0000092230us-gaap:NondesignatedMemberus-gaap:InterestRateContractMemberus-gaap:OtherTradingMemberus-gaap:~~NondesignatedMemberus-gaap:MortgagesMember2023-06-30~~MortgagesMember2023-09-30

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: ~~June~~September 30, 2023

Commission File Number: 1-10853

TRUIST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)


North Carolina		56-0939887
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

214 North Tryon Street
Charlotte,	North Carolina	28202
(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 class

Trading Symbol

Name of each exchange on which registered

Common Stock, $5 par value

TFC

New York Stock Exchange

Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred Stock

TFC.PI

New 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 Stock

TFC.PJ

New York Stock Exchange

Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock

TFC.PO

New York Stock Exchange

Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred Stock

TFC.PR

New 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 filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller 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 ~~June~~September 30, 2023, ~~1,331,976,019~~1,333,668,077 shares of the registrant’s common stock, $5 par value, were outstanding.

TABLE OF CONTENTS

TRUIST FINANCIAL CORPORATION

FORM 10-Q

~~June~~September 30, 2023

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, Divestitures, and Noncontrolling Interests

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

3738

Note 17. Computation of EPS

4143

Note 18. Operating Segments

4243

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Regulatory Considerations

4445

Executive Overview

4446

Analysis of Results of Operations

4748

Analysis of Financial Condition

Risk Management

Liquidity

Capital

Share Repurchase activity

7173

Critical Accounting Policies

7273

Item 3.

Quantitative and Qualitative Disclosures About Market Risk (see Market Risk in MD&A)

6364

Item 4.

Controls and Procedures

7274

PART II - Other Information

Item 1.

Legal Proceedings

7275

Item 1A.

Risk Factors

7275

Item 2.

Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

7275

Item 3.

Defaults Upon Senior Securities - (none)

Item 4.

Mine Safety Disclosures - (not applicable)

Item 5.

Other Information

7275

Item 6.

Exhibits

7376

Glossary of Defined Terms

The following terms may be used throughout this report, including the consolidated financial statements and related notes.


Term			Definition
ACL			Allowance for credit losses
AFS			Available-for-sale
Agency MBS			Mortgage-backed securities issued by a U.S. government agency or GSE
ALLL			Allowance for loan and lease losses


AOCI			Accumulated other comprehensive income (loss)





Board			Truist’s Board of Directors


C&CB			Corporate and Commercial Banking, an operating segment

CB&W			Consumer Banking and Wealth, an operating segment
CCAR			Comprehensive Capital Analysis and Review


CDI			Core deposit intangible
CECL			Current expected credit loss model
CEO			Chief Executive Officer
CFO			Chief Financial Officer
CFTC			Commodity Futures Trading Commission
~~CFO~~			~~Chief Financial Officer~~
CET1			Common equity tier 1



Company			Truist Financial Corporation and its subsidiaries (interchangeable with “Truist” below)
COVID-19			Coronavirus disease 2019

CRE			Commercial real estate


DEI			Diversity, Equity & Inclusion


DTA			Deferred tax asset






EPS			Earnings per common share



Exchange Act			Securities Exchange Act of 1934, as amended

FDIC			Federal Deposit Insurance Corporation


FHLB			Federal Home Loan Bank
FHLMC			Federal Home Loan Mortgage Corporation

FNMA			Federal National Mortgage Association
FRB			Board of Governors of the Federal Reserve System

GAAP			Accounting principles generally accepted in the United States of America
GDP			Gross Domestic Product


Grandbridge			Grandbridge Real Estate Capital, LLC
GSE			U.S. government-sponsored enterprise
HFI			Held for investment

HQLA			High-quality liquid assets
HTM			Held-to-maturity

IH			Truist Insurance Holdings, LLC, an operating segment
IPV			Independent price verification


ISDA			International Swaps and Derivatives Association, Inc.
LCR			Liquidity Coverage Ratio
LHFS			Loans held for sale
LIBOR			London Interbank Offered Rate
LIBOR Act			Adjustable Interest Rate (LIBOR) Act
LOCOM			Lower of cost or market
Market Risk Rule			Market risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBS			Mortgage-backed securities
MD&A			Management’s Discussion and Analysis of Financial Condition and Results of Operations
Merger			Merger of BB&T Corporation and SunTrust Banks, Inc effective December 6, 2019

