0000092230tfc:ClientRelatedAndOtherRiskManagementMemberus-gaap:0000092230us-gaap:InterestRateContractMemberus-gaap:NondesignatedMemberus-gaap:SwapMember2021-09-30CashFlowHedgingMemberus-gaap:InterestExpenseMember2021-01-012021-06-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


 Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: SeptemberJune 30, 20212022
Commission File Number: 1-10853
_____________________________
TRUIST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

_____________________________________________
North Carolina56-0939887
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
214 North Tryon Street
Charlotte,North Carolina28202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(336)733-2000

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $5 par valueTFCNew York Stock Exchange
Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred StockTFC.PINew York Stock Exchange
5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred StockTFC.PJNew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred StockTFC.PONew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred StockTFC.PRNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

At SeptemberJune 30, 2021, 1,334,891,5262022, 1,326,393,427 shares of the registrant’s common stock, $5 par value, were outstanding.


TABLE OF CONTENTS
TRUIST FINANCIAL CORPORATION
FORM 10-Q
SeptemberJune 30, 20212022
Page No.
PART I - Financial Information
Glossary of Defined Terms
Forward-Looking Statements
Item 1.Financial Statements
Consolidated Balance Sheets (Unaudited)
Consolidated Statements of Income (Unaudited)
Consolidated Statements of Comprehensive Income (Unaudited)
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
Consolidated Statements of Cash Flows (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
Note 2. Business Combinations
Note 3. Securities Financing Activities
Note 4. Investment Securities
Note 5. Loans and ACL
Note 6. Goodwill and Other Intangible Assets
Note 7. Loan Servicing
Note 8. Other Assets and Liabilities
Note 9. Borrowings
Note 10. Shareholders’ Equity
Note 11. AOCI
Note 12. Income Taxes
Note 13. Benefit Plans
Note 14. Commitments and Contingencies
Note 15. Fair Value Disclosures
Note 16. Derivative Financial Instruments
Note 17. Computation of EPS
Note 18. Operating Segments
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Regulatory Considerations
Executive Overview
Analysis of Results of Operations
Analysis of Financial Condition
Risk Management
Liquidity
Capital
Share Repurchase activity
Critical Accounting Policies
Item 3.Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management in MD&A)
Item 4.Controls and Procedures
PART II - Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities - (none)
Item 4.Mine Safety Disclosures - (not applicable)
Item 5.Other Information - (none to be reported)
Item 6.Exhibits




Glossary of Defined Terms
The following terms may be used throughout this report, including the consolidated financial statements and related notes.
TermDefinition
ACLAllowance for credit losses
AFSAvailable-for-sale
Agency MBSMortgage-backed securities issued by a U.S. government agency or GSE
ALLLAllowance for loan and lease losses
ARRCAlternative Reference Rates Committee of the FRB and the Federal Reserve Bank of New York
AOCIAccumulated other comprehensive income (loss)
BB&TBB&T Corporation and subsidiaries (changed to “Truist Financial Corporation” effective with the Merger)
BoardTruist’s Board of Directors
C&CBCorporate and Commercial Banking, an operating segment
CARES ActThe Coronavirus Aid, Relief, and Economic Security Act
CB&WConsumer Banking and Wealth, an operating segment
CCARComprehensive Capital Analysis and Review
CDICore deposit intangible
CECLCurrent expected credit loss model
CEOChief Executive Officer
CFOChief Financial Officer
CET1Common equity tier 1
CFPBConsumer Financial Protection Bureau
CompanyTruist Financial Corporation and its subsidiaries (interchangeable with “Truist” below), formerly BB&T Corporation
COVID-19Coronavirus disease 2019
CRACommunity Reinvestment Act of 1977
CRECommercial real estate
CROChief Risk Officer
CVACredit valuation adjustment
EPSEarnings per common share
EVEESGEconomic value of equityEnvironmental, Social, and Governance
Exchange ActSecurities Exchange Act of 1934, as amended
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FHLMCFederal Home Loan Mortgage Corporation
FNMAFederal National Mortgage Association
FRBBoard of Governors of the Federal Reserve System
FTEFull-time equivalent employee
GAAPAccounting principles generally accepted in the United States of America
GDPGross Domestic Product
GrandbridgeGrandbridge Real Estate Capital, LLC
GSEU.S. government-sponsored enterprise
HFIHeld for investment
HQLAHigh-quality liquid assets
HTM
Held-to-maturity
IHInsurance Holdings, an operating segment
IPVIndependent price verification
ISDAInternational Swaps and Derivatives Association, Inc.
LCRLiquidity Coverage Ratio
LHFSLoans held for sale
LIBORLondon Interbank Offered Rate
LOCOMLower of cost or market
Market Risk RuleMarket risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBSMortgage-backed securities
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MergerMerger of BB&T and SunTrust effective December 6, 2019
MRMModel Risk Management
MSRMortgage servicing right
NANot applicable
NIMNet interest margin, computed on a TE basis
NMNot meaningful
NPANonperforming asset
NPLNonperforming loan
NSFRNet stable funding ratio
NYSENew York Stock Exchange
OASOption adjusted spread
OCCOffice of the Comptroller of the Currency
Truist Financial Corporation 1


TermDefinition
OCIOther comprehensive income (loss)
OPEBOther post-employment benefit
OREOOther real estate owned
OT&COther, Treasury and Corporate
Parent CompanyTruist Financial Corporation, the parent company of Truist Bank and other subsidiaries
PCDPurchased credit deteriorated loans
PCIPurchased credit impaired loans
PPPPaycheck Protection Program, established by the CARES Act
Re-REMICsRe-securitizations of Real Estate Mortgage Investment Conduits
Truist Financial Corporation 1


TermDefinition
ROU assetsRight-of-use assets
RUFCReserve for unfunded lending commitments
S&PStandard & Poor’s
SBICSmall Business Investment Company
SCBStress Capital Buffer
SECSecurities and Exchange Commission
SOFRSecured Overnight Financing Rate
SunTrustSunTrust Banks, Inc.
TDRTroubled debt restructuring
TETaxable-equivalent
TRSTotal Return Swap
TruistTruist Financial Corporation and its subsidiaries (interchangeable with the “Company” above), formerly BB&T Corporation
Truist BankTruist Bank, formerly Branch Banking and Trust Company
U.S.United States of America
U.S. TreasuryUnited States Department of the Treasury
UPBUnpaid principal balance
USAAUnited Services Automobile Association
VaRValue-at-risk
VIEVariable interest entity

2 Truist Financial Corporation


Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of Truist. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could,” and other similar expressions are intended to identify these forward-looking statements.

Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding Truist’s business, the economy, and other future conditions. Such statements involve inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As such, Truist’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed in Part I, Item 1A-Risk Factors in Truist’s Form 10-K for the year ended December 31, 2020:2021:

residual risks and uncertainties relating to the Merger of heritage BB&T and heritage SunTrust, including the ability to successfully integrate the companies or to realize the anticipated benefits of the Merger;
expenses relating to the Merger and integration of heritage BB&Tapplication and heritage SunTrust;data center decommissioning;
deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;
the COVID-19 pandemic disrupted the global economy and adversely impacted Truist’s financial condition and results of operations, including through increased expenses, reduced fee income and net interest margin, decreased demand for certain types of loans, and increases in the allowance for credit losses; thea resurgence of the pandemic, in recent monthswhether due to new variants of the coronavirus or other factors, could reintroduce or prolong these negative impacts and also adversely affect Truist’s capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets;
Truist is subject to credit risk by lending or committing to lend money, and may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;
changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark, and potentially negative interest rates, which could adversely affect Truist’s revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity;
inability to access short-term funding or liquidity, loss of client deposits or changes in Truist’s credit ratings, which could increase the cost of funding or limit access to capital markets;
risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk;
risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators;
failure to execute on strategic or operational plans, including the ability to successfully complete or integrate mergers and acquisitions;
increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards, and (ii) products and services offered by non-bank financial technology companies, may reduce Truist’s client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact Truist’s businesses or results of operations;
failure to maintain or enhance Truist’s competitive position with respect to new products, services and technology, whether it fails to anticipate client expectations or because its technological developments fail to perform as desired or do not achieve market acceptance or regulatory approval or for other reasons, may cause Truist to lose market share or incur additional expense;
negative public opinion, which could damage Truist’s reputation;
increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance;
regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences;
evolving legislative, accounting and regulatory standards, including with respect to climate, capital, and liquidity requirements, and results of regulatory examinations may adversely affect Truist’s financial condition and results of operations;
the monetary and fiscal policies of the federal government and its agencies, including in response to rising inflation, could have a material adverse effect on the economy and Truist’s profitability;
accounting policies and processes require management to make estimates about matters that are uncertain, including the potential write down to goodwill if there is an elongated period of decline in market value for Truist’s stock and adverse economic conditions are sustained over a period of time;
general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, and instability in global geopolitical matters or volatility in financial markets could result in, among other things, slower deposit or asset growth, a deterioration in credit quality, or a reduced demand for credit, insurance, or other services;
risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases;
risks relating to Truist’s role as a loan servicer, including an increase in the scope or costs of the services Truist is required to perform, without any corresponding increase in servicing fees or a breach of Truist’s obligations as servicer;
Truist’s success depends on hiring and retaining key personnel,teammates, and if these individuals leave or change roles without effective replacements, Truist’s operations and integration activities could be adversely impacted, which could be exacerbated in the increased work-from-home environment caused by the COVID-19 pandemic as Truist continues to integrate the management teams of heritage BB&T and heritage SunTrust;job markets may be less constrained by physical geography;
fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect, or mitigate;
security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s teammates and clients, malware intrusion, data corruption attempts, system breaches, cyber attacks,cyber-attacks, which have increased in frequency with current geopolitical tensions, identity theft, ransomware attacks, and physical security risks, such as natural disasters, environmental conditions, and intentional acts of destruction, could result in the disclosure of confidential information, adversely affect Truist’s business or reputation or create significant legal or financial exposure; and
widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism and pandemics), and the effects of climate change, including physical risks, such as more frequent and intense weather events, and risks related to the transition to a lower carbon economy, such as regulatory or technological changes or shifts in market dynamics or consumer preferences, could have an adverse effect on Truist’s financial condition and results of operations, lead to material disruption of Truist’s operations or the ability or willingness of clients to access Truist’s products and services.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, Truist undertakes no obligation to revise or update any forward-looking statements.
Truist Financial Corporation 3


ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)
Unaudited
(Dollars in millions, except per share data, shares in thousands)
September 30, 2021December 31, 2020Unaudited
(Dollars in millions, except per share data, shares in thousands)
Jun 30, 2022Dec 31, 2021
AssetsAssetsAssets
Cash and due from banksCash and due from banks$4,656 $5,029 Cash and due from banks$5,511 $5,085 
Interest-bearing deposits with banksInterest-bearing deposits with banks15,171 13,839 Interest-bearing deposits with banks17,602 15,210 
Securities borrowed or purchased under resale agreements1,919 1,745 
Securities borrowed or purchased under agreements to resellSecurities borrowed or purchased under agreements to resell2,650 4,028 
Trading assets at fair valueTrading assets at fair value6,972 3,872 Trading assets at fair value5,230 4,423 
AFS securities at fair valueAFS securities at fair value151,038 120,788 AFS securities at fair value79,278 153,123 
LHFS (including $4,799 and $4,955 at fair value, respectively)5,133 6,059 
Loans and leases285,522 299,734 
HTM securities ($53,905 and $1,495 at fair value, respectively)HTM securities ($53,905 and $1,495 at fair value, respectively)60,081 1,494 
LHFS (including $3,149 and $3,544 at fair value, respectively)LHFS (including $3,149 and $3,544 at fair value, respectively)3,638 4,812 
Loans and leases (including $20 and $23 at fair value, respectively)Loans and leases (including $20 and $23 at fair value, respectively)303,662 289,513 
ALLLALLL(4,702)(5,835)ALLL(4,187)(4,435)
Loans and leases, net of ALLLLoans and leases, net of ALLL280,820 293,899 Loans and leases, net of ALLL299,475 285,078 
Premises and equipmentPremises and equipment3,719 3,870 Premises and equipment3,682 3,700 
GoodwillGoodwill24,891 24,447 Goodwill26,299 26,098 
CDI and other intangible assetsCDI and other intangible assets2,930 2,984 CDI and other intangible assets3,535 3,408 
MSRs at fair value2,584 2,023 
Other assets (including $4,002 and $4,891 at fair value, respectively)30,051 30,673 
Loan servicing rights at fair valueLoan servicing rights at fair value3,466 2,633 
Other assets (including $2,336 and $3,436 at fair value, respectively)Other assets (including $2,336 and $3,436 at fair value, respectively)34,676 32,149 
Total assetsTotal assets$529,884 $509,228 Total assets$545,123 $541,241 
LiabilitiesLiabilitiesLiabilities
Noninterest-bearing depositsNoninterest-bearing deposits$143,595 $127,629 Noninterest-bearing deposits$147,752 $145,892 
Interest-bearing depositsInterest-bearing deposits262,262 253,448 Interest-bearing deposits277,007 270,596 
Short-term borrowings (including $1,735 and $1,115 at fair value, respectively)5,226 6,092 
Short-term borrowings (including $1,816 and $1,731 at fair value, respectively)Short-term borrowings (including $1,816 and $1,731 at fair value, respectively)13,736 5,292 
Long-term debtLong-term debt37,837 39,597 Long-term debt30,319 35,913 
Other liabilities (including $601 and $555 at fair value, respectively)12,064 11,550 
Other liabilities (including $1,914 and $586 at fair value, respectively)Other liabilities (including $1,914 and $586 at fair value, respectively)13,310 14,277 
Total liabilitiesTotal liabilities460,984 438,316 Total liabilities482,124 471,970 
Shareholders’ EquityShareholders’ EquityShareholders’ Equity
Preferred stockPreferred stock6,673 8,048 Preferred stock6,673 6,673 
Common stock, $5 par valueCommon stock, $5 par value6,674 6,745 Common stock, $5 par value6,632 6,639 
Additional paid-in capitalAdditional paid-in capital34,977 35,843 Additional paid-in capital34,410 34,565 
Retained earningsRetained earnings22,114 19,455 Retained earnings24,500 22,998 
AOCI, net of deferred income taxesAOCI, net of deferred income taxes(1,538)716 AOCI, net of deferred income taxes(9,240)(1,604)
Noncontrolling interestsNoncontrolling interests— 105 Noncontrolling interests24 — 
Total shareholders’ equityTotal shareholders’ equity68,900 70,912 Total shareholders’ equity62,999 69,271 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$529,884 $509,228 Total liabilities and shareholders’ equity$545,123 $541,241 
Common shares outstandingCommon shares outstanding1,334,892 1,348,961 Common shares outstanding1,326,393 1,327,818 
Common shares authorizedCommon shares authorized2,000,000 2,000,000 Common shares authorized2,000,000 2,000,000 
Preferred shares outstandingPreferred shares outstanding223 280 Preferred shares outstanding223 223 
Preferred shares authorizedPreferred shares authorized5,000 5,000 Preferred shares authorized5,000 5,000 

The accompanying notes are an integral part of these consolidated financial statements.
4 Truist Financial Corporation


CONSOLIDATED STATEMENTS OF INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Interest Income    
Interest and fees on loans and leases$2,825 $3,174 $8,728 $10,327 
Interest on securities548 393 1,488 1,331 
Interest on other earning assets53 56 147 279 
Total interest income3,426 3,623 10,363 11,937 
Interest Expense    
Interest on deposits33 96 116 718 
Interest on long-term debt151 152 446 635 
Interest on other borrowings13 38 124 
Total interest expense193 261 600 1,477 
Net Interest Income3,233 3,362 9,763 10,460 
Provision for credit losses(324)421 (710)2,158 
Net Interest Income After Provision for Credit Losses3,557 2,941 10,473 8,302 
Noninterest Income    
Insurance income645 518 1,961 1,648 
Wealth management income356 324 1,042 945 
Service charges on deposits276 247 787 754 
Residential mortgage income179 221 396 807 
Investment banking and trading income301 244 958 636 
Card and payment related fees225 200 650 558 
Lending related fees74 77 268 210 
Operating lease income57 72 191 232 
Commercial real estate related income78 55 259 148 
Income from bank-owned life insurance43 46 139 135 
Securities gains (losses)— 104 — 402 
Other income131 102 316 119 
Total noninterest income2,365 2,210 6,967 6,594 
Noninterest Expense    
Personnel expense2,187 2,058 6,536 6,038 
Professional fees and outside processing372 323 1,063 859 
Net occupancy expense187 233 578 697 
Software expense251 221 707 647 
Amortization of intangibles145 170 431 513 
Equipment expense154 127 389 363 
Marketing and customer development94 75 226 215 
Operating lease depreciation47 56 144 204 
Loan-related expense52 59 161 177 
Regulatory costs43 34 99 93 
Merger-related and restructuring charges172 236 610 552 
Loss (gain) on early extinguishment of debt— — (3)235 
Other expense91 163 475 471 
Total noninterest expense3,795 3,755 11,416 11,064 
Earnings    
Income before income taxes2,127 1,396 6,024 3,832 
Provision for income taxes423 255 1,189 670 
Net income1,704 1,141 4,835 3,162 
Noncontrolling interests— (3)
Net income available to the bank holding company1,704 1,138 4,838 3,153 
Preferred stock dividends and other88 70 329 197 
Net income available to common shareholders$1,616 $1,068 $4,509 $2,956 
Basic EPS$1.21 $0.79 $3.37 $2.20 
Diluted EPS1.20 0.79 3.34 2.18 
Basic weighted average shares outstanding1,334,825 1,347,916 1,339,558 1,346,605 
Diluted weighted average shares outstanding1,346,854 1,358,122 1,351,712 1,357,174 
Unaudited
(Dollars in millions, except per share data, shares in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Interest Income    
Interest and fees on loans and leases$2,898 $2,901 $5,542 $5,903 
Interest on securities675 497 1,315 940 
Interest on other earning assets100 45 173 94 
Total interest income3,673 3,443 7,030 6,937 
Interest Expense    
Interest on deposits99 36 131 83 
Interest on long-term debt137 147 269 295 
Interest on other borrowings30 15 40 29 
Total interest expense266 198 440 407 
Net Interest Income3,407 3,245 6,590 6,530 
Provision for credit losses171 (434)76 (386)
Net Interest Income After Provision for Credit Losses3,236 3,679 6,514 6,916 
Noninterest Income    
Insurance income825 690 1,552 1,316 
Investment banking and trading income255 402 516 748 
Wealth management income337 345 680 686 
Service charges on deposits254 253 506 511 
Card and payment related fees246 225 458 425 
Residential mortgage income74 117 163 217 
Lending related fees100 94 185 194 
Operating lease income66 66 124 134 
Commercial mortgage income26 47 58 80 
Income from bank-owned life insurance50 46 101 96 
Securities gains (losses)(1)— (70)— 
Other income16 120 117 195 
Total noninterest income2,248 2,405 4,390 4,602 
Noninterest Expense    
Personnel expense2,102 2,207 4,153 4,349 
Professional fees and outside processing349 341 712 691 
Software expense234 246 466 456 
Net occupancy expense181 182 389 391 
Amortization of intangibles143 142 280 286 
Equipment expense114 122 232 235 
Marketing and customer development93 66 177 132 
Operating lease depreciation47 47 95 97 
Loan-related expense47 55 91 109 
Regulatory costs44 31 79 56 
Merger-related and restructuring charges121 297 337 438 
Loss (gain) on early extinguishment of debt(39)— (39)(3)
Other expense144 275 282 384 
Total noninterest expense3,580 4,011 7,254 7,621 
Earnings    
Income before income taxes1,904 2,073 3,650 3,897 
Provision for income taxes372 415 702 766 
Net income1,532 1,658 2,948 3,131 
Noncontrolling interests(3)
Net income available to the bank holding company1,531 1,657 2,946 3,134 
Preferred stock dividends and other77 98 165 241 
Net income available to common shareholders$1,454 $1,559 $2,781 $2,893 
Basic EPS$1.09 $1.16 $2.09 $2.16 
Diluted EPS1.09 1.16 2.08 2.14 
Basic weighted average shares outstanding1,330,160 1,338,302 1,329,601 1,341,963 
Diluted weighted average shares outstanding1,338,864 1,349,492 1,340,225 1,354,210 

The accompanying notes are an integral part of these consolidated financial statements.
Truist Financial Corporation 5


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)
Unaudited
(Dollars in millions)
Three Months Ended September 30,Nine Months Ended September 30,Unaudited
(Dollars in millions)
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020Unaudited
(Dollars in millions)
2022202120222021
Net incomeNet income$1,704 $1,141 $4,835 $3,162 Net income$1,532 $1,658 $2,948 $3,131 
OCI, net of tax:OCI, net of tax:    OCI, net of tax:    
Net change in net pension and postretirement costsNet change in net pension and postretirement costs(55)(11)(22)18 Net change in net pension and postretirement costs(2)13 33 
Net change in cash flow hedgesNet change in cash flow hedges51 30 Net change in cash flow hedges49 10 54 46 
Net change in AFS securitiesNet change in AFS securities(438)(375)(2,283)1,267 Net change in AFS securities(2,849)459 (7,838)(1,845)
Net change in HTM securitiesNet change in HTM securities92 — 136 — 
Other, netOther, net(2)— (1)Other, net(2)(1)
Total OCI, net of taxTotal OCI, net of tax(490)(377)(2,254)1,314 Total OCI, net of tax(2,705)468 (7,636)(1,764)
Total comprehensive incomeTotal comprehensive income$1,214 $764 $2,581 $4,476 Total comprehensive income$(1,173)$2,126 $(4,688)$1,367 
Income Tax Effect of Items Included in OCI:Income Tax Effect of Items Included in OCI:Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costsNet change in net pension and postretirement costs$(13)$(4)$(3)$Net change in net pension and postretirement costs$$(1)$$10 
Net change in cash flow hedgesNet change in cash flow hedges16 Net change in cash flow hedges15 16 14 
Net change in AFS securitiesNet change in AFS securities(133)(114)(701)389 Net change in AFS securities(867)139 (2,380)(568)
Net change in HTM securitiesNet change in HTM securities27 — 40 — 
Other, netOther, net— — — — 
Total income taxes related to OCITotal income taxes related to OCI$(144)$(116)$(688)$403 Total income taxes related to OCI$(822)$141 $(2,319)$(544)

The accompanying notes are an integral part of these consolidated financial statements.
6 Truist Financial Corporation


CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, shares in thousands)
Unaudited
(Dollars in millions, shares in thousands)
Shares of Common StockPreferred StockCommon StockAdditional Paid-In CapitalRetained EarningsAOCINoncontrolling InterestsTotal Shareholders’ EquityUnaudited
(Dollars in millions, shares in thousands)
Shares of Common StockPreferred StockCommon StockAdditional Paid-In CapitalRetained EarningsAOCINoncontrolling InterestsTotal Shareholders’ Equity
Balance, July 1, 20201,347,609 $7,143 $6,738 $35,676 $18,373 $847 $106 $68,883 
Balance, April 1, 2021Balance, April 1, 20211,344,845 $7,124 $6,724 $35,360 $20,184 $(1,516)$— $67,876 
Net incomeNet income— — — — 1,138 — 1,141 Net income— — — — 1,657 — 1,658 
OCIOCI— — — — — (377)— (377)OCI— — — — — 468 — 468 
Issued in connection with equity awards, netIssued in connection with equity awards, net509 — (6)— — — (3)Issued in connection with equity awards, net209 — (3)(2)— — (4)
Issued in connection with preferred stock offerings— 905 — — — — — 905 
Repurchase of common stockRepurchase of common stock(10,284)— (51)(559)— — — (610)
Redemption of preferred stockRedemption of preferred stock— (451)— — (14)— — (465)
Cash dividends declared on common stockCash dividends declared on common stock— — — — (602)— — (602)
Cash dividends declared on preferred stockCash dividends declared on preferred stock— — — — (84)— — (84)
Equity-based compensation expenseEquity-based compensation expense— — — 100 — — — 100 
Other, netOther, net— — — — — — (1)(1)
Balance, June 30, 2021Balance, June 30, 20211,334,770 $6,673 $6,674 $34,898 $21,139 $(1,048)$— $68,336 
Balance, April 1, 2022Balance, April 1, 20221,331,414 $6,673 $6,657 $34,539 $23,687 $(6,535)$23 $65,044 
Net incomeNet income— — — — 1,531 — 1,532 
OCIOCI— — — — — (2,705)— (2,705)
Issued in connection with equity awards, netIssued in connection with equity awards, net87 — (1)(2)— — (2)
Repurchase of common stockRepurchase of common stock(5,108)— (26)(224)— — — (250)
Cash dividends declared on common stockCash dividends declared on common stock— — — — (607)— — (607)Cash dividends declared on common stock— — — — (639)— — (639)
Cash dividends declared on preferred stockCash dividends declared on preferred stock— — — — (70)— — (70)Cash dividends declared on preferred stock— — — — (77)— — (77)
Equity-based compensation expenseEquity-based compensation expense— — — 104 — — — 104 Equity-based compensation expense— — — 96 — — — 96 
Other, net— — — — — — (3)(3)
Balance, September 30, 20201,348,118 $8,048 $6,741 $35,774 $18,834 $470 $106 $69,973 
Balance, July 1, 20211,334,770 $6,673 $6,674 $34,898 $21,139 $(1,048)$— $68,336 
Net income— — — — 1,704 — — 1,704 
OCI— — — — — (490)— (490)
Issued in connection with equity awards, net122 — — (4)(1)— — (5)
Cash dividends declared on common stock— — — — (640)— — (640)
Cash dividends declared on preferred stock— — — — (88)— — (88)
Equity-based compensation expense— — — 83 — — — 83 
Balance, September 30, 20211,334,892 $6,673 $6,674 $34,977 $22,114 $(1,538)$— $68,900 
Balance, June 30, 2022Balance, June 30, 20221,326,393 $6,673 $6,632 $34,410 $24,500 $(9,240)$24 $62,999 
Balance, January 1, 20201,342,166 $5,102 $6,711 $35,609 $19,806 $(844)$174 $66,558 
Net income— — — — 3,153 — 3,162 
OCI— — — — — 1,314 — 1,314 
Issued in connection with equity awards, net5,952 — 30 (115)(2)— — (87)
Issued in connection with preferred stock offerings— 3,449 — — — — — 3,449 
Redemption of preferred stock— (503)— — — — (500)
Cash dividends declared on common stock— — — — (1,817)— — (1,817)
Cash dividends declared on preferred stock— — — — (200)— — (200)
Equity-based compensation expense— — — 280 — — — 280 
Cumulative effect adjustment for new accounting standards— — — — (2,109)— — (2,109)
Other, net— — — — — — (77)(77)
Balance, September 30, 20201,348,118 $8,048 $6,741 $35,774 $18,834 $470 $106 $69,973 
Balance, January 1, 2021Balance, January 1, 20211,348,961 $8,048 $6,745 $35,843 $19,455 $716 $105 $70,912 Balance, January 1, 20211,348,961 $8,048 $6,745 $35,843 $19,455 $716 $105 $70,912 
Net incomeNet income— — — — 4,838 — (3)4,835 Net income— — — — 3,134 — (3)3,131 
OCIOCI— — — — — (2,254)— (2,254)OCI— — — — — (1,764)— (1,764)
Issued in connection with equity awards, netIssued in connection with equity awards, net5,719 — 28 (118)(3)— — (93)Issued in connection with equity awards, net5,597 — 28 (114)(2)— — (88)
Repurchase of common stockRepurchase of common stock(19,788)— (99)(1,017)— — — (1,116)Repurchase of common stock(19,788)— (99)(1,017)— — — (1,116)
Redemption of preferred stockRedemption of preferred stock— (1,375)— — (40)— — (1,415)Redemption of preferred stock— (1,375)— — (40)— — (1,415)
Cash dividends declared on common stockCash dividends declared on common stock— — — — (1,847)— — (1,847)Cash dividends declared on common stock— — — — (1,207)— — (1,207)
Cash dividends declared on preferred stockCash dividends declared on preferred stock— — — — (289)— — (289)Cash dividends declared on preferred stock— — — — (201)— — (201)
Equity-based compensation expenseEquity-based compensation expense— — — 269 — — — 269 Equity-based compensation expense— — — 186 — — — 186 
Other, netOther, net— — — — — — (102)(102)Other, net— — — — — — (102)(102)
Balance, September 30, 20211,334,892 $6,673 $6,674 $34,977 $22,114 $(1,538)$— $68,900 
Balance, June 30, 2021Balance, June 30, 20211,334,770 $6,673 $6,674 $34,898 $21,139 $(1,048)$— $68,336 
Balance, January 1, 2022Balance, January 1, 20221,327,818 $6,673 $6,639 $34,565 $22,998 $(1,604)$— $69,271 
Net incomeNet income— — — — 2,946 — 2,948 
OCIOCI— — — — — (7,636)— (7,636)
Issued in connection with equity awards, netIssued in connection with equity awards, net3,683 — 19 (107)(3)— — (91)
Repurchase of common stockRepurchase of common stock(5,108)— (26)(224)— — — (250)
Cash dividends declared on common stockCash dividends declared on common stock— — — — (1,276)— — (1,276)
Cash dividends declared on preferred stockCash dividends declared on preferred stock— — — — (165)— — (165)
Equity-based compensation expenseEquity-based compensation expense— — — 176 — — — 176 
Other, netOther, net— — — — — — 22 22 
Balance, June 30, 2022Balance, June 30, 20221,326,393 $6,673 $6,632 $34,410 $24,500 $(9,240)$24 $62,999 

The accompanying notes are an integral part of these consolidated financial statements.
Truist Financial Corporation 7


CONSOLIDATED STATEMENTS OF CASH FLOWS
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
Nine Months Ended September 30,
(Dollars in millions)
20212020
Unaudited
(Dollars in millions)
Unaudited
(Dollars in millions)
Six Months Ended June 30,
20222021
Cash Flows From Operating Activities:Cash Flows From Operating Activities:  Cash Flows From Operating Activities:  
Net incomeNet income$4,835 $3,162 Net income$2,948 $3,131 
Adjustments to reconcile net income to net cash from operating activities:Adjustments to reconcile net income to net cash from operating activities:  Adjustments to reconcile net income to net cash from operating activities:  
Provision for credit lossesProvision for credit losses(710)2,158 Provision for credit losses76 (386)
DepreciationDepreciation610 694 Depreciation397 401 
Amortization of intangiblesAmortization of intangibles431 513 Amortization of intangibles280 286 
Equity-based compensation expense269 280 
Securities (gains) lossesSecurities (gains) losses— (402)Securities (gains) losses70 — 
Net change in operating assets and liabilities:Net change in operating assets and liabilities:  Net change in operating assets and liabilities:  
LHFSLHFS156 1,144 LHFS395 2,139 
MSRs(206)639 
Loan servicing rightsLoan servicing rights(638)(156)
Pension assetPension asset(456)(417)Pension asset(468)(479)
Derivative assets and liabilitiesDerivative assets and liabilities905 (3,064)Derivative assets and liabilities2,143 668 
Trading assetsTrading assets(3,100)1,063 Trading assets(807)(2,073)
Other assets and other liabilitiesOther assets and other liabilities896 (299)Other assets and other liabilities(228)(223)
Other, netOther, net(545)(442)Other, net(391)(5)
Net cash from operating activitiesNet cash from operating activities3,085 5,029 Net cash from operating activities3,777 3,303 
Cash Flows From Investing Activities:Cash Flows From Investing Activities:  Cash Flows From Investing Activities:  
Proceeds from sales of AFS securitiesProceeds from sales of AFS securities137 5,219 Proceeds from sales of AFS securities3,198 112 
Proceeds from maturities, calls and paydowns of AFS securitiesProceeds from maturities, calls and paydowns of AFS securities25,424 14,917 Proceeds from maturities, calls and paydowns of AFS securities8,285 17,175 
Purchases of AFS securitiesPurchases of AFS securities(59,578)(28,242)Purchases of AFS securities(8,658)(39,378)
Proceeds from maturities, calls and paydowns of HTM securitiesProceeds from maturities, calls and paydowns of HTM securities2,567 — 
Purchases of HTM securitiesPurchases of HTM securities(3,020)— 
Originations and purchases of loans and leases, net of sales and principal collectedOriginations and purchases of loans and leases, net of sales and principal collected(13,356)13,451 
Net cash received (paid) for securities borrowed or purchased under agreements to resellNet cash received (paid) for securities borrowed or purchased under agreements to resell1,378 503 
Originations and purchases of loans and leases, net of sales and principal collected14,503 (4,328)
Net cash received (paid) for FHLB stock116 599 
Net cash received (paid) for asset acquisitions, business combinations, and divestituresNet cash received (paid) for asset acquisitions, business combinations, and divestitures(505)1,130 
Net cash paid for premises and equipment(314)(716)
Net cash received (paid) for mergers, acquisitions and divestitures390 (1,811)
Other, netOther, net(600)275 Other, net(694)(18)
Net cash from investing activitiesNet cash from investing activities(19,922)(14,087)Net cash from investing activities(10,805)(7,025)
Cash Flows From Financing Activities:Cash Flows From Financing Activities:Cash Flows From Financing Activities:
Net change in depositsNet change in deposits24,790 38,263 Net change in deposits8,275 17,209 
Net change in short-term borrowingsNet change in short-term borrowings(866)(11,972)Net change in short-term borrowings8,444 (440)
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt4,626 26,570 Proceeds from issuance of long-term debt943 3,333 
Repayment of long-term debtRepayment of long-term debt(5,873)(27,667)Repayment of long-term debt(5,831)(4,546)
Repurchase of common stockRepurchase of common stock(1,116)— Repurchase of common stock(250)(1,116)
Net proceeds from preferred stock issued— 3,449 
Redemption of preferred stockRedemption of preferred stock(1,415)(500)Redemption of preferred stock— (1,415)
Cash dividends paid on common stockCash dividends paid on common stock(1,847)(1,817)Cash dividends paid on common stock(1,276)(1,207)
Cash dividends paid on preferred stockCash dividends paid on preferred stock(289)(200)Cash dividends paid on preferred stock(165)(201)
Net cash received (paid) for hedge unwindsNet cash received (paid) for hedge unwinds— 1,111 Net cash received (paid) for hedge unwinds(198)— 
Other, netOther, net(214)(136)Other, net(96)(206)
Net cash from financing activitiesNet cash from financing activities17,796 27,101 Net cash from financing activities9,846 11,411 
Net Change in Cash and Cash EquivalentsNet Change in Cash and Cash Equivalents959 18,043 Net Change in Cash and Cash Equivalents2,818 7,689 
Cash and Cash Equivalents, January 1Cash and Cash Equivalents, January 118,868 19,065 Cash and Cash Equivalents, January 120,295 18,868 
Cash and Cash Equivalents, September 30$19,827 $37,108 
Cash and Cash Equivalents, June 30Cash and Cash Equivalents, June 30$23,113 $26,557 
Supplemental Disclosure of Cash Flow Information:Supplemental Disclosure of Cash Flow Information:Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:Net cash paid (received) during the period for:Net cash paid (received) during the period for:
Interest expenseInterest expense$655 $1,555 Interest expense$430 $461 
Income taxesIncome taxes745 94 Income taxes418 579 
Noncash investing activities:Noncash investing activities:
Transfer of AFS securities to HTMTransfer of AFS securities to HTM59,436 — 

The accompanying notes are an integral part of these consolidated financial statements.
8 Truist Financial Corporation


NOTE 1. Basis of Presentation

General

See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with GAAP. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. The year-end consolidated balance sheet data was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 20202021 should be referred to in connection with these unaudited interim consolidated financial statements. There were no significant changes to the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 20202021 that could have a material effect on the Company’s financial statements.

Reclassifications

Certain amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current presentation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses.expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for financial instruments; valuation of MSRs; goodwill, intangiblesecurities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other purchase accounting related adjustments;intangible assets; income taxes; and pension and postretirement benefit plan obligations and expenses; and tax assets, liabilities, and expense.obligations.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

There were no standards adopted during the current year that had a material effect on the Company’s financial statements, and no standards not yet adopted by the Company that are expected to have a material effect on the Company’s financial statements.
Standard / Adoption DateDescriptionEffects on the Financial Statements
Standards Not Yet Adopted
Troubled Debt Restructurings and Vintage Disclosures
January 1, 2023
Eliminates the accounting guidance for TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Additionally, requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.Truist has created a project plan and is actively engaged with its lines of business to establish reporting mechanisms consistent with the requirements of this standard. While implementation efforts are ongoing, the Company does not expect that the implementation of this standard will have a material impact on the Company. Upon adoption, Truist expects the newly required disclosures to be included in the Loans and ACL footnote.
Fair Value Hedging – Portfolio Layer Method
January 1, 2023
Introduces the portfolio layer method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method (previously named, last-of-layer method). Additionally, expands the scope of the portfolio layer method to include non-prepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.Truist is continuing to evaluate the use of the portfolio layer method in its hedging programs, although future use of the standard is dependent on its asset-liability management strategies in the context of the then current interest rate outlook. Truist does not believe adoption of the standard will have a material impact on its active last-of-layer hedges.

Truist Financial Corporation 9


NOTE 2. Business Combinations

On JulyMarch 1, 2021,2022, Truist acquired Constellation Affiliated Partners,Kensington Vanguard National Land Services, one of the country’s largest independent full-service national title insurance agencies, which resulted in approximately $543$198 million of goodwill and $418$138 million of identifiable intangible assets in the IH segment. Fair value estimates related to the acquired assets and liabilities are subject to adjustment during the one-year measurement period following the closing of the acquisition. The intangible assets are being amortized on an accelerated basis over a term of 15.015 years based upon the estimated duration of economic benefits received. Goodwill of $456$130 million and identifiable intangible assets of $277$110 million are deductible for tax purposes.

On August 10, 2021, Truist announced it will acquire Service Finance, LLC for $2.0 billion in cash consideration, which is expected to close in the fourth quarter of 2021.

Truist Financial Corporation 9


NOTE 3. Securities Financing Activities

Securities purchased under resale agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently sold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. At September 30, 2021 and December 31, 2020, the total market value of collateral held was $1.9 billion and $1.7 billion, of which $188 million and $27 million was repledged, respectively. The following table presents securities borrowed or purchased under resale agreements:agreements to resell:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Securities purchased under agreements to resellSecurities purchased under agreements to resell$2,010 $3,460 
Securities borrowedSecurities borrowed640 568 
Total securities borrowed or purchased under agreements to resellTotal securities borrowed or purchased under agreements to resell$2,650 $4,028 
Securities purchased under resale agreements$1,302 $1,158 
Securities borrowed617 587 
Total securities borrowed or purchased under resale agreements$1,919 $1,745 
Fair value of collateral held available to be resold or repledgedFair value of collateral held available to be resold or repledged$2,637 $4,005 
Fair value of securities repledgedFair value of securities repledged707 1,141 

For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to “Note 14. Commitments and Contingencies” for additional information related to pledged securities. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Overnight and ContinuousUp to 30 daysTotalOvernight and ContinuousUp to 30 daysTotal(Dollars in millions)Overnight and ContinuousUp to 30 daysTotalOvernight and ContinuousUp to 30 daysTotal
U.S. TreasuryU.S. Treasury$1,533 $$1,540 $305 $31 $336 U.S. Treasury$154 $— $154 $749 $409 $1,158 
State and MunicipalState and Municipal200 — 200 — — — 
GSEGSE98 32 130 45 54 GSE10 18 53 25 78 
Agency MBS - residentialAgency MBS - residential473 173 646 442 448 Agency MBS - residential1,079 24 1,103 720 141 861 
Corporate and other debt securitiesCorporate and other debt securities172 112 284 204 179 383 Corporate and other debt securities150 313 463 213 125 338 
Total securities sold under agreements to repurchaseTotal securities sold under agreements to repurchase$2,276 $324 $2,600 $996 $225 $1,221 Total securities sold under agreements to repurchase$1,593 $345 $1,938 $1,735 $700 $2,435 

There were no securities financing transactions subject to legally enforceable master netting arrangements that were eligible for balance sheet netting for the periods presented.

