Truist Explores Sale of $7 Billion Afco Credit Unit in Strategic Shift

Truist Financial Corp. (NYSE: TFC) is exploring a potential sale of its specialty lending unit, Afco Credit Corp., in a move to sharpen its focus on core banking activities, according to a Bloomberg report. The Charlotte-based regional bank is reportedly working with financial advisers to assess interest from potential buyers for the insurance premium finance business.

Strategic Review Under New CEO

The potential divestiture marks one of the first significant strategic moves under new Chief Executive Officer Mike Lyons, who assumed the role last month. The sale is part of a broader effort to streamline the bank's balance sheet and reallocate capital toward its primary operations, including its branch network, digital platforms, and deposit-gathering initiatives that support net interest margins.

Afco Credit Corp. is a provider of short-term commercial financing that allows businesses to pay for property and casualty insurance premiums over time. According to the report, the unit manages assets valued between $6 billion and $7 billion.

Details of the Potential Transaction

Truist is reportedly considering several options for the unit, according to people familiar with the matter cited by Bloomberg. These options include:

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• An outright sale of the entire Afco Credit business.
• A direct sale of the unit's portfolio of assets.

Private credit firms are expected to be among the interested bidders for the assets. While final valuation terms have not been determined, sources indicated the transaction is anticipated to command a premium relative to the value of the underlying asset base.

Market Impact and Context

The move comes as many regional banks are re-evaluating their portfolios to optimize risk-weighted assets amid evolving capital requirements. By shedding a non-core lending division, Truist could reduce its specialized credit commitments.

Shares of Truist Financial rose approximately 1% in trading following the publication of the report. It is important to note that the deliberations are in a preliminary phase, and sources emphasized that the discussions may not ultimately lead to a transaction.