MRO			Model Risk Oversight
MSR			Mortgage servicing right

NA			Not applicable


NIM			Net interest margin, computed on a TE basis

NPA			Nonperforming asset
NPL			Nonperforming loan
NSFR			Net stable funding ratio
NYSE			New York Stock Exchange
OAS			Option adjusted spread
OCC			Office of the Comptroller of the Currency
OCI			Other comprehensive income (loss)

OPEB			Other post-employment benefit
OREO			Other real estate owned
OT&C			Other, Treasury and Corporate

Parent Company			Truist Financial Corporation, the parent company of Truist Bank and other subsidiaries

PCD			Purchased credit deteriorated loans






ROU assets			Right-of-use assets


RUFC			Reserve for unfunded lending commitments
S&P			Standard & Poor’s

SBIC			Small Business Investment Company
SCB			Stress Capital Buffer

Truist Financial Corporation 1


Term			Definition
SEC			Securities and Exchange Commission
SOFR			Secured Overnight Financing Rate


TBA			To-be-announced
TBVPS			Tangible book value per common share

TDR			Troubled debt restructuring
TE			Taxable-equivalent

TRS			Total Return Swap
Truist			Truist Financial Corporation and its subsidiaries (interchangeable with the “Company” above)
Truist Bank			Truist Bank, formerly Branch Banking and Trust Company
U.S.			United States of America
U.S. Treasury			United States Department of the Treasury
UPB			Unpaid principal balance
USAA			United Services Automobile Association

VaR			Value-at-risk
VIE			Variable 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, 2022:

•~~changes in~~current and future economic and market conditions, such as the interest rate environment, including the replacement of LIBOR as an interest rate ~~benchmark,~~benchmark; U.S. fiscal debt, budget and tax matters; geopolitical matters (including conflicts in the Ukraine, Israel, and the Gaza Strip); and any slow down in global economic growth 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;

•the monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, could have a material adverse effect on the economy and Truist’s profitability;

•regulatory and supervisory matters, litigation, or other legal actions 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 standards, regulatory and supervisory standards, including with respect to climate, deposit, capital, liquidity, and long-term debt requirements, which may become more stringent in light of recent turmoil in the banking industry and results of regulatory examinations, which may adversely affect Truist’s ~~revenue~~financial condition and results of operations;

•increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance could damage its reputation and adversely impact business and revenues;

•Truist may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, ~~the value of assets~~including FDIC insurance premiums, and ~~obligations, including~~could affect our ~~portfolio of investment securities,~~ability to attract and ~~the availability~~retain depositors and ~~cost of capital, cash flows, and liquidity;~~to borrow or raise capital;

•Truist is subject to credit risk by lending or committing to lend money, 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, and may suffer losses if the value of collateral declines in stressed market conditions;

•inability to access short-term funding or liquidity, loss of client deposits, or changes in Truist’s credit ratings could increase the cost of funding, limit access to capital markets, or negatively affect Truist’s overall liquidity or capitalization;

•Truist may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect our ability to attract and retain depositors and to borrow or raise capital;

•general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, including as a result of supply chain disruptions, inflationary pressures and labor shortages, and instability in global geopolitical matters, including due to an outbreak or escalation of hostilities, 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;

•unexpected outflows of uninsured deposits may require usTruist to sell investment securities at a loss;

•a loss of value of ~~our~~Truist’s investment portfolio could negatively impact market perceptions of Truist and could lead to deposit withdrawals;

•~~the effects of COVID-19 adversely impacted the Company’s operations and financial performance and similar adverse impacts resulting from pandemics could occur in future periods;~~

•risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk;

•there are risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators;

•deposit attrition, client loss, or revenue loss following completed mergers or acquisitions may be greater than anticipated;

•Truist could fail to execute on strategic or operational plans, including the ability to ~~successfully complete or integrate mergers and acquisitions;~~achieve its cost saves targets;

•increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards or compliance costs, and (ii) products and services offered by non-bank financial technology companies, which 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~~we fail to anticipate client expectations or because ~~its~~our 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 could damage Truist’s reputation and adversely impact business and revenues, including the effects of social media on market perceptions of Truist and banks generally;