10 Truist Financial Corporation


NOTE 4. Investment Securities

The following tables summarize the Company’s AFS and HTM securities:
September 30, 2021
(Dollars in millions)
Amortized CostGross UnrealizedFair Value
GainsLosses
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:AFS securities:    AFS securities:    
U.S. TreasuryU.S. Treasury$9,700 $18 $21 $9,697 U.S. Treasury$10,855 $— $597 $10,258 
GSEGSE1,829 47 1,874 GSE269 — 19 250 
Agency MBS - residentialAgency MBS - residential133,933 954 1,826 133,061 Agency MBS - residential69,071 6,879 62,197 
Agency MBS - commercialAgency MBS - commercial3,083 30 40 3,073 Agency MBS - commercial2,966 314 2,654 
States and political subdivisionsStates and political subdivisions422 38 458 States and political subdivisions383 14 23 374 
Non-agency MBSNon-agency MBS2,856 11 2,846 Non-agency MBS4,050 — 625 3,425 
OtherOther29 — — 29 Other123 — 120 
Total AFS securitiesTotal AFS securities$151,852 $1,088 $1,902 $151,038 Total AFS securities$87,717 $21 $8,460 $79,278 
HTM securities:HTM securities:    
Agency MBS - residentialAgency MBS - residential$60,081 $— $6,176 $53,905 
December 31, 2020
(Dollars in millions)
Amortized CostGross UnrealizedFair Value
GainsLosses
December 31, 2021
(Dollars in millions)
December 31, 2021
(Dollars in millions)
Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:AFS securities:    AFS securities:    
U.S. TreasuryU.S. Treasury$1,721 $25 $— $1,746 U.S. Treasury$9,892 $$106 $9,795 
GSEGSE1,840 77 — 1,917 GSE1,667 33 1,698 
Agency MBS - residentialAgency MBS - residential111,589 1,975 23 113,541 Agency MBS - residential135,886 656 2,500 134,042 
Agency MBS - commercialAgency MBS - commercial2,987 72 3,057 Agency MBS - commercial2,928 18 64 2,882 
States and political subdivisionsStates and political subdivisions447 47 493 States and political subdivisions382 39 420 
Non-agency MBSNon-agency MBS4,305 — 47 4,258 
OtherOther34 — — 34 Other28 — — 28 
Total AFS securitiesTotal AFS securities$118,618 $2,196 $26 $120,788 Total AFS securities$155,088 $755 $2,720 $153,123 
HTM securities:HTM securities:    
Agency MBS - residentialAgency MBS - residential$1,494 $$— $1,495 

10In the first quarter of 2022, Truist Financial Corporationtransferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies. Management determined that it has both the positive intent and ability to hold these securities to maturity. On the date of transfer, the difference between the par value and the fair value of these securities, which was recorded as a loss in AOCI, resulted in a net discount of $3.7 billion, inclusive of $510 million of basis adjustment gains from terminated fair value hedges attributable to the transferred securities. The discount will be accreted and unrealized loss in AOCI will be amortized, offsetting within interest income over the remaining life of the securities using the interest method. There were no gains or losses recognized as a result of this transfer.


CertainThe amortized cost and estimated fair value of certain MBS securities issued by FNMA and FHLMC that exceeded 10% of shareholders’ equity at September 30, 2021. The FNMA investments had total amortized cost and fair value of $42.1 billion and $41.7 billion, respectively. The FHLMC investments had total amortized cost and fair value of $44.8 billion and $44.2 billion, respectively.are shown in the table below:
Jun 30, 2022
(Dollars in millions)Amortized CostFair Value
FNMA$44,022 $39,503 
FHLMC44,548 39,828 


Truist Financial Corporation 11


The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table. The expected life of MBS may be shorter than the contractual maturities because borrowers may have the right to prepay their obligations with or without penalties.
Amortized CostFair ValueAmortized CostFair Value
September 30, 2021
(Dollars in millions)
Due in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotalDue in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotal
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
Due in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotalDue in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotal
AFS securities:AFS securities:AFS securities:
U.S. TreasuryU.S. Treasury$276 $8,446 $978 $— $9,700 $276 $8,441 $980 $— $9,697 U.S. Treasury$1,120 $8,746 $983 $$10,855 $1,106 $8,252 $894 $$10,258 
GSEGSE432 1,237 — 160 1,829 437 1,274 — 163 1,874 GSE— — — 269 269 — — — 250 250 
Agency MBS - residentialAgency MBS - residential— 317 133,615 133,933 — 327 132,733 133,061 Agency MBS - residential— 587 68,483 69,071 — 573 61,623 62,197 
Agency MBS - commercialAgency MBS - commercial— 23 3,059 3,083 — 23 3,049 3,073 Agency MBS - commercial— 17 2,941 2,966 — 16 2,630 2,654 
States and political subdivisionsStates and political subdivisions38 95 118 171 422 39 98 135 186 458 States and political subdivisions15 76 124 168 383 15 76 125 158 374 
Non-agency MBSNon-agency MBS— — — 2,856 2,856 — — — 2,846 2,846 Non-agency MBS— — — 4,050 4,050 — — — 3,425 3,425 
OtherOther— 22 29 — 22 29 Other37 18 64 123 37 17 62 120 
Total AFS securitiesTotal AFS securities$747 $9,786 $1,436 $139,883 $151,852 $753 $9,821 $1,465 $138,999 $151,038 Total AFS securities$1,139 $8,868 $1,729 $75,981 $87,717 $1,125 $8,374 $1,625 $68,154 $79,278 
HTM securities:HTM securities:
Agency MBS - residentialAgency MBS - residential$— $— $— $60,081 $60,081 $— $— $— $53,905 $53,905 

The following tables present the fair values and gross unrealized losses of investments based on the length of time that individual securities have been in a continuous unrealized loss position:
Less than 12 months12 months or moreTotalLess than 12 months12 months or moreTotal
September 30, 2021
(Dollars in millions)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:AFS securities:      
U.S. TreasuryU.S. Treasury$9,644 $541 $594 $56 $10,238 $597 
GSEGSE230 19 — — 230 19 
Agency MBS - residentialAgency MBS - residential54,268 5,703 7,489 1,176 61,757 6,879 
Agency MBS - commercialAgency MBS - commercial1,031 791,552 235 2,583 314 
States and political subdivisionsStates and political subdivisions198 20 20 218 23 
Non-agency MBSNon-agency MBS3,425 625 — — 3,425 625 
OtherOther115 — — 115 
TotalTotal$68,911 $6,990 $9,655 $1,470 $78,566 $8,460 
HTM securities:HTM securities:      
Agency MBS - residentialAgency MBS - residential$34,004 $3,516 $19,901 $2,660 $53,905 $6,176 
Less than 12 months12 months or moreTotal
December 31, 2021
(Dollars in millions)
December 31, 2021
(Dollars in millions)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:AFS securities:      AFS securities:      
U.S. TreasuryU.S. Treasury$6,247 $21 $— $— $6,247 $21 U.S. Treasury$8,412 $88 $582 $18 $8,994 $106 
GSEGSE95 — — 95 GSE104 — — 104 
Agency MBS - residentialAgency MBS - residential95,852 1,812 443 14 96,295 1,826 Agency MBS - residential101,262 2,377 2,638 123 103,900 2,500 
Agency MBS - commercialAgency MBS - commercial1,943 34257 2,200 40 Agency MBS - commercial1,749 50 413 14 2,162 64 
States and political subdivisionsStates and political subdivisions24 22 46 States and political subdivisions— — 22 22 
Non-agency MBSNon-agency MBS2,183 11 — — 2,183 11 Non-agency MBS4,258 47 — — 4,258 47 
OtherOther22 — — — 22 — Other— — — — 
TotalTotal$106,366 $1,881 $722 $21 $107,088 $1,902 Total$115,791 $2,564 $3,655 $156 $119,446 $2,720 
Less than 12 months12 months or moreTotal
December 31, 2020
(Dollars in millions)
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:      
U.S. Treasury$17 $— $— $— $17 $— 
Agency MBS - residential4,028 21 203 4,231 23 
Agency MBS - commercial463 — 467 
States and political subdivisions20 — 32 52 
Other— — — — 
Total$4,534 $23 $239 $$4,773 $26 

At SeptemberJune 30, 20212022 and December 31, 2020,2021, 0 ACL was established for AFS or HTM securities. Substantially all of the unrealized losses on the securities portfolio, including non-agency MBS, were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. HTM debt securities consist of residential agency MBS. Accordingly, the Company does not expect to incur any credit losses on HTM investment securities.

The following table presents gross securities gains and losses recognized in earnings:
(Dollars in millions)(Dollars in millions)Three Months Ended September 30,Nine Months Ended September 30,(Dollars in millions)Three Months Ended June 30,Six Months Ended June 30,
2021202020212020(Dollars in millions)2022202120222021
Gross realized gainsGross realized gains$— $104 $— $404 Gross realized gains$— $— $13 $— 
Gross realized lossesGross realized losses— — — (2)Gross realized losses(1)— (83)— 
Securities gains (losses), netSecurities gains (losses), net$— $104 $— $402 Securities gains (losses), net$(1)$— $(70)$— 

12 Truist Financial Corporation 11


NOTE 5. Loans and ACL

The following tables present loans and leases HFI by aging category. Government guaranteed loans are not placed on nonaccrualnonperforming status regardless of delinquency because collection of principal and interest is reasonably assured. The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period. In certain limited circumstances, accommodation programs result in the delinquency status being reset to current.
AccruingAccruing
September 30, 2021
(Dollars in millions)
Current30-89 Days Past Due90 Days Or More Past DueNonperformingTotal
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
Current30-89 Days Past Due90 Days Or More Past Due (1)NonperformingTotal
Commercial:Commercial:     Commercial:     
Commercial and industrialCommercial and industrial$128,448 $131 $$411 $128,992 Commercial and industrial$149,197 $223 $27 $393 $149,840 
CRECRE24,285 — 20 24,309 CRE22,117 10 19 22,149 
Commercial constructionCommercial construction5,680 — 5,689 Commercial construction5,150 — 5,157 
Lease financing4,767 16 12 4,799 
Consumer:Consumer:Consumer:
Residential mortgageResidential mortgage45,038 495 852 306 46,691 Residential mortgage49,188 535 911 269 50,903 
Residential home equity and directResidential home equity and direct24,988 81 146 25,222 Residential home equity and direct25,020 156 10 159 25,345 
Indirect autoIndirect auto26,189 560 172 26,923 Indirect auto26,590 584 244 27,419 
Indirect otherIndirect other11,094 53 11,155 Indirect other11,874 78 11,961 
StudentStudent5,635 456 968 — 7,059 Student4,890 453 801 — 6,144 
Credit cardCredit card4,623 37 23 — 4,683 Credit card4,668 48 28 — 4,744 
TotalTotal$280,747 $1,823 $1,872 $1,080 $285,522 Total$298,694 $2,091 $1,787 $1,090 $303,662 
(1)Includes government guaranteed loans of $884 million in the residential mortgage portfolio and $796 million in the student portfolio.
(1)Includes government guaranteed loans of $884 million in the residential mortgage portfolio and $796 million in the student portfolio.
AccruingAccruing
December 31, 2020
(Dollars in millions)
Current30-89 Days Past Due90 Days Or More Past DueNonperformingTotal
December 31, 2021
(Dollars in millions)
December 31, 2021
(Dollars in millions)
Current30-89 Days Past Due90 Days Or More Past Due (1)NonperformingTotal
Commercial:Commercial:     Commercial:     
Commercial and industrialCommercial and industrial$137,726 $83 $13 $532 $138,354 Commercial and industrial$138,225 $130 $13 $394 $138,762 
CRECRE26,506 14 — 75 26,595 CRE23,902 20 — 29 23,951 
Commercial constructionCommercial construction6,472 — 14 6,491 Commercial construction4,962 — 4,971 
Lease financing5,206 — 28 5,240 
Consumer:Consumer:    Consumer:    
Residential mortgageResidential mortgage45,333 782 841 316 47,272 Residential mortgage46,033 514 1,009 296 47,852 
Residential home equity and directResidential home equity and direct25,751 98 10 205 26,064 Residential home equity and direct24,809 107 141 25,066 
Indirect autoIndirect auto25,498 495 155 26,150 Indirect auto25,615 607 218 26,441 
Indirect otherIndirect other11,102 68 11,177 Indirect other10,811 64 10,883 
StudentStudent5,823 618 1,111 — 7,552 Student5,357 555 868 — 6,780 
Credit cardCredit card4,759 51 29 — 4,839 Credit card4,735 45 27 — 4,807 
TotalTotal$294,176 $2,220 $2,008 $1,330 $299,734 Total$284,449 $2,044 $1,930 $1,090 $289,513 
(1)Includes government guaranteed loans of $978 million in the residential mortgage portfolio and $864 million in the student portfolio.
(1)Includes government guaranteed loans of $978 million in the residential mortgage portfolio and $864 million in the student portfolio.

12 Truist Financial Corporation 13


The following table presentstables present the amortized cost basis of loans by origination year and credit quality indicator:
September 30, 2021
(Dollars in millions)
Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to TermOther (1)
20212020201920182017Prior Total
Commercial:    
Commercial and industrial:
Pass$25,433 $17,587 $14,278 $9,315 $5,670 $10,042 $41,570 $— $(390)$123,505 
Special mention186 231 402 253 97 92 973 — — 2,234 
Substandard302 314 493 213 71 289 1,160 — — 2,842 
Nonperforming36 26 70 46 18 59 157 — (1)411 
Total25,957 18,158 15,243 9,827 5,856 10,482 43,860 — (391)128,992 
CRE:
Pass2,825 3,405 5,516 3,794 2,051 2,442 671 — (61)20,643 
Special mention57 107 486 317 51 129 — — — 1,147 
Substandard305 310 633 551 402 298 — — — 2,499 
Nonperforming— 12 — — — 20 
Total3,189 3,823 6,635 4,664 2,507 2,881 671 — (61)24,309 
Commercial construction:
Pass836 1,125 1,676 681 138 99 661 — 5,223 
Special mention— 26 140 102 — — — — — 268 
Substandard40 74 65 — — — — 191 
Nonperforming— — — — — 
Total842 1,158 1,857 857 207 99 661 — 5,689 
Lease financing:
Pass970 1,232 811 525 528 707 — — (62)4,711 
Special mention— — — — — — 
Substandard— 29 36 — — — 70 
Nonperforming— — — — 12 
Total971 1,235 843 531 533 747 — — (61)4,799 
Consumer:
Residential mortgage:
Performing12,741 7,355 4,360 2,237 2,719 16,872 — — 101 46,385 
Nonperforming— 22 27 22 232 — — — 306 
Total12,741 7,358 4,382 2,264 2,741 17,104 — — 101 46,691 
Residential home equity and direct:
Performing4,061 3,028 2,015 829 241 482 10,946 3,405 69 25,076 
Nonperforming50 78 — 146 
Total4,062 3,031 2,019 831 242 489 10,996 3,483 69 25,222 
Indirect auto:
Performing8,950 7,705 5,106 2,612 1,426 778 — — 174 26,751 
Nonperforming37 54 38 21 18 — — (5)172 
Total8,959 7,742 5,160 2,650 1,447 796 — — 169 26,923 
Indirect other:
Performing3,747 3,083 1,901 1,086 527 779 — — 26 11,149 
Nonperforming— — — — — — 
Total3,747 3,086 1,903 1,086 527 780 — — 26 11,155 
Student— 22 94 79 66 6,765 — — 33 7,059 
Credit card— — — — — — 4,653 30 — 4,683 
Total$60,468 $45,613 $38,136 $22,789 $14,126 $40,143 $60,841 $3,513 $(107)$285,522 
Truist Financial Corporation 13


December 31, 2020
(Dollars in millions)
Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to TermOther (1)
20202019201820172016PriorTotal
Commercial:
Commercial and industrial:
Pass$34,858 $18,881 $13,312 $7,713 $5,174 $8,888 $42,780 $231 $(579)$131,258 
Special mention471 434 343 98 120 157 1,808 (1)3,435 
Substandard461 445 339 121 144 256 1,353 12 (2)3,129 
Nonperforming38 92 48 29 25 61 233 532 
Total35,828 19,852 14,042 7,961 5,463 9,362 46,174 252 (580)138,354 
CRE:
Pass4,563 6,600 4,427 2,752 1,473 2,096 617 — (69)22,459 
Special mention171 599 585 116 77 141 — — — 1,689 
Substandard410 776 438 281 182 280 — — 2,372 
Nonperforming15 43 — — — 75 
Total5,145 7,990 5,451 3,158 1,738 2,560 622 — (69)26,595 
Commercial construction:
Pass1,052 2,141 1,889 232 27 110 534 — 5,987 
Special mention— 108 64 — — — — 175 
Substandard70 106 73 59 — — — 315 
Nonperforming— — — — — 14 
Total1,123 2,358 2,026 299 33 111 536 6,491 
Lease financing:
Pass1,377 1,139 775 746 241 760 — — 27 5,065 
Special mention39 20 — — — — 72 
Substandard— 34 31 — — — 75 
Nonperforming— — — 28 
Total1,380 1,217 801 764 248 803 — — 27 5,240 
Consumer:
Residential mortgage:
Performing8,197 6,729 3,735 4,374 5,424 18,333 — — 164 46,956 
Nonperforming13 16 13 14 257 — — — 316 
Total8,200 6,742 3,751 4,387 5,438 18,590 — — 164 47,272 
Residential home equity and direct:
Performing4,513 3,126 1,416 481 214 557 13,886 1,619 47 25,859 
Nonperforming87 101 205 
Total4,514 3,130 1,418 482 215 564 13,973 1,720 48 26,064 
Indirect auto:
Performing10,270 7,436 4,015 2,401 1,220 506 — — 147 25,995 
Nonperforming13 50 44 27 15 12 — — (6)155 
Total10,283 7,486 4,059 2,428 1,235 518 — — 141 26,150 
Indirect other:
Performing4,433 3,019 1,706 826 431 718 — — 39 11,172 
Nonperforming— — — — — 
Total4,434 3,020 1,707 826 431 720 — — 39 11,177 
Student22 110 95 81 64 7,185 — — (5)7,552 
Credit card— — — — — — 4,802 37 — 4,839 
Total$70,929 $51,905 $33,350 $20,386 $14,865 $40,413 $66,107 $2,012 $(233)$299,734 
(1)Includes certain deferred fees and costs, unapplied payments, and other adjustments.

June 30, 2022
(Dollars in millions)
Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to TermOther (1)
20222021202020192018Prior Total
Commercial:    
Commercial and industrial:
Pass$24,294 $27,579 $13,238 $10,294 $6,785 $11,523 $52,024 $— $(188)$145,549 
Special mention124 150 325 139 200 45 517 — — 1,500 
Substandard178 324 357 360 183 240 756 — — 2,398 
Nonperforming52 13 77 48 25 171 — — 393 
Total24,603 28,105 13,933 10,870 7,216 11,833 53,468 — (188)149,840 
CRE:
Pass2,598 3,801 2,607 4,456 2,956 2,925 690 — (50)19,983 
Special mention10 87 108 177 237 35 — — — 654 
Substandard95 161 168 411 340 318 — — — 1,493 
Nonperforming— 10 — — — 19 
Total2,707 4,052 2,884 5,045 3,533 3,288 690 — (50)22,149 
Commercial construction:
Pass768 1,259 1,072 469 201 130 1,008 — (1)4,906 
Special mention30 53 53 — — — — 140 
Substandard11 30 33 34 — — — — 111 
Nonperforming— — — — — — — — — — 
Total781 1,264 1,132 555 288 130 1,008 — (1)5,157 
Consumer:
Residential mortgage:
Current6,223 17,625 6,385 3,235 1,471 14,249 — — — 49,188 
30 - 89 days past due32 50 34 36 38 345 — — — 535 
90 days or more past due59 76 111 658 — — — 911 
Nonperforming— 17 21 219 — — — 269 
Total6,257 17,683 6,487 3,364 1,641 15,471 — — — 50,903 
Residential home equity and direct:
Current3,044 3,886 1,928 1,141 444 399 10,624 3,569 (15)25,020 
30 - 89 days past due45 12 51 26 — 156 
90 days or more past due— — — — — — — 10 
Nonperforming— 46 89 — 159 
Total3,089 3,903 1,941 1,154 450 408 10,729 3,686 (15)25,345 
Indirect auto:
Current6,833 8,737 5,219 3,265 1,565 971 — — — 26,590 
30 - 89 days past due43 163 118 115 72 73 — — — 584 
90 days or more past due— — — — — — — — 
Nonperforming56 53 60 38 32 — — — 244 
Total6,882 8,956 5,390 3,440 1,675 1,076 — — — 27,419 
Indirect other:
Current3,516 3,386 2,113 1,235 706 918 — — — 11,874 
30 - 89 days past due13 22 16 12 — — — 78 
90 days or more past due— — — — — — 
Nonperforming— — — — — 
Total3,530 3,410 2,131 1,249 715 926 — — — 11,961 
Student:
Current— — 1978634,714 — — 164,890 
30 - 89 days past due— — — — 1450 — — 2453 
90 days or more past due— — — — 1797 — — 3801 
Total— — 1978655,961 — — 216,144 
Credit card:
Current0000004,648 19 4,668 
30 - 89 days past due00000046 — 48 
90 days or more past due00000027 — 28 
Total— — — — — — 4,721 22 4,744 
Total$47,849 $67,373 $33,917 $25,755 $15,583 $39,093 $70,616 $3,708 $(232)$303,662 
14 Truist Financial Corporation


ACL
December 31, 2021
(Dollars in millions)
Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to TermOther (1)
20212020201920182017PriorTotal
Commercial:
Commercial and industrial:
Pass$35,530 $17,430 $14,105 $8,994 $5,633 $9,424 $43,035 $— $(169)$133,982 
Special mention195 221 326 317 46 70 691 — — 1,866 
Substandard352 356 395 197 91 335 794 — — 2,520 
Nonperforming50 19 49 42 16 34 184 — — 394 
Total36,127 18,026 14,875 9,550 5,786 9,863 44,704 — (169)138,762 
CRE:
Pass4,836 2,946 5,109 3,201 1,774 2,131 762 — (61)20,698 
Special mention13 118 483 247 44 83 — — — 988 
Substandard321 264 523 528 321 279 — — — 2,236 
Nonperforming11 — — — — 29 
Total5,171 3,329 6,126 3,976 2,148 2,500 762 — (61)23,951 
Commercial construction:
Pass1,113 1,179 1,259 419 44 95 558 — 12 4,679 
Special mention— 14 72 50 — — — — — 136 
Substandard13 45 67 17 — — — — 149 
Nonperforming— — — — — — 
Total1,120 1,206 1,377 536 66 95 558 — 13 4,971 
Consumer:
Residential mortgage:
Current17,271 6,798 3,642 1,753 2,237 14,240 — — 92 46,033 
30 - 89 days past due58 31 32 40 31 322 — — — 514 
90 or more days past due44 91 133 95 643 — — — 1,009 
Nonperforming18 27 20 226 — — (1)296 
Total17,333 6,878 3,783 1,953 2,383 15,431 — — 91 47,852 
Residential home equity and direct:
Current4,962 2,630 1,717 691 189 425 10,757 3,388 50 24,809 
30 - 89 days past due10 53 21 — 107 
90 days or more past due— — — — — — — 
Nonperforming— 48 75 141 
Total4,972 2,641 1,731 695 190 435 10,863 3,488 51 25,066 
Indirect auto:
Current10,699 6,691 4,293 2,158 1,081 504 — — 189 25,615 
30 - 89 days past due119 138 145 97 56 52 — — — 607 
90 days or more past due— — — — — — — — 
Nonperforming28 48 61 41 21 19 — — — 218 
Total10,846 6,877 4,499 2,296 1,158 576 — — 189 26,441 
Indirect other:
Current4,333 2,724 1,638 937 455 691 — — 33 10,811 
30 - 89 days past due14 15 15 12 — — — 64 
90 days or more past due— — — — — — 
Nonperforming— — — — — 
Total4,349 2,741 1,655 949 459 697 — — 33 10,883 
Student:
Current— 21 88 73 61 5,122 — — (8)5,357 
30 - 89 days past due— — 552 — — — 555 
90 days or more past due— — — — 867 — — — 868 
Total— 21 89 74 63 6,541 — — (8)6,780 
Credit card:
Current0000004,711 24 — 4,735 
30 - 89 days past due00000043 — 45 
90 days or more past due00000026 — 27 
Total— — — — — — 4,780 27 — 4,807 
Total$79,918 $41,719 $34,135 $20,029 $12,253 $36,138 $61,667 $3,515 $139 $289,513 
(1)Includes certain deferred fees and costs and other adjustments.

The following tables present activity in the ACL:
(Dollars in millions)Balance at Jul 1, 2020Charge-OffsRecoveriesProvision (Benefit)Other (2)Balance at Sep 30, 2020
Commercial:     
Commercial and industrial$2,137 $(112)$20 $140 $— $2,185 
CRE391 (44)— 155 — 502 
Commercial construction134 (19)17 — 134 
Lease financing59 (44)34 — 53 
Consumer:
Residential mortgage431 (4)(6)— 424 
Residential home equity and direct697 (52)16 43 — 704 
Indirect auto1,190 (72)22 49 — 1,189 
Indirect other213 (8)13 — 222 
Student123 (6)— 11 130 
Credit card327 (44)29 — 320 
ALLL5,702 (405)79 485 5,863 
RUFC431 — — (64)(1)366 
ACL$6,133 $(405)$79 $421 $$6,229 
(Dollars in millions)Balance at Jul 1, 2021Charge-OffsRecoveriesProvision (Benefit)Other (2)Balance at Sep 30, 2021
Commercial: 
Commercial and industrial$1,757 $(57)$21 $(180)$— $1,541 
CRE440 (1)(70)— 370 
Commercial construction69 — (11)— 59 
Lease financing47 — 21 (37)— 31 
Consumer:
Residential mortgage321 (7)(6)— 311 
Residential home equity and direct694 (51)20 (18)— 645 
Indirect auto1,116 (73)22 — 1,071 
Indirect other181 (13)21 — 194 
Student129 (6)126 
Credit card367 (31)— 354 
ALLL5,121 (239)104 (285)4,702 
RUFC315 — — (39)— 276 
ACL$5,436 $(239)$104 $(324)$$4,978 
(Dollars in millions)Balance at Jan 1, 2020 (1)Charge-OffsRecoveriesProvision (Benefit)Other (2)Balance at Sep 30, 2020
Commercial:      
Commercial and industrial$560 $(274)$58 $937 $904 $2,185 
CRE150 (59)325 82 502 
Commercial construction52 (22)10 78 16 134 
Lease financing10 (50)(5)94 53 
Consumer:     
Residential mortgage176 (50)26 265 424 
Residential home equity and direct107 (185)46 282 454 704 
Indirect auto304 (294)63 298 818 1,189 
Indirect other60 (46)18 40 150 222 
Student— (20)24 125 130 
Credit card122 (147)22 148 175 320 
PCI— — — (8)— 
ALLL1,549 (1,147)233 2,153 3,075 5,863 
RUFC340 — — 21 366 
ACL$1,889 $(1,147)$233 $2,158 $3,096 $6,229 
Truist Financial Corporation 15


(Dollars in millions)Balance at Jan 1, 2021Charge-OffsRecoveriesProvision (Benefit)Other (2)Balance at Sep 30, 2021
Commercial:      
Commercial and industrial$2,156 $(181)$60 $(494)$— $1,541 
CRE573 (5)(204)— 370 
Commercial construction81 (2)(23)— 59 
Lease financing48 (8)24 (33)— 31 
Consumer:     
Residential mortgage368 (22)10 (45)— 311 
Residential home equity and direct714 (163)58 36 — 645 
Indirect auto1,198 (247)71 49 — 1,071 
Indirect other208 (41)18 — 194 
Student130 (12)126 
Credit card359 (113)28 80 — 354 
ALLL5,835 (794)279 (622)4,702 
RUFC364 — — (88)— 276 
ACL$6,199 $(794)$279 $(710)$$4,978 
ACL

The following tables present activity in the ACL:
(Dollars in millions)Balance at Apr 1, 2021Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Jun 30, 2021
Commercial:
Commercial and industrial$2,136 $(53)$23 $(302)$— $1,804 
CRE544 — (108)— 440 
Commercial construction77 — (9)— 69 
Consumer:
Residential mortgage343 (4)(23)— 321 
Residential home equity and direct707 (57)20 24 — 694 
Indirect auto1,176 (69)27 (18)— 1,116 
Indirect other187 (11)(2)— 181 
Student131 (3)— — 129 
Credit card361 (42)10 38 — 367 
ALLL5,662 (239)97 (400)5,121 
RUFC349 — — (34)— 315 
ACL$6,011 $(239)$97 $(434)$$5,436 
(Dollars in millions)Balance at Apr 1, 2022Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Jun 30, 2022
Commercial: 
Commercial and industrial$1,319 $(17)$13 $42 $— $1,357 
CRE283 (1)(51)— 237 
Commercial construction53 — (4)— 50 
Consumer:
Residential mortgage310 (2)15 — 327 
Residential home equity and direct574 (85)20 79 — 588 
Indirect auto957 (77)26 46 — 952 
Indirect other211 (18)29 — 228 
Student115 (4)— (10)(1)100 
Credit card348 (40)31 — 348 
ALLL4,170 (244)85 177 (1)4,187 
RUFC253 — — (6)— 247 
ACL$4,423 $(244)$85 $171 $(1)$4,434 
(Dollars in millions)Balance at Jan 1, 2021Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Jun 30, 2021
Commercial:
Commercial and industrial$2,204 $(132)$42 $(310)$— $1,804 
CRE573 (4)(134)— 440 
Commercial construction81 (2)(12)— 69 
Consumer:
Residential mortgage368 (15)(39)— 321 
Residential home equity and direct714 (112)38 54 — 694 
Indirect auto1,198 (174)49 43 — 1,116 
Indirect other208 (28)13 (12)— 181 
Student130 (6)— 129 
Credit card359 (82)19 71 — 367 
ALLL5,835 (555)175 (337)5,121 
RUFC364 — — (49)— 315 
ACL$6,199 $(555)$175 $(386)$$5,436 
16 Truist Financial Corporation


(Dollars in millions)Balance at Jan 1, 2022Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Jun 30, 2022
Commercial:      
Commercial and industrial$1,426 $(48)$30 $(51)$— $1,357 
CRE350 (2)(118)— 237 
Commercial construction52 (1)(3)— 50 
Consumer:     
Residential mortgage308 (4)10 13 — 327 
Residential home equity and direct615 (143)40 76 — 588 
Indirect auto1,022 (179)49 60 — 952 
Indirect other195 (37)12 58 — 228 
Student117 (10)— (7)— 100 
Credit card350 (81)18 61 — 348 
ALLL4,435 (505)168 89 — 4,187 
RUFC260 — — (13)— 247 
ACL$4,695 $(505)$168 $76 $— $4,434 
(1)Balance is prior to the adoption of CECL.
(2)Includes the adoption of CECL,amounts for the ALLL for PCD acquisitions, and other activity.

The commercial ALLL decreased $312$11 million and $857$184 million and the consumer ALLL increased $28 million and decreased $62 million for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively. The decreases, with the exception of the consumer portfolio for bothpurposes of the three and nine month periods are due to an improving economic outlook and lower loan balances.

The consumer ALLL decreased $94 million and $271 million for the three and nine months ended SeptemberJune 30, 2021, respectively. The decrease for the three-month period reflects an improving economic outlook slightly2022 which saw a slight increase, reflect a continued favorable credit environment tempered by uncertainty associated with inflation, supply chain disruption, rising rates, and geopolitical events, partially offset by loan growth primarily in the residential mortgageloan portfolio. The decrease for the nine-month period reflects an improving economic outlook and lower loan balances primarily in the residential mortgage and home equity and direct portfolios.

The RUFC decreased $39$6 million and $88$13 million for the three and ninesix months ended SeptemberJune 30, 2021,2022, respectively. The decreases reflect an improving economic outlook.a continued favorable credit environment.

The quantitative models have been designed to estimate losses using macro-economic forecasts over a reasonable and supportable forecast period of two years, followed by a reversion to long-term historical loss conditions over a one-year period. These macro-economic forecasts include a numberForecasts of key economicmacroeconomic variables utilizedused in loss forecasting that include, but are not limited to, unemployment trends, US real GDP, corporate credit spreads, rental rates, property values, the primary 30-year mortgage rate, home price indices, and used car prices.

The primary economic forecast incorporates a third-party baseline forecast that is adjusted to reflect Truist’s interest rate outlook. Management also considers optimistic and pessimistic third-party macro-economic forecasts in order to capture uncertainty in the economic environment. These forecasts, along with the primary economic forecast, are weighted 40% baseline, 30% optimistic, and 30% pessimistic in the SeptemberJune 30, 2021 ACL.2022 ACL, unchanged since December 31, 2021. While the scenario weightings were unchanged, each forecast scenario reflected a moderate deterioration in certain economic variables over the reasonable and supportable forecast period when compared to the prior period. The primary economic forecast shaping the ACL estimate at SeptemberJune 30, 20212022 included GDP growth in the high singlelow-single digits through 2021, then slowing to the low single digits in 2022, and an improving unemployment rate tostarting in the mid singlelow-single digits throughwith a slight increase towards mid-single digits by the end of 2021 followed by continued improvement through the remainder of the reasonable and supportable forecast period.

Quantitative models have certain limitations with respect to estimating expected losses, particularly in times of rapidly changing macro-economic conditions and forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to be an important component of the ACL for the foreseeable future. The SeptemberJune 30, 20212022 ACL estimate includes adjustments to addressconsider the impact of current and expected events or risks not captured by the loss forecasting models, including imprecisionthe outcomes of which are uncertain and may not be completely considered by quantitative models. Refer to “Note 1. Basis of Presentation” in future economic forecasts, uncertainty aroundTruist’s Annual Report on Form 10-K for the return of consumer and business confidence once stimulus ceases, and the impact of government relief programs and client accommodations on expected losses.year ended December 31, 2021 for additional information.

16 Truist Financial Corporation 17


PCD Loan Activity

For PCD loans, the initial estimate of expected credit losses is recognized in the ALLL on the date of acquisition using the same methodology as other loans held for investment. The following table provides a summary of purchased student loans with credit deterioration at acquisition:
Nine Months Ended September 30, 2021
(Dollars in millions)
Par value$286 
ALLL at acquisition(4)
Non-credit premium (discount)
Purchase price$283 

NPAs

The following table provides a summary of nonperforming loans and leases, excluding LHFS. Interest income recognized on nonperforming loans HFI was immaterial for the nine months ended September 30, 2021 and 2020, respectively.LHFS:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Recorded InvestmentRecorded InvestmentRecorded InvestmentRecorded Investment
(Dollars in millions)(Dollars in millions)Without an ALLLWith an ALLLWithout an ALLLWith an ALLL(Dollars in millions)Without an ALLLWith an ALLLWithout an ALLLWith an ALLL
Commercial:Commercial: Commercial: 
Commercial and industrialCommercial and industrial$129 $282 $82 $450 Commercial and industrial$128 $265 $125 $269 
CRECRE19 63 12 CRE11 12 17 
Commercial constructionCommercial construction— 14 Commercial construction— — — 
Lease financing— 12 — 28 
Consumer:Consumer:Consumer:
Residential mortgageResidential mortgage302 312 Residential mortgage265 292 
Residential home equity and directResidential home equity and direct143 203 Residential home equity and direct157 138 
Indirect autoIndirect auto165 154 Indirect auto240 217 
Indirect otherIndirect other— — Indirect other— — 
TotalTotal$148 $932 $152 $1,178 Total$146 $944 $145 $945 

The following table presents a summary of nonperforming assets and residential mortgage loans in the process of foreclosure.foreclosure:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Nonperforming loans and leases HFINonperforming loans and leases HFI$1,080 $1,330 Nonperforming loans and leases HFI$1,090 $1,090 
Nonperforming LHFSNonperforming LHFS76 Nonperforming LHFS33 22 
Foreclosed real estateForeclosed real estate20 Foreclosed real estate
Other foreclosed propertyOther foreclosed property39 32 Other foreclosed property47 43 
Total nonperforming assetsTotal nonperforming assets$1,204 $1,387 Total nonperforming assets$1,173 $1,163 
Residential mortgage loans in the process of foreclosureResidential mortgage loans in the process of foreclosure$157 $140 Residential mortgage loans in the process of foreclosure$245 $135 

Truist Financial Corporation 17


TDRs

The following table presents a summary of TDRs:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Performing TDRs:Performing TDRs:  Performing TDRs:  
Commercial:Commercial:  Commercial:  
Commercial and industrialCommercial and industrial$144 $78 Commercial and industrial$105 $147 
CRECRE47 CRE
Commercial constructionCommercial construction— 
Lease financing56 60 
Consumer:Consumer:Consumer:
Residential mortgageResidential mortgage712 648 Residential mortgage1,042 692 
Residential home equity and directResidential home equity and direct105 88 Residential home equity and direct84 98 
Indirect autoIndirect auto390 392 Indirect auto401 389 
Indirect otherIndirect otherIndirect other
StudentStudent23 Student27 25 
Credit cardCredit card30 37 Credit card22 27 
Total performing TDRsTotal performing TDRs1,475 1,361 Total performing TDRs1,693 1,390 
Nonperforming TDRsNonperforming TDRs159 164 Nonperforming TDRs204 152 
Total TDRsTotal TDRs$1,634 $1,525 Total TDRs$1,897 $1,542 
ALLL attributable to TDRsALLL attributable to TDRs$108 $132 ALLL attributable to TDRs$122 $102 

The primary type of modification for newly designated TDRs is summarized in the tables below. New TDR balances represent the recorded investment at the end of the quarter in which the modification was made. The prior quarter balance represents recorded investment at the beginning of the quarter in which the modification was made. Rate modifications consist of TDRs made with below market interest rates, including those that also have modifications of loan structures.
As of / For the Three Months Ended September 30, 2021As of / For the Nine Months Ended September 30, 2021
(Dollars in millions)Type of ModificationPrior Quarter Loan BalanceALLL at Period EndType of ModificationPrior Quarter Loan BalanceALLL at Period End
RateStructureRateStructure
Newly designated TDRs:
Commercial:   
Commercial and industrial$$17 $27 $$35 $116 $168 $15 
CRE— — — — — 10 12 
Lease financing— — 
Consumer:
Residential mortgage33 24 57 122 163 285 12 
Residential home equity and direct10 — 41 48 
Indirect auto39 48 82 53 142 16 
Indirect other— — — 
Student— 10 10 — — 18 18 — 
Credit card— — 10 
Re-modification of previously designated TDRs23 51 37 
As of / For the Three Months Ended September 30, 2020As of / For the Nine Months Ended September 30, 2020
Type of ModificationPrior Quarter Loan BalanceALLL at Period EndType of ModificationPrior Quarter Loan BalanceALLL at Period End
(Dollars in millions)RateStructureRateStructure
Newly designated TDRs:
Commercial:
Commercial and industrial$13 $49 $70 $$46 $53 $118 $12 
CRE10 15 28 11 32 
Lease financing— — — — — — 
Consumer:
Residential mortgage157 17 174 297 58 359 17 
Residential home equity and direct— 31 13 45 
Indirect auto20 25 98 26 129 17 
Indirect other— — 
Student— — — — 
Credit card— 24 — 23 
Re-modification of previously designated TDRs10 36 11 
Charge-offs and forgiveness of principal and interest for TDRs were immaterial for all periods presented.
18 Truist Financial Corporation



The amount of modified loans that were classified as TDRs during the previous 12 months and experienced a payment default for the three and nine months ended September 30, 2021 and 2020 was immaterial. Payment default is defined as movement of the TDR to nonperforming status, foreclosure, or charge-off, whichever occurs first.
As of / For the Three Months Ended June 30, 2022As of / For the Six Months Ended June 30, 2022
(Dollars in millions)Type of ModificationPrior Quarter Loan BalanceRelated ALLL at Period EndType of ModificationPrior Quarter Loan BalanceRelated ALLL at Period End
RateStructureRateStructure
Newly designated TDRs:
Commercial$— $$$— $— $$11 $— 
Consumer97 197 293 14 245 388 622 29 
Credit card— — 
Re-modification of previously designated TDRs29 30 40 
As of / For the Three Months Ended June 30, 2021As of / For the Six Months Ended June 30, 2021
Type of ModificationPrior Quarter Loan BalanceRelated ALLL at Period EndType of ModificationPrior Quarter Loan BalanceRelated ALLL at Period End
(Dollars in millions)RateStructureRateStructure
Newly designated TDRs:
Commercial$— $$$— $27 $109 $153 $13 
Consumer63 71 137 10 138 226 370 23 
Credit card— — 
Re-modification of previously designated TDRs14 28 20 

Unearned Income, Discounts, and Net Deferred Loan Fees and Costs

The following table presents additional information about loans and leases:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Unearned income, discounts and net deferred loan fees and costs$1,142 $2,219 
Unearned income, discounts, and net deferred loan fees and costsUnearned income, discounts, and net deferred loan fees and costs$329 $849 

Truist Financial Corporation 19


NOTE 6. Goodwill and Other Intangible Assets

The Company performed a qualitative assessment of current events and circumstances, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, and a comparison of management’s forecast and assumptions to those used in its October 1, 20202021 quantitative impairment test, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of SeptemberJune 30, 2021,2022, and therefore no triggering event occurred that required a quantitative goodwill impairment test. SeeRefer to “Note 1. Basis of Presentation” and “Note 7. Goodwill and Other Intangible Assets” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional information.

