15-Year Overdraft Class Action Lawsuit Resolved: Truist Takes $240 Million Hit

Truist Financial has reached a landmark settlement to end a lengthy overdraft class action lawsuit that dates back 15 years, a move that will significantly weigh on the bank’s bottom line. The financial institution has agreed to pay up to $240 million to resolve the dispute, which has been dragging through courts since it originated with one of Truist’s predecessor institutions, SunTrust Banks. The settlement, still pending court approval, marks the conclusion of a protracted legal battle centered on whether overdraft fees should have been classified as interest and subjected to Georgia’s interest rate caps.

Overdraft Fee Dispute: From SunTrust to Today’s Class Action Resolution

The root of the overdraft class action lawsuit traces back to a complaint filed against SunTrust Banks. The original plaintiff contended that all overdraft fees charged by the Atlanta-based institution should have been classified as interest, thereby falling under Georgia’s usury laws and interest rate limitations. When the plaintiff passed away in 2014, the case evolved into a broader class action with significantly expanded claims. Plaintiffs later alleged that SunTrust violated both civil and criminal usury statutes and demanded class-wide damages, including up to $452 million in fee refunds and pre-judgment interest.

The case gained momentum early this year when the U.S. Supreme Court declined to review Truist’s appeal against an unfavorable Georgia Supreme Court ruling. That decision effectively blocked the bank’s attempt to overturn the class-action status of the lawsuit, paving the way for the settlement negotiations that culminated in the current agreement.

The Numbers Behind the Overdraft Settlement: $130 Million in Immediate Costs

The financial toll of the overdraft dispute resolution became immediately apparent in Truist’s fourth-quarter 2025 results. The $130 million settlement expense reduced the bank’s earnings per share by 12 cents for the quarter alone and 18 cents for the full year. Combined with $63 million in severance-related costs tied to ongoing workforce restructuring, Truist’s quarterly earnings per share landed at $1.00, missing analyst consensus estimates by 9 cents according to S&P Capital IQ.

The settlement costs were particularly impactful when viewed against Truist’s overall expense picture. The bank’s noninterest expenses reached $3.17 billion in the fourth quarter, marking a 4% increase compared to the same period in 2024. For the entire 2025 year, total expenses climbed to $12.08 billion, up 0.5% from 2024, though still tracking below the bank’s own guidance.

Beyond the Settlement: Truist’s Restructuring and Workforce Challenges

While the overdraft lawsuit settlement captured headlines, Truist simultaneously grappled with substantial restructuring expenses. The $63 million in severance payments during the fourth quarter shaved another 4 cents off earnings per share. Looking back over two years, restructuring charges—encompassing severance, occupancy costs, professional services, and external processing fees—totaled $358 million.

Truist initiated its major organizational overhaul in late 2023 with an ambitious target to reduce costs by $750 million over 12 to 18 months. CFO Mike Maguire told analysts during the earnings call that while restructuring expenses should moderate somewhat in 2026, severance and facility-related costs will persist as the company continues its transformation.

The workforce numbers illustrate the ongoing transition. At the end of December 2024, Truist employed 37,661 full-time equivalents. This rose to 38,534 by September 2025 before settling at 38,062 by year-end—a quarterly decline of approximately 1.2%. Maguire explained that these shifts reflect a strategic shift from temporary contractors to permanent staff. He suggested that while total headcount might rise as more contractors convert to full-time status, the average cost per employee should decline if execution proceeds as planned.

2025 Performance: Positive Metrics Offset by Legal and Restructuring Drag

Despite the headwinds from the overdraft lawsuit and restructuring costs, Truist posted some encouraging operational metrics for 2025. Net income reached $1.35 billion, representing a 6.1% increase year-over-year. Net interest income climbed 3.06% to $3.7 billion, boosted by higher average loan balances and lower deposit costs. Fee income rose 5.17% to $1.55 billion, driven by gains in investment banking, trading, and wealth management activities. Total revenue expanded to $5.25 billion from $5.06 billion in the prior-year quarter.

The bank’s scale remained robust, with $542 billion in managed assets as of the reporting date.

Looking Ahead: Return on Equity Targets and Capital Management Plans

CEO Bill Rogers reiterated the bank’s strategic objective of achieving a 15% return on tangible common equity by 2027, with the 2025 performance at 12.7%. When questioned about expectations beyond 2027, Rogers declined to offer specifics, citing potential changes in the bank’s capital position and broader macroeconomic conditions.

On the capital management front, Truist announced plans to repurchase more common stock in 2026 than in the prior year, targeting approximately $4 billion in buybacks, with roughly $1 billion expected to occur by the end of March. In 2025, the bank completed $2.5 billion in share repurchases. The board has authorized up to $10 billion in total repurchases with no expiration date, providing management with flexibility to return capital to shareholders as conditions permit.

The overdraft class action lawsuit’s resolution represents a chapter closed on a 15-year legal saga, but Truist’s path forward will continue to be shaped by its restructuring initiatives and pursuit of improved profitability metrics in the years ahead.