•regulatory matters, litigation or other legal actions may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences;

•Truist faces substantial legal and operational risks in safeguarding personal information;

•evolving legislative, accounting and regulatory standards, including with respect to climate, capital, and liquidity requirements, which may become more stringent in light of recent market events, such as long-term debt requirements, and results of regulatory examinations may adversely affect Truist’s financial condition and results of operations;

•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;~~time or if there is a decline in a reporting unit’s forecasted net income;

•Truist faces 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;

•there are 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 teammates, and if these individuals leave or change roles without effective replacements, Truist’s operations could be adversely impacted, which could be exacerbated in the increased work-from-home environment as job markets may be less constrained by physical geography;

•Truist’s operations rely on its ability, and the ability of key external parties, to maintain appropriate-staffed workforces, and on the competence, trustworthiness, health and safety of teammates;

•Truist faces the risk of 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, cyberattacks, which have increased in frequency with 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.~~services; and

•the effects of COVID-19 adversely impacted the Company’s operations and financial performance and similar adverse impacts resulting from pandemics could occur in future periods.

Readers are cautioned not to place undue reliance on these forward-looking statements, which represented management’s views on the date they were 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)	Jun 30, 2023		Dec 31, 2022		Unaudited (Dollars in millions, except per share data, shares in thousands)	Sep 30, 2023		Dec 31, 2022
Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	4,782	$	5,379	Cash and due from banks	$	5,156	$	5,379
Interest-bearing deposits with banks	Interest-bearing deposits with banks	25,228		16,042		Interest-bearing deposits with banks	24,676		16,042
Securities borrowed or purchased under agreements to resell	Securities borrowed or purchased under agreements to resell	2,315		3,181		Securities borrowed or purchased under agreements to resell	2,018		3,181
Trading assets at fair value	Trading assets at fair value	4,097		4,905		Trading assets at fair value	4,384		4,905
AFS securities at fair value	AFS securities at fair value	68,965		71,801		AFS securities at fair value	65,117		71,801
HTM securities (fair value of $45,956 and $47,791, respectively)		55,958		57,713
LHFS (including $1,645 and $1,065 at fair value, respectively)		1,923		1,444
HTM securities (fair value of $42,501 and $47,791, respectively)						HTM securities (fair value of $42,501 and $47,791, respectively)	54,942		57,713
LHFS (including $1,269 and $1,065 at fair value, respectively)						LHFS (including $1,269 and $1,065 at fair value, respectively)	1,413		1,444
Loans and leases (including $16 and $18 at fair value, respectively)	Loans and leases (including $16 and $18 at fair value, respectively)	322,092		325,991		Loans and leases (including $16 and $18 at fair value, respectively)	315,699		325,991
ALLL	ALLL	(4,606)		(4,377)		ALLL	(4,693)		(4,377)
Loans and leases, net of ALLL	Loans and leases, net of ALLL	317,486		321,614		Loans and leases, net of ALLL	311,006		321,614
Premises and equipment	Premises and equipment	3,453		3,605		Premises and equipment	3,394		3,605
Goodwill	Goodwill	27,013		27,013		Goodwill	26,979		27,013
CDI and other intangible assets	CDI and other intangible assets	3,403		3,672		CDI and other intangible assets	3,292		3,672
Loan servicing rights at fair value	Loan servicing rights at fair value	3,497		3,758		Loan servicing rights at fair value	3,537		3,758
Other assets (including $1,715 and $1,582 at fair value, respectively)		36,429		35,128
Other assets (including $1,079 and $1,582 at fair value, respectively)						Other assets (including $1,079 and $1,582 at fair value, respectively)	36,793		35,128
Total assets	Total assets	$	554,549	$	555,255	Total assets	$	542,707	$	555,255
Liabilities	Liabilities					Liabilities
Noninterest-bearing deposits	Noninterest-bearing deposits	$	121,831	$	135,742	Noninterest-bearing deposits	$	116,674	$	135,742
Interest-bearing deposits	Interest-bearing deposits	284,212		277,753		Interest-bearing deposits	283,350		277,753
Short-term borrowings (including $1,585 and $1,551 at fair value, respectively)		24,456		23,422
Short-term borrowings (including $1,718 and $1,551 at fair value, respectively)						Short-term borrowings (including $1,718 and $1,551 at fair value, respectively)	23,485		23,422