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. The adjustmentsActivity during 2022 reflects the acquisition of Kensington Vanguard National Land Services. Activity during 2021 primarily reflects the acquisitions of Service Finance, LLC, and Constellation Affiliated Partners. Refer to “Note 2. Business Combinations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 to CB&W reflectfor additional information on the divestiture of certain businesses. Refer toacquisitions and “Note 18. Operating Segments” for additional information on segments.
(Dollars in millions)(Dollars in millions)CB&WC&CBIHTotal(Dollars in millions)CB&WC&CBIHTotal
Goodwill, January 1, 2020$14,040 $8,125 $1,989 $24,154 
Goodwill, January 1, 2021Goodwill, January 1, 2021$15,841 $6,167 $2,439 $24,447 
Mergers and acquisitionsMergers and acquisitions— — 450 450 Mergers and acquisitions1,168 — 556 1,724 
Adjustments and otherAdjustments and other1,801 (1,958)— (157)Adjustments and other(139)(18)84 (73)
Goodwill, December 31, 202015,841 6,167 2,439 24,447 
Goodwill, December 31, 2021Goodwill, December 31, 202116,870 6,149 3,079 26,098 
Mergers and acquisitionsMergers and acquisitions— — 556 556 Mergers and acquisitions— — 187 187 
Adjustments and otherAdjustments and other(139)(18)45 (112)Adjustments and other— — 14 14 
Goodwill, September 30, 2021$15,702 $6,149 $3,040 $24,891 
Goodwill, June 30, 2022Goodwill, June 30, 2022$16,870 $6,149 $3,280 $26,299 

The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:
September 30, 2021December 31, 2020
June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
CDICDI$2,563 $(1,097)$1,466 $2,600 $(852)$1,748 CDI$2,519 $(1,300)$1,219 $2,563 $(1,190)$1,373 
Other, primarily client relationship intangiblesOther, primarily client relationship intangibles2,499 (1,035)1,464 2,217 (981)1,236 Other, primarily client relationship intangibles3,494 (1,178)2,316 3,116 (1,081)2,035 
TotalTotal$5,062 $(2,132)$2,930 $4,817 $(1,833)$2,984 Total$6,013 $(2,478)$3,535 $5,679 $(2,271)$3,408 


In the first quarter of 2022, Truist redeemed a noncontrolling equity interest in SunTrust Merchant Services, LLC, and paid cash of $175 million in exchange for the rights to certain merchant banking relations, including relations previously referred by Truist to SunTrust Merchant Services, LLC. Upon completion of this transaction, Truist recognized a gain on the redemption of noncontrolling equity interest of $74 million and $282 million of other intangibles representing the fair value of acquired contractual relationships as of the transaction date. The intangible assets are being amortized over a term of 12 years based upon the estimated duration of economic benefits received.
20 Truist Financial Corporation 19


NOTE 7. Loan Servicing

The Company acquires servicing rights, and retains servicing rights related to certain of its sales or securitizations of residential mortgages, commercial mortgages, and commercial mortgageother consumer loans. Servicing rights on residential and commercial mortgages are capitalized by the Company as MSRsLoan servicing rights on the Consolidated Balance Sheets. Income earned by the Company on its residential MSRs is derived primarily from contractually specified mortgage servicing fees and late fees, net of curtailment costs. Income earned by the Company on its commercial mortgageloan servicing rights is derived primarily from contractually specified servicing fees, late fees, net of curtailment costs, and other ancillary fees.

Residential Mortgage Activities
The following tables summarize residential mortgage servicing activities:
(Dollars in millions)Sep 30, 2021Dec 31, 2020
UPB of residential mortgage loan servicing portfolio$248,546 $239,034 
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate198,119 188,341 
Mortgage loans sold with recourse269 328 
Maximum recourse exposure from mortgage loans sold with recourse liability171 201 
Indemnification, recourse and repurchase reserves89 93 
As of / For the Nine Months Ended September 30,
(Dollars in millions)
20212020
UPB of residential mortgage loans sold from LHFS$30,148 $36,069 
Pre-tax gains recognized on mortgage loans sold and held for sale347 828 
Servicing fees recognized from mortgage loans serviced for others437 480 
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others0.31 %0.32 %
Weighted average interest rate on mortgage loans serviced for others3.49 3.92 
(Dollars in millions)Jun 30, 2022Dec 31, 2021
UPB of residential mortgage loan servicing portfolio$262,845 $246,727 
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate209,504 196,011 
Mortgage loans sold with recourse214 244 
Maximum recourse exposure from mortgage loans sold with recourse liability135 155 
Indemnification, recourse and repurchase reserves58 74 
As of / For the Six Months Ended June 30,
(Dollars in millions)
20222021
UPB of residential mortgage loans sold from LHFS$15,907 $22,020 
Pre-tax gains recognized on mortgage loans sold and held for sale66 223 
Servicing fees recognized from mortgage loans serviced for others297 280 
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others0.30 %0.31 %
Weighted average interest rate on mortgage loans serviced for others3.42 3.66 

The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:
Nine Months Ended September 30,
(Dollars in millions)
20212020
Residential MSRs, carrying value, January 1$1,778 $2,371 
Acquired355 — 
Additions476 490 
Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds12 (612)
OAS238 53 
Realization of expected net servicing cash flows, passage of time and other(550)(539)
Residential MSRs, carrying value, September 30$2,309 $1,763 

(Dollars in millions)20222021
Residential MSRs, carrying value, January 1$2,305 $1,778 
Acquired195 52 
Additions257 347 
Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds630 20 
OAS(24)153 
Realization of expected net servicing cash flows, passage of time and other(215)(387)
Residential MSRs, carrying value, June 30$3,148 $1,963 

The sensitivity of the fair value of the Company’s residential MSRs to changes in key assumptions is presented in the following table:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
RangeWeighted AverageRangeWeighted AverageRangeWeighted AverageRangeWeighted Average
(Dollars in millions)(Dollars in millions)MinMaxMinMax(Dollars in millions)MinMaxMinMax
Prepayment speedPrepayment speed11.3 %15.3 %14.2 %12.8 %30.8 %15.4 %Prepayment speed8.9 %10.7 %9.4 %11.4 %15.3 %13.8 %
Effect on fair value of a 10% increaseEffect on fair value of a 10% increase$(119)$(89)Effect on fair value of a 10% increase$(109)$(113)
Effect on fair value of a 20% increaseEffect on fair value of a 20% increase(228)(171)Effect on fair value of a 20% increase(210)(216)
OASOAS1.8 %10.1 %4.0 %3.5 %13.7 %7.3 %OAS1.3 %11.6 %4.3 %1.5 %10.7 %4.2 %
Effect on fair value of a 10% increaseEffect on fair value of a 10% increase$(36)$(45)Effect on fair value of a 10% increase$(55)$(37)
Effect on fair value of a 20% increaseEffect on fair value of a 20% increase(71)(88)Effect on fair value of a 20% increase(107)(73)
Composition of loans serviced for others:Composition of loans serviced for others:   Composition of loans serviced for others:   
Fixed-rate residential mortgage loansFixed-rate residential mortgage loans99.2 %98.8 %Fixed-rate residential mortgage loans99.4 %99.3 %
Adjustable-rate residential mortgage loansAdjustable-rate residential mortgage loans0.8 1.2 Adjustable-rate residential mortgage loans0.6 0.7 
TotalTotal  100.0 %  100.0 %Total  100.0 %  100.0 %
Weighted average lifeWeighted average life  5.1 years  4.8 yearsWeighted average life  6.7 years  5.2 years

20 Truist Financial Corporation


The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in one assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change. See “Note 15. Fair Value Disclosures” for additional information on the valuation techniques used.

Truist Financial Corporation 21


Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities for the periods presented:activities:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
UPB of CRE mortgages serviced for othersUPB of CRE mortgages serviced for others$37,437 $36,670 UPB of CRE mortgages serviced for others$36,759 $37,960 
CRE mortgages serviced for others covered by recourse provisionsCRE mortgages serviced for others covered by recourse provisions10,146 9,019 CRE mortgages serviced for others covered by recourse provisions9,889 10,243 
Maximum recourse exposure from CRE mortgages sold with recourse liabilityMaximum recourse exposure from CRE mortgages sold with recourse liability2,922 2,624 Maximum recourse exposure from CRE mortgages sold with recourse liability2,845 2,958 
Recorded reserves related to recourse exposureRecorded reserves related to recourse exposure18 18 Recorded reserves related to recourse exposure15 16 
CRE mortgages originated during the year-to-date periodCRE mortgages originated during the year-to-date period6,490 6,739 CRE mortgages originated during the year-to-date period3,460 9,380 
Commercial MSRs at fair valueCommercial MSRs at fair value275 245 Commercial MSRs at fair value283 280 

Other Servicing Activities

The Company had $35 million and $48 million of other loan servicing rights at fair value as of June 30, 2022 and December 31, 2021, respectively.

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

The Company leases certain assets, consisting primarily of real estate, and assesses at contract inception whether a contract is, or contains, a lease. The following tables present additional information on leases, excluding leases related to the lease financing businesses:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Operating LeasesFinance LeasesOperating LeasesFinance Leases(Dollars in millions)Operating LeasesFinance LeasesOperating LeasesFinance Leases
ROU assetsROU assets$1,207 $25 $1,333 $36 ROU assets$1,095 $21 $1,168 $22 
Lease liabilitiesLease liabilities1,694 31 1,896 42 Lease liabilities1,471 25 1,600 26 
Weighted average remaining termWeighted average remaining term6.7 years6.4 years6.9 years6.3 yearsWeighted average remaining term6.4 years6.0 years6.6 years6.4 years
Weighted average discount rateWeighted average discount rate2.4 %3.6 %2.4 %4.8 %Weighted average discount rate2.4 %3.4 %2.3 %3.5 %
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)2021202020212020(Dollars in millions)2022202120222021
Operating lease costsOperating lease costs$71 $87 $241 $280 Operating lease costs$75 $85 $160 $170 

Lessor Operating Leases

The Company’s two primary lessor businesses are equipment financing and structured real estate with income recorded in Operating lease income on the Consolidated Statements of Income.

The following table presents a summary of assets under operating leases and activity related to assets under operating leases. This table excludes subleases on assets included in premises and equipment.
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Assets held under operating leases (1)Assets held under operating leases (1)$1,932 $2,144 Assets held under operating leases (1)$2,136 $2,110 
Accumulated depreciationAccumulated depreciation(405)(517)Accumulated depreciation(540)(539)
NetNet$1,527 $1,627 Net$1,596 $1,571 
(1) Includes certain land parcels subject to operating leases that have indefinite lives.

The carrying value of assets previously under operating leases was immaterial.

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain teammates for which the Company is the beneficiary. These policies provide the Company an efficient form of funding for retirement and other employee benefits costs. The carrying value of bank-owned life insurance was $6.5$7.6 billion at SeptemberJune 30, 20212022 and $7.3 billion December 31, 2020.

2021.
22 Truist Financial Corporation 21


NOTE 9. Borrowings

The following table presents a summary of short-term borrowings:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Federal funds purchasedFederal funds purchased$$79 Federal funds purchased$2,942 $— 
Securities sold under agreements to repurchaseSecurities sold under agreements to repurchase2,600 1,221 Securities sold under agreements to repurchase1,938 2,435 
FHLB advancesFHLB advances— 2,649 FHLB advances6,000 — 
Collateral in excess of derivative exposuresCollateral in excess of derivative exposures310 385 Collateral in excess of derivative exposures420 318 
Master notesMaster notes573 621 Master notes620 808 
Other short-term borrowings1,735 1,137 
Securities sold shortSecurities sold short1,816 1,731 
Total short-term borrowingsTotal short-term borrowings$5,226 $6,092 Total short-term borrowings$13,736 $5,292 

The following table presents a summary of long-term debt:
(Dollars in millions)Sep 30, 2021Dec 31, 2020
Truist Financial Corporation:
Fixed rate senior notes$14,365 $15,984 
Floating rate senior notes1,348 900 
Fixed rate subordinated notes1,266 1,283 
Capital notes619 615 
Structured notes (1)84 108 
Truist Bank:
Fixed rate senior notes10,604 11,907 
Floating rate senior notes2,400 1,567 
Fixed rate subordinated notes5,099 5,142 
FHLB advances867 878 
Other long-term debt (2)1,185 1,014 
Nonbank subsidiaries:
Other long-term debt (3)— 199 
Total long-term debt$37,837 $39,597 
(Dollars in millions)Jun 30, 2022Dec 31, 2021
Truist Financial Corporation:
Fixed rate senior notes (1)$11,481 $13,271 
Floating rate senior notes (1)999 1,348 
Fixed rate subordinated notes (2)930 1,254 
Capital Notes (2)622 620 
Structured notes (3)11 11 
Truist Bank:
Fixed rate senior notes (1)8,058 9,545 
Floating rate senior notes (1)1,749 2,399 
Fixed rate subordinated notes (2)4,898 5,043 
FHLB advances863 
Other long-term debt (4)1,275 1,263 
Nonbank subsidiaries:
Other long-term debt (5)293 296 
Total long-term debt$30,319 $35,913 
(1)Prior period was revised to reclassify certain floating rate senior notes that were reported as fixed rate senior notes at December 31, 2021.
(2)Subordinated and capital notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.
(3)Consist of notes with various terms that include fixed or floating rate interest or returns that are linked to an equity index.
(2)(4)Includes debt associated with finance leases, tax credit investments, and other.
(3)(5)Includes debt associated with structured real estate leases.

The Company does not consolidate certain wholly-owned trusts which were formed for the sole purpose of issuing trust preferred securities. The proceeds from the trust preferred securities issuances were invested in capital notes of the Parent Company. The Parent Company’s obligations constitute a full and unconditional guarantee of the trust preferred securities.

22 Truist Financial Corporation


NOTE 10. Shareholders’ Equity

Common Stock

The following table presents thetotal dividends declared per share of common stock:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Cash dividends declared per share$0.48 $0.45 $1.38 $1.35 
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Cash dividends declared per share$0.48 $0.45 $0.96 $0.90 

Share Repurchase Activity

As of September 30, 2021, theThe Board of Directors hadhas authorized the repurchase of up to $4.2 billion of the Company’s common stock through September 30, 2022. For the nine months ended SeptemberAt June 30, 2021, the Company repurchased $1.1 billion of common stock, which represented 19.8 million shares. Repurchased shares revert to the status of authorized and unissued shares. At September 30, 2021,2022, Truist had remaining authorization to repurchase $3.1$2.3 billion of common stock under the Board approved repurchase plan. The amount ofTruist’s share repurchasesrepurchase activity is dependent on capital deployment through organic growth and acquisitions, giving consideration to economic and regulatory conditions.

Preferred Stock

During For the first quarter of 2021,six months ended June 30, 2022, the Company redeemed all 18,000 outstanding sharesrepurchased $250 million of its perpetual preferredcommon stock, series F and the corresponding depositary shares representing fractional interests in such series for $450which represented 5.1 million and all 20,000 outstanding shares of its perpetual preferred stock series G and the corresponding depositary shares representing fractional interests in such series for $500 million.

During the second quarter of 2021, the Company redeemed all 18,600 outstanding shares of its perpetual preferred stock series H and the corresponding depositary shares representing fractional interests in such series for $465 million.shares.

Truist Financial Corporation 23


NOTE 11. AOCI

AOCI includes the after-tax change in unrecognized net costs related to defined benefit pension and OPEB plans as well as unrealized gains and losses on cash flow hedges, AFS securities, and HTM securities transferred from AFS securities.
Three Months Ended September 30, 2021 and 2020
(Dollars in millions)
Pension and OPEB CostsCash Flow HedgesAFS SecuritiesOther, netTotal
AOCI balance, July 1, 2020$(1,093)$(79)$2,022 $(3)$847 
(Dollars in millions)(Dollars in millions)Pension and OPEB CostsCash Flow HedgesAFS SecuritiesHTM SecuritiesOther, netTotal
AOCI balance, April 1, 2021AOCI balance, April 1, 2021$(840)$(28)$(650)$— $$(1,516)
OCI before reclassifications, net of taxOCI before reclassifications, net of tax(25)— (380)(404)OCI before reclassifications, net of tax(9)— 394 — 386 
Amounts reclassified from AOCI:Amounts reclassified from AOCI:     Amounts reclassified from AOCI:     
Before taxBefore tax18 10 — 35 Before tax13 85 — — 107 
Tax effectTax effect— Tax effect20 — — 25 
Amounts reclassified, net of taxAmounts reclassified, net of tax14 — 27 Amounts reclassified, net of tax10 65 — — 82 
Total OCI, net of taxTotal OCI, net of tax(11)(375)(377)Total OCI, net of tax(2)10 459 — 468 
AOCI balance, September 30, 2020$(1,104)$(71)$1,647 $(2)$470 
AOCI balance, July 1, 2021$(842)$(18)$(191)$$(1,048)
AOCI balance, June 30, 2021AOCI balance, June 30, 2021$(842)$(18)$(191)$— $$(1,048)
AOCI balance, April 1, 2022AOCI balance, April 1, 2022$(78)$(4)$(3,627)$(2,828)$$(6,535)
OCI before reclassifications, net of taxOCI before reclassifications, net of tax(59)— (496)(2)(557)OCI before reclassifications, net of tax— 46 (2,873)— (2)(2,829)
Amounts reclassified from AOCI:Amounts reclassified from AOCI:     Amounts reclassified from AOCI:     
Before taxBefore tax75 — 88 Before tax32 119 — 164 
Tax effectTax effect17 — 21 Tax effect27 — 40 
Amounts reclassified, net of taxAmounts reclassified, net of tax58 — 67 Amounts reclassified, net of tax24 92 — 124 
Total OCI, net of taxTotal OCI, net of tax(55)(438)(2)(490)Total OCI, net of tax49 (2,849)92 (2)(2,705)
AOCI balance, September 30, 2021$(897)$(13)$(629)$$(1,538)
AOCI balance, June 30, 2022AOCI balance, June 30, 2022$(73)$45 $(6,476)$(2,736)$— $(9,240)
Nine Months Ended September 30, 2021 and 2020
(Dollars in millions)
Pension and OPEB CostsCash Flow HedgesAFS SecuritiesOther, netTotal
(Dollars in millions)(Dollars in millions)Pension and OPEB CostsCash Flow HedgesAFS SecuritiesHTM SecuritiesOther, netTotal
AOCI balance, January 1, 2020$(1,122)$(101)$380 $(1)$(844)
OCI before reclassifications, net of tax(26)— 1,411 (1)1,384 
Amounts reclassified from AOCI:     
Before tax58 39 (189)— (92)
Tax effect14 (45)— (22)
Amounts reclassified, net of tax44 30 (144)— (70)
Total OCI, net of tax18 30 1,267 (1)1,314 
AOCI balance, September 30, 2020(1,104)(71)1,647 (2)470 
AOCI balance, January 1, 2021AOCI balance, January 1, 2021$(875)$(64)$1,654 $$716 AOCI balance, January 1, 2021$(875)$(64)$1,654 $— $$716 
OCI before reclassifications, net of taxOCI before reclassifications, net of tax(40)— (2,510)— (2,550)OCI before reclassifications, net of tax19 — (2,014)— (1,993)
Amounts reclassified from AOCI:Amounts reclassified from AOCI:     Amounts reclassified from AOCI:     
Before taxBefore tax24 67 296 — 387 Before tax18 60 221 — — 299 
Tax effectTax effect16 69 — 91 Tax effect14 52 — — 70 
Amounts reclassified, net of taxAmounts reclassified, net of tax18 51 227 — 296 Amounts reclassified, net of tax14 46 169 — — 229 
Total OCI, net of taxTotal OCI, net of tax(22)51 (2,283)— (2,254)Total OCI, net of tax33 46 (1,845)— (1,764)
AOCI balance, September 30, 2021$(897)$(13)$(629)$$(1,538)
AOCI balance, June 30, 2021AOCI balance, June 30, 2021$(842)$(18)$(191)$— $$(1,048)
AOCI balance, January 1, 2022AOCI balance, January 1, 2022$(86)$(9)$(1,510)$— $$(1,604)
OCI before reclassifications, net of taxOCI before reclassifications, net of tax46 (7,909)— (1)(7,862)
AFS Securities transferred to HTM, net of taxAFS Securities transferred to HTM, net of tax— — 2,872 (2,872)— — 
Amounts reclassified from AOCI:Amounts reclassified from AOCI:     
Before taxBefore tax16 11 93 176— 296 
Tax effectTax effect22 40— 70 
Amounts reclassified, net of taxAmounts reclassified, net of tax11 71 136 — 226 
Total OCI, net of taxTotal OCI, net of tax13 54 (7,838)136 (1)(7,636)
AOCI balance, June 30, 2022AOCI balance, June 30, 2022$(73)$45 $(6,476)$(2,736)$— $(9,240)
Primary income statement location of amounts reclassified from AOCIPrimary income statement location of amounts reclassified from AOCIOther expenseNet interest income and Other expenseSecurities gains (losses) and Net interest incomeNet interest incomePrimary income statement location of amounts reclassified from AOCIOther expenseNet interest income and Other expenseSecurities gains (losses) and Net interest incomeNet interest incomeNet interest income

24 Truist Financial Corporation


NOTE 12. Income Taxes

For the three months ended SeptemberJune 30, 20212022 and 2020,2021, the provision for income taxes was $423$372 million and $255$415 million, respectively, representing effective tax rates of 19.9%19.5% and 18.3%20.0%, respectively. For the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, the provision for income taxes was $1.2 billion$702 million and $670$766 million, respectively, representing effective tax rates of 19.7%19.2% and 17.5%19.7%, respectively. The higherlower effective tax rate for the three and nine months ended SeptemberJune 30, 20212022 was primarily due to higherdriven by lower pre-tax income without a corresponding increaseincome. The lower effective tax rate for the six months ended June 30, 2022 was primarily driven by changes in beneficial tax items.discrete taxes. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

24 Truist Financial Corporation


NOTE 13. Benefit Plans

The components of net periodic (benefit) cost for defined benefit pension plans are summarized in the following table:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)Income Statement Location2021202020212020(Dollars in millions)Income Statement Location2022202120222021
Service costService costPersonnel expense$148 $141 $463 $377 Service costPersonnel expense$140 $157 $279 $315 
Interest costInterest costOther expense80 78 239 234 Interest costOther expense88 80 176 159 
Estimated return on plan assetsEstimated return on plan assetsOther expense(250)(217)(748)(650)Estimated return on plan assetsOther expense(270)(249)(539)(498)
Amortization and otherAmortization and otherOther expense20 26 58 Amortization and otherOther expense17 17 
Net periodic (benefit) costNet periodic (benefit) cost$(13)$22 $(20)$19 Net periodic (benefit) cost$(33)$(3)$(67)$(7)

Truist makes contributions to the qualified pension plans in amounts between the minimum required for funding andup to the maximum deductible for federal income tax purposes. Discretionary contributions totaling $403$351 million were made to the Truist pension plan during the ninesix months ended SeptemberJune 30, 2021.2022. There are no required contributions for the remainder of 2021.2022.

NOTE 14. Commitments and Contingencies

Truist utilizes a variety of financial instruments to mitigate exposure to risks and meet the financing needs of clients and to mitigate exposure to risks.provide investment opportunities for clients. These financial instruments include commitments to extend credit, letters of credit and financial guarantees, derivatives, and derivatives.other investments. Truist also has commitments to fund certain affordable housing investments and contingent liabilities related to certain sold loans.

Tax Credit and Certain Equity Investments

The Company invests in certain affordable housing projects throughout its market area as a means of supporting local communities. Truist receives tax credits related to these investments, for which the Company typically acts as a limited partner and therefore does not exert control over the operating or financial policies of the partnerships. The following table summarizes certain tax credit and certain equity investments:
(Dollars in millions)(Dollars in millions)Balance Sheet LocationSep 30, 2021Dec 31, 2020(Dollars in millions)Balance Sheet LocationJun 30, 2022Dec 31, 2021
Investments in affordable housing projects:Investments in affordable housing projects:  Investments in affordable housing projects:  
Carrying amountCarrying amountOther assets$3,911 $3,823 Carrying amountOther assets$4,279 $4,107 
Amount of future funding commitments included in carrying amountAmount of future funding commitments included in carrying amountOther liabilities1,157 1,057 Amount of future funding commitments included in carrying amountOther liabilities1,445 1,285 
Lending exposureLending exposureNA580 546 Lending exposureLoans and leases for funded amounts1,151 763 
Renewable energy investments:Renewable energy investments:Renewable energy investments:
Carrying amountCarrying amountOther assets215 167 Carrying amountOther assets192 257 
Amount of future funding commitments not included in carrying amountAmount of future funding commitments not included in carrying amountNA189 76 Amount of future funding commitments not included in carrying amountNA510 71 
Private equity and certain other equity method investments:Private equity and certain other equity method investments:Private equity and certain other equity method investments:
Carrying amountCarrying amountOther assets1,758 1,574 Carrying amountOther assets1,819 1,822 
Amount of future funding commitments not included in carrying amountAmount of future funding commitments not included in carrying amountNA474 471 Amount of future funding commitments not included in carrying amountNA424 411 

Truist Financial Corporation 25


The following table presents a summary of tax credits and amortization associated with the Company’s tax credit investment activity:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)Income Statement Location2021202020212020(Dollars in millions)Income Statement Location2022202120222021
Tax credits:Tax credits:Tax credits:
Investments in affordable housing projectsInvestments in affordable housing projectsProvision for income taxes$121 $116 $360 $347 Investments in affordable housing projectsProvision for income taxes$127 $119 $255 $239 
Other community development investmentsOther community development investmentsProvision for income taxes24 23 70 68 Other community development investmentsProvision for income taxes24 23 47 46 
Renewable energy investmentsRenewable energy investmentsNA (1)36 32 96 134 Renewable energy investmentsNA (1)24 21 61 60 
Amortization and other changes in carrying amount:Amortization and other changes in carrying amount:Amortization and other changes in carrying amount:
Investments in affordable housing projectsInvestments in affordable housing projectsProvision for income taxes$117 $119 $353 $346 Investments in affordable housing projectsProvision for income taxes$124 $117 $248 $236 
Other community development investmentsOther community development investmentsOther noninterest income21 19 59 57 Other community development investmentsOther noninterest income20 19 39 38 
Renewable energy investmentsRenewable energy investmentsOther noninterest incomeRenewable energy investmentsOther noninterest income— 
(1)Tax credits received for these investments are recorded as a reduction to the carrying value of these investments.

Truist Financial Corporation 25


Letters of Credit and Financial Guarantees

In the normal course of business, Truist utilizes certain financial instruments to meet the financing needs of clients and to mitigate exposure to risks. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial guarantee arrangements.

The following is a summary of selected notional amounts of off-balance sheet financial instruments:
(Dollars in millions)(Dollars in millions)September 30, 2021December 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Commitments to extend, originate, or purchase creditCommitments to extend, originate, or purchase credit$202,167 $186,731 Commitments to extend, originate, or purchase credit$210,385 $198,658 
Residential mortgage loans sold with recourseResidential mortgage loans sold with recourse269 328 Residential mortgage loans sold with recourse214 244 
CRE mortgages serviced for others covered by recourse provisionsCRE mortgages serviced for others covered by recourse provisions10,146 9,019 CRE mortgages serviced for others covered by recourse provisions9,889 10,243 
Other loans serviced for others covered by recourse provisionsOther loans serviced for others covered by recourse provisions646 588 
Letters of creditLetters of credit5,074 5,066 Letters of credit5,725 5,568 

Total Return Swaps

The Company facilitates matched book TRS transactions on behalf of clients, whereby a VIE purchases reference assets identified by a client and the Company enters into a TRS with the VIE, with a mirror-image TRS facing the client. The Company provides senior financing to the VIE in the form of demand notes to fund the purchase of the reference assets. Reference assets are typically fixed income instruments primarily composed of syndicated bank loans. The TRS contracts pass through interest and other cash flows on the reference assets to the third party clients, along with exposing those clients to decreases in value on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial margin collateral, as well as ongoing margin as the fair values of the underlying reference assets change. The following table provides a summary of the TRS transactions with VIE purchases. VIE assets include trading loans and bonds:
(Dollars in millions)Jun 30, 2022Dec 31, 2021
Total return swaps:
VIE assets$1,531 $1,519 
Trading loans and bonds1,440 1,491 
VIE liabilities73 50 

The Company concluded that the associated VIEs should be consolidated because the Company has (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses and the right to receive benefits, that could potentially be significant. At September 30, 2021, the Company’s Consolidated Balance Sheet reflected $1.6 billion of assets and $133 million of other liabilities of the VIEs. At December 31, 2020, the Company’s Consolidated Balance Sheet reflected $1.3 billion of assets and $41 million of other liabilities of the VIEs. VIE assets include trading loans and bonds totaling $1.5 billion and $1.3 billion at September 30, 2021 and December 31, 2020, respectively. The activities of the VIEs are restricted to buying and selling the reference assets and the risks/benefits of any such assets owned by the VIEs are passed to the third party clients via the TRS contracts. For additional information on TRS contracts and the related VIEs, see “Note 16. Derivative Financial Instruments.”

26 Truist Financial Corporation


Pledged Assets

Certain assets were pledged to secure municipal deposits, securities sold under agreements to repurchase, certain derivative agreements, and borrowings or borrowing capacity, as well as to fund certain obligations related to nonqualified defined benefit and defined contribution retirement plans and for other purposes as required or permitted by law. Assets pledged to the FHLB and FRB are subject to applicable asset discounts when determining borrowing capacity. The Company obtains secured financing and letters of credit from the FRB and FHLB. The Company’s letters of credit from the FHLB can be used to secure various client deposits, including public fund relationships. Excluding assets related to employeenonqualified benefit plans, the majority of the agreements governing the pledged assets do not permit the other party to sell or repledge the collateral. The following table provides the total carrying amount of pledged assets by asset type:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Pledged securitiesPledged securities$25,914 $24,974 Pledged securities$28,837 $29,678 
Pledged loans:Pledged loans:Pledged loans:
FRBFRB72,030 75,615 FRB67,658 73,349 
FHLBFHLB66,040 69,994 FHLB62,876 64,698 
Unused borrowing capacity:Unused borrowing capacity:Unused borrowing capacity:
FRBFRB51,457 52,831 FRB48,122 52,170 
FHLBFHLB52,459 52,274 FHLB41,379 49,244 

26 Truist Financial Corporation


Litigation and Regulatory Matters

Truist and/or its subsidiaries are routinely named as defendants in or parties to numerous actual or threatened legal proceedings, including private, civil litigation and regulatory investigations or enforcement matters, arising from the ordinary conduct of its regular business activities. The matters range from individual actions involving a single plaintiff to class action lawsuits with multiplemany class members and can involve claims for substantial amounts.or indeterminate alleged damages or for injunctive or other relief. Investigations may involve both formal and informal proceedings, by both governmental agencies and self-regulatory organizations.organizations, and could result in fines, penalties, restitution, and/or alterations in Truist’s business practices. These legal proceedings are at varying stages of adjudication, arbitration, or investigation and may consist of a variety of claims, including common law tort and contract claims, as well as statutory antitrust, securities, and consumer protection claims. The ultimate resolution of any proceeding and the timing of such resolution is uncertain and inherently difficult to predict. It is possible that the ultimate resolution of these matters, if unfavorable, may be material to the consolidated financial position, consolidated results of operations, or consolidated cash flows of Truist.Truist, or cause significant reputational consequences.

Truist establishes accruals for legal matters when potential losses associated with the actions become probable and the amount of loss can be reasonably estimated. There is no assurance that the ultimate resolution of these matters will not significantly exceed the amounts that Truist has accrued. Accruals for legal matters are based on management’s best judgment after consultation with counsel and others.

The Company estimates reasonably possible losses, in excess of amounts accrued, of up to approximately $200 million as of SeptemberJune 30, 2021.2022. This estimate isdoes not represent Truist’s maximum loss exposure, and actual losses may vary significantly. In addition, the matters underlying this estimate will change from time to time. Estimated losses are based upon currently available information and involvesinvolve considerable judgment, given that claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete, and material facts may be disputed or unsubstantiated, among other factors. In addition,

For certain matters, Truist may be unable to estimate the matters underlying this estimate will change from time to time and actual losses may vary significantly from this estimate. Asloss or range of loss, even if it believes that a result, the Company does not believe that an estimate ofloss is probable or reasonably possible, losses can be madeuntil developments in the case provide additional information sufficient to support such an estimate. Such matters are not accrued for certain matters. Such mattersand are not reflected in the estimate provided herein.of reasonably possible losses.

The following is a description of a certain legal proceedingproceedings in which Truist is involved:

Bickerstaff v. SunTrust Bank

This class action case was filed in the Fulton County State Court on July 12, 2010, and an amended complaint was filed on August 9, 2010. Plaintiff asserts that all overdraft fees charged to his account which related to debit card and ATM transactions are actually interest charges and therefore subject to the usury laws of Georgia. Plaintiff has brought claims for violations of civil and criminal usury laws, conversion, and money had and received.received, and seeks damages on a class-wide basis, including refunds of challenged overdraft fees and pre-judgment interest. On October 6, 2017, the trial court granted plaintiff’s motion for class certification and defined the class as “Every Georgia citizen who had or has one or more accounts with SunTrust Bank and who, from July 12, 2006, to October 6, 2017 (i) had at least one overdraft of $500.00 or less resulting from an ATM or debit card transaction (the “Transaction”); (ii) paid any Overdraft Fees as a result of the Transaction; and (iii) did not receive a refund of those Fees,” and the granting of a certified class was affirmed on appeal. On April 8, 2020, the Company filed a motion seeking to narrow the scope of this class, and on May 29, 2020, it filed a renewed motion to compel arbitration of the claims of some of the class members. On February 9, 2021, the trial court denied both motions as premature but heldpremature. Truist filed a second renewed motion to compel arbitration against certain class members on July 5, 2022. The Company continues to believe that the issues could be raised again after the conclusion of discovery, which is currently underway. The Company believes that theunderlying claims are without merit.

United Services Automobile Association v. Truist Bank

USAA filed a lawsuit on July 29, 2022 against the Company in the United States District Court for the Eastern District of Texas alleging that the Company’s mobile remote deposit capture systems infringe certain patents held by USAA. The complaint seeks damages, including for alleged willful infringement, as well as injunctive and other equitable relief.

