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Abstract Multiwavelength observations suggest that the accretion disk in the hard and intermediate states of X-ray binaries (XRBs) and active galactic nucleus transitions from a cold, thin disk at large distances into a hot, thick flow close to the black hole (BH). However, the formation, structure, and dynamics of such truncated disks are poorly constrained due to the complexity of the thermodynamic, magnetic, and radiative processes involved. We present the first radiation-transport two-temperature general relativistic magnetohydrodynamic (GRMHD) simulations of truncated disks radiating at ∼35% of the Eddington luminosity with and without large-scale poloidal magnetic flux. We demonstrate that when a geometrically thin accretion disk is threaded by large-scale net poloidal magnetic flux, it self-consistently transitions at small radii into a two-phase medium of cold gas clumps floating through a hot, magnetically dominated corona. This transition occurs at a well-defined truncation radius determined by the distance out to which the disk is saturated with magnetic flux. The average ion and electron temperatures in the semiopaque corona reach, respectively,T_i≳ 10¹⁰K andT_e≳ 5 × 10⁸K. The system produces radiation, powerful collimated jets, and broader winds at the total energy efficiency exceeding 90%, the highest ever energy extraction efficiency from a spinning BH by a radiatively efficient flow in a GRMHD simulation. This is consistent with jetted ejections observed during XRB outbursts. The two-phase medium may naturally lead to broadened iron line emission observed in the hard state.