Long-term debt	Long-term debt	44,749		43,203		Long-term debt	41,232		43,203
Other liabilities (including $3,128 and $2,971 at fair value, respectively)		15,620		14,598
Other liabilities (including $3,474 and $2,971 at fair value, respectively)						Other liabilities (including $3,474 and $2,971 at fair value, respectively)	15,959		14,598
Total liabilities	Total liabilities	490,868		494,718		Total liabilities	480,700		494,718
Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Preferred stock	Preferred stock	6,673		6,673		Preferred stock	6,673		6,673
Common stock, $5 par value	Common stock, $5 par value	6,660		6,634		Common stock, $5 par value	6,668		6,634
Additional paid-in capital	Additional paid-in capital	35,990		34,544		Additional paid-in capital	36,114		34,544
Retained earnings	Retained earnings	27,577		26,264		Retained earnings	27,944		26,264
AOCI, net of deferred income taxes	AOCI, net of deferred income taxes	(13,374)		(13,601)		AOCI, net of deferred income taxes	(15,559)		(13,601)
Noncontrolling interests	Noncontrolling interests	155		23		Noncontrolling interests	167		23
Total shareholders’ equity	Total shareholders’ equity	63,681		60,537		Total shareholders’ equity	62,007		60,537
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	554,549	$	555,255	Total liabilities and shareholders’ equity	$	542,707	$	555,255
Common shares outstanding	Common shares outstanding	1,331,976		1,326,829		Common shares outstanding	1,333,668		1,326,829
Common shares authorized	Common shares authorized	2,000,000		2,000,000		Common shares authorized	2,000,000		2,000,000
Preferred shares outstanding	Preferred shares outstanding	223		223		Preferred shares outstanding	223		223
Preferred shares authorized	Preferred shares authorized	5,000		5,000		Preferred shares authorized	5,000		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)	Unaudited (Dollars in millions, except per share data, shares in thousands)	Three Months Ended June 30,				Six Months Ended June 30,				Unaudited (Dollars in millions, except per share data, shares in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022				Unaudited (Dollars in millions, except per share data, shares in thousands)	2023		2022		2023		2022
Interest Income	Interest Income
Interest and fees on loans and leases	Interest and fees on loans and leases	$	4,915	$	2,898	$	9,571	$	5,542			Interest and fees on loans and leases	$	4,976	$	3,490	$	14,547	$	9,032
Interest on securities	Interest on securities	749		675		1,501		1,315				Interest on securities	763		709		2,264		2,024
Interest on other earning assets	Interest on other earning assets	512		100		889		173				Interest on other earning assets	490		170		1,379		343
Total interest income	Total interest income	6,176		3,673		11,961		7,030				Total interest income	6,229		4,369		18,190		11,399
Interest Expense	Interest Expense											Interest Expense
Interest on deposits	Interest on deposits	1,506		99		2,631		131				Interest on deposits	1,831		331		4,462		462
Interest on long-term debt	Interest on long-term debt	734		137		1,248		269				Interest on long-term debt	491		190		1,739		459
Interest on other borrowings	Interest on other borrowings	311		30		589		40				Interest on other borrowings	343		103		932		143
Total interest expense	Total interest expense	2,551		266		4,468		440				Total interest expense	2,665		624		7,133		1,064
Net Interest Income	Net Interest Income	3,625		3,407		7,493		6,590				Net Interest Income	3,564		3,745		11,057		10,335
Provision for credit losses	Provision for credit losses	538		171		1,040		76				Provision for credit losses	497		234		1,537		310
Net Interest Income After Provision for Credit Losses	Net Interest Income After Provision for Credit Losses	3,087		3,236		6,453		6,514				Net Interest Income After Provision for Credit Losses	3,067		3,511		9,520		10,025
Noninterest Income	Noninterest Income											Noninterest Income
Insurance income	Insurance income	935		825		1,748		1,552				Insurance income	793		725		2,541		2,277
Wealth management income	Wealth management income	330		337		669		680				Wealth management income	343		334		1,012		1,014
Investment banking and trading income	Investment banking and trading income	211		255		472		516				Investment banking and trading income	185		222		657		738
Service charges on deposits	Service charges on deposits	240		254		489		506				Service charges on deposits	152		263		641		769
Card and payment related fees	Card and payment related fees	236		246		466		458				Card and payment related fees	238		241		704		699
Mortgage banking income	Mortgage banking income	99		100		241		221				Mortgage banking income	102		122		343		343
Lending related fees	Lending related fees	86		100		192		185				Lending related fees	102		80		294		265
Operating lease income	Operating lease income	64		66		131		124				Operating lease income	63		66		194		190