Truist Financial Corporation 27


NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

Accounting standards define fair value as the price that would be received on the measurement date to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants, with a three level measurement hierarchy:

Level 1: Quoted prices for identical instruments in active markets
Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets
Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable

The following tables present fair value information for assets and liabilities measured at fair value on a recurring basis:
September 30, 2021
(Dollars in millions)
TotalLevel 1Level 2Level 3Netting Adjustments (1)
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
TotalLevel 1Level 2Level 3Netting Adjustments (1)
Assets:Assets:    Assets:    
Trading assets:Trading assets:Trading assets:
U.S. TreasuryU.S. Treasury$2,414 $— $2,414 $— $— U.S. Treasury$678 $— $678 $— $— 
GSEGSE184 — 184 — — GSE341 — 341 — — 
Agency MBS - residentialAgency MBS - residential973 — 973 — — Agency MBS - residential1,088 — 1,088 — — 
Agency MBS - commercialAgency MBS - commercial— — — Agency MBS - commercial75 — 75 — — 
States and political subdivisionsStates and political subdivisions67 — 67 — — States and political subdivisions299 — 299 — — 
Corporate and other debt securitiesCorporate and other debt securities1,031 — 1,031 — — Corporate and other debt securities832 — 832 — — 
LoansLoans1,943 — 1,943 — — Loans1,596 — 1,596 — — 
OtherOther355 294 61 — — Other321 246 75 — — 
Total trading assetsTotal trading assets6,972 294 6,678 — — Total trading assets5,230 246 4,984 — — 
AFS securities:AFS securities: AFS securities: 
U.S. TreasuryU.S. Treasury9,697 — 9,697 — — U.S. Treasury10,258 — 10,258 — — 
GSEGSE1,874 — 1,874 — — GSE250 — 250 — — 
Agency MBS - residentialAgency MBS - residential133,061 — 133,061 — — Agency MBS - residential62,197 — 62,197 — — 
Agency MBS - commercialAgency MBS - commercial3,073 — 3,073 — — Agency MBS - commercial2,654 — 2,654 — — 
States and political subdivisionsStates and political subdivisions458 — 458 — — States and political subdivisions374 — 374 — — 
Non-agency MBSNon-agency MBS2,846 — 2,846 — — Non-agency MBS3,425 — 3,425 — — 
OtherOther29 — 29 — — Other120 — 120 — — 
Total AFS securitiesTotal AFS securities151,038 — 151,038 — — Total AFS securities79,278 — 79,278 — — 
LHFS at fair valueLHFS at fair value4,799 — 4,799 — — LHFS at fair value3,149 — 3,149 — — 
MSRs at fair value2,584 — — 2,584 — 
Loans and leasesLoans and leases20 — — 20 — 
Loan servicing rights at fair valueLoan servicing rights at fair value3,466 — — 3,466 — 
Other assets:Other assets:Other assets:
Derivative assetsDerivative assets2,976 676 3,893 38 (1,631)Derivative assets1,386 420 2,712 12 (1,758)
Equity securitiesEquity securities1,026 940 86 — — Equity securities950 828 122 — — 
Total assetsTotal assets$169,395 $1,910 $166,494 $2,622 $(1,631)Total assets$93,479 $1,494 $90,245 $3,498 $(1,758)
Liabilities:Liabilities:    Liabilities:    
Derivative liabilitiesDerivative liabilities$601 $304 $3,132 $28 $(2,863)Derivative liabilities$1,914 $329 $3,985 $48 $(2,448)
Securities sold shortSecurities sold short1,735 12 1,723 — — Securities sold short1,816 1,809 — — 
Total liabilitiesTotal liabilities$2,336 $316 $4,855 $28 $(2,863)Total liabilities$3,730 $336 $5,794 $48 $(2,448)
28 Truist Financial Corporation


December 31, 2020
(Dollars in millions)
TotalLevel 1Level 2Level 3Netting Adjustments (1)
December 31, 2021
(Dollars in millions)
December 31, 2021
(Dollars in millions)
TotalLevel 1Level 2Level 3Netting Adjustments (1)
Assets:Assets:    Assets:    
Trading assets:Trading assets:Trading assets:
U.S. TreasuryU.S. Treasury$793 $— $793 $— $— U.S. Treasury$125 $— $125 $— $— 
GSEGSE164 — 164 — — GSE306 — 306 — — 
Agency MBS - residentialAgency MBS - residential599 — 599 — — Agency MBS - residential1,016 — 1,016 — — 
Agency MBS - commercialAgency MBS - commercial21 — 21 — — Agency MBS - commercial13 — 13 — — 
States and political subdivisionsStates and political subdivisions34 — 34 — — States and political subdivisions91 — 91 — — 
Corporate and other debt securitiesCorporate and other debt securities545 — 545 — — Corporate and other debt securities738 — 738 — — 
LoansLoans1,586 — 1,586 — — Loans1,791 — 1,791 — — 
OtherOther130 123 — — Other343 285 58 — — 
Total trading assetsTotal trading assets3,872 123 3,749 — — Total trading assets4,423 285 4,138 — — 
AFS securities:AFS securities:    AFS securities:    
U.S. TreasuryU.S. Treasury1,746 — 1,746 — — U.S. Treasury9,795 — 9,795 — — 
GSEGSE1,917 — 1,917 — — GSE1,698 — 1,698 — — 
Agency MBS - residentialAgency MBS - residential113,541 — 113,541 — — Agency MBS - residential134,042 — 134,042 — — 
Agency MBS - commercialAgency MBS - commercial3,057 — 3,057 — — Agency MBS - commercial2,882 — 2,882 — — 
States and political subdivisionsStates and political subdivisions493 — 493 — — States and political subdivisions420 — 420 — — 
Non-agency MBSNon-agency MBS4,258 — 4,258 — — 
OtherOther34 — 34 — — Other28 — 28 — — 
Total AFS securitiesTotal AFS securities120,788 — 120,788 — — Total AFS securities153,123 — 153,123 — — 
LHFS at fair valueLHFS at fair value4,955 — 4,955 — — LHFS at fair value3,544 — 3,544 — — 
MSRs at fair value2,023 — — 2,023 — 
Loans and leasesLoans and leases23 — — 23 — 
Loan servicing rights at fair valueLoan servicing rights at fair value2,633 — — 2,633 — 
Other assets:Other assets:    Other assets:    
Derivative assetsDerivative assets3,837 752 4,903 186 (2,004)Derivative assets2,370 887 3,110 30 (1,657)
Equity securitiesEquity securities1,054 996 58 — — Equity securities1,066 967 99 — — 
Total assetsTotal assets$136,529 $1,871 $134,453 $2,209 $(2,004)Total assets$167,182 $2,139 $164,014 $2,686 $(1,657)
Liabilities:Liabilities:    Liabilities:    
Derivative liabilitiesDerivative liabilities$555 $386 $3,263 $14 $(3,108)Derivative liabilities$586 $438 $3,056 $42 $(2,950)
Securities sold shortSecurities sold short1,115 1,112 — — Securities sold short1,731 1,723 — — 
Total liabilitiesTotal liabilities$1,670 $389 $4,375 $14 $(3,108)Total liabilities$2,317 $446 $4,779 $42 $(2,950)
(1)Refer to “Note 16. Derivative Financial Instruments” for additional discussion on netting adjustments.

At SeptemberJune 30, 20212022 and December 31, 2020,2021, investments totaling $490$361 million and $387$440 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 18. Fair Value Disclosures” of the Annual Report on Form 10-K for the year ended December 31, 2020.2021.

Truist Financial Corporation 29


Activity for Level 3 assets and liabilities is summarized below:
Three Months Ended September 30, 2021 and 2020
(Dollars in millions)
Non-agency MBSMSRsNet DerivativesPrivate Equity Investments
Balance at July 1, 2020$— $2,077 $203 $— 
Three Months Ended June 30, 2022 and 2021
(Dollars in millions)
Three Months Ended June 30, 2022 and 2021
(Dollars in millions)
Loans and LeasesLoan Servicing RightsNet Derivatives
Balance at April 1, 2021Balance at April 1, 2021$— $2,365 $(10)
Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):
Included in earningsIncluded in earnings— (54)128 — Included in earnings— (192)81 
PurchasesPurchases— 20 — 
IssuancesIssuances— 192 229 — Issuances— 227 81 
SettlementsSettlements— (224)(346)— Settlements— (189)(114)
Balance at September 30, 2020$— $1,991 $214 $— 
Balance at July 1, 2021$— $2,231 $38 $— 
Balance at June 30, 2021Balance at June 30, 2021$— $2,231 $38 
Balance at April 1, 2022Balance at April 1, 2022$21 $3,013 $(74)
Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):
Included in earningsIncluded in earnings— 78 — Included in earnings— 260 (93)
PurchasesPurchases— 303 — — Purchases— 195 — 
IssuancesIssuances— 145 77 — Issuances— 123 23 
SalesSales— (1)— — Sales— (1)— 
SettlementsSettlements— (172)(111)— Settlements— (124)108 
OtherOther(1)— — 
Balance at June 30, 2022Balance at June 30, 2022$20 $3,466 $(36)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022$— $$— 
Balance at September 30, 2021$— $2,584 $10 $— 
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2021$— $78 $21 $— 
Nine Months Ended September 30, 2021 and 2020
(Dollars in millions)
Non-agency MBSMSRsNet DerivativesPrivate Equity Investments
Six Months Ended June 30, 2022 and 2021
(Dollars in millions)
Six Months Ended June 30, 2022 and 2021
(Dollars in millions)
Loans and LeasesLoan Servicing RightsNet Derivatives
Balance at January 1, 2020$368 $2,618 $19 $440 
Balance at January 1, 2021Balance at January 1, 2021$— $2,023 $172 
Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):   Total realized and unrealized gains (losses): 
Included in earningsIncluded in earnings306 (616)365 Included in earnings— 182 (83)
Included in unrealized net holding gains (losses) in OCI(178)— — — 
PurchasesPurchases— — — 27 Purchases— 52 — 
IssuancesIssuances— 523 655 — Issuances— 387 177 
Sales(481)— — — 
SettlementsSettlements(15)(534)(825)(21)Settlements— (413)(228)
Transfers out of level 3 and other— — — (448)
Balance at September 30, 2020$— $1,991 $214 $— 
Balance at January 1, 2021$— $2,023 $172 $— 
Balance at June 30, 2021Balance at June 30, 2021$— $2,231 $38 
Balance at January 1, 2022Balance at January 1, 2022$23 $2,633 $(12)
Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):Total realized and unrealized gains (losses):
Included in earningsIncluded in earnings— 260 (77)— Included in earnings— 617 (263)
PurchasesPurchases— 355 — — Purchases— 195 — 
IssuancesIssuances— 532 254 — Issuances— 281 40 
SalesSales— (1)— — Sales— (1)— 
SettlementsSettlements— (585)(339)— Settlements— (259)199 
Balance at September 30, 2021$— $2,584 $10 $— 
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2021$— $260 $16 $— 
OtherOther(3)— — 
Balance at June 30, 2022Balance at June 30, 2022$20 $3,466 $(36)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022$— $617 $(7)
Primary income statement location of realized gains (losses) included in earningsPrimary income statement location of realized gains (losses) included in earningsSecurities gains (losses)Residential mortgage income and Commercial real estate related incomeResidential mortgage income and Commercial real estate related incomeOther incomePrimary income statement location of realized gains (losses) included in earningsOther incomeResidential mortgage income and Commercial mortgage incomeResidential mortgage income and Commercial mortgage income

During 2020, Truist sold non-agency MBS previously categorized as Level 3 that represented ownership interests in various tranches of Re-REMIC trusts. Additionally during 2020, as a result of a change in control of the funds’ manager, the Company deconsolidated certain SBIC funds for which it had previously concluded that it was the primary beneficiary.

Refer to “Note 7. Loan Servicing” for additional information on valuation techniques and inputs for MSRs.
30 Truist Financial Corporation



Fair Value Option

The following table details the fair value and UPB of LHFScertain loans that were elected to be measured at fair value. Trading loans, included in other trading assets, were also elected to be measured at fair value.value:
September 30, 2021December 31, 2020 June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Fair ValueUPBDifferenceFair ValueUPBDifference(Dollars in millions)Fair ValueUPBDifferenceFair ValueUPBDifference
Trading loansTrading loans$1,943 $1,912 $31 $1,586 $1,619 $(33)Trading loans$1,596 $1,713 $(117)$1,791 $1,784 $
Loans and leasesLoans and leases20 22 (2)23 35 (12)
LHFS at fair valueLHFS at fair value4,799 4,700 99 4,955 4,736 219 LHFS at fair value3,149 3,135 14 3,544 3,450 94 
30 Truist Financial Corporation



Nonrecurring Fair Value Measurements

The following table provides information about certain assets measured at fair value on a nonrecurring basis still held as of period end. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. These assets are considered to be Level 3 assets.
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Carrying value:Carrying value:Carrying value:
LHFSLHFS$255 $979 LHFS$114 $101 
Loans and leasesLoans and leases122 142 Loans and leases402 443 
OtherOther102 92 Other50 100 

The following table provides information about valuation adjustments for certain assets measured at fair value on a nonrecurring basis. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end.
Nine Months Ended September 30,
(Dollars in millions)
20212020
Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)20222021
Valuation adjustments:Valuation adjustments:Valuation adjustments:
LHFSLHFS$(27)$(52)LHFS$(4)$(26)
Loans and leasesLoans and leases(41)(38)Loans and leases(165)(243)
OtherOther(156)(137)Other(160)(127)

LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at the lower of cost or market. LHFS as of December 31, 2020 includes the small ticket loan and lease portfolio that was sold during the first quarter of 2021.LOCOM. The table above excludes $79$375 million and $125 million$1.2 billion of LHFS carried at cost at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively, that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value. The Company held $76 million in nonperforming LHFS at September 30, 2021 and $5 million of nonperforming LHFS at December 31, 2020. LHFS that were 90 days or more past due and still accruing interest were not material at September 30, 2021.

Loans and leases consists of larger commercial loans and leases that do not share similar risk characteristics. Theseare collateral-dependent and other secured loans and leases that have been charged-off to the fair value of the collateral. Valuation adjustments for loans and leases are collateral dependent and may be subject to liquidity adjustments.primarily recorded in the Provision for credit losses in the Consolidated statement of income. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional discussion of individually evaluated loans and leases.

Other includes foreclosed real estate, other foreclosed property, ROU assets, premises and equipment, and OREO, and consists primarily of residential homes, commercial properties, vacant lots, and automobiles. ROU assets are measured based on the fair value of the assets, which considers the potential for sublease income. The remaining assets are measured at the lower of cost or fair value,LOCOM, less costs to sell.

Truist Financial Corporation 31


Financial Instruments Not Recorded at Fair Value

For financial instruments not recorded at fair value, estimates of fair value are based on relevant market data and information about the instruments. Values obtained relate to trading without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications, estimated transaction costs that may result from bulk sales or the relationship between various instruments.

An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets. In addition, changes in assumptions could significantly affect these fair value estimates. Financial assets and liabilities not recorded at fair value are summarized below:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value(Dollars in millions)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
Financial assets:Financial assets:    Financial assets:
HTM securitiesHTM securitiesLevel 2$60,081 $53,905 $1,494 $1,495 
Loans and leases HFI, net of ALLLLoans and leases HFI, net of ALLLLevel 3$280,820 $281,198 $293,899 $295,461 Loans and leases HFI, net of ALLLLevel 3299,455 292,846 285,055 284,914 
Financial liabilities:Financial liabilities:  Financial liabilities:  
Time depositsTime depositsLevel 216,675 16,810 21,941 22,095 Time depositsLevel 213,562 13,660 15,886 16,017 
Long-term debtLong-term debtLevel 237,837 38,491 39,597 40,864 Long-term debtLevel 230,319 29,020 35,913 36,251 

The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was $276$247 million and $364$260 million at SeptemberJune 30, 20212022 and December 31, 2020,2021, respectively.

32 Truist Financial Corporation 31


NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

The following table presents the gross notional amounts and estimated fair value of derivative instruments employed by the Company. Truist held 0 cash flow hedges as of September 30, 2021 and December 31, 2020.
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Notional AmountFair ValueNotional AmountFair Value Notional AmountFair ValueNotional AmountFair Value
(Dollars in millions)(Dollars in millions)AssetsLiabilitiesAssetsLiabilities(Dollars in millions)AssetsLiabilitiesAssetsLiabilities
Cash flow hedges:Cash flow hedges:      
Interest rate contracts:Interest rate contracts:      
Swaps hedging commercial loansSwaps hedging commercial loans$10,500 $— $— $— $— $— 
Fair value hedges:Fair value hedges:   Fair value hedges:   
Interest rate contracts:Interest rate contracts:   Interest rate contracts:   
Swaps hedging long-term debtSwaps hedging long-term debt12,893 — (41)12,690 — (6)
Swaps hedging AFS securitiesSwaps hedging AFS securities$24,006 $— $(4)$17,765 $— $— Swaps hedging AFS securities7,097 — — 12,711 — (2)
TotalTotal19,990 — (41)25,401 — (8)
Not designated as hedges:Not designated as hedges:      Not designated as hedges:      
Client-related and other risk management:Client-related and other risk management:      Client-related and other risk management:      
Interest rate contracts:Interest rate contracts:      Interest rate contracts:      
SwapsSwaps149,428 2,103 (731)156,338 3,399 (862)Swaps154,805 525 (1,759)150,223 1,716 (733)
OptionsOptions24,939 36 (21)25,386 45 (18)Options29,619 140 (130)23,659 43 (30)
Forward commitmentsForward commitments8,426 (9)4,847 (11)Forward commitments2,039 11 (11)2,404 (5)
OtherOther2,582 — — 2,573 — — Other2,836 (3)2,927 — — 
Equity contractsEquity contracts30,431 1,484 (1,779)31,152 1,856 (2,297)Equity contracts36,531 717 (811)34,232 1,582 (2,089)
Credit contracts:Credit contracts:Credit contracts:
Loans and leasesLoans and leases815 — (2)1,056 — (5)Loans and leases484 — (1)570 — (2)
Risk participation agreementsRisk participation agreements8,413 (4)7,802 (13)Risk participation agreements6,429 — (2)8,145 — (4)
Total return swapsTotal return swaps1,424 (27)1,296 13 (33)Total return swaps1,542 89 — 1,445 (19)
Foreign exchange contractsForeign exchange contracts16,224 175 (145)12,066 189 (219)Foreign exchange contracts19,446 449 (427)16,102 160 (156)
CommodityCommodity4,536 697 (689)2,872 130 (124)Commodity6,699 1,067 (1,076)4,641 475 (468)
TotalTotal247,218 4,504 (3,407)245,388 5,642 (3,582)Total260,430 3,000 (4,220)244,348 3,981 (3,506)
Mortgage banking:Mortgage banking:      Mortgage banking:      
Interest rate contracts:Interest rate contracts:      Interest rate contracts:      
SwapsSwaps634 — — 687 — — Swaps573 — — 441 — — 
OptionsOptions216 — — — — 
Interest rate lock commitmentsInterest rate lock commitments4,928 38 (16)8,609 186 (3)Interest rate lock commitments2,597 12 (19)4,163 30 (7)
When issued securities, forward rate agreements and forward commitmentsWhen issued securities, forward rate agreements and forward commitments9,082 63 (2)11,691 (73)When issued securities, forward rate agreements and forward commitments5,592 24 (12)6,913 (15)
OtherOther308 — 466 — — Other317 — 424 — 
TotalTotal14,952 102 (18)21,453 192 (76)Total9,295 40 (31)11,941 38 (22)
MSRs:MSRs:      MSRs:      
Interest rate contracts:Interest rate contracts:      Interest rate contracts:      
SwapsSwaps38,329 — (3)36,161 — (5)Swaps14,727 — — 12,837 — — 
OptionsOptions101 — 101 — — Options13,241 77 (23)101 — 
When issued securities, forward rate agreements and forward commitmentsWhen issued securities, forward rate agreements and forward commitments3,644 — (32)1,314 — When issued securities, forward rate agreements and forward commitments2,168 25 (47)3,927 — 
OtherOther1,682 — — 760 — — Other1,320 — 2,017 — — 
TotalTotal43,756 (35)38,336 (5)Total31,456 104 (70)18,882 — 
Total derivatives not designated as hedgesTotal derivatives not designated as hedges305,926 4,607 (3,460)305,177 5,841 (3,663)Total derivatives not designated as hedges301,181 3,144 (4,321)275,171 4,027 (3,528)
Total derivativesTotal derivatives$329,932 4,607 (3,464)$322,942 5,841 (3,663)Total derivatives$331,671 3,144 (4,362)$300,572 4,027 (3,536)
Gross amounts in the Consolidated Balance Sheets:Gross amounts in the Consolidated Balance Sheets:    Gross amounts in the Consolidated Balance Sheets:    
Amounts subject to master netting arrangementsAmounts subject to master netting arrangements(1,314)1,314  (1,561)1,561 Amounts subject to master netting arrangements(1,395)1,395  (1,312)1,312 
Cash collateral (received) posted for amounts subject to master netting arrangementsCash collateral (received) posted for amounts subject to master netting arrangements (317)1,549  (443)1,547 Cash collateral (received) posted for amounts subject to master netting arrangements (363)1,053  (345)1,638 
Net amountNet amount $2,976 $(601) $3,837 $(555)Net amount $1,386 $(1,914) $2,370 $(586)

32 Truist Financial Corporation 33


The following table presents the offsetting of derivative instruments including financial instrument collateral related to legally enforceable master netting agreements and amounts held or pledged as collateral. U.S. GAAP does not permit netting of non-cash collateral balances in the Consolidated Balance Sheets:
September 30, 2021
(Dollars in millions)
Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:Derivative assets:Derivative assets:
Derivatives subject to master netting arrangement or similar arrangementDerivatives subject to master netting arrangement or similar arrangement$3,714 $(1,631)$2,083 $(3)$2,080 Derivatives subject to master netting arrangement or similar arrangement$2,604 $(1,433)$1,171 $— $1,171 
Derivatives not subject to master netting arrangement or similar arrangementDerivatives not subject to master netting arrangement or similar arrangement521 — 521 — 521 Derivatives not subject to master netting arrangement or similar arrangement120 — 120 — 120 
Exchange traded derivativesExchange traded derivatives372 — 372 — 372 Exchange traded derivatives420 (325)95 — 95 
Total derivative assetsTotal derivative assets$4,607 $(1,631)$2,976 $(3)$2,973 Total derivative assets$3,144 $(1,758)$1,386 $— $1,386 
Derivative liabilities:Derivative liabilities:Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangementDerivatives subject to master netting arrangement or similar arrangement$(3,221)$2,863 $(358)$53 $(305)Derivatives subject to master netting arrangement or similar arrangement$(3,567)$2,123 $(1,444)$27 $(1,417)
Derivatives not subject to master netting arrangement or similar arrangementDerivatives not subject to master netting arrangement or similar arrangement(242)— (242)— (242)Derivatives not subject to master netting arrangement or similar arrangement(466)— (466)— (466)
Exchange traded derivativesExchange traded derivatives(1)— (1)— (1)Exchange traded derivatives(329)325 (4)— (4)
Total derivative liabilitiesTotal derivative liabilities$(3,464)$2,863 $(601)$53 $(548)Total derivative liabilities$(4,362)$2,448 $(1,914)$27 $(1,887)
December 31, 2020
(Dollars in millions)
Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
December 31, 2021
(Dollars in millions)
December 31, 2021
(Dollars in millions)
Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:Derivative assets:Derivative assets:
Derivatives subject to master netting arrangement or similar arrangementDerivatives subject to master netting arrangement or similar arrangement$4,383 $(1,618)$2,765 $(2)$2,763 Derivatives subject to master netting arrangement or similar arrangement$2,752 $(1,221)$1,531 $(1)$1,530 
Derivatives not subject to master netting arrangement or similar arrangementDerivatives not subject to master netting arrangement or similar arrangement705 — 705 (1)704 Derivatives not subject to master netting arrangement or similar arrangement388 — 388 — 388 
Exchange traded derivativesExchange traded derivatives753 (386)367 — 367 Exchange traded derivatives887 (436)451 — 451 
Total derivative assetsTotal derivative assets$5,841 $(2,004)$3,837 $(3)$3,834 Total derivative assets$4,027 $(1,657)$2,370 $(1)$2,369 
Derivative liabilities:Derivative liabilities:Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangementDerivatives subject to master netting arrangement or similar arrangement$(3,103)$2,722 $(381)$35 $(346)Derivatives subject to master netting arrangement or similar arrangement$(2,873)$2,514 $(359)$66 $(293)
Derivatives not subject to master netting arrangement or similar arrangementDerivatives not subject to master netting arrangement or similar arrangement(174)— (174)— (174)Derivatives not subject to master netting arrangement or similar arrangement(225)— (225)— (225)
Exchange traded derivativesExchange traded derivatives(386)386 — — — Exchange traded derivatives(438)436 (2)— (2)
Total derivative liabilitiesTotal derivative liabilities$(3,663)$3,108 $(555)$35 $(520)Total derivative liabilities$(3,536)$2,950 $(586)$66 $(520)

The following table presents the carrying value of hedged items in fair value hedging relationships:
September 30, 2021December 31, 2020June 30, 2022December 31, 2021
Hedge Basis AdjustmentHedge Basis AdjustmentHedge Basis AdjustmentHedge Basis Adjustment
(Dollars in millions)(Dollars in millions)Hedged Asset / Liability BasisItems Currently DesignatedDiscontinued HedgesHedged Asset / Liability BasisItems Currently DesignatedDiscontinued Hedges(Dollars in millions)Hedged Asset / Liability BasisItems Currently DesignatedDiscontinued HedgesHedged Asset / Liability BasisItems Currently DesignatedDiscontinued Hedges
AFS securities (1)AFS securities (1)$116,770 $(495)$43 $100,988 $(33)$50 AFS securities (1)$43,783 $(505)$(4)$108,758 $(400)$(150)
Loans and leasesLoans and leases394 — 16 470 — 18 Loans and leases373 — 11 382 — 12 
Long-term debtLong-term debt22,490 — 700 27,725 — 930 Long-term debt23,108 (394)278 27,361 (137)629 
(1)The amortized cost of AFS securities was $117.8$48.9 billion at SeptemberJune 30, 20212022 and $99.4$110.6 billion at December 31, 2020.2021.

34 Truist Financial Corporation 33


Impact of Derivatives on the Consolidated Statements of Income and Comprehensive Income

Derivatives Designated as Hedging Instruments under GAAP

No portion of the change in fair value of derivatives designated as hedges has been excluded from effectiveness testing.

The following table summarizes amounts related to cash flow hedges, which consist of interest rate contracts.contracts:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)2021202020212020(Dollars in millions)2022202120222021
Pre-tax gain (loss) recognized in OCI:Pre-tax gain (loss) recognized in OCI:
Commercial loansCommercial loans$59 $— $59 $— 
Pre-tax gain (loss) reclassified from AOCI into interest expense:Pre-tax gain (loss) reclassified from AOCI into interest expense:Pre-tax gain (loss) reclassified from AOCI into interest expense:
DepositsDeposits$— $(2)$(2)$(8)Deposits$— $(1)$— $(2)
Short-term borrowingsShort-term borrowings— (5)(12)(13)Short-term borrowings— (7)— (12)
Long-term debtLong-term debt(7)(3)(17)(18)Long-term debt(5)(5)(11)(10)
TotalTotal$(7)$(10)$(31)$(39)Total$(5)$(13)$(11)$(24)
Pre-tax gain (loss) reclassified from AOCI into other expense: (1)Pre-tax gain (loss) reclassified from AOCI into other expense: (1)Pre-tax gain (loss) reclassified from AOCI into other expense: (1)
DepositsDeposits$— $— $(12)$— Deposits$— $— $— $(12)
Short-term borrowingsShort-term borrowings— — (20)— Short-term borrowings— — — (20)
Long-term debtLong-term debt— — (4)— Long-term debt— — — (4)
TotalTotal$— $— $(36)$— Total$— $— $— $(36)
(1)Represents the accelerated amortization of amounts reclassified from AOCI, where management determined that the forecasted transaction is probable of not occurring.

The following table summarizes the impact on net interest income related to fair value hedges:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)2021202020212020(Dollars in millions)2022202120222021
AFS securities:AFS securities:AFS securities:
Amounts related to interest settlementsAmounts related to interest settlements$(15)$— $(39)$— Amounts related to interest settlements$$(13)$$(24)
Recognized on derivativesRecognized on derivatives81 — 442 — Recognized on derivatives60 (163)474 361 
Recognized on hedged itemsRecognized on hedged items(83)(3)(448)(7)Recognized on hedged items(42)161 (444)(365)
Net income (expense) recognizedNet income (expense) recognized(17)(3)(45)(7)Net income (expense) recognized27 (15)34 (28)
Loans and leases:Loans and leases:Loans and leases:
Amounts related to interest settlements— (1)— (1)
Recognized on derivatives— — — (3)
Recognized on hedged itemsRecognized on hedged items(1)— (2)Recognized on hedged items— — (1)(1)
Net income (expense) recognizedNet income (expense) recognized(1)(1)(2)(3)Net income (expense) recognized— — (1)(1)
Long-term debt:Long-term debt:Long-term debt:
Amounts related to interest settlementsAmounts related to interest settlements— 78 — 182 Amounts related to interest settlements— 19 — 
Recognized on derivativesRecognized on derivatives— (99)— 831 Recognized on derivatives(38)— (467)— 
Recognized on hedged itemsRecognized on hedged items73 112 227 (817)Recognized on hedged items82 75 568 154 
Net income (expense) recognizedNet income (expense) recognized73 91 227 196 Net income (expense) recognized47 75 120 154 
Net income (expense) recognized, totalNet income (expense) recognized, total$55 $87 $180 $186 Net income (expense) recognized, total$74 $60 $153 $125 

The following table presents information about the Company’s terminated cash flow and fair value hedges:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCINet unrecognized after-tax gain (loss) on active hedges recorded in AOCI$(44)$— 
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)$(13)$(64)Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)(1)(9)
Estimated portion of net after-tax gain (loss) on terminated hedges to be reclassified from AOCI into earnings during the next 12 monthsEstimated portion of net after-tax gain (loss) on terminated hedges to be reclassified from AOCI into earnings during the next 12 months(13)(42)Estimated portion of net after-tax gain (loss) on terminated hedges to be reclassified from AOCI into earnings during the next 12 months(3)(9)
Maximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instrumentsMaximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instruments7 yearsN/A
Fair value hedges:Fair value hedges:Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2029)$641 $862 
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2030) (1)Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2030) (1)$756 $767 
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 monthsPortion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months223 292 Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months179 231 

(1)
Includes deferred gains that are recorded in AOCI as a result of the reclassification to HTM of previously hedged securities of $485 million at June 30, 2022.

34 Truist Financial Corporation 35


Derivatives Not Designated as Hedging Instruments under GAAP

The Company also enters into derivatives that are not designated as accounting hedges under GAAP to economically hedge certain risks as well as in a trading capacity with its clients.

The following table presents pre-tax gain (loss) recognized in income for derivative instruments not designated as hedges:
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)Income Statement Location2021202020212020(Dollars in millions)Income Statement Location2022202120222021
Client-related and other risk management:Client-related and other risk management:  Client-related and other risk management:  
Interest rate contractsInterest rate contractsInvestment banking and trading income and other income$28 $14 $142 $(13)Interest rate contractsInvestment banking and trading income and other income$72 $12 $128 $114 
Foreign exchange contractsForeign exchange contractsInvestment banking and trading income and other income73 (50)107 31 Foreign exchange contractsInvestment banking and trading income and other income147 179 34 
Equity contractsEquity contractsInvestment banking and trading income and other income(18)(4)Equity contractsInvestment banking and trading income and other income(12)(20)
Credit contractsCredit contractsInvestment banking and trading income and other income13 (68)(48)238 Credit contractsInvestment banking and trading income and other income83 (27)91 (61)
Commodity contractsCommodity contractsInvestment banking and trading incomeCommodity contractsInvestment banking and trading income(5)— 
Mortgage banking:Mortgage banking:  Mortgage banking:  
Interest rate contractsInterest rate contractsResidential mortgage income(18)(137)(15)(285)Interest rate contractsResidential mortgage income217 (88)478 
Interest rate contractsInterest rate contractsCommercial real estate related income— (1)Interest rate contractsCommercial mortgage income— — (1)(1)
MSRs:MSRs:  MSRs:  
Interest rate contractsInterest rate contractsResidential mortgage income(48)(3)(162)534 Interest rate contractsResidential mortgage income(265)219 (614)(114)
Interest rate contractsInterest rate contractsCommercial real estate related income(1)— (8)22 Interest rate contractsCommercial mortgage income(5)(14)(7)
TotalTotal$50 $(239)$$529 Total$246 $120 $254 $(47)

Credit Derivative Instruments

As part of the Company’s corporate investment banking business, the Company enters into contracts that are, in form or substance, written guarantees; specifically, risk participations, TRS, and credit default swaps. The Company accounts for these contracts as derivatives.

Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on the derivative due to a failure to pay by the counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At SeptemberJune 30, 2021,2022, the remaining terms on these risk participations ranged from less than one year to 1016 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming 100% default by all obligors on the maximum value.

The Company has also entered into TRS contracts on loans.loans and bonds. To mitigate its credit risk, the Company typically receives initial margin from the counterparty upon entering into the TRS and variation margin if the fair value of the underlying reference assets deteriorates. For additional information on the Company’s TRS contracts, see “Note 14. Commitments and Contingencies.”

The Company enters into credit default swaps to hedge credit risk associated with certain loans and leases. The Company accounts for these contracts as derivatives, and accordingly, recognizes these contracts at fair value.

The following table presents additional information related to interest rate derivative risk participation agreements and total return swaps:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Risk participation agreements:Risk participation agreements:Risk participation agreements:
Maximum potential amount of exposureMaximum potential amount of exposure$563 $530 Maximum potential amount of exposure$261 $521 
Total return swaps:Total return swaps:Total return swaps:
Cash collateral heldCash collateral held292 374 Cash collateral held385 290 

36 Truist Financial Corporation 35


The following table summarizes collateral positions with counterparties:
(Dollars in millions)(Dollars in millions)Sep 30, 2021Dec 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Dealer and other counterparties:Dealer and other counterparties:  Dealer and other counterparties:
Cash and other collateral received from counterpartiesCash and other collateral received from counterparties$319 $446 Cash and other collateral received from counterparties$362 $346 
Derivatives in a net gain position secured by collateral receivedDerivatives in a net gain position secured by collateral received474 585 Derivatives in a net gain position secured by collateral received467 506 
Unsecured positions in a net gain with counterparties after collateral postingsUnsecured positions in a net gain with counterparties after collateral postings155 49 Unsecured positions in a net gain with counterparties after collateral postings110 143 
Cash collateral posted to dealer counterparties1,603 1,524 
Cash collateral posted to counterpartiesCash collateral posted to counterparties1,045 1,704 
Derivatives in a net loss position secured by collateralDerivatives in a net loss position secured by collateral1,703 1,604 Derivatives in a net loss position secured by collateral1,289 2,591 
Additional collateral that would have been posted had the Company’s credit ratings dropped below investment gradeAdditional collateral that would have been posted had the Company’s credit ratings dropped below investment gradeAdditional collateral that would have been posted had the Company’s credit ratings dropped below investment grade— 
Central counterparties clearing:Central counterparties clearing:Central counterparties clearing:
Cash collateral, including initial margin, posted to central clearing partiesCash collateral, including initial margin, posted to central clearing parties37 172 Cash collateral, including initial margin, posted to central clearing parties45 31 
Derivatives in a net loss positionDerivatives in a net loss position32 90 Derivatives in a net loss position36 18 
Derivatives in a net gain positionDerivatives in a net gain position18 Derivatives in a net gain position— 
Securities pledged to central counterparties clearingSecurities pledged to central counterparties clearing1,193 1,281 Securities pledged to central counterparties clearing808 904 

NOTE 17. Computation of EPS

Basic and diluted EPS calculations are presented in the following table:
Three Months Ended September 30,Nine Months Ended September 30,
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions, except per share data, shares in thousands)(Dollars in millions, except per share data, shares in thousands)2021202020212020(Dollars in millions, except per share data, shares in thousands)2022202120222021
Net income available to common shareholdersNet income available to common shareholders$1,616 $1,068 $4,509 $2,956 Net income available to common shareholders$1,454 $1,559 $2,781 $2,893 
Weighted average number of common sharesWeighted average number of common shares1,334,825 1,347,916 1,339,558 1,346,605 Weighted average number of common shares1,330,160 1,338,302 1,329,601 1,341,963 
Effect of dilutive outstanding equity-based awardsEffect of dilutive outstanding equity-based awards12,029 10,206 12,154 10,569 Effect of dilutive outstanding equity-based awards8,704 11,190 10,624 12,247 
Weighted average number of diluted common sharesWeighted average number of diluted common shares1,346,854 1,358,122 1,351,712 1,357,174 Weighted average number of diluted common shares1,338,864 1,349,492 1,340,225 1,354,210 
Basic EPSBasic EPS$1.21 $0.79 $3.37 $2.20 Basic EPS$1.09 $1.16 $2.09 $2.16 
Diluted EPSDiluted EPS$1.20 $0.79 $3.34 $2.18 Diluted EPS$1.09 $1.16 $2.08 $2.14 
Anti-dilutive awardsAnti-dilutive awards1,647 3,267 Anti-dilutive awards4,843 — 130 

NOTE 18. Operating Segments

Truist operates and measures business activity across 3 segments: Consumer BankingCB&W, C&CB, and Wealth, Corporate and Commercial Banking, and Insurance Holdings,IH, with functional activities included in Other, Treasury and Corporate.OT&C. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see “Note 21. Operating Segments” of the Annual Report on Form 10-K for the year ended December 31, 2020.2021.

36 Truist Financial Corporation 37


The following table presents results by segment:
Three Months Ended September 30,
(Dollars in millions)
CB&WC&CBIHOT&C (1)Total
2021202020212020202120202021202020212020
Three Months Ended June 30,
(Dollars in millions)
Three Months Ended June 30,
(Dollars in millions)
CB&WC&CBIHOT&C (1)Total
2022202120222021202220212022202120222021
Net interest income (expense)Net interest income (expense)$1,667 $1,858 $1,124 $1,234 $27 $31 $415 $239 $3,233 $3,362 Net interest income (expense)$1,567 $1,687 $1,277 $1,182 $30 $25 $533 $351 $3,407 $3,245 
Net intersegment interest income (expense)Net intersegment interest income (expense)369 333 49 49 (2)(7)(416)(375)— — Net intersegment interest income (expense)707 385 57 114 (2)— (762)(499)— — 
Segment net interest incomeSegment net interest income2,036 2,191 1,173 1,283 25 24 (1)(136)3,233 3,362 Segment net interest income2,274 2,072 1,334 1,296 28 25 (229)(148)3,407 3,245 
Allocated provision for credit lossesAllocated provision for credit losses(5)181 (264)311 — (56)(71)(324)421 Allocated provision for credit losses199 (4)(28)(399)(1)(1)(30)171 (434)
Segment net interest income after provisionSegment net interest income after provision2,041 2,010 1,437 972 24 24 55 (65)3,557 2,941 Segment net interest income after provision2,075 2,076 1,362 1,695 27 26 (228)(118)3,236 3,679 
Noninterest incomeNoninterest income1,032 997 753 608 652 524 (72)81 2,365 2,210 Noninterest income892 925 636 808 833 698 (113)(26)2,248 2,405 
Amortization of intangiblesAmortization of intangibles78 103 37 45 30 17 — 145 170 Amortization of intangibles79 78 32 38 32 24 — 143 142 
Other noninterest expenseOther noninterest expense1,855 1,834 783 800 507 429 505 522 3,650 3,585 Other noninterest expense1,875 1,867 749 790 592 491 221 721 3,437 3,869 
Income (loss) before income taxesIncome (loss) before income taxes1,140 1,070 1,370 735 139 102 (522)(511)2,127 1,396 Income (loss) before income taxes1,013 1,056 1,217 1,675 236 209 (562)(867)1,904 2,073 
Provision (benefit) for income taxesProvision (benefit) for income taxes268 252 295 149 34 25 (174)(171)423 255 Provision (benefit) for income taxes240 257 263 369 58 50 (189)(261)372 415 
Segment net income (loss)Segment net income (loss)$872 $818 $1,075 $586 $105 $77 $(348)$(340)$1,704 $1,141 Segment net income (loss)$773 $799 $954 $1,306 $178 $159 $(373)$(606)$1,532 $1,658 
Identifiable assets (period end)Identifiable assets (period end)$161,116 $166,640 $177,578 $191,625 $9,454 $6,999 $181,736 $133,919 $529,884 $499,183 Identifiable assets (period end)$166,378 $156,520 $193,406 $178,746 $11,126 $8,649 $174,213 $178,049 $545,123 $521,964 
Nine Months Ended September 30,
(Dollars in millions)
CB&WC&CBIHOT&C (1)Total
2021202020212020202120202021202020212020
Six Months Ended June 30,
(Dollars in millions)
Six Months Ended June 30,
(Dollars in millions)
CB&WC&CBIHOT&C (1)Total
2022202120222021202220212022202120222021
Net interest income (expense)Net interest income (expense)$5,110 $5,564 $3,511 $4,116 $76 $99 $1,066 $681 $9,763 $10,460 Net interest income (expense)$3,095 $3,440 $2,371 $2,391 $54 $49 $1,070 $650 $6,590 $6,530 
Net intersegment interest income (expense)Net intersegment interest income (expense)1,162 1,033 115 (207)(10)(28)(1,267)(798)— — Net intersegment interest income (expense)1,361 616 233 187 (2)— (1,592)(803)— — 
Segment net interest incomeSegment net interest income6,272 6,597 3,626 3,909 66 71 (201)(117)9,763 10,460 Segment net interest income4,456 4,056 2,604 2,578 52 49 (522)(153)6,590 6,530 
Allocated provision for credit lossesAllocated provision for credit losses91 887 (698)1,244 (104)20 (710)2,158 Allocated provision for credit losses272 96 (178)(434)— (19)(48)76 (386)
Segment net interest income after provisionSegment net interest income after provision6,181 5,710 4,324 2,665 65 64 (97)(137)10,473 8,302 Segment net interest income after provision4,184 3,960 2,782 3,012 51 49 (503)(105)6,514 6,916 
Noninterest incomeNoninterest income2,877 3,074 2,254 1,684 1,983 1,679 (147)157 6,967 6,594 Noninterest income1,842 1,845 1,255 1,500 1,571 1,332 (278)(75)4,390 4,602 
Amortization of intangiblesAmortization of intangibles236 316 113 130 80 53 14 431 513 Amortization of intangibles152 157 65 75 63 51 — 280 286 
Other noninterest expenseOther noninterest expense5,544 5,584 2,324 2,481 1,451 1,280 1,666 1,206 10,985 10,551 Other noninterest expense3,710 3,721 1,472 1,513 1,121 944 671 1,157 6,974 7,335 
Income (loss) before income taxesIncome (loss) before income taxes3,278 2,884 4,141 1,738 517 410 (1,912)(1,200)6,024 3,832 Income (loss) before income taxes2,164 1,927 2,500 2,924 438 386 (1,452)(1,340)3,650 3,897 
Provision (benefit) for income taxesProvision (benefit) for income taxes768 680 896 330 125 102 (600)(442)1,189 670 Provision (benefit) for income taxes518 471 543 639 108 94 (467)(438)702 766 
Segment net income (loss)Segment net income (loss)$2,510 $2,204 $3,245 $1,408 $392 $308 $(1,312)$(758)$4,835 $3,162 Segment net income (loss)$1,646 $1,456 $1,957 $2,285 $330 $292 $(985)$(902)$2,948 $3,131 
Identifiable assets (period end)Identifiable assets (period end)$161,116 $166,640 $177,578 $191,625 $9,454 $6,999 $181,736 $133,919 $529,884 $499,183 Identifiable assets (period end)$166,378 $156,520 $193,406 $178,746 $11,126 $8,649 $174,213 $178,049 $545,123 $521,964 
(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.

