Truist settles 15-year-old legal saga, causing earnings hit

• Key insight: Truist’s fourth-quarter earnings were hurt by $130 million in legal-related fees and $63 million in severance costs.
• What’s at stake: As part of the settlement agreement related to a court case involving overdraft fees, the bank has agreed to pay up to $240 million.
• Forward look: Truist Chief Financial Officer Mike Maguire said restructuring charges should be “lower in 2026, modestly,” though there will still be severance-related costs.

Truist Financial has agreed to pay up to $240 million to resolve a long-running legal saga, and that settlement ate into its fourth-quarter profits, the company announced Wednesday.

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The quarterly results, which fell short of Wall Street’s expectations, were also hurt by $63 million of expenses tied to employee severance packages.

The settlement agreement, which is subject to court approval, caps a 15-year class-action suit about overdraft fees that arose at one of Truist’s predecessor banks.

The plaintiff, who died in 2014, had argued that all of the overdraft fees that Atlanta-based SunTrust Banks charged to his account were actually interest charges and therefore were subject to the maximum interest-rate limit laws of the state of Georgia, according to Truist’s most recent quarterly filing.

The plaintiff later argued that SunTrust violated civil and criminal usury laws, and sought damages on a class-wide basis, including refunds of up to $452 million for challenged overdraft fees and pre-judgment interest.

Earlier this month, the U.S. Supreme Court declined to hear Truist’s appeal of a Georgia Supreme Court decision that was unfavorable to Truist. The Charlotte, North Carolina, bank had taken issue with the case’s status as a class-action suit.

The settlement agreement added $130 million to Truist’s fourth-quarter expenses. It wiped out 12 cents of earnings per share for the quarter and 18 cents per share for the year.

On Wednesday, the $542 billion-asset bank declined to comment further on the settlement agreement, which is expected to be included with a motion for preliminary approval when it is filed with the court.

Overall, Truist’s noninterest expenses totaled $3.17 billion for the fourth quarter, up about 4% from the same quarter in 2024. For all of 2025, the bank’s expenses were $12.08 billion, up roughly half of one percent compared with the prior year and coming in under the bank’s 2025 guidance.

The cost of job cuts

The severance costs, which shaved four cents off Truist’s fourth-quarter earnings per share, are among the bank’s ongoing restructuring charges. Such charges have totaled $358 million over the past two years. In addition to severance costs, the restructuring charges include occupancy fees, professional services costs and outside processing fees.

Truist’s restructuring charges should be “lower in 2026, modestly,” Chief Financial Officer Mike Maguire told analysts Wednesday during the company’s fourth-quarter earnings call. The bank, which struggled for years with higher-than-expected costs, initiated an organizational revamp in the fall of 2023 to reduce expenses by $750 million over a 12- to 18-month period.

“Obviously, we’ll continue to have severance expense,” Maguire said in response to an analyst’s question about what to expect in 2026. “We’ll continue to have facilities-related charges and the like. But I do think that there is an opportunity and an expectation that they’ll be lower over time.”

Truist’s headcount has ebbed and flowed over the past year, according to data provided in its fourth-quarter earnings press release.

At the end of December 2024, the company had 37,661 full-time equivalent jobs. By the end of September 2025, that number had risen to 38,534. It then dropped to 38,062 by the end of December 2025, a quarter-over-quarter decline of about 1.2%.

The ups and downs in headcount reflect the bank’s shift away from temporary contract workers, Maguire said on the call. “So in fact you might actually see headcount higher throughout the course of the year as we move from contractor to full-time employees,” he added. But “cost per full-time equivalent would go down, assuming we do a good job executing that strategy.”

For the quarter ending Dec. 31, Truist reported earnings per share of $1.00, missing analysts’ average estimate by 9 cents, according to S&P Capital IQ.

Net income for the quarter was $1.35 billion, up 6.1% year over year. Net interest income rose 3.06% from the prior-year quarter to $3.7 billion, as average total loans increased and average deposit costs declined. Fee income of $1.55 billion rose 5.17%, due to higher investment banking and trading income and wealth management income.

Revenues totaled $5.25 billion, up from $5.06 billion in the same quarter of 2024.

During Wednesday’s call, Truist CEO Bill Rogers reiterated the bank’s expectation that it will achieve a return on tangible common equity of 15% for all of 2027. For 2025, that profitability metric came in at 12.7%.

When pressed by an analyst about the post-2027 outlook for return on tangible common equity, Rogers declined to get specific.

“Past 2027 … I don’t want to sort of speculate as to what all those things might be,” he said.

He cited the possibility that the company might be in a different capital position by that time, and he said the economic environment after 2027 could also be a factor.

The bank said Wednesday that it plans to buy back more common shares this year than last year — about $4 billion in total, including roughly $1 billion by the end of March.

In 2025, Truist repurchased $2.5 billion of common shares. In December 2025, its board authorized the repurchase of up to $10 billion of common stock with no expiration date.