net proceeds, which Truist plans to use to repay wholesale borrowings.

Lyon, the former president of PNC Financial Services Group and former CEO of Fiserv, will have to act urgently to satisfy shareholders.

Although he will have time to start shaping Truist At the bank he wants to create, shareholders will be eager to see progress and, therefore, higher returns, said Scott Siefers, an analyst at TD Cowen.

“Virtually everyone I know has a very high opinion of Mike and what he will be able to do, but even though Mike is new, the story of Truist that’s not the case,” Siefers told American Banker. “There’s a feeling that people were waiting Truist to reach top speed for a while, and investors are likely worried that this story will have to take a step back before it can move forward. »

Truist is in the midst of a detailed strategic review of each of its businesses, including its loan portfolios, to determine what will help it become a high-performing bank and what is holding it back, Lyons said. The results of this review are expected to be revealed in early 2027.

So far, the results have been mixed, according to Lyons. The branch network is strong and there are several high-quality businesses, such as corporate lending, commercial real estate and wealth management, he said. At the same time, “we found that capital was spread across many areas,” including areas that don’t support the bank’s core strategy, Lyons said.

“We have a clear vision. … Is it strategic? (Are there) clear financial returns? Or does it … do anything to protect the bank?” he said. “If it’s not, we’ll move it.”

The bank has already taken some steps to exit domestic businesses, as it attempts to focus on its core southeast market. In September he said it would sell $5.5 billion in auto loansliquidating most of the assets of its auto loan subsidiary, Regional Acceptance Corp.

In July, before Lyon’s arrival and shortly after setting higher profitability targets, the bank said it stopped providing loans for marine and recreational vehicles. This change was an effort to generate higher returns, improve efficiency and direct capital to the bank’s most generative areas, Bill Rogers, The truist the former CEO, said at the time.

As part of the leadership changes announced Friday, Truist said that Donta Wilson, who was The truist director of personal and small business banking for three years, will leave the bank at the end of the year. Wilson, a member of the bank’s leadership team, was an executive at BB&T before the merger with SunTrust Banks, which created Truist.

In a post Friday on LinkedIn, Wilson said he had “deep optimism for The truist future and great pride” in the bank. He declared The truist employees and customers “are in good hands”.

Meanwhile, D. Steve Boland, the former chief administrative officer of Bank of America, joins Truist as vice-president. Boland, who retired from BofA last year, was president of BofA’s retail banking business before being promoted to chief administrative officer.

Boland is set to join Truist on December 1, a Truist the spokesperson said in an email Friday.

Shimna Sameer, another longtime BofA executive, will become The truist director of consumer banking. Sameer, who was hired earlier this year to lead The truist wealth management, will instead lead the bank’s efforts to grow core deposits, deepen primary banking relationships and improve the customer experience. It will begin on October 19, Truist the spokesperson said.

Additionally, Jeff Warner will join the team later this month to serve as Director of Small Business Banking. Warner was named head of small business at Pittsburgh-based PNC in December 2024, according to his LinkedIn profile. His 17-year tenure at the PNC overlapped with that of Lyon.

Boland, Sameer and Warner will report directly to Lyon, the bank said.

Rogers remains with the bank, serving as executive chairman of the board. He plans to retire completely Truist in April 2027.

Third quarter results

The truist The third-quarter results, released Friday, were mostly overshadowed by Lyons’ early comments as CEO. For the period ending Sept. 30, the bank reported net income of $799 million, a sharp year-over-year decline resulting from a $1.4 billion pretax loss on the sale of available-for-sale securities and impacts related to the sale of the auto loan portfolio.

Excluding these items, net income was $1.4 billion for the quarter, the bank said.

Earnings per share were 56 cents, missing the consensus estimate of $1.21 from analysts surveyed by S&P Capital IQ. Total revenue was almost $3.8 billion, down from $5.2 billion in the corresponding quarter a year earlier, while non-interest expenses rose slightly to $3.1 billion as of September 30.

The bank’s net interest income increased by 0.7% year-on-year, mainly due to repricing of fixed assets and liabilities, higher customer deposit balances and higher loan balances. Truist said.

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Noninterest income fell 95% from the same period last year, reflecting the $1.4 billion securities loss as well as a decline in mortgage banking fees and “other income,” the bank said.

The bank’s return on tangible equity was 7.2% for the quarter, or 14.6% on an adjusted basis.

What Lyons does next and how he decides to shape Truistwill be critical, Mayo said. It will be a multi-year transformation, Mayo predicted.

“Defining who they don’t want to be is sometimes as important as defining what they want to be,” he said.