38 Truist Financial Corporation 37


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements, the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, other information contained in this document, as well as with Truist’s Annual Report on Form 10-K for the year ended December 31, 2020.2021.

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021.

Regulatory Considerations

The regulatory framework applicable to banking organizations is intended primarily for the protection of depositors and the stability of the financial system, rather than for the protection of shareholders and creditors. Truist is subject to banking laws and regulations, and various other laws and regulations, which affect the operations and management of Truist and its ability to make distributions to shareholders. Truist and its subsidiaries are also subject to supervision and examination by multiple regulators. The descriptions below summarize updates since the filing of the Annual Report on Form 10-K for the year ended December 31, 20202021 to state and federal laws to which Truist is subject. These descriptions do not summarize all possible or proposed changes in current laws or regulations and are not intended to be a substitute for the related statues or regulatory provisions. Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional disclosures.

Supplementary Leverage RatioIn March 2022, the U.S. enacted federal legislation that is intended to minimize legal and economic uncertainty following U.S. dollar LIBOR’s cessation by replacing LIBOR references in certain contracts under certain circumstances with a SOFR-based rate to be established in a forthcoming FRB rule that incorporates a spread adjustment specified in the statute. While some states have already adopted LIBOR legislation, the federal legislation expressly preempts any provision of any state or local law, statute, rule, regulation, or standard.

The temporary exclusion of U.S. Treasury securities and deposits at the FRB from the calculation of the supplementary leverage ratio expired as scheduled on March 31, 2021. This temporary relief previously benefited the Company’s supplementary leverage ratio by approximately 20 basis points. The FRB also announced plans to invite public comment on several potential supplementary leverage ratio modifications to ensure that the supplementary leverage ratio remains effective in an environment of higher reserves, though such proposal had not been published as of the date of this report.

Stress Capital Buffer

The FRB assigned Truist an SCB of 2.5%, which is effective from October 1, 2021 to September 30, 2022, at which point a revised SCB will be calculated and provided to Truist.

The FRB has lifted the restrictions on capital distributions for large banking organizations, including Truist, that had been in place due to the uncertainty caused by the COVID-19 pandemic. Going forward, Truist is subject to the normal restrictions on capital distributions under the SCB framework and applicable law.

Security-Based Swap Dealer Registration

In November 2021, Truist Bank conditionally registered with the SEC as a security-based swap dealer. As a result, Truist Bank’s security-based swaps business is now subject to requirements that are similar to the CFTC rules applicable to swap dealers, including trade reporting, business conduct standards, recordkeeping, margin, and potentially mandatory clearing and exchange trading requirements.

Resolution Plans

The FDIC issued a policy statement in June 2021 announcing that it will resume requiring bank level resolution plans for large banks, including Truist Bank, and bank-level resolution plans will have more streamlined content requirements. Truist Bank will be required to submit a bank-level resolution plan every three years. During the third quarter, Truist Bank was informed by the FDIC that its next resolution plan will be due on or before December 1, 2022. The FDIC also clarified the content requirements of the next resolution plan Truist Bank is required to submit.

Truist submitted its inaugural resolution plan to the FRB and FDIC in September 2021, which is currently under review.

Lifting of Consent Order

In June 2021, the FDIC terminated the consent order between SunTrust Bank and the FRB relating to certain identified legacy compliance issues. Truist Bank, as successor to SunTrust Bank, committed to comply with the obligations in the order in connection with the FDIC’s and FRB’s approval of the Merger.

Truist Financial Corporation 39


Executive Overview

Truist had solid financialOur second quarter 2022 performance inreflects our improved momentum post-integration and the third quarterresiliency of 2021 that was driven by strong fee income from aour diverse business mix - including wealth, insurance brokerage, investment banking, and positive trends in a numbervolatile market environment. Loan growth was broad-based and we delivered significant expansion of other businesses given improving economic conditions. Improving economic conditionsour net interest margin as a result of higher interest rates and our strong deposit franchise. Credit quality remained excellent in the second quarter, also led to strong creditevidenced by our performance and a benefit from the provision for credit losses. The Company achieved a significant milestone in early October with the successful migration of approximately 7 million clients (primarily heritage BB&T) to the new Truist technology ecosystem. In addition, Truist completed the retail mortgage origination conversion and accelerated the roll-out of the new Truist digital app during the third quarter of 2021.latest CCAR stress test, with Truist continues to reaffirm its commitment to achieving $1.6 billionhaving the second-lowest loan loss rate among our peers under the severely adverse stress scenario. Following our stress test results, we announced an 8% increase in net cost saves on a run rate basisour quarterly cash dividend, which was approved by the fourth quarterBoard of 2022. Truist also continues to closely monitor the COVID-19 pandemic and its effects on stakeholders and the financial markets and is actively supporting teammates, clients, and communities.Directors at their July meeting.

Integration EffortsWhile certain residual integration activities remain, we’re seeing the early benefits of our shift from integrating to operating and continue to make strategic investments in talent and technology to accelerate our growth. We’re confident Truist is well-positioned to perform in different credit environments given our diverse business mix and strong capital position.

Major milestones duringSee below for further updates on our ESG efforts and a more detailed discussion of our second quarter financial performance.

ESG

Our recent 2021 include:Environmental, Social, and Governance and Corporate Social Responsibility report highlights the significant steps we’ve taken to meet and exceed our goals, including the diversity of our senior leadership and supporting our clients and communities to transition to a lower carbon economy.

Environmental

CompletedTruist has joined the Wealth brokeragePartnership for Carbon Accounting Financials, and trust transitions.set 2030 goals to reduce Scope 1 and Scope 2 emissions by 35% each, and to reduce water consumption by 25%, relative to 2019.
Completed the mortgage systemsWe announced our goal to achieve net zero greenhouse gas emissions by 2050, supporting our clients’ transition enabling clients to get the best of both heritage SunTrust and heritage BB&T to meet their homeownership needs.
Continued to activate the Integrated Relationship Management approach. Truist’s Integrated Relationship Management approach is designed to deepen client relationships and bring the full breadth and depth of Truist’s products and services to meet clients’ financial needs.
Introduced the new Truist digital app; migrated approximately 7 million clients to the new Truist digital banking experience, with nearly half of clients beginning to use the app
Converted heritage BB&T retail and commercial clients to the new Truist technology ecosystem, the most significant milestone to date.

Supporting Clients

Truist continues to work closely with clients as they navigate through the continuing challenges from the COVID-19 pandemic. Truist supported clients by being the sixth largest amongst commercial banks in the second round of PPP funding, assisting clients with the forgiveness process, and continuing to support clients as they transition from payment relief programs. Truist originated approximately $17 billion of PPP loans. As of September 30, 2021, Truist had $3.5 billion of PPP loans outstanding.

Supporting Teammates

Truist offered a voluntary separation and retirement program to eligible teammates in June 2021. Nearly 2,000 teammates elected to participate in the voluntary program designed to provide tenured teammates flexibility on how they want to manage their career. Approximately 50% of those that elected to participate had separation dates of September 30, 2021. While Truist is hiring in some areas and rightsizing in others through natural attrition, planned staffing reductions, and the voluntary separation and retirement program, Truist is actively supporting all teammates affected by reductions with opportunities and tools for internal placement, severance payments, and outplacement assistance and coaching. The Company recognized $189 million of merger-related and restructuring charges in 2021 related to the voluntary separation and retirement program.

low-carbon economy.
Truist has made progress towards the commitment to increase racially and ethnically diverse teammates among senior leadership roles to more than 15% by 2023 with current progress at 14.2% as of September 30, 2021. For early career program hiring in 2021, 54% of seats at Truist were filled by candidates from various diverse backgrounds. Truist teammates have received $24 million through Truist Momentum, a workplace financial wellness program that educates, equips, and inspires teammates to manage their money based on what matters most to them.

Supporting Communities

Truist continued to fulfill its purpose in meaningful ways in the community in the third quarter through a number of unique and creative initiatives. Truist expanded its partnership with EVERFI bringing literacy tools to elementary schools across the nation. Truist showed leadership as the first top-10 bank to join BlackRock’s philanthropic Emergency Savings Initiative. Truist Community Capital provided over $300 million in equity in the third quarter to support communities through investments in affordable housing, access to healthy foods and education, and investments in job creation and small businesses. Truist continued to make solid progress towards the Company’s $60 billion Community Benefits Plan, ending August 2021 at 112% of the annual target. In July, Truist also released its second annual Corporate Social Responsibility and Environmental, Social and Governance report to outline its advancements and commitments with regard to diversity, equity, and inclusion; environmental sustainability and climate change; governance; community involvement; and financial inclusion.

4038 Truist Financial Corporation


Executive Leadership changesSocial

DuringGuided by our purpose to inspire and build better lives and communities, we’re investing in key talent by increasing our minimum wage to $22 per hour effective October 1, 2022, positioning Truist as a leader in the third quarterindustry.
Together with the Truist announced its new executive leadership structure effective September 1, 2021. As previously announced as partFoundation and the Truist Charitable Fund, we’ve committed $120 million to help historically underserved small businesses gain access to capital and technical assistance.
Truist continues to be ahead of the Merger, William H. Rogers, Jr. succeeded Kelly S. King as CEO on September 12, 2021 and Kelly S. King transitionedschedule with regard to our $60 billion Community Benefits Plan commitment.
In July 2022, Truist launched Truist One Banking, a first-of-its-kind approach to the role of executive chairman through March 12, 2022. The other members ofchecking account experience, designed to address clients’ direct feedback.
Launched the executive leadership teamstate-of-the-art Innovation and their roles are:Technology Center to support our ongoing efforts to transform the client experience.
Acquired Long Game, the award winning mobile app that motivates smart financial behaviors.

Daryl N. Bible - Chief Financial Officer
Scott Case - Chief Information Officer
Hugh S. (Beau) Cummins, III - Vice Chair
Ellen M. Fitzsimmons - Chief Legal Officer and Head of Public Affairs
John Howard - Chief Insurance Officer
Michael B. Maguire - Chief National Consumer Finance Services and Payments Officer
Kimberly Moore-Wright - Chief Teammate Officer and Head of Enterprise Diversity
Brant J. Standridge - Chief Retail Community Banking Officer
Clarke R. Starnes III - Chief Risk Officer
Joseph M. Thompson - Chief Wealth Officer
David H. Weaver - Chief Commercial Community Banking Officer
Dontá L. Wilson - Chief Digital and Client Experience OfficerGovernance

Truist made several leadership changes during the first quarter of 2022 that are discussed in the executive overview section of our Quarterly Report on Form 10-Q for the period ended March 31, 2022.
In May 2022, Truist announced that CFO Daryl Bible has made the decision to retire from Truist after a distinguished 38-year career and more than 14 years with the company. As Truist conducts the search for its new CFO, Mr. Bible will continue to serve in his current role to support a successful transition.

Financial Results

Net income available to common shareholders for the thirdsecond quarter of 2022 of $1.5 billion was down 6.7% compared with the second quarter of 2021, totaled $1.6 billion, up 51%, compared withprimarily due to a benefit in the third quarter ofprovision for credit losses last year. On a diluted per common share basis, earnings for the thirdsecond quarter of 20212022 were $1.20, an increase$1.09, a decrease of $0.41$0.07, or 6.0%, compared to the thirdsecond quarter of 2020.2021. Truist’s results of operations for the thirdsecond quarter of 20212022 produced an annualized return on average assets of 1.28%1.14% and an annualized return on average common shareholders’ equity of 10.2%10.3% compared to prior year returns of 0.91%1.28% and 6.9%10.1%, respectively.

Results for the thirdsecond quarter of 20212022 included merger-related and restructuring charges of $172$121 million ($13292 million after-tax), incremental operating expenses related to the Merger of $191$117 million ($14789 million after-tax), and a one-time professional fee expensegain on the redemption of $30FHLB advances of $39 million ($23($30 million after-tax). Results for the thirdsecond quarter of 20202021 included $236$297 million ($181228 million after-tax) of merger-related and restructuring charges, $152$190 million ($115146 million after-tax) of incremental operating expenses related to the Merger, securities gainsand expense associated with charitable contributions to the Truist Foundation and the Truist Charitable Fund of $104$200 million ($80 million after-tax), and a charitable contribution of $50 million ($38153 million after-tax).

Truist’s revenue for the third quarter of 2021 was $5.6 billion. On a TE basis, revenue was also $5.6$5.7 billion for the thirdsecond quarter of 2021, an increase of $25 million, or 0.4%,2022, relatively flat compared to the same period in 2020. Excluding securities gains of $104 million from the third quarter of 2020, adjusted taxable equivalent revenues increased $129 million, or 2.3%, compared to the earlier quarter.

2021. TE net interest income for the thirdsecond quarter of 20212022 was down $130up $162 million, or 3.8%4.9%, compared to the earlier quarter due to lower purchase accounting accretion, lowerhigher market interest rates on earning assets, and a decrease in loans. These decreases were partially offset bycoupled with well controlled deposit costs, growth in the securities portfolio and lower funding costs, higher fees onpremium amortization. These increases were partially offset by lower purchase accounting accretion and lower PPP loans, and fewer interest deferrals on COVID-19 loan accommodations.revenue. Average earning assets increased $26.4$20.6 billion, or 6.1%4.5%, compared to the earlier quarter. The increase in average earning assets reflects a $66.4$13.0 billion, or 83%10%, increase in average securities, while averagea $6.9 billion, or 2.4%, increase in total loans and leases, decreased $25.4and a $1.0 billion, or 8.0%20%, increase in average interest earning trading assets. Average deposits increased $27.5 billion, or 6.9%, and average other earning assets decreased $16.5short term borrowings increased $3.5 billion, or 46%. The growth in average earning assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $30.5 billion, or 8.2%56%, compared to the earlier quarter, while average long-term debt and short-term borrowings decreased $3.6$5.6 billion, or 8.8%, and $849 million, or 14%, respectively.15%.

Net interest margin was 2.81%2.89%, down 29up one basis pointspoint compared to the same period in 2020.earlier quarter. The yield on the total loan portfolio for the thirdsecond quarter of 20212022 was 3.90%3.91%, down 14ten basis points compared to the earlier quarter, reflecting the impact of lower purchase accounting accretion, and a lower rate environment.partially offset by higher market interest rates. The yield on the average securities portfolio was 1.50%1.82%, down 47up 35 basis points compared to the earlier quarter primarily due to purchases of higher yielding securities, favorable hedge benefits, and lower yieldspremium amortization.

The average cost of total deposits was 0.09%, up five basis points compared to the earlier quarter. The average cost of short-term borrowings was 1.26%, up 28 basis points compared to the earlier quarter. The average cost of long-term debt was 1.75%, up 15 basis points compared to the earlier quarter. The increase in rates on new purchases.deposits and other funding sources was largely attributable to the higher rate environment.

The provision for credit losses was a benefit of $324$171 million, compared to a costbenefit of $421$434 million for the same period in 2020.earlier quarter. The earlier quarter reflected significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current quarter includesincluded a reserve release due to the improving economic outlook.credit environment during that period. Net charge-offs for the thirdsecond quarter of 20212022 totaled $135$159 million compared to $326$142 million in the earlier quarter. The third quarter of 2020 included $97 million of charge-offs related to the implementation of CECL, which required a gross up of loan carrying values in connection with the establishment of an allowance on PCD loans. The net charge-off ratio for the current quarter of 0.19%0.22% was down 23up two basis points compared to the third quarter 2020, due primarily to the additional losses on PCD loans taken in the earlier quarter and lower actual net losses in the commercial portfolio.quarter.

Truist Financial Corporation 4139


Noninterest income for the thirdsecond quarter of 2021 increased $1552022 decreased $157 million, or 7.0%, compared to the same period in 2020. Noninterest income for the third quarter of 2020 included $104 million of securities gains on available-for-sale securities. Excluding securities gains, noninterest income increased $259 million, or 12%6.5%, compared to the earlier quarter. Insurance income increased $127 million due to acquisitions, as well as organic growth. Investment banking and trading income increased $57decreased $147 million, or 37%, due to stronglower structured real estate fees, lower high-yield bond and equity originations fees, lower loan syndications, and lower merger and acquisition activity and loan syndications. Wealth managementfees, partially offset by higher trading income increased $32 million due to higher valuations ofCVA gains. Other income decreased $104 million, or 87%, due to valuation changes from assets under management.held for certain post-retirement benefits, which is primarily offset by lower personnel expense, and lower investment income from the Company’s SBIC investments. Residential mortgage banking income decreased $42$43 million, primarily dueor 37%, as lower production income (due to lower production related revenues as a result of lower gain on sale margins and refinance volumes resulting from the higher rate environment) was partially offset by higher servicing income (due to lower prepayments and servicing portfolio purchases). These decreases were partially offset by a $135 million, or 20%, increase in insurance income due to increases in the valuation of mortgage servicing rightscontinued strong organic growth and lower prepayment rates. Additionally, there were increases in service charges on deposit accounts, other income, and card and payment related fees due to improved economic activity.acquisitions.

Noninterest expense for the thirdsecond quarter of 20212022 was up $40down $431 million, or 1.1%11%, compared to the same period in 2020.earlier quarter. Merger-related and restructuring charges decreased $64$176 million primarily due to facilities impairmentslower costs in connection with the earlier quarter, while incrementalvoluntary separation and retirement program and lower costs associated with exiting facilities. Incremental operating expenses related to the Merger increased $39decreased $73 million, primarily reflected in professional fees and outside processing.processing expenses and personnel expense. The current quarter also includes a $30$39 million professional fee to develop an ongoing program to identify, prioritize, and roadmap teammate generated revenue growth and expense savings opportunities beyondgain on the Merger.redemption of FHLB advances. The earlierprior quarter included $50$200 million forof expense associated with charitable contributions to the Truist Foundation and the Truist Charitable Fund (other expense). Excluding the aforementioned items and changes inthe amortization of intangibles, adjusted noninterest expense was up $110increased $56 million, or 3.5%1.8%, compared to the earlier quarter. Additionally, increasesPersonnel expense decreased $105 million, or 4.8%, ($74 million on an adjusted basis) due to lower other employee benefits as a result of the decrease in personnel expense of $129 million werenoninterest income for post-retirement benefits and lower incentives, partially offset by a decline in net occupancyhigher salaries due to annual merit increases and higher staffing for insurance (primarily from acquisitions) and enterprise technology. Other expense of $46increased $73 million on an adjusted basis primarily due to increased operational losses and otherteammate travel expenses. Professional fees and outside processing expenses were up $42 million on an adjusted basis due to increased call center staffing and enterprise technology investments. Marketing and customer development expense of $72 million.was up $27 million due to increased spend to continue to build and strengthen Truist’s brand.

The provision for income taxes was $423$372 million for the thirdsecond quarter of 2021,2022, compared to $255$415 million for the same period in 2020. This produced anearlier quarter. The effective tax rate for the thirdsecond quarter of 2021 of 19.9%2022 was 19.5%, compared to 18.3%20.0% for the earlier quarter. The higherdecrease in the effective tax rate isfor the second quarter of 2022 was primarily due to higherdriven by lower pre-tax income in the current quarter without a corresponding increase in beneficial tax items.income.

Truist’s total assets at SeptemberJune 30, 20212022 were $529.9$545.1 billion, an increase of $20.7$3.9 billion, or 4.1%0.7%, compared to December 31, 2020. The increase in total assets was primarily a result of strong deposit growth, the deployment of which led to an increase in AFS securities of $30.3 billion, which was partially offset by a $15.1 billion decline in total2021. Total loans and leases.

Total depositsleases at SeptemberJune 30, 20212022, were $405.9$307.3 billion, an increase of $24.8$13.0 billion, or 6.5%4.4% compared with December 31, 2021. The increase in loans reflects broad based loan growth across most portfolios primarily in the second quarter of 2022. Total deposits at June 30, 2022 were $424.8 billion, an increase of $8.3 billion, or 2.0%, compared to December 31, 2020. Deposit growth was strong during the first nine months of 2021 resulting from fiscal and monetary stimulus, partially offset by the maturity of higher-cost personal accounts.2021.

Asset quality remains excellent, reflecting Truist’s prudent risk culture and diverse portfolio, improving economic conditions, and the ongoing effects of government stimulus. As of September 30, 2021, nonperforming assets were 0.23% of total assets, down four basis points from December 31, 2020. The allowance for loan and lease loss coverage ratio was 4.35x nonperforming loans and leases held for investment, compared to 4.39x at December 31, 2020.portfolio.

Truist maintained strong capital and liquidity.liquidity levels. As of SeptemberJune 30, 2021,2022, the CET1 ratio was 10.1%9.2% and the average LCR was 114%. For the nine months ended September 30, 2021, Truist completed $1.1 billion of share repurchases and redeemed $1.4 billion of preferred stock. Additionally, the Company had $5.8 billion of senior long term debt maturities and redemptions, partially offset by $4.5 billion of issuances. Truist increased the common dividend 7% during the third quarter to $0.48 per share, resulting in dividend and total payout ratios for the thirdsecond quarter of 2021 of 40%2022 was 110%. In October 2021,The 20 basis point decline in the CET1 ratio compared to March 31, 2022 primarily reflects strong loan growth and share repurchases. Truist declared common dividends of $0.48 per share in the second quarter of 2022 and repurchased $250 million of common stock, resulting in dividend and total payout ratios of 44% and 61% respectively. Truist completed the 2022 CCAR process during the second quarter of 2022 and received the preliminary stress capital buffer requirement of 2.5% for the fourth quarter of 2021.

period October 1, 2022 to September 30, 2023. By August 31, 2022, the Federal Reserve will provide Truist continues to target a CET1 ratio of approximately 9.75% overwith its final stress capital buffer requirement. In July 2022, the near-term. As previously communicated, the Company expects to be able to, with appropriate approvals from its Board of Directors deploy approximately $4 billion to $5 billion of capital (eitherapproved an increase in the formquarterly dividend of share repurchases or acquisitions) between 3Q21 and 3Q22. During8% to $0.52 beginning in the third quarter of 2021, Truist completed the acquisition of Constellation Affiliated Partners and announced the acquisition of Service Finance, LLC, reducing the amount of capital deployment available for acquisitions or share repurchases to approximately $1 billion to $2 billion through 3Q22. Truist resumed repurchasing shares and expects to consume approximately $500 million of this capacity via share repurchases in the fourth quarter of 2021 reflecting the Company’s strong capital position, and the reduced integration risk with successful migration of heritage BB&T retail and commercial clients to the Truist ecosystem.2022.

4240 Truist Financial Corporation


Analysis of Results of Operations

Net Interest Income and NIM

ThirdSecond Quarter 20212022 compared to ThirdSecond Quarter 20202021

NetTaxable equivalent net interest income for the thirdsecond quarter of 20212022 was down $130up $162 million, or 3.8%4.9%, compared to the earlier quarter primarily due to lower purchase accounting accretion, lowerhigher market interest rates on earning assets, and a decrease in loans. These decreases were partially offset bycoupled with well controlled deposit costs, growth in the securities portfolio and lower funding costs, higher fees on Payroll Protection Program loans,premium amortization. These increases were partially offset by lower purchase accounting accretion and fewer interest deferrals on COVID-19 loan accommodations.lower PPP revenue. Average earning assets increased $26.4$20.6 billion, or 6.1%4.5%, compared to the earlier quarter. The increase in average earning assets reflects a $66.4$13.0 billion, or 83%10%, increase in average securities, while averagea $6.9 billion, or 2.4%, increase in total loans and leases, decreased $25.4and a $1.0 billion, or 8.0%20%, increase in average interest earning trading assets. Average deposits increased $27.5 billion, or 6.9%, and average other earning assets decreased $16.5short term borrowings increased $3.5 billion, or 46%. The growth in average earning assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $30.5 billion, or 8.2%56%, compared to the earlier quarter, while average long-term debt and short-term borrowings decreased $3.6$5.6 billion, or 8.8%, and $849 million, or 14%, respectively.15%.

Net interest margin was 2.81%2.89%, down 29up one basis pointspoint compared to the earlier quarter. The yield on the total loan portfolio for the thirdsecond quarter of 20212022 was 3.90%3.91%, down 14ten basis points compared to the earlier quarter, reflecting the impact of lower purchase accounting accretion, and a lower rate environment.partially offset by higher market interest rates. The yield on the average securities portfolio was 1.50%1.82%, down 47up 35 basis points compared to the earlier quarter primarily due to purchases of higher yielding securities, favorable hedge benefits, and lower yields on new purchases.premium amortization.

The average cost of total deposits was 0.03%0.09%, down sevenup five basis points compared to the earlier quarter. The average rate oncost of short-term borrowings was 0.68%1.26%, down 17up 28 basis points compared to the earlier quarter. The average rate oncost of long-term debt was 1.61%1.75%, up 1315 basis points compared to the earlier quarter. The lowerincrease in rates on deposits and short-term borrowings reflect the lower rate environment. The higher rates on long-term debtother funding sources was duelargely attributable to the runoff of lowerhigher rate FHLB advances.environment.

NineSix Months of 20212022 compared to NineSix Months of 20202021

NetTaxable equivalent net interest income for the ninesix months ended SeptemberJune 30, 20212022 was down $710up $58 million, or 6.7%0.9%, compared to the prior period primarily due to lower purchase accounting accretion, lowerhigher market interest rates on earning assets, and a decrease in loans. These decreases were partially offset bycoupled with well controlled deposit costs, growth in the securities portfolio and lower funding costs, higher fees on Payroll Protection Program loans,premium amortization, partially offset by lower purchase accounting accretion and fewer interest deferrals on COVID-19 loan accommodations.lower PPP revenue. Average earning assets increased $21.8$23.3 billion, or 5.0%5.2%, compared to the prior period. The increase in average earning assets reflects a $57.9$21.7 billion, or 75%17%, increase in average securities, whileand a $1.1 billion, or 22%, increase in average interest earning trading assets. Average total loans and leases decreased $22.4were relatively flat as a $1.1 billion, or 7.1%0.4%, increase in loans and leases held for investment was more than offset by a decline in loans held for sale. Average deposits increased $29.8 billion, or 7.6%, and average other earning assets decreased $14.3short-term borrowings increased $1.8 billion, or 42%. The growth in average earning assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $34.9 billion, or 9.7%29%, compared to the prior period, while average long-term debt and short-term borrowings decreased $10.3$4.1 billion, or 22%, and $5.3 billion, or 46%, respectively.11%.

Net interest margin was 2.90%2.83% for the ninesix months ended SeptemberJune 30, 2021,2022, down 3612 basis points compared to the prior period. The yield on the total loan portfolio for the ninesix months ended SeptemberJune 30, 20212022 was 4.00%3.80%, down 3925 basis points compared to the prior period, reflecting the impact of lower purchase accounting accretion, and the lower rate environment.partially offset by higher market interest rates. The yield on the average securities portfolio was 1.48%1.75% for the ninesix months ended SeptemberJune 30, 2021, down 832022, up 29 basis points compared to the prior period primarily due to lower yields on new purchases of higher yielding securities, favorable hedge benefits, and lower premium amortization.

The average cost of total deposits was 0.04%0.06% for the ninesix months ended SeptemberJune 30, 2021, down 232022, up two basis points compared to the prior period. The average ratecost on short-term borrowings was 0.84%0.98% for the ninesix months ended SeptemberJune 30, 2021, down 622022, up eight basis points compared to the prior period. The average ratecost on long-term debt was 1.59%1.61% for the ninesix months ended SeptemberJune 30, 2021, down 192022, up three basis points compared to the prior period. The lowerincrease in rates on interest-bearing liabilities reflectdeposits and other funding sources was largely attributable to the lowerhigher rate environment.

As of SeptemberJune 30, 2022, the remaining unamortized fair value marks on the loan and lease portfolio, deposits, and long-term debt were $924 million, $3 million, and $109 million, respectively. As of December 31, 2021, the remaining unamortized fair value marks on the loan and lease portfolio, deposits and long-term debt were $1.5$1.3 billion, $9$7 million, and $157 million, respectively. As of December 31, 2020, the remaining unamortized fair value marks on the loan and lease portfolio, deposits and long-term debt were $2.4 billion, $19 million, and $216$139 million, respectively.

The remaining unamortized fair value mark on loans and leases consistsconsist of $807$559 million for consumer loans and leases, and $733$365 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as paydowns occur.

The major components of net interest income and the related annualized yields as well as the variances between the periods caused by changes in interest rates versus changes in volumes are summarized below.
Truist Financial Corporation 4341


Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)
Three Months Ended September 30,
(Dollars in millions)
Average Balances (5)Annualized Yield/RateIncome/ExpenseIncr.
(Decr.)
Change due to
202120202021202020212020RateVolume
Three Months Ended June 30,
(Dollars in millions)
Three Months Ended June 30,
(Dollars in millions)
Average Balances (5)Annualized Yield/RateIncome/ExpenseIncr.
(Decr.)
Change due to
202220212022202120222021RateVolume
AssetsAssets         Assets         
Total securities, at amortized cost: (2)Total securities, at amortized cost: (2)         Total securities, at amortized cost: (2)         
U.S. TreasuryU.S. Treasury$9,699 $2,218 0.72 %1.78 %$18 $10 $$(9)$17 U.S. Treasury$10,544 $9,070 0.86 %0.73 %$22 $16 $$$
GSEGSE1,830 1,842 2.31 2.33 10 10 — — — GSE255 1,840 1.96 2.33 11 (10)(1)(9)
Agency MBSAgency MBS132,890 75,232 1.53 1.95 509 366 143 (93)236 Agency MBS133,339 124,251 1.88 1.50 625 466 159 123 36 
States and political subdivisionsStates and political subdivisions425 499 3.52 5.03 (3)(2)(1)States and political subdivisions371 437 3.83 3.55 — — — 
Non-agency MBSNon-agency MBS1,398 — 2.20 — — — Non-agency MBS4,097 17 2.30 2.46 23 — 23 — 23 
OtherOther30 37 1.90 1.99 — (1)— (1)Other75 32 3.66 1.88 — — 
Total securitiesTotal securities146,272 79,828 1.50 1.97 549 394 155 (104)259 Total securities148,681 135,647 1.82 1.47 676 497 179 125 54 
Interest earning trading assetsInterest earning trading assets5,809 4,056 2.81 3.23 41 32 (5)14 Interest earning trading assets6,073 5,061 3.55 2.82 55 37 18 10 
Other earning assets (3)Other earning assets (3)19,331 35,819 0.25 0.26 13 24 (11)(1)(10)Other earning assets (3)21,203 21,592 0.85 0.19 45 36 36 — 
Loans and leases, net of unearned income: (4)Loans and leases, net of unearned income: (4)        Loans and leases, net of unearned income: (4)        
Commercial and industrialCommercial and industrial130,025 143,452 3.00 3.02 981 1,087 (106)(7)(99)Commercial and industrial145,558 138,539 3.24 3.10 1,174 1,072 102 48 54 
CRECRE24,849 27,761 2.86 2.88 181 203 (22)(1)(21)CRE22,508 25,645 3.41 2.84 193 183 10 34 (24)
Commercial ConstructionCommercial Construction5,969 6,861 2.96 3.26 42 55 (13)(5)(8)Commercial Construction5,256 6,359 3.46 2.95 43 45 (2)(9)
Lease financing4,917 5,626 3.39 3.71 42 52 (10)(4)(6)
Residential mortgageResidential mortgage45,369 51,500 3.96 4.47 450 576 (126)(62)(64)Residential mortgage49,237 43,605 3.58 4.35 440 474 (34)(91)57 
Residential home equity and directResidential home equity and direct25,242 26,726 5.67 5.86 360 394 (34)(13)(21)Residential home equity and direct25,124 25,238 5.25 5.74 329 361 (32)(30)(2)
Indirect autoIndirect auto26,830 24,732 5.99 6.51 405 405 — (33)33 Indirect auto26,496 26,444 5.47 6.20 362 409 (47)(48)
Indirect otherIndirect other11,112 11,530 6.54 7.05 183 204 (21)(14)(7)Indirect other11,471 10,797 6.27 6.86 180 185 (5)(16)11 
StudentStudent7,214 7,446 4.02 4.30 74 80 (6)(4)(2)Student6,331 7,396 4.20 3.90 66 72 (6)(11)
Credit cardCredit card4,632 4,810 9.01 9.03 105 109 (4)— (4)Credit card4,728 4,552 8.91 8.73 105 99 
Total loans and leases HFITotal loans and leases HFI286,159 310,444 3.92 4.06 2,823 3,165 (342)(143)(199)Total loans and leases HFI296,709 288,575 3.91 4.03 2,892 2,900 (8)(89)81 
LHFSLHFS4,179 5,247 2.69 2.78 28 37 (9)(1)(8)LHFS3,152 4,390 4.20 2.57 33 28 14 (9)
Total loans and leasesTotal loans and leases290,338 315,691 3.90 4.04 2,851 3,202 (351)(144)(207)Total loans and leases299,861 292,965 3.91 4.01 2,925 2,928 (3)(75)72 
Total earning assetsTotal earning assets461,750 435,394 2.98 3.34 3,454 3,652 (198)(254)56 Total earning assets475,818 455,265 3.12 3.06 3,701 3,471 230 96 134 
Nonearning assetsNonearning assets64,935 65,432       Nonearning assets64,750 63,509       
Total assetsTotal assets$526,685 $500,826       Total assets$540,568 $518,774       
Liabilities and Shareholders’ EquityLiabilities and Shareholders’ Equity        Liabilities and Shareholders’ Equity        
Interest-bearing deposits:Interest-bearing deposits:        Interest-bearing deposits:        
Interest-checkingInterest-checking$107,802 $96,707 0.05 0.06 14 15 (1)(3)Interest-checking$112,375 $106,121 0.15 0.06 43 15 28 27 
Money market and savingsMoney market and savings136,094 123,598 0.03 0.06 19 (10)(12)Money market and savings148,632 134,029 0.13 0.03 50 42 41 
Time depositsTime deposits17,094 27,940 0.23 0.89 10 62 (52)(34)(18)Time deposits14,133 18,213 0.17 0.28 13 (7)(5)(2)
Total interest-bearing deposits (6)Total interest-bearing deposits (6)260,990 248,245 0.05 0.15 33 96 (63)(49)(14)Total interest-bearing deposits (6)275,140 258,363 0.14 0.06 99 36 63 63 — 
Short-term borrowingsShort-term borrowings5,360 6,209 0.68 0.85 13 (4)(2)(2)Short-term borrowings9,618 6,168 1.26 0.98 30 15 15 10 
Long-term debtLong-term debt37,329 40,919 1.61 1.48 151 152 (1)13 (14)Long-term debt31,263 36,873 1.75 1.60 137 147 (10)13 (23)
Total interest-bearing liabilitiesTotal interest-bearing liabilities303,679 295,373 0.25 0.35 193 261 (68)(38)(30)Total interest-bearing liabilities316,021 301,404 0.34 0.26 266 198 68 81 (13)
Noninterest-bearing deposits (6)Noninterest-bearing deposits (6)141,738 123,966        Noninterest-bearing deposits (6)148,610 137,892        
Other liabilitiesOther liabilities11,915 11,853        Other liabilities12,437 10,813        
Shareholders’ equityShareholders’ equity69,353 69,634        Shareholders’ equity63,500 68,665        
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$526,685 $500,826        Total liabilities and shareholders’ equity$540,568 $518,774        
Average interest-rate spreadAverage interest-rate spread  2.73 %2.99 %     Average interest-rate spread  2.78 %2.80 %     
NIM/net interest income - taxable equivalentNIM/net interest income - taxable equivalent  2.81 %3.10 %$3,261 $3,391 $(130)$(216)$86 NIM/net interest income - taxable equivalent  2.89 %2.88 %$3,435 $3,273 $162 $15 $147 
Taxable-equivalent adjustmentTaxable-equivalent adjustment    $28 $29    Taxable-equivalent adjustment    $28 $28    
(1) Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs, and dividends.
(2) Total securities include AFS and HTM securities.
(3) Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.
(4) Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances.
(5) Represents daily average balances. Excludes basis adjustments for fair value hedges.
(6) Total deposit costs were 0.03%0.09% and 0.10%0.04% for the three months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
4442 Truist Financial Corporation


Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)
Nine Months Ended September 30,
(Dollars in millions)
Average Balances (5)Annualized Yield/RateIncome/ExpenseIncr.
(Decr.)
Change due to
202120202021202020212020RateVolume
Six Months Ended June 30,
(Dollars in millions)
Six Months Ended June 30,
(Dollars in millions)
Average Balances (5)Annualized Yield/RateIncome/ExpenseIncr.
(Decr.)
Change due to
202220212022202120222021RateVolume
AssetsAssets         Assets         
Total securities, at amortized cost: (2)Total securities, at amortized cost: (2)         Total securities, at amortized cost: (2)         
U.S. TreasuryU.S. Treasury$6,872 $2,243 0.74 %1.86 %$38 $31 $$(28)$35 U.S. Treasury$10,219 $5,435 0.79 %0.76 %$40 $20 $20 $$19 
GSEGSE1,837 1,847 2.32 2.33 32 32 — — — GSE685 1,840 2.11 2.33 22 (15)(2)(13)
Agency MBSAgency MBS125,157 72,152 1.49 2.29 1,401 1,240 161 (533)694 Agency MBS135,185 121,228 1.80 1.47 1,215 892 323 214 109 
States and political subdivisionsStates and political subdivisions435 512 3.53 4.04 12 16 (4)(2)(2)States and political subdivisions372 441 3.77 3.54 (1)— (1)
Non-agency MBSNon-agency MBS477 115 2.18 16.78 15 (7)(21)14 Non-agency MBS4,161 2.27 2.45 47 — 47 — 47 
OtherOther32 37 1.90 2.44 — (1)(1)— Other51 32 3.22 1.90 — — 
Total securitiesTotal securities134,810 76,906 1.48 2.31 1,491 1,335 156 (585)741 Total securities150,673 128,984 1.75 1.46 1,317 942 375 214 161 
Interest earning trading assetsInterest earning trading assets5,208 4,695 2.80 3.85 110 135 (25)(39)14 Interest earning trading assets5,956 4,902 3.30 2.81 98 69 29 13 16 
Other earning assets (3)Other earning assets (3)19,453 33,708 0.26 0.57 38 144 (106)(60)(46)Other earning assets (3)20,074 19,515 0.75 0.27 75 25 50 49 
Loans and leases, net of unearned income: (4)Loans and leases, net of unearned income: (4)   Loans and leases, net of unearned income: (4)   
Commercial and industrialCommercial and industrial133,218 142,731 3.06 3.47 3,045 3,710 (665)(425)(240)Commercial and industrial142,233 139,776 3.06 3.12 2,161 2,165 (4)(42)38 
CRECRE25,563 27,538 2.86 3.46 553 717 (164)(116)(48)CRE23,029 25,926 3.12 2.87 361 372 (11)31 (42)
Commercial ConstructionCommercial Construction6,293 6,673 2.98 3.92 135 192 (57)(46)(11)Commercial Construction5,152 6,457 3.26 2.99 78 93 (15)(22)
Lease financing4,928 5,872 3.86 4.24 143 187 (44)(16)(28)
Residential mortgageResidential mortgage44,931 52,288 4.25 4.53 1,431 1,778 (347)(106)(241)Residential mortgage48,610 44,708 3.57 4.39 868 981 (113)(193)80 
Residential home equity and directResidential home equity and direct25,378 27,161 5.74 6.08 1,089 1,237 (148)(68)(80)Residential home equity and direct25,004 25,447 5.31 5.78 659 729 (70)(57)(13)
Indirect autoIndirect auto26,547 24,809 6.25 6.68 1,240 1,240 — (83)83 Indirect auto26,293 26,403 5.51 6.38 719 835 (116)(113)(3)
Indirect otherIndirect other10,920 11,255 6.79 7.19 555 606 (51)(33)(18)Indirect other11,167 10,823 6.30 6.92 349 372 (23)(35)12 
StudentStudent7,375 7,622 3.96 4.75 219 271 (52)(43)(9)Student6,489 7,457 4.02 3.93 129 145 (16)(19)
Credit cardCredit card4,610 5,097 8.99 9.34 310 356 (46)(13)(33)Credit card4,705 4,598 8.94 8.99 209 205 (1)
Total loans and leases HFITotal loans and leases HFI289,763 311,046 4.02 4.42 8,720 10,294 (1,574)(949)(625)Total loans and leases HFI292,682 291,595 3.81 4.07 5,533 5,897 (364)(400)36 
LHFSLHFS4,485 5,575 2.61 3.00 88 126 (38)(15)(23)LHFS3,511 4,640 3.47 2.58 61 60 18 (17)
Total loans and leasesTotal loans and leases294,248 316,621 4.00 4.39 8,808 10,420 (1,612)(964)(648)Total loans and leases296,193 296,235 3.80 4.05 5,594 5,957 (363)(382)19 
Total earning assetsTotal earning assets453,719 431,930 3.08 3.72 10,447 12,034 (1,587)(1,648)61 Total earning assets472,896 449,636 3.01 3.13 7,084 6,993 91 (106)197 
Nonearning assetsNonearning assets64,444 65,780        Nonearning assets65,391 64,196        
Total assetsTotal assets$518,163 $497,710        Total assets$538,287 $513,832        
Liabilities and Shareholders’ EquityLiabilities and Shareholders’ Equity         Liabilities and Shareholders’ Equity         
Interest-bearing deposits:Interest-bearing deposits:         Interest-bearing deposits:         
Interest-checkingInterest-checking$106,234 $93,205 0.06 0.28 44 199 (155)(178)23 Interest-checking$112,268 $105,436 0.10 0.06 57 30 27 25 
Money market and savingsMoney market and savings133,167 123,536 0.03 0.27 27 254 (227)(245)18 Money market and savings145,085 131,680 0.08 0.03 61 18 43 41 
Time depositsTime deposits18,609 32,157 0.32 1.10 45 265 (220)(138)(82)Time deposits14,885 19,379 0.18 0.36 13 35 (22)(15)(7)
Foreign office deposits - interest-bearingForeign office deposits - interest-bearing— — — — — — — — — 
Total interest-bearing deposits (6)Total interest-bearing deposits (6)258,010 248,898 0.06 0.39 116 718 (602)(561)(41)Total interest-bearing deposits (6)272,238 256,495 0.10 0.07 131 83 48 51 (3)
Short-term borrowingsShort-term borrowings6,081 11,350 0.84 1.46 38 124 (86)(41)(45)Short-term borrowings8,289 6,448 0.98 0.90 40 29 11 
Long-term debtLong-term debt37,339 47,643 1.59 1.78 446 635 (189)(63)(126)Long-term debt33,289 37,344 1.61 1.58 269 295 (26)(31)
Total interest-bearing liabilitiesTotal interest-bearing liabilities301,430 307,891 0.27 0.64 600 1,477 (877)(665)(212)Total interest-bearing liabilities313,816 300,287 0.28 0.27 440 407 33 59 (26)
Noninterest-bearing deposits (6)Noninterest-bearing deposits (6)136,118 110,375        Noninterest-bearing deposits (6)147,279 133,261        
Other liabilitiesOther liabilities11,262 12,133        Other liabilities12,052 10,932        
Shareholders’ equityShareholders’ equity69,353 67,311        Shareholders’ equity65,140 69,352        
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$518,163 $497,710        Total liabilities and shareholders’ equity$538,287 $513,832        
Average interest-rate spreadAverage interest-rate spread  2.81 %3.08 %     Average interest-rate spread  2.73 %2.86 %     
NIM/net interest income - taxable equivalentNIM/net interest income - taxable equivalent  2.90 %3.26 %$9,847 $10,557 $(710)$(983)$273 NIM/net interest income - taxable equivalent  2.83 %2.95 %$6,644 $6,586 $58 $(165)$223 
Taxable-equivalent adjustmentTaxable-equivalent adjustment    $84 $97    Taxable-equivalent adjustment    $54 $56    
(1)Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs, and dividends.
(2)Total securities include AFS and HTM securities.
(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.
(4)Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances.
(5)Represents daily average balances. Excludes basis adjustments for fair value hedges.
(6)Total deposit costs were 0.04%0.06% and 0.27%0.04% for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
Truist Financial Corporation 4543


Provision for Credit Losses

ThirdSecond Quarter 20212022 compared to ThirdSecond Quarter 20202021

The provision for credit losses was a benefit of $324$171 million, compared to a costbenefit of $421$434 million for the earlier quarter. The earlier quarter reflected significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current quarter includesincluded a reserve release due to the improving economic outlook.credit environment during that period. Net charge-offs for the thirdsecond quarter of 20212022 totaled $135$159 million compared to $326$142 million in the earlier quarter. The third quarter of 2020 included $97 million of charge-offs related to the implementation of CECL, which required a gross up of loan carrying values in connection with the establishment of an allowance on PCD loans. The net charge-off ratio for the current quarter of 0.19%0.22% was down 23up two basis points compared to the third quarter 2020, due primarily to the additional losses on PCD loans taken in the earlier quarter and lower actual net losses in the commercial portfolio.quarter.

NineSix Months of 20212022 compared to NineSix Months of 20202021

The provision for credit losses was $76 million for the six months ended June 30, 2022, compared to a benefit of $710$386 million for the nine months ended September 30, 2021, compared to a cost of $2.2 billion for the prior period. The current period provision expense primarily reflects growth in the loan portfolio, partially offset by a decline in the ALLL ratio, whereas the prior period included significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current period includes reserve releasesrelease due to the improving economic outlook.credit environment during that period. Net charge-offs for the ninesix months ended SeptemberJune 30, 20212022 totaled $515$337 million compared to $914$380 million in the earlierprior period. The 2020 period included the previously mentioned $97 million of charge-offs related to the implementation of CECL. The net charge-off ratio for the current yearperiod of 0.24%0.23% was down 15three basis points compared to the prior period, primarily driven by lower losses across all portfolios, partially driven by additional losses on PCD loans taken in 2020, combined with higher recoveries.period.

Noninterest Income

Noninterest income is a significant contributor to Truist’s financial results. Management focuses on diversifying its sources of revenue to reduce Truist’s reliance on traditional spread-based interest income, as certain fee-based activities are a relatively stable revenue source during periods of changing interest rates.
Table 2: Noninterest IncomeTable 2: Noninterest IncomeTable 2: Noninterest Income
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change(Dollars in millions)20222021% Change20222021% Change
Insurance incomeInsurance income$645 $518 24.5 %$1,961 $1,648 19.0 %Insurance income$825 $690 19.6 %$1,552 $1,316 17.9 %
Investment banking and trading incomeInvestment banking and trading income255 402 (36.6)516 748 (31.0)
Wealth management incomeWealth management income356 324 9.9 1,042 945 10.3 Wealth management income337 345 (2.3)680 686 (0.9)
Service charges on depositsService charges on deposits276 247 11.7 787 754 4.4 Service charges on deposits254 253 0.4 506 511 (1.0)
Card and payment related feesCard and payment related fees246 225 9.3 458 425 7.8 
Residential mortgage incomeResidential mortgage income179 221 (19.0)396 807 (50.9)Residential mortgage income74 117 (36.8)163 217 (24.9)
Investment banking and trading income301 244 23.4 958 636 50.6 
Card and payment related fees225 200 12.5 650 558 16.5 
Lending related feesLending related fees74 77 (3.9)268 210 27.6 Lending related fees100 94 6.4 185 194 (4.6)
Operating lease incomeOperating lease income57 72 (20.8)191 232 (17.7)Operating lease income66 66 — 124 134 (7.5)
Commercial real estate related income78 55 41.8 259 148 75.0 
Commercial mortgage incomeCommercial mortgage income26 47 (44.7)58 80 (27.5)
Income from bank-owned life insuranceIncome from bank-owned life insurance43 46 (6.5)139 135 3.0 Income from bank-owned life insurance50 46 8.7 101 96 5.2 
Securities gains (losses)Securities gains (losses)— 104 NM— 402 NMSecurities gains (losses)(1)— NM(70)— NM
Other incomeOther income131 102 28.4316 119 165.5Other income16 120 (86.7)117 195 (40.0)
Total noninterest incomeTotal noninterest income$2,365 $2,210 7.0 $6,967 $6,594 5.7 Total noninterest income$2,248 $2,405 (6.5)$4,390 $4,602 (4.6)

ThirdSecond Quarter 20212022 compared to ThirdSecond Quarter 20202021

Noninterest income for the thirdsecond quarter of 2021 increased $1552022 decreased $157 million, or 7.0%6.5%, compared to the earlier quarter. Noninterest income for the third quarter of 2020 included $104 million of securities gains on available-for-sale securities. Excluding securities gains, noninterest income increased $259 million, or 12%, compared to the earlier quarter. Insurance income increased $127 million due to acquisitions, as well as organic growth. Investment banking and trading income increased $57decreased $147 million, or 37%, due to stronglower structured real estate fees, lower high-yield bond and equity originations fees, lower loan syndications, and lower merger and acquisition activity and loan syndications. Wealth managementfees, partially offset by higher trading income increased $32 million due to higher valuations of assets under management. Service charges on deposit accounts and card and payment related fees increased $29CVA gains. Other income decreased $104 million, and $25 million, respectively,or 87%, due to increased economic activity.valuation changes from assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense, and lower investment income from the Company’s SBIC investments. Residential mortgage banking income decreased $42$43 million, primarily dueor 37%, as lower production income (due to lower production related revenues as a result of lower gain on sale margins and refinance volumes resulting from the higher rate environment) was partially offset by higher servicing income (due to lower prepayments and servicing portfolio purchases). These decreases were partially offset by a $135 million, or 20%, increase in insurance income due to increases in the valuation of mortgage servicing rightscontinued strong organic growth and lower prepayment rates. Other income increased $29 million primarily due to investment income (primarily valuation gains) from the Company’s SBIC investments.acquisitions.

4644 Truist Financial Corporation


NineSix Months of 20212022 compared to NineSix Months of 20202021

Noninterest income for the ninesix months ended SeptemberJune 30, 2021 increased $3732022 decreased $212 million, or 5.7%4.6%, compared to the prior period. Other income forThe current period includes net securities losses of $70 million and the nine months ended September 30, 2021 includesgain on the redemption of noncontrolling equity interest (other income) of $74 million. The earlier period included a gain of $37 million gain from the divestiture of certain businesses whereas(other income). Excluding the aforementioned items, noninterest income for the nine months ended September 30, 2020 included $402 million of securities gains on available-for-sale securities. Excluding securities gains and the divestiture gain, noninterest income increased $738was down $179 million, or 12%3.9%, compared to the prior period. Investment banking and trading income increased $322decreased $232 million, or 31%, due to strong investment banking income from loan syndications andlower merger and acquisition fees, as well ashigh-yield bond originations, equity originations, structured real estate fees, trading income, and loan syndication fees. Excluding the impact from CVA recoveries in the current period compared to losses in the earlier period. Insuranceaforementioned gains, other income increased $313decreased $115 million, due to acquisitions, as well as organic growth. Other income increased $197 millionor 73%, primarily due to higher valuations of $96a $140 million fordecrease from assets held for certain post-retirement benefits, which is largelyprimarily offset by higher benefits expense included inlower personnel expense. In addition, other income increased $94 million related to increased investment income (primarily valuations gains) from the Company’s SBIC and Truist Ventures investments. Commercial real-estate related income increased $111 million primarily due to client-related structured real estate transactions. Wealth management increased $97 million due to higher valuations of assets under management. Card and payment related fees and service charges on deposits increased $92 million and $33 million, respectively, due to increased economic activity. Lending related fees increased $58 million due to gains from the sale of finance leases and noninterest loan fees due to higher unused line fees. Residential mortgage banking income decreased $411$54 million primarily dueas lower production income (due to lower production related revenues as a result of lower gain on sale margins and refinance volumes resulting from the higher rate environment) was partially offset by higher servicing income (due to lower prepayments and servicing portfolio purchases.) Commercial mortgage income decreased $22 million primarily due to an increase in the valuation of mortgage servicing rights. Operating leaselower volumes and margins. Insurance income decreased $41increased $236 million due to declines incontinued organic growth and acquisitions. Card and payment related fees increased $33 million due to the lease portfolio.first quarter 2022 acquisition of certain merchant services relationships and increased activity.

Noninterest Expense

The following table provides a breakdown of Truist’s noninterest expense:
Table 3: Noninterest ExpenseTable 3: Noninterest ExpenseTable 3: Noninterest Expense
Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change(Dollars in millions)20222021% Change20222021% Change
Personnel expensePersonnel expense$2,187 $2,058 6.3 %$6,536 $6,038 8.2 %Personnel expense$2,102 $2,207 (4.8)%$4,153 $4,349 (4.5)%
Professional fees and outside processingProfessional fees and outside processing372 323 15.2 1,063 859 23.7 Professional fees and outside processing349 341 2.3 712 691 3.0 
Software expenseSoftware expense234 246 (4.9)466 456 2.2 
Net occupancy expenseNet occupancy expense187 233 (19.7)578 697 (17.1)Net occupancy expense181 182 (0.5)389 391 (0.5)
Software expense251 221 13.6 707 647 9.3 
Amortization of intangiblesAmortization of intangibles145 170 (14.7)431 513 (16.0)Amortization of intangibles143 142 0.7 280 286 (2.1)
Equipment expenseEquipment expense154 127 21.3 389 363 7.2 Equipment expense114 122 (6.6)232 235 (1.3)
Marketing and customer developmentMarketing and customer development94 75 25.3 226 215 5.1 Marketing and customer development93 66 40.9 177 132 34.1 
Operating lease depreciationOperating lease depreciation47 56 (16.1)144 204 (29.4)Operating lease depreciation47 47 — 95 97 (2.1)
Loan-related expenseLoan-related expense52 59 (11.9)161 177 (9.0)Loan-related expense47 55 (14.5)91 109 (16.5)
Regulatory costsRegulatory costs43 34 26.5 99 93 6.5 Regulatory costs44 31 41.9 79 56 41.1 
Merger-related and restructuring chargesMerger-related and restructuring charges172 236 (27.1)610 552 10.5 Merger-related and restructuring charges121 297 (59.3)337 438 (23.1)
Loss (gain) on early extinguishment of debtLoss (gain) on early extinguishment of debt— — — (3)235 (101.3)Loss (gain) on early extinguishment of debt(39)— NM(39)(3)NM
Other expenseOther expense91 163 (44.2)475 471 0.8 Other expense144 275 (47.6)282 384 (26.6)
Total noninterest expenseTotal noninterest expense$3,795 $3,755 1.1 $11,416 $11,064 3.2 Total noninterest expense$3,580 $4,011 (10.7)$7,254 $7,621 (4.8)

ThirdSecond Quarter 20212022 compared to ThirdSecond Quarter 20202021

Noninterest expense for the thirdsecond quarter of 20212022 was up $40down $431 million, or 1.1%11%, compared to the earlier quarter. Merger-related and restructuring charges decreased $64$176 million primarily due to facilities impairmentslower costs in connection with the earlier quarter, while incrementalvoluntary separation and retirement program and lower costs associated with exiting facilities. Incremental operating expenses related to the Merger increased $39decreased $73 million, primarily reflected in professional fees and outside processing.processing expenses and personnel expense. The current quarter also includes a $30$39 million professional fee to develop an ongoing program to identify, prioritize, and roadmap teammate generated revenue growth and expense savings opportunities beyondgain on the Merger.redemption of FHLB advances. The earlierprior quarter included $50$200 million forof expense associated with charitable contributions to the Truist Foundation and the Truist Charitable Fund (other expense). Excluding the aforementioned items and changes inthe amortization of intangibles, adjusted noninterest expense was up $110increased $56 million, or 3.5%1.8%, compared to the earlier quarter. Personnel expense decreased $105 million, or 4.8%, ($74 million on an adjusted basis) due to lower other employee benefits as a result of the decrease in noninterest income for post-retirement benefits and lower incentives, partially offset by higher salaries due to annual merit increases and higher staffing for insurance (primarily from acquisitions) and enterprise technology. Other expense increased $129$73 million on an adjusted basis primarily due to higher incentiveincreased operational losses and teammate travel expenses. Professional fees and outside processing expenses were up $42 million on an adjusted basis due to variable compensation from higher revenuesincreased call center staffing and improved overall performance relative to targets, higher medical insurance claims,enterprise technology investments. Marketing and personnel cost related to acquired companies, partially offset by lower equity based compensation. Additionally, net occupancycustomer development expense decreased $46was up $27 million primarily due to branchincreased spend to continue to build and property consolidations. Other expense also includes a decrease of $42 million for non-service-related pension cost components.strengthen Truist’s brand.

Truist Financial Corporation 4745


NineSix Months of 20212022 compared to NineSix Months of 20202021

Noninterest expense for the ninesix months ended SeptemberJune 30, 20212022 was up $352down $367 million, or 3.2%4.8%, compared to the earlier period. Merger-related and restructuring charges increased $58decreased $101 million due to lower costs in connection with the voluntary separation and other incrementalretirement program, partially offset by higher costs for client day one conversions. Incremental operating expenses related to the Merger increased $201 million.decreased $46 million, primarily reflected in personnel expense and professional fees and outside processing expenses. The current period alsoincludes a $39 million gain on the redemption of FHLB advances. The prior period includes $200 million for charitable contributions to the Truist Foundation and the Truist Charitable Fund (other expense), $36 million of expense associated with an acceleration of loss recognition related to certain terminated cash flow hedges the previously mentioned $30 million professional fee expense(other expense), and a small gain on the early extinguishment of debt, whereas the earlier period included a $235 million loss on the early extinguishment of debt and a $50 million charitable contribution.debt. Excluding the aforementioned items and changes ina decrease of $6 million for amortization of intangibles, noninterest expense increased $197$58 million, or 2.1%0.9%, compared to the earlier period. Other expense was up $127 million on an adjusted basis primarily due to increased operational losses and teammate travel expenses. Marketing and customer development expense increased $45 million, or 34%, due to increased spend to continue to build and strengthen Truist’s brand. Personnel expense increased $498decreased $196 million, or 4.5%, ($147 million on an adjusted basis) primarily driven by higher incentive expenses due to variable compensation from higher revenues and improved overall performance relative to targets, higherlower other employee benefits due toas a result of the previously mentioned increasedecrease in noninterest income higher medical insurance claims,for post-retirement benefits and personnel cost related to acquired companies. These increases in personnel expense were partially offset by lower salaries due to fewer FTEs. Software expense increased $60 million due to higher spending on certain projects. Other expense includes decreases of $125 million for non-service-related pension cost components. There was also a decrease of $119 million from net occupancy expense primarily due to branch and property consolidations and a decrease in operating lease depreciation of $60 million due to valuation adjustments taken in the prior year.incentives expenses.

Merger-Related and Restructuring Charges

The following table presents a summary of merger-related and restructuring charges and the related accruals:accruals. The 2022 and 2021 merger-related and restructuring costs primarily reflect charges as a result of the Merger, including costs for severance and other benefits, costs related to exiting facilities, and other restructuring initiatives.
Table 4: Merger-Related and Restructuring Accrual ActivityTable 4: Merger-Related and Restructuring Accrual ActivityTable 4: Merger-Related and Restructuring Accrual Activity
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021Three Months Ended June 30, 2022Six Months Ended June 30, 2022
(Dollars in millions)(Dollars in millions)Accrual at Jul 1, 2021ExpenseUtilizedAccrual at Sep 30, 2021Accrual at Jan 1, 2021ExpenseUtilizedAccrual at Sep 30, 2021(Dollars in millions)Accrual at Apr 1, 2022ExpenseUtilizedAccrual at Jun 30, 2022Accrual at Jan 1, 2022ExpenseUtilizedAccrual at Jun 30, 2022
Severance and personnel-related (1)$152 $77 $(154)$75 $36 $269 $(230)$75 
Severance and personnel-relatedSeverance and personnel-related$42 $29 $(43)$28 $77 $66 $(115)$28 
Occupancy and equipmentOccupancy and equipment(8)— — 110 (110)— Occupancy and equipment— 17 (17)— — 115 (115)— 
Professional servicesProfessional services28 79 (69)38 16 197 (175)38 Professional services37 36 (49)24 37 100 (113)24 
Systems conversion and related costsSystems conversion and related costs— (9)— — 22 (22)— Systems conversion and related costs11 (13)— 31 (30)
OtherOther10 (4)10 11 12 (13)10 Other28 (33)12 25 (35)
Total (2)$195 $172 $(244)$123 $63 $610 $(550)$123 
Total (1)Total (1)$89 $121 $(155)$55 $126 $337 $(408)$55 
(1)Includes $189 million of restructuring charges for the nine months ended September 30, 2021 related to the Company’s voluntary separation and retirement program.
(2)Related to the Merger, the Company recognized $170$97 million and $305 million of expensesexpense, respectively, for the three and six months ended SeptemberJune 30, 2021 and $578 million for the nine months ended September2022. At June 30, 2021. At September 30, 2021,2022, the Company had an accrual of $117$46 million related to the Merger. The remaining expense and accrual relate to other restructuring activities.

Segment Results

Truist operates and measures business activity across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury, and Corporate. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. See “Note 18. Operating Segments” herein and “Note 21. Operating Segments” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional disclosures related to Truist’s reportable business segments, including additional details related to results of operations. Fluctuations in noninterest income and noninterest expense are more fully discussed in the Noninterest Income and Noninterest Expense sections above.
Table 5: Net Income by Reportable SegmentTable 5: Net Income by Reportable SegmentTable 5: Net Income by Reportable Segment
Three Months Ended September 30,Nine Months Ended September 30, Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)20212020% Change20212020% Change(Dollars in millions)20222021% Change20222021% Change
Consumer Banking and WealthConsumer Banking and Wealth$872 $818 6.6 %$2,510 $2,204 13.9 %Consumer Banking and Wealth$773 $799 (3.3)%$1,646 $1,456 13.0 %
Corporate and Commercial BankingCorporate and Commercial Banking1,075 586 83.43,245 1,408 130.5 Corporate and Commercial Banking954 1,306 (27.0)1,957 2,285 (14.4)
Insurance HoldingsInsurance Holdings105 77 36.4 392 308 27.3 Insurance Holdings178 159 11.9 330 292 13.0 
Other, Treasury & CorporateOther, Treasury & Corporate(348)(340)2.4 (1,312)(758)73.1 Other, Treasury & Corporate(373)(606)38.4 (985)(902)(9.2)
Truist Financial CorporationTruist Financial Corporation$1,704 $1,141 49.3 $4,835 $3,162 52.9 Truist Financial Corporation$1,532 $1,658 (7.6)$2,948 $3,131 (5.8)

4846 Truist Financial Corporation


ThirdSecond Quarter 20212022 compared to ThirdSecond Quarter 20202021

Consumer Banking and Wealth

CB&W net income was $872$773 million for the thirdsecond quarter of 2021, an increase2022, a decrease of $54$26 million compared to the earlier quarter. Segment net interest income decreased $155increased $202 million primarily due to a decline in thedriven by favorable funding credit provided on deposits attributable to the higher rate environment and higher average loan balances, partially offset by decreased loan spreads and lower purchase accounting accretion, and a decline in average loans.accretion. The allocated provision for credit losses decreased $186increased $203 million which reflectsreflecting the impact of an allowance release duringloan growth in the current quarter and an allowance build during the earlier quarter. The earlier quarter reflected significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current quarter includes a reserve release in the earlier quarter as well as increased charge offs in the current quarter. Noninterest income decreased $33 million compared to the earlier quarter driven by a decrease in residential mortgage income due to lower production income (due to lower margins and refinance volumes), partially offset by higher servicing income (due to lower prepayments and servicing portfolio purchases.) This decrease is partially offset by higher card and payment fees driven by higher merchant income due to the improving economic outlook. Noninterest income increased $35 million due to increases in wealth management income due to favorable market conditions in the current quarter, card and related fee income, and service charges on deposits, partially offset by lower residential mortgage income driven by lower gain on sale margins and volumes.acquisition of certain merchant services relationships as well as higher consumer spend. Noninterest expense was stableflat compared to the earlier quarter.

CB&W average loans and leases held for investment decreased $6.8increased $3.7 billion, or 4.9%2.8%, for the thirdsecond quarter of 20212022 compared to the earlier quarter, primarily driven by loweran increase in residential mortgage balances due to the continued strategy to put certain correspondent channel production onto the balance sheet and home equitylower prepayments. In addition, indirect other increased primarily due to growth from Service Finance and recreational lending partially offset by increased indirect auto lending. runoff in other partnership lending programs. These increases were partially offset by lower mortgage warehouse lending as well as runoff in student loans.

Average total deposits increased $23$14.2 billion, or 10.4%5.9%, for the thirdsecond quarter of 20212022 compared to the earlier quarter, primarily due to the impact of fiscaldriven by increases in interest bearing checking, noninterest-bearing deposits, and monetary stimulus.money market and savings, partially offset by a decline in time deposits.

Corporate and Commercial Banking

C&CB net income was $1.1 billion$954 million for the thirdsecond quarter of 2021, an increase2022, a decrease of $489$352 million compared to the earlier quarter. Segment net interest income decreased $110increased $38 million primarily due to reducedhigher funding credit on deposits, increases to noninterest-bearing deposit balances, and higher average loan balances, partially offset by lower PPP revenue and lower purchase accounting accretion, and a decline in average loans, partially offset by higher spreads on loans.accretion. The allocated provision for credit losses decreased $575increased $371 million primarily reflecting an allowance release in the current quarter, whereas the earlier quarter included an allowance build. The earlier quarter reflected significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current quarter includes a reserve release due to the improving economic outlook. Noninterest income increased $145 million driven by investment banking income, commercial real estate income, and higher investment income (primarily valuation gains) from SBIC investments. Noninterest expense decreased $25 million primarily due to lower operating losses, operating lease depreciation, and lower allocated corporate expensesloan growth in the current quarter, partially offset by lower net charge offs in the current quarter. Noninterest income decreased $172 million compared to the earlier quarter due to lower investment banking revenue, partially offset by higher restructuring chargestrading income due to higher CVA gains. Noninterest expense decreased $47 million driven by lower incentive expense tied to lower revenues as well as lower merger-related costs given diminishing integration-related activities in the current quarter.

C&CB average loans held for investment decreased $17.6increased $6.5 billion, or 10.5%4.2%, for the thirdsecond quarter of 20212022 compared to the earlier quarter, primarily due to increases in core commercial and industrial loans, partially offset by decreases in average PPP loan forgivenessloans (commercial and lower line utilization in commercial loans,industrial) and average commercial real estate and dealer floor plan. construction loans.

Average total deposits increased $8.8 billion,decreased $703 million, or 6.2%0.5%, for the thirdsecond quarter of 20212022 compared to the earlier quarter, primarily due to the impact of fiscal and monetary stimulus.declines in average interest bearing deposits, partially offset by an increase in noninterest-bearing deposits.

Insurance Holdings

IH net income was $105$178 million for the thirdsecond quarter of 2021,2022, an increase of $28$19 million compared to the earlier quarter. Noninterest income increased $128$135 million primarily due to acquisitionscontinued organic growth and higher property and casualty insurance production from strong organic growth.acquisitions. Noninterest expense increased $91$109 million primarily due to higher performance-based incentives and amortization of intangibles related to acquisitions.salaries.

Other, Treasury & Corporate

OT&C generated a net loss of $348$373 million in the thirdsecond quarter of 2021,2022, compared to a net loss of $340$606 million in the earlier quarter. Segment netNet interest income increased $135decreased $81 million primarily due to lower nethigher funding creditscredit on liabilitiesdeposits to other segments, andpartially offset by higher earnings in the securities portfolio from higher yields on new purchases and lower premium amortization. Noninterest income decreased $87 million primarily due to utilize excess liquidity. The allocated provisionvaluation changes from assets held for credit losses increased $15certain post-retirement benefits, which is primarily offset by lower personnel expense. Noninterest expense decreased $502 million which primarily reflects a smaller release in the reserve for unfunded commitments in the current quarter compared to the earlier quarter. Noninterest income decreased $153 millionquarter primarily due to a gain on sale of securities in the earlier quarter. Noninterest expense decreased $22 million primarily due to lower merger related charges in the current quarter and charitable contributions to the Truist Foundation and the Truist Charitable Fund in the earlier quarter, partially offset by higher incentive expense driven by executive incentive compensationlower merger-related and higher accruals reflectingrestructuring charges and incremental operating expenses related to the job regrading projectMerger, a gain on the redemption of FHLB advances in the fourthcurrent quarter, 2020.and lower personnel expense due to lower other employee benefits as a result of the decrease in noninterest income for post-retirement benefits and lower incentives.

Truist Financial Corporation 4947


NineSix Months of 20212022 compared to NineSix Months of 20202021

Consumer Banking and Wealth

CB&W net income was $2.5$1.6 billion for the ninesix months ended SeptemberJune 30, 2021,2022, an increase of $306$190 million, or 13%, compared to the same period of the prior year. Segment net interest income decreased $325increased $400 million primarily due to reducedfavorable funding credit on deposits attributable to the higher rate environment and higher average loan and deposit balances, partially offset by decreased loan spreads and lower purchase accounting accretion, and a decline in average loans.accretion. The allocated provision for credit losses decreased $796increased $176 million primarily due to an allowanceimpact of loan growth in the current year and a higher reserve release that was primarily driven by an improving economic outlook and lower netin the prior year as well as increased charge offs in the auto, home equity, card, and mortgage portfolios as well as lower loan balances.current year. Noninterest income decreased $197 million, dueand noninterest expense were flat compared to lower residential mortgage income driven by lower gain on sale margins and volumes, partially offset by increased revenues in wealth management and card and payment related activities resulting from improving economic conditions as well as gains from the divestiture of certain businesses. Noninterest expense decreased $120 million primarily due to lower salary expense, pension costs, amortization of intangibles, and occupancy expenses, partially offset by increased incentives tied to performance and related benefits expense in the currentprior year.

CB&W average loans and leases decreased $7.6held for investment increased $936 million, or 0.7%, at June 30, 2022, compared to the same period of the prior year driven primarily by an increase in residential mortgage loans due to the continued strategy to put certain correspondent channel production onto the balance sheet and lower prepayments. In addition, indirect other increased primarily due to growth from Service Finance and recreational lending, partially offset by runoff in other partnership lending programs. These increases were partially offset by lower mortgage warehouse lending as well as runoff in student loans.

CB&W average total deposits increased $18.2 billion, or 5.4%7.7%, at SeptemberJune 30, 2021,2022, compared to the same period of the prior year primarily due to lower residential mortgage loansincreases in average money market and home equity lending,savings, interest bearing checking, and noninterest-bearing deposits, partially offset by increased mortgage warehouse and indirect auto lending. Average total deposits were up $25.7a decline in time deposits.

CB&W had 2,117 banking offices at June 30, 2022, a decrease of 440 offices compared to June 30, 2021. The decrease in offices was driven primarily by the consolidation of branches as a result of the Merger.

Truist Wealth had assets under management of $180.1 billion as of June 30, 2022, a decrease of $23.0 billion, or 12%15%, at September 30, 2021, compared to the same period of the prior year primarily due to the impact of fiscal and monetary stimulus.unfavorable market performance.

Corporate and Commercial Banking

C&CB net income was $3.2$2.0 billion for the ninesix months ended SeptemberJune 30, 2021, an increase2022, a decrease of $1.8 billion$328 million, or 14%, compared to the same period of the prior year. Segment net interest income decreased $283increased $26 million primarily due to reducedhigher funding credit on deposits and increases to non-interest bearing deposit balances, partially offset by lower fee income associated with PPP loan forgiveness and lower purchase accounting accretion, and a decline in average loans.accretion. The allocated provision for credit losses decreased $1.9 billionincreased $256 million which reflects anlower allowance release drivenreleases in the current period compared to the prior period and the impact of loan growth in the current period, partially offset by an improving economic outlook, lower net charge offs primarily in the commercial and industrial portfolio as well ascurrent period. Noninterest income decreased $245 million due lower structured real estate fees, lower loan balances. Noninterestsyndications, lower high yield bond and equity originations fees, and lower merger and acquisition fees, partially offset by higher trading income increased $570 million due to strong investment banking and trading income, commercial real-estate related income, increased lending related fees, income from strategic investments, and increased service charges on deposits.higher CVA gains. Noninterest expense decreased $174$51 million primarily due to lower operating lease depreciation, lower allocated corporate expenses, a reduction in LIHTC liability mark accretion, and reduced salary and equity based compensationincentive expense partially offset by higher incentives tied to performancelower revenues as well as lower merger-related and increasedrestructuring charges and incremental operating expenses related to the Merger given diminishing integration-related activities in the current period and lower professional fees and outside processing expense.expenses.

C&CB average loans and leases decreased $14held for investment increased $1.5 billion, or 8.3%0.9%, at SeptemberJune 30, 2021,2022, compared to the same period of the prior year. Excluding an $8.1 billion decrease in average PPP loans, average loans held for investment were up $9.5 billion, or 6.5%, primarily driven by an increase in the commercial and industrial portfolio loans due to higher revolver utilization, partially offset by a decrease in average commercial real estate loans.

Corporate and Commercial Banking average total deposits increased $3.7 billion, or 2.5%, at June 30, 2022, compared to the same period of the prior year primarily due to lower line utilizationan increase in commercial loans, commercial real estate, and dealer floor plan. Average totalaverage noninterest-bearing deposits, were up $12.5 billion, or 9.3%, at September 30, 2021, compared to the same period of the prior year, primarily due to the impact of fiscal and monetary stimulus.partially offset by a decrease in interest bearing deposits.

Insurance Holdings

IH net income was $392$330 million for the ninesix months ended SeptemberJune 30, 2021,2022, an increase of $84$38 million, or 13%, compared to the same period of the prior year. Noninterest income increased $304$239 million primarily due to higher property and casualty insurance productionorganic growth as well as acquisitions. Noninterest expense increased $198$189 million primarily due to commissions on higher production and higher salaries in the current year.year along with higher amortization of intangibles and operating expenses related to acquisitions.

48 Truist Financial Corporation


Other, Treasury, and Corporate

OT&C generated a net loss of $1.3 billion$985 million in the ninesix months ended SeptemberJune 30, 2021,2022, compared to a net loss of $758$902 million in the same period of the prior year. Segment net interest income decreased $84$369 million due to higher funding credit on deposits to other segments, partially offset by higher earnings in the securities portfolio from higher yields on new purchases and lower premium amortization. Noninterest income decreased $203 million primarily due to valuation changes from assets held for certain post-retirement benefits and losses on the sale of securities in the current year, which is primarily offset by lower personnel expense. Noninterest expense decreased $489 million primarily due to lower net funding credits to other segmentspersonnel expense due to lower market rates partially offset by lower interest expense on borrowings. The allocated provision for credit losses decreased $124 million which primarily reflects changes in the reserve for unfunded commitmentsother employee benefits as well as an allowance release in the current year resulting from the improving economic outlook. Noninterest income decreased $304 million primarily due to a gain on the sale of non-agency MBS in the same periodresult of the prior year, partially offset bydecrease in noninterest income from assets held for certain post-employment benefits. Noninterest expense increased $448 million primarily due topost-retirement benefits and lower incentives, charitable contributions to the Truist Foundation and the Truist Charitable Fund as well as higherin the prior year, lower merger-related and restructuring charges and incremental operating expenses related to the Merger, and higher restructuring chargesa gain on the redemption of FHLB advances in the current year, partially offset by the loss on early extinguishment of long-term debt in the same period of the prior year.

50 Truist Financial Corporation


Analysis of Financial Condition

Investment Activities

The securities portfolio totaled $151.0$139.4 billion at SeptemberJune 30, 2021,2022, compared to $120.8$154.6 billion at December 31, 2020.2021. The increasedecrease was due primarily to increasesdeclines in U.S. Treasuryresidential agency MBS. In the first quarter of 2022, Truist transferred $59.4 billion of AFS securities and MBS resulting from strong deposit growth resulting from fiscal and monetary stimulus.to HTM as the Company continues to execute upon its asset-liability management strategies. As of June 30, 2022, 41% of the investment securities portfolio was held-to-maturity based on amortized cost. During 2022, Truist purchased $9.0 billion of investment securities with a weighted-average interest yield of 2.45%.

As of SeptemberJune 30, 2021,2022, approximately 2.9%5.7% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 1.9%4.6% as of December 31, 2020.2021. The effective duration of the securities portfolio was 5.67.1 years at SeptemberJune 30, 2021,2022, compared to 4.05.8 years at December 31, 2020.2021, excluding the impact of unsettled security purchases at period end. The increase in duration was driven by higher rates, resulting in slower prepayments and longer average lives for the MBS portfolio.

U.S. Treasury, GSE, and Agency MBS represents 98%97% of the total securities portfolio as of SeptemberJune 30, 20212022 and more than 99% at December 31, 2020.2021. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company also holds AAA rated non-agency MBS as the risk adjusted returns for these securities are more attractive than agency MBS.

Truist Financial Corporation 49


Lending Activities

The following table presents the composition of average loans and leases:
Table 6: Average Loans and LeasesTable 6: Average Loans and LeasesTable 6: Average Loans and Leases
For the Three Months Ended
(Dollars in millions)
For the Three Months Ended
(Dollars in millions)
Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 2020
For the Three Months Ended
(Dollars in millions)
Jun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021
Commercial:Commercial:Commercial:
Commercial and industrialCommercial and industrial$130,025 $133,646 $136,051 $139,223 $143,452 Commercial and industrial$145,558 $138,872 $134,804 $134,942 $138,539 
CRECRE24,849 25,645 26,211 27,030 27,761 CRE22,508 23,555 24,396 24,849 25,645 
Commercial constructionCommercial construction5,969 6,359 6,557 6,616 6,861 Commercial construction5,256 5,046 5,341 5,969 6,359 
Lease financing4,917 4,893 4,975 5,401 5,626 
Consumer:Consumer:Consumer:
Residential mortgageResidential mortgage45,369 43,605 45,823 48,847 51,500 Residential mortgage49,237 47,976 47,185 45,369 43,605 
Residential home equity and directResidential home equity and direct25,242 25,238 25,658 26,327 26,726 Residential home equity and direct25,124 24,883 25,146 25,242 25,238 
Indirect autoIndirect auto26,830 26,444 26,363 25,788 24,732 Indirect auto26,496 26,088 26,841 26,830 26,444 
Indirect otherIndirect other11,112 10,797 10,848 11,291 11,530 Indirect other11,471 10,860 10,978 11,112 10,797 
StudentStudent7,214 7,396 7,519 7,519 7,446 Student6,331 6,648 6,884 7,214 7,396 
Credit cardCredit card4,632 4,552 4,645 4,818 4,810 Credit card4,728 4,682 4,769 4,632 4,552 
Total average loans and leases HFITotal average loans and leases HFI$286,159 $288,575 $294,650 $302,860 $310,444 Total average loans and leases HFI$296,709 $288,610 $286,344 $286,159 $288,575 

Average loans and leases held for investment for the thirdsecond quarter of 20212022 were $286.2$296.7 billion, down $2.4up $8.1 billion, or 0.8%2.8%, compared to the secondfirst quarter of 2021.2022. Excluding a $695 million decrease in average PPP loans, average loans held for investment were up $8.8 billion, or 3.1%.

Average commercial loans decreased $4.8increased $5.8 billion, or 2.8%3.5%, as $1.5due to broad-based growth of $6.7 billion, of average growthor 4.8%, within the core commercial and industrial portfolioportfolio. This growth was more thanpartially offset by a $4.0$1.0 billion decrease in average Paycheck Protection Program loans (commercial and industrial), a $1.1 billion decrease in average dealer floor plan loans (commercial and industrial), a $796 million decrease in average CRE loans, and a $390 million decrease in average commercial construction loans. Approximately $600 million of senior care facility loans were transferred primarily from CRE to commercial and industrial at the beginning of August, which impacted the variances noted above.

Average consumer loans increased $2.3$2.2 billion, or 2.0%1.9%, primarily due to a $1.8$1.3 billion increase in residential mortgages due to increased capacity, lower prepayments, and the decisioncontinued strategy to hold certain correspondent channel production on the balance sheet certain production from the correspondent channel, a $386and lower prepayments. In addition, indirect other increased $611 million increase in indirect auto loans primarily due to solid growth in the prime automobile segment, and a $315 million increase in other indirect loans primarily due to growth from the Service Finance, recreational lending and Sheffield portfolios, partially offset by runoff in recreationalother partnership lending programs. Indirect auto increased $408 million primarily in the prime segment of the portfolio and power sports lending. Residentialresidential home equity and direct loansincreased $241 million. These increases were up slightly due to solid growth from LightStream more than offsetting the declinepartially offset by $317 million of runoff in home equity lines of credit.
Truist Financial Corporation 51


COVID-19 Lending Activitiesstudent loans.

The CARES Act created the PPP, which has temporarily expanded the Small Business Administration’s business loan guarantee program. The carrying value of PPP loans was $3.5 billion as of September
At June 30, 2021. The CARES Act additionally includes provisions that were designed to encourage financial institutions to support borrowers impacted by COVID-19. These modifications are generally not considered a TDR. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended2022 and December 31, 2020 for additional disclosures related to modifications2021, 53% and TDRs. Payment relief assistance includes forbearance, deferrals, extension and re-aging programs, along with certain other modification strategies. The following table provides a summary of accommodations as of September 30, 2021:
Table 7: Client Accommodations (1)
Active AccommodationsExited Accommodations
September 30, 2021
(Dollars in millions)
Total CountOutstanding BalanceOutstanding Balance% Paid-off or Current (2)Types of Accommodations
Commercial324 $$17,297 98 %Clients may elect to defer loan or lease payments for up to 90 days without late fees being incurred but with finance charges continuing to accrue.
Consumer13,715 553 8,292 87 Clients may elect to defer loan payments for time periods that generally range from 30 to 90 days without late fees being incurred but with finance charges generally continuing to accrue. The Company’s residential mortgage forbearance program generally provides up to 180 days of relief. Additional relief may be provided in certain circumstances.
Credit card454 156 88 Clients may elect to defer payments for up to 90 days without late fees being incurred but with finance charges accruing. In addition, Truist provided credit card clients with 5% cash back on qualifying card purchases for certain important basic needs.
Total14,493 $559 $25,745 
(1)Excludes approximately 9,000 client accommodations related to government guaranteed loans totaling approximately $1.2 billion.
(2)Calculated based on accommodation count; includes loans that are less than 30 days past due.

The following table provides a summary of the Company’s exposure related to loans that have exited accommodations:
Table 8: Accommodations Exposure
September 30, 2021
(Dollars in millions)
Exposure
Current$24,513 
Past due and still accruing492 
Nonperforming740 
Total$25,745 

The following table provides a summary of exposure to industries that management believes were more vulnerable during the COVID-19 pandemic. These selected industry exposures represent 8.8%52%, respectively, of loans held for investment at September 30, 2021. Truist is actively managing these portfolios and will continue to make underwriting or risk acceptance adjustments as appropriate.
Table 9: Selected Credit Exposures
September 30, 2021
(Dollars in billions)
Outstanding BalancePercentage of Loans HFI
Senior Care$6.7 2.4 %
Hotels, Resorts & Cruise Lines5.7 2.0 
Acute Care Facilities4.9 1.7 
Oil & Gas Portfolio3.8 1.3 
Restaurants2.4 0.8 
Sensitive Retail1.7 0.6 
Total$25.2 8.8 %

leases HFI were variable rate.
5250 Truist Financial Corporation


Asset Quality

The following tables summarize asset quality information:
Table 10: Asset Quality
(Dollars in millions)Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 2020
NPAs:     
NPLs:     
Commercial and industrial$411 $397 $451 $532 $507 
CRE20 25 58 75 52 
Commercial construction12 13 14 
Lease financing12 23 28 32 
Residential mortgage306 302 290 316 205 
Residential home equity and direct146 165 172 205 180 
Indirect auto172 148 158 155 137 
Indirect other
Total NPLs HFI1,080 1,060 1,171 1,330 1,124 
Loans held for sale76 78 72 130 
Total nonaccrual loans and leases1,156 1,138 1,243 1,335 1,254 
Foreclosed real estate13 18 20 30 
Other foreclosed property39 41 38 32 30 
Total nonperforming assets$1,204 $1,192 $1,299 $1,387 $1,314 
TDRs:     
Performing TDRs:
Commercial and industrial$144 $144 $142 $78 $84 
CRE24 47 47 36 
Commercial construction— — — — 
Lease financing56 58 59 60 
Residential mortgage712 727 733 648 640 
Residential home equity and direct105 107 109 88 71 
Indirect auto390 389 399 392 336 
Indirect other
Student23 13 
Credit card30 32 35 37 38 
Total performing TDRs1,475 1,501 1,539 1,361 1,217 
Nonperforming TDRs159 190 207 164 140 
Total TDRs$1,634 $1,691 $1,746 $1,525 $1,357 
Loans 90 days or more past due and still accruing: (1)
Commercial and industrial$$14 $14 $13 $
CRE— — — — 
Lease financing16 — — — — 
Residential mortgage852 976 975 841 573 
Residential home equity and direct11 10 
Indirect auto
Indirect other
Student968 1,046 1,037 1,111 570 
Credit card23 22 32 29 24 
Total loans 90 days or more past due and still accruing$1,872 $2,068 $2,072 $2,008 $1,197 
Loans 30-89 days past due and still accruing: (1)     
Commercial and industrial$131 $128 $117 $83 $155 
CRE14 
Commercial construction— 
Lease financing18 35 
Residential mortgage495 543 577 782 796 
Residential home equity and direct81 73 82 98 103 
Indirect auto560 428 328 495 321 
Indirect other53 47 45 68 52 
Student456 548 556 618 666 
Credit card37 31 35 51 39 
Total loans 30-89 days past due and still accruing$1,823 $1,824 $1,788 $2,220 $2,148 
Table 7: Asset Quality
(Dollars in millions)Jun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021
NPAs:
NPLs:
Commercial and industrial$393 $330 $394 $423 $402 
CRE19 27 29 20 25 
Commercial construction— — 12 
Residential mortgage269 315 296 306 302 
Residential home equity and direct159 141 141 146 165 
Indirect auto244 227 218 172 148 
Indirect other
Total NPLs HFI1,090 1,044 1,090 1,080 1,060 
Loans held for sale33 39 22 76 78 
Total nonaccrual loans and leases1,123 1,083 1,112 1,156 1,138 
Foreclosed real estate13 
Other foreclosed property47 49 43 39 41 
Total nonperforming assets$1,173 $1,135 $1,163 $1,204 $1,192 
TDRs:
Performing TDRs:
Commercial and industrial$105 $104 $147 $200 $202 
CRE24 
Commercial construction— — — 
Residential mortgage - government guaranteed761 622 480 507 520 
Residential mortgage - nonguaranteed281 244 212 205 207 
Residential home equity and direct84 91 98 105 107 
Indirect auto401 392 389 390 389 
Indirect other
Student - nonguaranteed27 25 25 23 13 
Credit card22 25 27 30 32 
Total performing TDRs1,693 1,515 1,390 1,475 1,501 
Nonperforming TDRs204 189 152 159 190 
Total TDRs$1,897 $1,704 $1,542 $1,634 $1,691 
Loans 90 days or more past due and still accruing:
Commercial and industrial$27 $22 $13 $18 $14 
CRE— — — — 
Commercial construction— — — — 
Residential mortgage - government guaranteed884 996 978 823 929 
Residential mortgage - nonguaranteed27 31 31 29 47 
Residential home equity and direct10 12 
Indirect auto
Indirect other
Student - government guaranteed796 818 864 965 1,043 
Student - nonguaranteed
Credit card28 28 27 23 22 
Total loans 90 days or more past due and still accruing$1,787 $1,914 $1,930 $1,872 $2,068 
Loans 30-89 days past due and still accruing:
Commercial and industrial$223 $280 $130 $135 $146 
CRE10 13 20 
Commercial construction
Residential mortgage - government guaranteed233 216 256 264 307 
Residential mortgage - nonguaranteed302 326 258 231 236 
Residential home equity and direct156 142 107 81 73 
Indirect auto584 529 607 560 428 
Indirect other78 65 64 53 47 
Student - government guaranteed447 476 549 451 543 
Student - nonguaranteed
Credit card48 47 45 37 31 
Total loans 30-89 days past due and still accruing$2,091 $2,101 $2,044 $1,823 $1,824 
(1)The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period.
Truist Financial Corporation 5351


Nonperforming assets totaled $1.2 billion at SeptemberJune 30, 2021,2022, up $12$38 million compared to June 30, 2021.March 31, 2022 due to an increase in the commercial and industrial portfolio, partially offset by a decrease in the residential mortgage portfolio. Nonperforming loans and leases represented 0.40%held for investment were 0.36% of total loans and leases up one basis pointheld for investment at June 30, 2022, flat compared to June 30, 2021.March 31, 2022.

Performing TDRs were down $26up $178 million compared to the prior quarter primarily due to declinesan increase in thegovernment guaranteed residential mortgage and CRE portfolios.mortgages.

Loans 90 days or more past due and still accruing totaled $1.9$1.8 billion at SeptemberJune 30, 2021,2022, down $196$127 million, compared to the prior quarter. The ratio of loans 90 days or more past due and still accruingseven basis points, as a percentage of loans and leases was 0.66% at September 30, 2021, down six basis points fromcompared with the prior quarter. Thequarter primarily due to a decline in loans 90 days or more past due and still accruing was primarily ingovernment guaranteed residential mortgages and student loans.mortgages. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.03%0.04% at September 30, 2021, down one basis point from June 30, 2021.2022, flat from March 31, 2022.

Loans 30-89 days past due and still accruing of $1.8$2.1 billion at SeptemberJune 30, 20212022 were stabledown $10 million, or three basis points, as a percentage of loans and leases, compared to the prior quarter.quarter due to declines in the commercial and industrial portfolio, partially offset by a seasonal increase in the indirect auto portfolio.

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 10.7. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to “Note 5. Loans and ACL” for the amortized cost basis of loans by origination year and credit quality indicator as well as additional disclosures related to these potential problem loans.NPLs.
Table 11: Asset Quality Ratios
As of / For the Three Months EndedSep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 2020
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI0.64 %0.64 %0.61 %0.74 %0.70 %
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI0.66 0.72 0.71 0.67 0.39 
NPLs as a percentage of loans and leases HFI0.38 0.37 0.40 0.44 0.37 
NPLs as a percentage of total loans and leases (1)0.40 0.39 0.42 0.44 0.40 
NPAs as a percentage of:
Total assets (1)0.23 0.23 0.25 0.27 0.26 
Loans and leases HFI plus foreclosed property0.40 0.39 0.42 0.46 0.39 
Net charge-offs as a percentage of average loans and leases HFI0.19 0.20 0.33 0.27 0.42 
ALLL as a percentage of loans and leases HFI1.65 1.79 1.94 1.95 1.91 
Ratio of ALLL to:
Net charge-offs8.79x8.98x5.87x7.15x4.52x
NPLs4.35x4.83x4.84x4.39x5.22x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)0.03 %0.04 %0.04 %0.04 %0.03 %
Applicable ratios are annualized.
Table 8: Asset Quality Ratios
Jun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI0.69 %0.72 %0.71 %0.64 %0.64 %
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI0.59 0.66 0.67 0.66 0.72 
NPLs as a percentage of loans and leases HFI0.36 0.36 0.38 0.38 0.37 
NPLs as a percentage of total loans and leases (1)0.37 0.37 0.38 0.40 0.39 
NPAs as a percentage of:
Total assets (1)0.22 0.21 0.21 0.23 0.23 
Loans and leases HFI plus foreclosed property0.38 0.38 0.39 0.40 0.39 
ALLL as a percentage of loans and leases HFI1.38 1.44 1.53 1.65 1.79 
Ratio of ALLL to NPLs3.84x3.99x4.07x4.35x4.83x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)0.04 %0.04 %0.03 %0.03 %0.04 %
(1)Includes LHFS.
(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student, and PPP loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio such that it might not be reflectivebecause collection of asset collectabilityprincipal and interest is reasonably assured or the ratio might not be comparable to other periods presented or to other portfolios that do not have government guarantees.

Table 9: Asset Quality Ratios (Continued)
For the Three Months EndedJun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial0.01 %0.04 %0.09 %0.04 %0.09 %
CRE(0.10)0.01 0.07 — (0.05)
Commercial construction(0.08)(0.02)(0.10)(0.06)(0.06)
Consumer:
Residential mortgage(0.02)(0.03)(0.02)0.04 (0.01)
Residential home equity and direct1.04 0.61 0.49 0.49 0.59 
Indirect auto0.77 1.23 1.01 0.75 0.63 
Indirect other0.43 0.48 0.39 0.26 0.17 
Student0.30 0.33 0.65 0.31 0.16 
Credit card2.63 2.77 2.31 1.90 2.75 
Total0.22 0.25 0.25 0.19 0.20 
Ratio of ALLL to net charge-offs6.54x5.78x6.14x8.79x8.98x
Ratios are annualized, as applicable.
54
52 Truist Financial Corporation


The following table presents activity related to NPAs:
Table 12: Rollforward of NPAs
Table 10: Rollforward of NPAsTable 10: Rollforward of NPAs
(Dollars in millions)(Dollars in millions)20212020(Dollars in millions)20222021
Balance, January 1Balance, January 1$1,387 $684 Balance, January 1$1,163 $1,387 
New NPAs (1)New NPAs (1)1,580 2,467 New NPAs (1)836 1,015 
Advances and principal increasesAdvances and principal increases280 255 Advances and principal increases175 227 
Disposals of foreclosed assets (2)(1)Disposals of foreclosed assets (2)(1)(297)(333)Disposals of foreclosed assets (2)(1)(215)(220)
Disposals of NPLs (3)(2)Disposals of NPLs (3)(2)(203)(521)Disposals of NPLs (3)(2)(68)(141)
Charge-offs and lossesCharge-offs and losses(279)(443)Charge-offs and losses(194)(181)
PaymentsPayments(775)(553)Payments(347)(564)
Transfers to performing statusTransfers to performing status(445)(258)Transfers to performing status(190)(309)
Other, netOther, net(44)16 Other, net13 (22)
Ending balance, September 30$1,204 $1,314 
Ending balance, June 30Ending balance, June 30$1,173 $1,192 
(1)For 2020, includes approximately $500 million of loans previously classified as PCI that would have otherwise been nonperforming as of December 31, 2019.
(2)Includes charge-offs and losses recorded upon sale of $95$50 million and $99$70 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.
(3)(2)Includes charge-offs and losses recorded upon sale of $1 million and $126$5 million for the ninesix months ended SeptemberJune 30, 20212022 and 2020,2021, respectively.

TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term and a concession has been granted to the borrower. As a result, Truist works with borrowers to prevent further difficulties and to improve the likelihood of recovery on a loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR. In accordance with the CARES Act, Truist implementedFor loan modification programs in response to the COVID-19 pandemic, Truist applied the relief from TDR accounting described in order to provide borrowers with flexibility with respect to repayment terms.the CARES Act. Payment relief assistance provided by Truist includes forbearance, deferrals, extension, and re-aging programs, along with certain other modification strategies. The Company adopted certain provisions of the CARES Act and other regulatory guidance that provide relief from the requirement to apply TDR accounting to (1) certain modifications of federally backed mortgages upon request from the borrower, and (2) certain modifications of other non-federally backed mortgages for borrowers impacted by the COVID-19 pandemic that were less than 30 days past due at December 31, 2019. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for the policies related to TDRs and COVID-19 loan modifications.

TDRs identified by SunTrust prior to the Merger date are not included in Truist’s TDR disclosure because all such loans were recorded at fair value and a new accounting basis was established as of the Merger date. Subsequent modifications are evaluated for potential treatment as TDRs in accordance with Truist’s accounting policies.

The following table provides a summary of performing TDR activity:
Table 13: Rollforward of Performing TDRs
Table 11: Rollforward of Performing TDRsTable 11: Rollforward of Performing TDRs
(Dollars in millions)(Dollars in millions)20212020(Dollars in millions)20222021
Balance, January 1Balance, January 1$1,361 $980 Balance, January 1$1,390 $1,361 
InflowsInflows548 599 Inflows570 411 
Payments and payoffs (1)Payments and payoffs (1)(283)(113)Payments and payoffs (1)(122)(160)
Charge-offsCharge-offs(33)(34)Charge-offs(15)(21)
Transfers to nonperforming TDRs (2)Transfers to nonperforming TDRs (2)(31)(66)Transfers to nonperforming TDRs (2)(39)(31)
Removal due to the passage of timeRemoval due to the passage of time(10)(6)Removal due to the passage of time(71)(9)
Non-concessionary re-modificationsNon-concessionary re-modifications(15)(2)Non-concessionary re-modifications(1)(13)
Transferred to LHFS, sold and otherTransferred to LHFS, sold and other(62)(141)Transferred to LHFS, sold and other(19)(37)
Balance, September 30$1,475 $1,217 
Balance, June 30Balance, June 30$1,693 $1,501 
(1)Includes scheduled principal payments, prepayments, and payoffs of amounts outstanding.
(2)Represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.

Truist Financial Corporation 5553


The following table provides further details regarding the payment status of TDRs outstanding at SeptemberJune 30, 2021:2022:
Table 14: Payment Status of TDRs (1)
September 30, 2021
(Dollars in millions)
CurrentPast Due 30-89 DaysPast Due 90 Days Or MoreTotal
Table 12: Payment Status of TDRs (1)Table 12: Payment Status of TDRs (1)
June 30, 2022
(Dollars in millions)
June 30, 2022
(Dollars in millions)
CurrentPast Due 30-89 DaysPast Due 90 Days Or MoreTotal
Performing TDRs:Performing TDRs:       Performing TDRs:       
Commercial:Commercial:Commercial:
Commercial and industrialCommercial and industrial$144 100.0 %$— — %$— — %$144 Commercial and industrial$90 85.7 %$14 13.3 %$1.0 %$105 
CRECRE100.0 — — — — CRE100.0 — — — — 
Commercial constructionCommercial construction100.0 — — — — 
Lease financing56 100.0 — — — — 56 
Consumer:Consumer:Consumer:
Residential mortgage482 67.7 81 11.4 149 20.9 712 
Residential mortgage - government guaranteedResidential mortgage - government guaranteed377 49.5 79 10.4 305 40.1 761 
Residential mortgage - nonguaranteedResidential mortgage - nonguaranteed241 85.7 26 9.3 14 5.0 281 
Residential home equity and directResidential home equity and direct101 96.2 3.8 — — 105 Residential home equity and direct80 95.3 4.7 — — 84 
Indirect autoIndirect auto320 82.1 70 17.9 — — 390 Indirect auto335 83.5 66 16.5 — — 401 
Indirect otherIndirect other85.7 14.3 — — Indirect other83.3 16.7 — — 
Student22 95.7 4.3 — — 23 
Student - nonguaranteedStudent - nonguaranteed25 92.6 3.7 3.7 27 
Credit cardCredit card26 86.7 10.0 3.3 30 Credit card19 86.4 9.1 4.5 22 
Total performing TDRsTotal performing TDRs1,165 78.9 160 10.9 150 10.2 1,475 Total performing TDRs1,178 69.6 193 11.4 322 19.0 1,693 
Nonperforming TDRsNonperforming TDRs49 30.8 17 10.7 93 58.5 159 Nonperforming TDRs76 37.3 26 12.7 102 50.0 204 
Total TDRsTotal TDRs$1,214 74.3 $177 10.8 $243 14.9 $1,634 Total TDRs$1,254 66.2 $219 11.5 $424 22.3 $1,897 
(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.

5654 Truist Financial Corporation


ACL

Activity related to the ACL is presented in the following tables:
Table 15: Activity in ACL
Table 13: Activity in ACLTable 13: Activity in ACL
For the Three Months EndedFor the Nine Months EndedFor the Three Months EndedSix Months Ended June 30,

(Dollars in millions)

(Dollars in millions)
Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 202020212020(Dollars in millions)Jun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 202120222021
Balance, beginning of periodBalance, beginning of period$5,436 $6,011 $6,199 $6,229 $6,133 $6,199 $1,889 Balance, beginning of period$4,423 $4,695 $4,978 $5,436 $6,011 $4,695 $6,199 
CECL adoption - impact to retained earnings before tax— — — — — — 2,762 
CECL adoption - reserves on PCD assets— — — — — — 378 
Provision for credit lossesProvision for credit losses(324)(434)48 177 421 (710)2,158 Provision for credit losses171 (95)(103)(324)(434)76 (386)
Charge-offs:Charge-offs:       Charge-offs:       
Commercial and industrialCommercial and industrial(57)(51)(73)(84)(112)(181)(274)Commercial and industrial(17)(31)(54)(57)(53)(48)(132)
CRECRE(1)— (4)(19)(44)(5)(59)CRE(1)(1)(5)(1)— (2)(4)
Commercial constructionCommercial construction— — (2)(8)(19)(2)(22)Commercial construction— (1)— — — (1)(2)
Lease financing— (2)(6)(4)(44)(8)(50)
Residential mortgageResidential mortgage(7)(4)(11)(6)(4)(22)(50)Residential mortgage(2)(2)(1)(7)(4)(4)(15)
Residential home equity and directResidential home equity and direct(51)(57)(55)(46)(52)(163)(185)Residential home equity and direct(85)(58)(51)(51)(57)(143)(112)
Indirect autoIndirect auto(73)(69)(105)(84)(72)(247)(294)Indirect auto(77)(102)(89)(73)(69)(179)(174)
Indirect otherIndirect other(13)(11)(17)(14)(8)(41)(46)Indirect other(18)(19)(16)(13)(11)(37)(28)
StudentStudent(6)(3)(3)(3)(6)(12)(20)Student(4)(6)(12)(6)(3)(10)(6)
Credit cardCredit card(31)(42)(40)(35)(44)(113)(147)Credit card(40)(41)(37)(31)(42)(81)(82)
Total charge-offsTotal charge-offs(239)(239)(316)(303)(405)(794)(1,147)Total charge-offs(244)(261)(265)(239)(239)(505)(555)
Recoveries:Recoveries:       Recoveries:       
Commercial and industrialCommercial and industrial21 20 19 34 20 60 58 Commercial and industrial13 17 23 42 23 30 42 
CRECRE— CRE— 
Commercial constructionCommercial construction10 Commercial construction
Lease financing21 — — 24 
Residential mortgageResidential mortgage10 Residential mortgage10 
Residential home equity and directResidential home equity and direct20 20 18 20 16 58 46 Residential home equity and direct20 20 21 20 20 40 38 
Indirect autoIndirect auto22 27 22 24 22 71 63 Indirect auto26 23 21 22 27 49 49 
Indirect otherIndirect other18 18 Indirect other12 13 
StudentStudent— — — — Student— — — — — — 
Credit cardCredit card10 10 28 22 Credit card10 18 19 
Total recoveriesTotal recoveries104 97 78 98 79 279 233 Total recoveries85 83 83 104 97 168 175 
Net charge-offsNet charge-offs(135)(142)(238)(205)(326)(515)(914)Net charge-offs(159)(178)(182)(135)(142)(337)(380)
OtherOther(2)(44)Other(1)— 
Balance, end of periodBalance, end of period$4,978 $5,436 $6,011 $6,199 $6,229 $4,978 $6,229 Balance, end of period$4,434 $4,423 $4,695 $4,978 $5,436 $4,434 $5,436 
ALLL (excluding PCD loans)$4,577 $4,979 $5,506 $5,668 $5,675 
ALLL for PCD loans125 142 156 167 188 
ACL:ACL:
ALLLALLL$4,187 $4,170 $4,435 $4,702 $5,121 $4,187 $5,121 
RUFCRUFC276 315 349 364 366 RUFC247 253 260 276 315 247 315 
Total ACLTotal ACL$4,978 $5,436 $6,011 $6,199 $6,229 Total ACL$4,434 $4,423 $4,695 $4,978 $5,436 $4,434 $5,436 

Net charge-offs during the thirdsecond quarter totaled $135$159 million, or 0.22% as a percentage of average loans, and were down $7 million compared to the prior quarter. The net charge-off ratio was 0.19%, down onethree basis pointpoints compared to the prior quarter.

The allowance for credit losses was $5.0$4.4 billion and includes $4.7$4.2 billion for the allowance for loan and lease losses and $276$247 million for the reserve for unfunded commitments. The ALLL ratio was 1.65%1.38% compared to 1.79%1.44% at June 30, 2021.March 31, 2022. The decline in the ALLL ratio was due to strong portfolio performance partially offset by a moderately slower economic outlook. The ALLL covered nonperforming loans and leases held for investment 4.35X3.84X compared to 4.83X3.99X at March 31, 2022. At June 30, 2021. At September 30, 2021,2022, the ALLL was 8.79X6.54X annualized net charge-offs, compared to 8.98X5.78X at June 30, 2021.March 31, 2022.

Truist Financial Corporation 5755


The following table presents an allocation of the ALLL. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases.
Table 16: Allocation of ALLL by Category
September 30, 2021December 31, 2020
Table 14: Allocation of ALLL by CategoryTable 14: Allocation of ALLL by Category
June 30, 2022December 31, 2021
(Dollars in millions)(Dollars in millions)Amount% ALLL in Each Category% Loans in Each CategoryAmount% ALLL in Each Category% Loans in Each Category(Dollars in millions)Amount% ALLL in Each Category% Loans in Each CategoryAmount% ALLL in Each Category% Loans in Each Category
Commercial and industrialCommercial and industrial$1,541 32.7 %45.2 %$2,156 37.0 %46.2 %Commercial and industrial$1,357 32.5 %49.4 %$1,426 32.2 %47.9 %
CRECRE370 7.9 8.5 573 9.8 8.9 CRE237 5.7 7.3 350 7.9 8.3 
Commercial constructionCommercial construction59 1.3 2.0 81 1.4 2.2 Commercial construction50 1.2 1.7 52 1.2 1.7 
Lease financing31 0.7 1.7 48 0.8 1.7 
Residential mortgageResidential mortgage311 6.6 16.4 368 6.3 15.8 Residential mortgage327 7.8 16.8 308 6.9 16.5 
Residential home equity and directResidential home equity and direct645 13.7 8.8 714 12.2 8.7 Residential home equity and direct588 14.0 8.3 615 13.9 8.7 
Indirect autoIndirect auto1,071 22.8 9.4 1,198 20.5 8.7 Indirect auto952 22.7 9.0 1,022 23.0 9.1 
Indirect otherIndirect other194 4.1 3.9 208 3.6 3.7 Indirect other228 5.4 3.9 195 4.4 3.8 
StudentStudent126 2.7 2.5 130 2.2 2.5 Student100 2.4 2.0 117 2.6 2.3 
Credit cardCredit card354 7.5 1.6 359 6.2 1.6 Credit card348 8.3 1.6 350 7.9 1.7 
Total ALLLTotal ALLL4,702 100.0 %100.0 %5,835 100.0 %100.0 %Total ALLL4,187 100.0 %100.0 %4,435 100.0 %100.0 %
RUFCRUFC276  364  RUFC247  260  
Total ACLTotal ACL$4,978  $6,199  Total ACL$4,434  $4,695  

Truist monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. Truist also receives notification when the first lien holder, whether Truist or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, Truist obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.

Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. Truist estimates credit losses on second lien loans where the first lien is delinquent based on historical experience; the increased risk of loss on these credits is reflected in the ALLL. As of SeptemberJune 30, 2021,2022, Truist held or serviced the first lien on 30%33% of its second lien positions.

Other Assets

The components of other assets are presented in the following table:
Table 17: Other Assets as of Period End
Table 15: Other Assets as of Period EndTable 15: Other Assets as of Period End
(Dollars in millions)(Dollars in millions)September 30, 2021December 31, 2020(Dollars in millions)Jun 30, 2022Dec 31, 2021
Bank-owned life insuranceBank-owned life insurance$6,512 $6,479 Bank-owned life insurance$7,563 $7,281 
Tax credit and other private equity investmentsTax credit and other private equity investments6,012 5,685 Tax credit and other private equity investments6,380 6,309 
Prepaid pension assetsPrepaid pension assets4,814 4,358 Prepaid pension assets6,406 5,938 
Derivative assetsDerivative assets2,976 3,837 Derivative assets1,386 2,370 
Accrued income1,841 1,934 
Accounts receivableAccounts receivable1,910 1,833 Accounts receivable3,151 2,244 
Leased assets and related assetsLeased assets and related assets1,846 1,810 Leased assets and related assets2,312 2,092 
Accrued incomeAccrued income1,853 1,791 
ROU assetsROU assets1,207 1,333 ROU assets1,095 1,168 
Prepaid expensesPrepaid expenses1,091 1,247 Prepaid expenses1,112 1,152 
Equity securities at fair valueEquity securities at fair value1,026 1,054 Equity securities at fair value950 1,066 
Structured real estate322 390 
FHLB stock48 164 
OtherOther446 549 Other2,468 738 
Total other assetsTotal other assets$30,051 $30,673 Total other assets$34,676 $32,149 

58 Truist Financial Corporation


Funding Activities

Deposits

The following table presents average deposits:
Table 18: Average Deposits
Table 16: Average DepositsTable 16: Average Deposits
Three Months Ended
(Dollars in millions)
Three Months Ended
(Dollars in millions)
Sep 30, 2021Jun 30, 2021Mar 31, 2021Dec 31, 2020Sep 30, 2020
Three Months Ended
(Dollars in millions)
Jun 30, 2022Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021
Noninterest-bearing depositsNoninterest-bearing deposits$141,738 $137,892 $128,579 $127,103 $123,966 Noninterest-bearing deposits$148,610 $145,933 $146,492 $141,738 $137,892 
Interest checkingInterest checking107,802 106,121 104,744 99,866 96,707 Interest checking112,375 112,159 110,506 107,802 106,121 
Money market and savingsMoney market and savings136,094 134,029 129,303 124,692 123,598 Money market and savings148,632 141,500 137,676 136,094 134,029 
Time depositsTime deposits17,094 18,213 20,559 23,605 27,940 Time deposits14,133 15,646 16,292 17,094 18,213 
Total average depositsTotal average deposits$402,728 $396,255 $383,185 $375,266 $372,211 Total average deposits$423,750 $415,238 $410,966 $402,728 $396,255 

56 Truist Financial Corporation


Average deposits for the thirdsecond quarter of 20212022 were $402.7$423.8 billion, an increase of $6.5$8.5 billion, or 1.6%2.0%, compared to the prior quarter. Average noninterest bearing deposits grew 2.8%increased 1.8% compared to the prior quarter and represented 35.2%35.1% of total deposits for the thirdsecond quarter of 2021,2022, unchanged compared to 34.8% for the prior quarter. Average interest checking and money market and savings and interest checking grew 1.6%5.0% and 1.5%0.2%, respectively, compared to the prior quarter.

The increase in average money market and savings was primarily due to an increase from brokered deposits. Average time deposits decreased 6.1%9.7% primarily due to the maturity of higher-cost personal accounts.

Borrowings

At SeptemberJune 30, 2021,2022, short-term borrowings totaled $5.2$13.7 billion, a decreasean increase of $866 million$8.4 billion compared to December 31, 2020, due primarily to a decrease of $2.6 billion in short-term FHLB advances, partially offset by an increase of $1.4 billion in securities sold under agreements to repurchase.

2021. Average short-term borrowings were $5.4$8.3 billion, or 1.2%1.8% of total funding, for the third quarter of 2021,six months ended June 30, 2022, as compared to $6.2$6.4 billion, or 1.5%, for the prior year. Average short-term borrowings decreased as a percentage of funding sources due to strong deposit growth.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $37.8$30.3 billion at SeptemberJune 30, 2021,2022, a decrease of $1.8$5.6 billion compared to December 31, 2020.2021. During 2021,the six months ended June 30, 2022, the Company had $5.8redemptions of $4.7 billion of senior long termand $300 million of subordinated long-term debt maturities and redemptions, partially offset by $2.3 billion of issuances of fixedissued $850 million fixed-to-floating rate senior notes with an interest rate of 1.27% to 1.89% maturing between 2027 to 2029 and issuances4.12% due June 6, 2028. During the six months ended June 30, 2022, Truist also redeemed $800 million of $2.3 billion in variable rate senior notes maturing between 2024 and 2025. FHLB advances, represented 2.3%which resulted in a gain on early extinguishment of total outstanding long-term debt at September 30, 2021, compared to 2.2% at December 31, 2020.of $39 million. The average cost of long-term debt was 1.59%1.61% for the ninesix months ended SeptemberJune 30, 2021, down 192022, up three basis points compared to the same period in 2020.2021.

In July 2022, Truist redeemed $1.0 billion of fixed rate senior notes that were due in August 2022. Additionally in July 2022, Truist issued $1.5 billion fixed-to-floating rate senior notes with an interest rate of 4.26% due July 28, 2026 and $1.0 billion fixed-to-floating rate subordinated notes with an interest rate of 4.92% due July 28, 2033.

Shareholders’ Equity

Total shareholders’ equity was $68.9$63.0 billion at SeptemberJune 30, 2021,2022, a decrease of $2.0$6.3 billion from December 31, 2020.2021. This decreasedecline includes a decrease of $2.3$7.6 billion in AOCI redemptions ofand $1.4 billion in preferred stock for Series F, G, and H, $2.1 billion in dividends, and $1.1 billion in repurchases of common stock, partially offset by $4.8$2.9 billion in net income. Truist’s book value per common share at SeptemberJune 30, 20212022 was $46.62,$42.45, compared to $46.52$47.14 at December 31, 2020.

Refer to “Note 10. Shareholders’ Equity” for additional disclosures related to preferred stock redemptions.2021.

Risk Management

Truist maintains a comprehensive risk management framework supported by people, processes, and systems to identify, measure, monitor, manage, and report significant risks arising from its exposures and business activities. Effective risk management involves optimizing risk and return while operating in a safe and sound manner, and promoting compliance with applicable laws and regulations. The Company’s risk management framework promotes the execution of business strategies and objectives in alignment with its risk appetite.

Truist has developed and employs a risk taxonomy that further guides business functions in identifying, measuring, responding to, monitoring, and reporting on possible exposures to the organization. The risk taxonomy drives internal risk conversations and enables Truist to clearly and transparently communicate to stakeholders the level of potential risk the Company faces, both presently and in the future, and the Company’s position on managing risk to acceptable levels.

Truist Financial Corporation 59


Truist is committed to fostering a culture that supports identification and escalation of risks across the organization. All teammates are responsible for upholding the Company’s purpose, mission, and values, and are encouraged to speak up if there is any activity or behavior that is inconsistent with the Company’s culture. The Truist code of ethics guides the Company’s decision making and informs teammates on how to act in the absence of specific guidance.

Truist seeks an appropriate return for the risk taken in its business operations. Risk-taking activities are evaluated and prioritized to identify those that present attractive risk-adjusted returns, while preserving asset value and capital.

Compensation decisions take into account a teammate’s adherence to and successful implementation of Truist’s risk values and associated policies and procedures. The Company’s compensation structure supports its core values and sound risk management practices in an effort to promote judicious risk-taking behavior.

Truist employs a comprehensive change management program to manage the residual risks associated with integrating heritage BB&T and heritage SunTrust. TheWhile integration activities are largely complete, the Board and Executive Leadership oversee the change management program, which is designed to ensure key decisions are reviewed and that there is appropriate oversight of application and data center decommissioning and residual integration activities.activities, achieved through Truist’s risk management process.

Truist Financial Corporation 57


Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional disclosures under the section titled “Risk Management.”

Market Risk

Market risk is the risk to current or anticipated earnings, capital, or economic value arising from changes in the market value of portfolios, securities, or other financial instruments. Market risk results from changes in the level, volatility, or correlations among financial market risk factors or prices, including interest rates, credit spreads, foreign exchange rates, equity, and commodity prices.

Effective management of market risk is essential to achieving Truist’s strategic financial objectives. Truist’s most significant market risk exposure is to interest rate risk in its balance sheet; however, market risk also results from underlying product liquidity risk, price risk, and volatility risk in Truist’s business units. Interest rate risk results from differences between the timing of rate changes and the timing of cash flows associated with assets and liabilities (re-pricing risk); from changing rate relationships among different yield curves affecting bank activities (basis risk); from changing rate relationships across the spectrum of maturities (yield curve risk); and from interest-related options inherently embedded in bank products (options risk).

The primary objectives of effective market risk management are to minimize adverse effects from changes in market risk factors on net interest income, net income, and capital, and to offset the risk of price changes for certain assets and liabilities recorded at fair value. At Truist, market risk management also includes the enterprise-wide IPV function.

Interest Rate Market Risk

As a financial institution, Truist is exposed to interest rate risk both on itsfrom assets, liabilities, and on its liabilities.off-balance sheet positions. To keep net interest margin as stable as possible, Truist actively manages its interest rate risk exposure through the strategic repricing of its assets and liabilities, taking into account the volumes, maturities, and mix, with the goal of keeping net interest margin as stable as possible.mix. Truist primarily uses three methods to measure and monitor its interest rate risk: (i) simulations of possible changes to net interest income over the next two years based on gradual changes in interest rates; (ii) analysis of interest rate shock scenarios; and (iii) analysis of economic value of equity based on changes in interest rates.

The Company’s simulation model takes into account assumptions related to prepayment trends, using a combination of market data and internal historical experiences for deposits and loans, as well as scheduled maturities and payments, and the expected outlook for the economy and interest rates. These assumptions are reviewed and adjusted monthly to reflect changes in current interest rates compared to the rates applicable to Truist’s assets and liabilities. The model also considers Truist’s current and prospective liquidity position, current balance sheet volumes, and projected growth and/or contractions, accessibility of funds for short-term needs and capital maintenance.

Deposit betas (the sensitivity of deposit rate changes relative to market rate changes) are an important assumption in the interest rate risk modeling process. Truist applies an average deposit beta (the sensitivity of deposit rate changes relativeassumptions to market rate changes) of approximately 50% to its non-maturity interest-bearing deposit accounts when determining its interest rate sensitivity. Non-maturity, interest-bearing deposit accounts include interest checking accounts, savings accounts, and money market accounts that do not have a contractual maturity. Truist utilizes a tiered deposit beta assumption framework that accounts for historically observed behaviors of clients and the Company. As interest rates rise, the deposit beta assumptions also rise to reflect increasing competition among banks as well as increased client demand for interest-bearing deposits. Based on the fed funds target range at June 30, 2022 of 1.50% to 1.75%, Truist applies an average deposit beta of approximately 35% for the next 50 basis point increase in the Federal funds rate and approximately 50% for any additional increases. Truist also regularly conducts sensitivity analyses on other key variables, including noninterest-bearing deposits, to determine the impact these variables could have on the Company’s interest rate risk position. The predictive value of the simulation model depends upon the accuracy of the assumptions, but management believes that it provides helpful information for the management of interest rate risk.

60 Truist Financial Corporation


The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next 12 months assuming a gradual change in interest rates as described below.
Table 19: Interest Sensitivity Simulation Analysis
Table 17: Interest Sensitivity Simulation AnalysisTable 17: Interest Sensitivity Simulation Analysis
Interest Rate ScenarioInterest Rate ScenarioAnnualized Hypothetical Percentage Change in Net Interest IncomeInterest Rate ScenarioAnnualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)Gradual Change in Prime Rate (bps)Prime RateGradual Change in Prime Rate (bps)Prime Rate
Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Jun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Up 100Up 1004.25 %4.25 %4.08 %3.43 %Up 1005.75 %4.25 %1.68 %3.93 %
Up 50Up 503.75 3.75 3.15 2.68 Up 505.25 3.75 1.65 3.07 
No ChangeNo Change3.25 3.25 — — No Change4.75 3.25 — — 
Down 25 (1)3.00 3.00 (1.22)(1.62)
Down 50 (1)Down 50 (1)2.75 2.75 (1.71)(1.94)Down 50 (1)4.25 2.75 (2.86)(1.93)
Down 100 (1)Down 100 (1)3.75 2.25 (3.94)(2.14)
(1)The Down 2550 and 50100 rates are floored at one basis point and may not reflect Down 2550 and 50100 basis points for all rate indices.

58 Truist Financial Corporation


Rate sensitivity increaseddecreased compared to prior periods, primarily driven by excess liquidityhigher starting rates and hedging changes partially offset by anhigher deposit betas as rates increase inand move into the investment securities portfolio.higher beta tiers.

Management considers how the interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during the current economic cycle. Much of this liquidity increase has resulted in growth in noninterest-bearing demand deposits. Consistent with the industry, Truist has seen a significant increase in this funding source. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of Truist. A decrease in the amount of these deposits in the future would reduce the asset sensitivity of Truist’s balance sheet because the Company wouldmay increase interest-bearing funds to offset the loss of this advantageous funding source. Alternatively, the Company may reduce the size of its investment portfolio to offset the loss of noninterest-bearing demand deposits to limit the impact on the balance sheet’s asset sensitivity.

The following table shows the results of Truist’s interest-rate sensitivity position assuming the loss of additional demand deposits and an associated increase in managed rate deposits versus current projections under various interest rate scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%.
Table 20: Deposit Mix Sensitivity Analysis
Table 18: Deposit Mix Sensitivity AnalysisTable 18: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)Gradual Change in Rates (bps)Base Scenario at September 30, 2021 (1)Results Assuming a Decrease in Noninterest-Bearing Demand DepositsGradual Change in Rates (bps)Base Scenario at June 30, 2022 (1)Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
td0 Billion$40 Billiontd0 Billion$40 Billion
Up 100Up 1004.08 %3.22 %2.37 %Up 1001.68 %0.97 %0.25 %
Up 50Up 503.15 2.52 1.90 Up 501.65 1.13 0.61 
(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at SeptemberJune 30, 20212022 as presented in the preceding table.

Truist also uses an EVE analysis to focus on longer-term projected changes in asset and liability values given potential changes in interest rates. This measure allows Truist to analyze interest rate risk that falls outside the net interest income simulation period. The EVE model is a discounted cash flow of the portfolio of assets, liabilities, and derivative instruments. The difference in the present value of assets minus the present value of liabilities is defined as EVE.

The following table shows the effect that the indicated changes in interest rates would have on EVE:
Table 21: EVE Simulation Analysis
Change in Interest Rates (bps)Hypothetical Percentage Change in EVE
Sep 30, 2021Sep 30, 2020
Up 100(5.1)%7.4 %
No Change— — 
Down 100(3.5)(6.8)

Truist uses financial instruments including derivatives to manage interest rate risk related to securities, commercial loans, MSRs, and mortgage banking operations, long-term debt, and other funding sources. Truist hedges a portion of its AFS securities to reduce mark-to-market volatility within AOCI and also to increase its overall asset sensitivity position. As of September 30, 2021, the Company had $24.0 billion of pay-fixed swaps associated with this hedging program that are accounted for as fair value hedges. In the third quarter of 2021, this hedging program reduced net interest income by $17 million. Truist also useshas utilized derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of SeptemberJune 30, 2021,2022, Truist had derivative financial instruments outstanding with notional amounts totaling $329.9$331.7 billion, with an associated net negative fair value of $2.4 billion.$528 million. See “Note 16. Derivative Financial Instruments” for additional disclosures.

To protect against any potential downside in rates, Truist Financial Corporation 61added $16 billion of receive fixed swaps, which are primarily forward starting. These swaps will begin in 2023 and 2024 and have laddered maturities that primarily range from 3 to 5 years with an average blended interest rate of 2.85%.


LIBOR in its current form will no longer be available after 2021. Transition

For most tenors of U.S. dollar LIBOR, the administrator of LIBOR extended publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR and all non-U.S. dollar LIBOR, will ceaseceased publication at December 31, 2021, based on this guidance. Truist has U.S. dollar LIBOR-based contracts that extend beyond June 30, 2023. In accordance with regulatory guidance, production of new U.S. dollarthe October 20, 2021 interagency Joint Statement on Managing the LIBOR contracts will cease before the end of 2021.transition. To prepare for the transition to an alternative reference rate, management formed a cross-functional project team to address the LIBOR transition. The project team performed an assessment to identify the potential risks related to the transition from LIBOR to a new index. The project teamindex or multiple indices and provides updates to Executive Leadership and the Board. As of June 30, 2022, Truist had outstanding LIBOR-based instruments that mature after June 30, 2023, including: loan and lease exposures totaling approximately $155 billion, notional derivative exposure totaling approximately $133 billion, long-term debt of $1.1 billion, and preferred stock of $1.5 billion. These amounts are inclusive of remediated contracts, which contain adequate fallback language for the transition.

Contract fallback language for existing loans and leases is under reviewhas largely been reviewed and certain contracts will need updated provisions forrequire amendments to support the transition. The Company has plans fortransition away from LIBOR. For impacted lines of business, to remediatethe Company has started remediating these contracts train impacted teammates, and provide timely notice to impacted clients.include standardized fallback language, or amending contracts to new reference rates at maturities during 2022. Current fallback language used for new, renewed, and modifiedto remediate contracts that mature after June 30, 2023 is generally consistent with ARRC recommendations and includes use of “hardwired fallback” language.

Truist Financial Corporation 59


The progress and approach to remediation will vary based on the type of contract and existing language used in the agreement. For commercial lending and general consumer lending, a significant number of remaining LIBOR contracts will require client outreach and remediation. Progress, year to date, has been focused on maturities earlier than June 30, 2023 and expanding usage of alternative reference rates. Efforts to amend and remediate contracts, excluding mortgage and student loans, that mature post June 30, 2023 ($146 billion) will be accelerated during the remainder of 2022. Truist has determined that adjustable rate mortgage products ($3.8 billion) have consistent and adequate fallback language to transition away from LIBOR in line with industry expectations; therefore, these contracts will not require remediation. Remediation of student loans ($5.5 billion) will follow pending guidance from the Department of Education on the replacement rate for certain student loans and recent guidance from the CFPB to allow transition to “comparable rates,” including SOFR or Prime in the private student loan portfolio, where appropriate.LIBOR is used directly. Certain derivatives without a clearly defined or practicable replacement benchmark rate will use the recent Federal legislation to replace LIBOR with a SOFR-based rate that will be established by FRB rulemaking. This legislation will also provide additional administrative benefit for a small portion of the commercial and consumer lending portfolios where contracts do not contain fallback language and have not yet been remediated.

Training has been provided for impacted teammates and will continue during 2022. Truist will continue to provide timely notices and information to impacted clients about the transition during 2022 and the first half of 2023. Truist continues to manage the impact of these contracts and other financial instruments, systems implications, hedging strategies, and related operational and market risks on established project plans for business and operational readiness forto support the transition.

As of December 31, 2021, Truist ceased entering into new contracts with a LIBOR reference rate for all product offerings, except on a limited basis, as permissible. Market risks associated with this changethe transition to alternative reference rates are dependent on themarket conditions as loans are transitioned to alternative reference rates availableduring 2022 and market conditions at transition. In 2020, Truist began offering SOFR-based lending solutions to wholesale and consumer clients and entered into SOFR-based derivative contracts.early 2023. The Company hasis actively been using SOFR as a reference rate in various loan contracts and has originated approximately $3$45 billion of loans, asissued $5.9 billion of September 30, 2021long-term debt, and has $84 billion in notional derivative exposure using this alternative reference rate.rate as of June 30, 2022. Alternatives, such as SOFR, may react differently from LIBOR in times of economic stress. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry and will continue to offer additional SOFR based products during 2021. Other2022. Additional alternative reference rates, such as Bloomberg Short Term Bank Yield will be supported based on market demand. Other emerging credit sensitive rates will be evaluated as additional alternatives for LIBOR.LIBOR based on market developments. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to the section titled “Item1A. Risk Factors” in the Form 10-K for the year ended December 31, 2020.2021.

Market risk from trading activities

As a financial intermediary, Truist provides its clients access to derivatives, foreign exchange and securities markets, which generate market risks. Trading market risk is managed using a comprehensive risk management approach, which includes measuring risk using VaR, stress testing, and sensitivity analysis. Risk metrics are monitored against a suite of limits on a daily basis at both the trading desk level and at the aggregate portfolio level, which is intended to ensure that exposures are in line with Truist’s risk appetite.

Truist is also subject to risk-based capital guidelines for market risk under the Market Risk Rule.

Covered Trading Positions

Covered positions subject to the Market Risk Rule include trading assets and liabilities, specifically those held for the purpose of short-term resale or with the intent of benefiting from actual or expected short-term price movements or to lock in arbitrage profits. Truist’s trading portfolio of covered positions results primarily from market making and underwriting services for the Company’s clients, as well as associated risk mitigating hedging activity. The trading portfolio, measured in terms of VaR, consists primarily of four sub-portfolios of covered positions: (i) credit trading, (ii) fixed income securities, (iii) interest rate derivatives, and (iv) equity derivatives. As a market maker across different asset classes, Truist’s trading portfolio also contains other sub-portfolios, including foreign exchange, loan trading, and commodity derivatives; however, these portfolios do not generate material trading risk exposures.

Valuation policies and methodologies exist for all trading positions. Additionally, these positions are subject to independent price verification. See “Note 16. Derivative Financial Instruments,” “Note 15. Fair Value Disclosures,” and “Critical Accounting Policies” herein for discussion of valuation policies and methodologies.

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Securitizations

As of SeptemberJune 30, 2021,2022, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $38$28 million, all of which were non-agency asset backed securities positions. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics including, but not limited to, deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s comprehensive risk management framework, which includes daily monitoring against a suite of limits. There were no off-balance sheet securitization positions during the reporting period.

Correlation Trading Positions

The trading portfolio of covered positions did not contain any correlation trading positions as of SeptemberJune 30, 2021.2022.

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VaR-Based Measures

VaR measures the potential loss of a given position or portfolio of positions at a specified confidence level and time horizon. Truist utilizes a historical VaR methodology to measure and aggregate risks across its covered trading positions. For risk management purposes, the VaR calculation is based on a historical simulation approach and measures the potential trading losses using a one-day holding period at a one-tail, 99% confidence level. For Market Risk Rule purposes, the Company calculates VaR using a 10-day holding period and a 99% confidence level. Due to inherent limitations of the VaR methodology, such as the assumption that past market behavior is indicative of future market performance, VaR is only one of several tools used to measure and manage market risk. Other tools used to actively manage market risk include stress testing, scenario analysis, and stop loss limits.

The trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, and the correlation between different positions. A portfolio of trading positions is typically less risky than the sum of the risk from each of the individual sub-portfolios, because, under normal market conditions, risk within each category partially offsets the exposure to other risk categories. The following table summarizes certain VaR-based measures for the three months and ninesix months ended SeptemberJune 30, 20212022 and 2020. In the third quarter of 2021,2021. Average one and ten dayten-day VaR measures declinedfor the three months ended June 30, 2022 increased from the same period of last year, primarily driven by higher market volatility over the past quarter. Average one and ten-day VaR measures for the six months ended June 30, 2022 were lower than last year as heightened market volatility experienced during March 2020 aged out of the 12-monthwas used for measuring VaR look-back window.
Table 22: VaR-based Measures
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(Dollars in millions)10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period
VaR-based Measures:
Maximum$$$65 $11 $68 $16 $65 $11 
Average31 16 23 
Minimum13 
Period-end46 46 
VaR by Risk Class:
Interest Rate Risk
Credit Spread Risk10 10 
Equity Price Risk
Foreign Exchange Risk— — — — 
Portfolio Diversification(5)(6)(5)(6)
Period-end
until March 2021.
Table 19: VaR-based Measures
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(Dollars in millions)10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period
VaR-based Measures:
Maximum$26 $$$$38 $14 $68 $16 
Average13 16 22 
Minimum
Period-end26 26 
VaR by Risk Class:
Interest Rate Risk
Credit Spread Risk
Equity Price Risk
Foreign Exchange Risk— — — — 
Portfolio Diversification(7)(4)(7)(4)
Period-end

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Stressed VaR-based measures

Stressed VaR, another component of market risk capital, is calculated using the same internal models as used for the VaR-based measure. Stressed VaR is calculated over a ten-day holding period at a one-tail, 99% confidence level and employs a historical simulation approach based on a continuous twelve-month historical window selected to reflect a period of significant financial stress for the Company’s trading portfolio. The following table summarizes Stressed VaR-based measures:
Table 23: Stressed VaR-based Measures - 10 Day Holding Period
Three Months Ended September 30,Nine Months Ended September 30,
Table 20: Stressed VaR-based Measures - 10 Day Holding PeriodTable 20: Stressed VaR-based Measures - 10 Day Holding Period
Three Months Ended June 30,Six Months Ended June 30,
(Dollars in millions)(Dollars in millions)2021202020212020(Dollars in millions)2022202120222021
MaximumMaximum$82 $65 $91 $65 Maximum$87 $91 $109 $91 
AverageAverage52 31 55 31 Average66 60 71 57 
MinimumMinimum31 14 26 13 Minimum40 43 40 26 
Period-endPeriod-end57 46 57 46 Period-end81 49 81 49 

Compared to the prior year, periods,average stressed VaR measures increased in the third quarter of 2021 primarily due to the normalization ofhigher market making inventory levels this year compared to the same periods of 2020 when inventory levels were lower due to the market volatility.in 2022.

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Specific Risk Measures

Specific risk is a measure of idiosyncratic risk that could result from risk factors other than broad market movements (e.g. default or event risks). The Market Risk Rule provides fixed risk weights under a standardized measurement method while also allowing a model-based approach, subject to regulatory approval. Truist utilizes the standardized measurement method to calculate the specific risk component of market risk regulatory capital. As such, incremental risk capital requirements do not apply.

VaR Model Backtesting

In accordance with the Market Risk Rule, the Company evaluates the accuracy of its VaR model through daily backtesting by comparing aggregate daily trading gains and losses (excluding fees, commissions, reserves, net interest income, and intraday trading) from covered positions with the corresponding daily VaR-based measures generated by the model. As illustrated in the following graph, thereVaR measures briefly increased in the first quarter of 2022 due to the increase in market volatility that normalized towards the end of the quarter. There were no Company-wide VaR backtesting exceptions during the twelve months ended SeptemberJune 30, 2021.2022. The total number of Company-wide VaR backtesting exceptions over the preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.
tfc-20210930_g1.jpgtfc-20220630_g1.jpg
62 Truist Financial Corporation


Model Risk Management

MRM is responsible for the independent model validation of all decision tools and models including trading market risk models. The validation activities are conducted in accordance with MRM policy, which incorporates regulatory guidance related to the evaluation of model conceptual soundness, ongoing monitoring, and outcomes analysis. As part of ongoing monitoring efforts, the performance of all trading risk models are reviewed regularly to preemptively address emerging developments in financial markets, assess evolving modeling approaches, and to identify potential model enhancement.

Stress Testing

The Company uses a comprehensive range of stress testing techniques to help monitor risks across trading desks and to augment standard daily VaR and other risk limits reporting. The stress testing framework is designed to quantify the impact of extreme, but plausible, stress scenarios that could lead to large unexpected losses. Stress tests include simulations for historical repeats and hypothetical risk factor shocks. All trading positions within each applicable market risk category (interest rate risk, equity risk, foreign exchange rate risk, credit spread risk, and commodity price risk) are included in the Company’s comprehensive stress testing framework. Management reviews stress testing scenarios on an ongoing basis and makes updates, as necessary, which is intended to ensure that both current and emerging risks are captured appropriately. Management also utilizes stress analyses to support the Company’s capital adequacy assessment standards. See the “Capital” section of MD&A for additional discussion of capital adequacy.

64 Truist Financial Corporation


Liquidity

Liquidity represents the continuing ability to meet funding needs, including deposit withdrawals, repayment of borrowings and other liabilities, and funding of loan commitments. In addition to the level of liquid assets, such as cash, cash equivalents, and AFS securities, other factors affect the ability to meet liquidity needs, including access to a variety of funding sources, maintaining borrowing capacity, growing core deposits, loan repayment, and the ability to securitize or package loans for sale.

Truist monitors the ability to meet client demand for funds under both normal and stressed market conditions. In considering its liquidity position, management evaluates Truist’s funding mix based on client core funding, client rate-sensitive funding, and national markets funding. In addition, management evaluates exposure to rate-sensitive funding sources that mature in one year or less. Management also measures liquidity needs against 30 days of stressed cash outflows for Truist and Truist Bank. To ensure a strong liquidity position and compliance with regulatory requirements, management maintains a liquid asset buffer of cash on hand and highly liquid unencumbered securities. As

Internal Liquidity Stress Testing

Liquidity stress testing is designed to ensure that Truist and Truist Bank have sufficient liquidity for a variety of September 30, 2021institution-specific and December 31, 2020,market-wide adverse scenarios. Each liquidity stress test scenario applies defined assumptions to execute sources and uses of liquidity over varying planning horizons. The types of expected liquidity uses during a stressed event may include deposit attrition, contractual maturities, reductions in unsecured and secured funding, and increased draws on unfunded commitments. To mitigate liquidity outflows, Truist has identified sources of liquidity; however, access to these sources of liquidity could be affected within a stressed environment.

Truist maintains a liquidity buffer of cash on hand and highly liquid unencumbered securities that is sufficient to meet the projected net stressed cash-flow needs and maintain compliance with regulatory requirements. The liquidity buffer consists of unencumbered highly liquid assets and Truist’s liquid assetliquidity buffer is substantially the same in composition to what qualifies as HQLA under the LCR Rule.

Contingency Funding Plan

Truist has a percentcontingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and commitments, particularly in the event of total assets, was 24.5%a liquidity contraction. This plan is designed to examine and 20.2%, respectively.quantify the organization’s liquidity under the various internal liquidity stress scenarios and is periodically tested to assess the plan’s reliability. Additionally, the plan provides a framework for management and other critical teammates to follow in the event of a liquidity contraction or in anticipation of such an event. The plan addresses authority for activation and decision making, liquidity options, and the responsibilities of key departments in the event of a liquidity contraction.

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LCR and HQLA

The LCR rule directs large U.S. banking organizations to hold unencumbered high-quality liquid assetsrequires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient to withstand projected 30-daymeet its estimated total net cash outflows as defined underover a prospective 30 calendar-day period of stress. Eligible HQLA, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy operational requirements of the LCR rule. As of January 1, 2020, Truist isand Truist Bank are subject to the Category III reduced LCR requirements. Truist held average weighted eligible HQLA of $85.0 billion and Truist’s average LCR was 114%110% for the three months ended SeptemberJune 30, 2021, well above the regulatory minimum of 100%.2022.

Effective July 2021, Truist became subject to final rules implementing the NSFR, which are designed to ensure that banking organizations maintain a stable, long-term funding profile in relation to their asset composition and off-balance sheet activities. At SeptemberJune 30, 2021,2022, the Company was compliant with this requirement.

The ability to raise funding at competitive prices is affected by the rating agencies’ viewsSources of the Parent Company’s and Truist Bank’s credit quality, liquidity, capital, and earnings. Management meets with the rating agencies on a regular basis to discuss current outlooks. During the nine months ended September 30, 2021, Fitch Ratings, S&P Global Ratings, DBRS Morningstar, and Moody’s Investors Service all affirmed their ratings and provided updates to their rating outlooks for the Company and the Bank as further detailed below.Funds

On May 7, 2021, Fitch Ratings affirmedManagement believes current sources of liquidity are sufficient to meet Truist’s on- and off-balance sheet obligations. Truist funds its balance sheet through diverse sources of funding including client deposits, secured and unsecured capital markets funding, and shareholders’ equity. Truist Bank’s primary source of funding is client deposits. Continued access to client deposits is highly dependent on public confidence in the ratingsstability of the Parent Company and Truist Bank and revised the rating outlookits ability to “stable” from “negative.” The revisionreturn funds to the rating outlook reflects the rating agency’s view that the Company’s diverse business model and strategy execution will drive stable earnings performance that supports its credit ratings. The revised rating outlook also reflects increased confidence in a U.S. economic recovery, which reduces the likelihood of the downside scenario that was contemplatedclients when Fitch Ratings revised the ratings outlook to “negative” in April 2020.requested.

On May 24, 2021, S&P Global Ratings affirmed the ratings of the Parent Company and Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and revised the rating outlookterm Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to “positive” from “stable”, citing the stabilization in U.S. economic trendssecured borrowing sources including FHLB advances, repurchase agreements, and the easing industry risk inFRB discount window. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the U.S. banking system. The rating agency also noted that the positive outlook reflects the view that, as a merged entity, Truist’s better geographic diversity, increased market position, improved earnings power, and higher technology spending provide a sustainable competitive advantage, and that the financial and credit positives of the merged entity could outweigh the operational risks of integrating two large regional banks.FRB:
Table 21: Selected Liquidity Sources
(Dollars in millions)Jun 30, 2022Dec 31, 2021
Unused borrowing capacity:
FRB$48,122 $52,170 
FHLB41,379 49,244 
Available investment securities (after haircuts)100,620 116,600 
Available secured borrowing capacity190,121 218,014 
Eligible cash at the FRB16,746 14,714 
Total$206,867 $232,728 

OnAt June 10,30, 2022, Truist Bank’s available secured borrowing capacity represented approximately 5.1 times the amount of wholesale funding maturities in one-year or less. FHLB unused borrowing capacity was $41.4 billion at June 30, 2022, down from $49.2 billion at December 31, 2021 DBRS Morningstar confirmed the ratings of the Parent Company and Truist Bank and revised the trend for all ratingsprimarily due to “positive” from “stable,” citing substantial progress to date with the Merger integration and the rating agency’s view that the impact of the economic fallout from the coronavirus pandemic on Truist’s asset quality and capital will continue to be manageable.increases in short-term borrowings.

On July 12, 2021, Moody’s Investors Service upgraded Truist Bank’s long-term subordinated debt rating to A2 from A3, and downgraded Truist Bank’s long-term bank deposit rating to Aa3 from Aa2. The rating actions were driven by revisions to the rating agency’s advanced loss given failure analysis within its updated methodology published on July 9, 2021.

See the “Liquidity” section of MD&A in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional information regarding credit ratings.
Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, repurchases of common stock, and payments on long-term debt.

Truist Financial Corporation 65


See “Note 22. Parent Company Financial Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for additional information regarding dividends from subsidiaries and debt transactions.

Access to funding at the Parent Company is more sensitive to market disruptions. Therefore, Truist prudently manages cash levels at the Parent Company to cover a minimum of one year of projected cash outflows which includes unfunded external commitments, debt service, common and preferred dividends and scheduled debt maturities, without the benefit of any new cash inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, serving as a source of strength to Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At SeptemberJune 30, 20212022 and December 31, 2020,2021, the Parent Company had 3634 months and 4335 months, respectively, of cash on hand to satisfy projected cash outflows, and 2019 months and 2219 months, respectively, when including the payment of common stock dividends.

Truist Bank

Truist carefully manages liquidity risk at Truist Bank. Truist Bank’s primary source of funding is client deposits. Continued access to client deposits is highly dependent on public confidence in the stability of Truist Bank and its ability to return funds to clients when requested.

Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and term Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to secured borrowing sources including FHLB advances, repurchase agreements, and the FRB discount window. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the FRB:
Table 24: Liquidity Sources
(Dollars in millions)Sep 30, 2021Dec 31, 2020
Unused borrowing capacity:
FRB$51,457 $52,831 
FHLB52,459 52,274 
AFS securities120,462 93,623 
Available secured borrowing capacity224,378 198,728 
Eligible cash at the FRB14,674 13,437 
Total$239,052 $212,165 

At September 30, 2021, Truist Bank’s available secured borrowing capacity represented approximately 10.8 times the amount of wholesale funding maturities in one-year or less.

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Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet ArrangementsCredit Ratings

ReferCredit ratings are forward-looking opinions of rating agencies as to the Company’s ability to meet its financial commitments and repay its securities and obligations in accordance with their terms of issuance. Credit ratings influence both borrowing costs and access to the capital markets. The Company’s credit ratings are continuously monitored by the rating agencies and are subject to change at any time. As Truist seeks to maintain high-quality credit ratings, management meets with the major rating agencies on a regular basis to provide financial and business updates and to discuss current outlooks and trends. See Item 1A, “Risk Factors” in Truist’s Annual Report on Form 10-K for the year ended December 31, 20202021 for discussion with respect to Truist’s quantitativeadditional information regarding factors that influence credit ratings and qualitative disclosures about its fixedpotential risks that could materialize in the event of downgrade in the Company’s credit ratings.

The credit ratings and determinable contractual obligations. Truist’s commitments include investmentsoutlooks of Truist and Truist Bank are unchanged from those presented in affordable housing projects throughout its market area, renewable energy credits, private equity funds, derivative contracts to manage various financial risks, as well as other commitments. Refer to “Note 14. Commitments and Contingencies,” “Note 15. Fair Value Disclosures,” and “Note 16. Derivative Financial Instruments” in this Form 10-Q, and “Note 16. Commitments and Contingencies” of the Company’s 2021 Annual Report on Form 10-K for further discussion of these commitments.10-K.

Capital

The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. Truist’s principal goals related to the maintenance of capital are to provide adequate capital to support Truist’s risk profile consistent with the Board-approved risk appetite, provide financial flexibility to support future growth and client needs, comply with relevant laws, regulations, and supervisory guidance, achieve optimal credit ratings for Truist and its subsidiaries, remain a source of strength for its subsidiaries, and provide a competitive return to shareholders. Risk-based capital ratios, which include CET1 capital, Tier 1 capital, and Total capital are calculated based on regulatory guidance related to the measurement of capital and risk-weighted assets.

Truist regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plans and stress testing results to the banking regulators. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, management’s overriding policyobjective is to maintain capital at levels that are in excess of internal capital targets, which are above the regulatory “well capitalized” minimums. Management evaluateshas implemented stress capital ratio minimum targets to evaluate whether capital ratios calculated after the effect of alternative capital actions are likely to remain above minimums specified by the FRB for the annual CCAR process. Breaches of stressed minimum targets prompt a review of the planned capital actions included in Truist’s capital plan.
Table 25: Capital Requirements
Table 22: Capital RequirementsTable 22: Capital Requirements
Minimum CapitalWell CapitalizedMinimum Capital Plus Stress Capital Buffer (1) Minimum CapitalWell CapitalizedMinimum Capital Plus Stress Capital Buffer (1)
TruistTruist Bank Minimum CapitalTruistTruist BankMinimum Capital Plus Stress Capital Buffer (1)
CET1CET14.5 %NA6.5 %7.2 %CET14.5 %NA6.5 %7.0 %
Tier 1 capitalTier 1 capital6.0 6.0 %8.0 8.7 Tier 1 capital6.0 6.0 %8.0 8.5 
Total capitalTotal capital8.0 10.0 10.0 10.7 Total capital8.0 10.0 10.0 10.5 
Leverage ratioLeverage ratio4.0 NA5.0 NALeverage ratio4.0 NA5.0 NA
Supplementary leverage ratioSupplementary leverage ratio3.0 NANANASupplementary leverage ratio3.0 NANANA
(1)Reflects a SCB of 2.7%2.5% applicable to Truist through Septemberas of June 30, 2021.

Truist completed2022. Truist’s SCB, received in the 2021 CCAR process, and received a SCB of 2.5% for the periodis effective from October 1, 2021 to September 30, 2022. Under the 2022 CCAR process, Truist increased the common dividend 7% during the third quarter of 2021 to $0.48 per share. Truist continues to target a CET1 ratio of approximately 9.75% over the near-term. As previously communicated, the Company expects to be able to, with appropriate approvalswas notified its preliminary SCB requirement would remain 2.5% from its Board of Directors, deploy approximately $4 billion to $5 billion of capital (either in the form of share repurchases or acquisitions) between 3Q21 and 3Q22. During the third quarter of 2021, Truist completed the acquisition of Constellation Affiliated Partners and announced the acquisition of Service Finance, LLC, reducing the amount of capital deployment available for acquisitions or share repurchases to approximately $1 billion to $2 billionOctober 1, 2022 through 3Q22. Truist resumed repurchasing shares and expects to consume approximately $500 million of this capacity via share repurchases in the fourth quarter of 2021 reflecting the Company’s strong capital position, and the reduced integration risk with successful migration of heritage BB&T retail and commercial clients to the Truist ecosystem.September 30, 2023.

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Truist’s capital ratios are presented in the following table:
Table 26: Capital Ratios - Truist Financial Corporation
Table 23: Capital Ratios - Truist Financial CorporationTable 23: Capital Ratios - Truist Financial Corporation
(Dollars in millions, except per share data, shares in thousands)(Dollars in millions, except per share data, shares in thousands)Sep 30, 2021Dec 31, 2020(Dollars in millions, except per share data, shares in thousands)Jun 30, 2022Dec 31, 2021
Risk-based:Risk-based:(preliminary) Risk-based:(preliminary) 
CET1 capital to risk-weighted assetsCET1 capital to risk-weighted assets10.1 %10.0 %CET1 capital to risk-weighted assets9.2 %9.6 %
Tier 1 capital to risk-weighted assetsTier 1 capital to risk-weighted assets11.9 12.1 Tier 1 capital to risk-weighted assets10.8 11.3 
Total capital to risk-weighted assetsTotal capital to risk-weighted assets13.9 14.5 Total capital to risk-weighted assets12.6 13.2 
Leverage ratioLeverage ratio9.0 9.6 Leverage ratio8.6 8.7 
Supplementary leverage ratioSupplementary leverage ratio7.8 8.7 Supplementary leverage ratio7.3 7.4 
Non-GAAP capital measure (1):Non-GAAP capital measure (1):  Non-GAAP capital measure (1):  
Tangible common equity per common shareTangible common equity per common share$26.34 $26.78 Tangible common equity per common share$20.51 $25.47 
Calculation of tangible common equity (1):Calculation of tangible common equity (1):  Calculation of tangible common equity (1):  
Total shareholders’ equityTotal shareholders’ equity$68,900 $70,912 Total shareholders’ equity$62,999 $69,271 
Less:Less:  Less:  
Preferred stockPreferred stock6,673 8,048 Preferred stock6,673 6,673 
Noncontrolling interestsNoncontrolling interests— 105 Noncontrolling interests24 — 
Goodwill and intangible assets, net of deferred taxesGoodwill and intangible assets, net of deferred taxes27,066 26,629 Goodwill and intangible assets, net of deferred taxes29,095 28,772 
Tangible common equityTangible common equity$35,161 $36,130 Tangible common equity$27,207 $33,826 
Risk-weighted assetsRisk-weighted assets$383,073 $379,153 Risk-weighted assets$413,563 $390,886 
Common shares outstanding at end of periodCommon shares outstanding at end of period1,334,892 1,348,961 Common shares outstanding at end of period1,326,393 1,327,818 
(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.

Capital ratios remained strong compared to the regulatory requirements for well capitalized banks. For the nine months ended September 30, 2021,Truist paid $1.8 billion indeclared common stock dividends or $1.38of $0.48 per share during the second quarter of 2022 and completed $1.1 billion inrepurchased $250 million of common share repurchases.stock. The dividend and total payout ratios for the nine months endedsecond quarter of 2022 were 44% and 61%, respectively.

Truist completed the 2022 CCAR process and received the preliminary stress capital buffer requirement of 2.5% for the period October 1, 2022 to September 30, 2021 were 41%2023. Truist had the second-lowest CET1 erosion and 66%, respectively.loan loss rate among its peers under the severely adverse stress scenario. By August 31, 2022, the Federal Reserve will provide Truist also redeemed $1.4 billionwith its final stress capital buffer requirement. In July 2022, the Board of preferred stockDirectors approved an increase in the quarterly dividend of 8% to optimize$0.52 beginning in the Company’s capital position.third quarter of 2022.

Truist CET1 ratio was 9.2% as of June 30, 2022. The 20 basis point decline compared to the March 31, 2022 CET1 ratio primarily reflects strong loan growth and share repurchases.

Share Repurchase Activity
Table 27: Share Repurchase Activity
(Dollars in millions, except per share data, shares in thousands)Total Shares Repurchased (1)Average Price Paid Per Share (2)Total Shares Repurchased Pursuant to Publicly-Announced Plan (3)Maximum Remaining Dollar Value of Shares Available for Repurchase Pursuant to Publicly-Announced Plan
July 2021— $— — $3,065 
August 2021— — — 3,065 
September 2021— — — 3,065 
Total— — — 
Table 24: Share Repurchase Activity
(Dollars in millions, except per share data, shares in thousands)Total Number of Shares Purchased (1)Average Price Paid Per Share (2)Total Number of Shares Purchased as part of Publicly Announced Plans (3)Approximate Dollar Value of Shares that may yet be Purchased Under the Plans
April 1, 2022 to April 30, 2022— $— — $2,565 
May 1, 2022 to May 31, 2022— — — 2,565 
June 1, 2022 to June 30, 20225,108 48.94 5,108 2,315 
Total5,108 48.94 5,108 
(1)Includes shares exchanged or surrendered in connection with the exercise of equity-based awards under equity-based compensation plans.
(2)Excludes commissions.
(3)Pursuant to the 2020 Repurchase Plan, announced in December 2020, authorizing up to $2.0 billion of share repurchases beginning in the first quarter of 2021. In June 2021, the Board of Directors increased, effective July 1, 2021, the previous repurchase authority to effectuate repurchases up to an additional $2.2 billion in shares of the Company’s common stock through September 30, 2022 (up to $4.2 billion in aggregate amount). With the additional authorization, the Company has $3.1$2.3 billion remaining for share repurchases.

6866 Truist Financial Corporation


Critical Accounting Policies

The accounting and reporting policies of Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Truist’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities, and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in the consolidated financial position and/or consolidated results of operations, and related disclosures. The more critical policiesMaterial estimates that are particularly susceptible to significant change include accounting for the ACL, determiningdetermination of the ACL; determination of fair value of financial instruments,for securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets,assets; income taxes,taxes; and benefit obligations associated with pension and postretirement benefit plans.obligations. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. The critical accounting policies are discussed in MD&A in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1. Basis of Presentation” in Form 10-K for the year ended December 31, 2020.2021. Disclosures regarding the effects of new accounting pronouncements are included in the “Note 1. Basis of Presentation” in this report. Except for the item noted below, thereThere have been no other changes to the significant accounting policies during 2021.2022.

Intangible Assets

The Company performed a qualitative assessment of current events and circumstances, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, and a comparison of management’s forecast and assumptions to those used in its October 1, 2020 quantitative impairment test, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of September 30, 2021, and therefore no triggering event occurred that required a quantitative goodwill impairment test. If economic conditions deteriorate, or the COVID-19 pandemic’s effects prolong or worsen, it may be more-likely-than-not that the fair value of one or more of Truist’s reporting units falls below its respective carrying amount, which would require a quantitative goodwill impairment test.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the management of the Company, under the supervision and with the participation of the Company’s CEO and CFO, carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective.effective as of the end of the period covered by the report.

Changes in Internal Control over Financial Reporting

Management of Truist is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended SeptemberJune 30, 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the Litigation and Regulatory Matters section in “Note 14. Commitments and Contingencies,” which is incorporated by reference into this item.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. Additional risks and uncertainties not currently known to Truist or that management has deemed to be immaterial also may materially adversely affect Truist’s business, financial condition, or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Refer to the Share Repurchase Activity section in the MD&A, which is incorporated by reference into this item.

70 Truist Financial Corporation 67


ITEM 6. EXHIBITS
Exhibit No.DescriptionLocation
3.1Amended and Restated Bylaws of Truist Financial Corporation.
3.2Amended and Restated Bylaws of Truist Financial Corporation.
4.1Second Supplemental Indenture, dated as of June 6, 2022, between the Company and U.S. Bank Trust Company, National Association.
4.2Fourth Supplemental Indenture, dated as of July 28, 2022, between the Company and U.S. Bank Trust Company, National Association.
10.1EmploymentRetirement and Consulting Agreement bybetween the Company and between BB&T Insurance Holdings, Inc. and John Howard.Daryl N. Bible.
10.2First Amendment to Employment Agreement with John Howard.Truist Financial Corporation Management Change of Control, Severance, and Noncompetition Plan.
11Statement re computation of earnings per share.
31.1Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.Filed herewith.
101.SCHXBRL Taxonomy Extension Schema.Filed herewith.
101.CALXBRL Taxonomy Extension Calculation Linkbase.Filed herewith.
101.LABXBRL Taxonomy Extension Label Linkbase.Filed herewith.
101.PREXBRL Taxonomy Extension Presentation Linkbase.Filed herewith.
101.DEFXBRL Taxonomy Definition Linkbase.Filed herewith.
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits101).Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
TRUIST FINANCIAL CORPORATION
(Registrant)
Date:NovemberAugust 1, 20212022By:/s/ Daryl N. Bible
  Daryl N. Bible
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:NovemberAugust 1, 20212022By:/s/ Cynthia B. Powell
  Cynthia B. Powell
Executive Vice President and Corporate Controller
(Principal Accounting Officer)

72 Truist Financial Corporation 69