Securities gains (losses)	Securities gains (losses)	—		(1)		—		(70)				Securities gains (losses)	—		(1)		—		(71)
Other income	Other income	92		66		119		218				Other income	130		50		249		268
Total noninterest income	Total noninterest income	2,293		2,248		4,527		4,390				Total noninterest income	2,108		2,102		6,635		6,492
Noninterest Expense	Noninterest Expense											Noninterest Expense
Personnel expense	Personnel expense	2,256		2,102		4,437		4,153				Personnel expense	2,200		2,116		6,637		6,269
Professional fees and outside processing	Professional fees and outside processing	352		349		666		712				Professional fees and outside processing	317		352		983		1,064
Software expense	Software expense	237		234		451		466				Software expense	238		225		689		691
Net occupancy expense	Net occupancy expense	180		181		363		389				Net occupancy expense	180		176		543		565
Amortization of intangibles	Amortization of intangibles	131		143		267		280				Amortization of intangibles	130		140		397		420
Equipment expense	Equipment expense	92		114		202		232				Equipment expense	97		122		299		354
Marketing and customer development	Marketing and customer development	79		93		157		177				Marketing and customer development	78		105		235		282
Operating lease depreciation	Operating lease depreciation	44		47		90		95				Operating lease depreciation	43		45		133		140

Regulatory costs	Regulatory costs	73		44		148		79				Regulatory costs	77		52		225		131
Merger-related and restructuring charges	Merger-related and restructuring charges	54		121		117		337				Merger-related and restructuring charges	75		62		192		399

Other expense	Other expense	250		152		541		334				Other expense	312		218		853		552
Total noninterest expense	Total noninterest expense	3,748		3,580		7,439		7,254				Total noninterest expense	3,747		3,613		11,186		10,867
Earnings	Earnings											Earnings
Income before income taxes	Income before income taxes	1,632		1,904		3,541		3,650				Income before income taxes	1,428		2,000		4,969		5,650
Provision for income taxes	Provision for income taxes	287		372		681		702				Provision for income taxes	245		363		926		1,065
Net income	Net income	1,345		1,532		2,860		2,948				Net income	1,183		1,637		4,043		4,585
Noncontrolling interests	Noncontrolling interests	36		1		38		2				Noncontrolling interests	6		4		44		6

Preferred stock dividends and other	Preferred stock dividends and other	75		77		178		165				Preferred stock dividends and other	106		97		284		262
Net income available to common shareholders	Net income available to common shareholders	$	1,234	$	1,454	$	2,644	$	2,781			Net income available to common shareholders	$	1,071	$	1,536	$	3,715	$	4,317
Basic EPS	Basic EPS	$	0.93	$	1.09	$	1.99	$	2.09			Basic EPS	$	0.80	$	1.16	$	2.79	$	3.25
Diluted EPS	Diluted EPS	0.92		1.09		1.98		2.08				Diluted EPS	0.80		1.15		2.77		3.22
Basic weighted average shares outstanding	Basic weighted average shares outstanding	1,331,953		1,330,160		1,330,286		1,329,601				Basic weighted average shares outstanding	1,333,522		1,326,539		1,331,377		1,328,569
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	1,337,307		1,338,864		1,338,346		1,340,225				Diluted weighted average shares outstanding	1,340,574		1,336,659		1,339,041		1,339,071

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 June 30,				Six Months Ended June 30,				Unaudited (Dollars in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022				Unaudited (Dollars in millions)	2023		2022		2023		2022
Net income	Net income	$	1,345	$	1,532	$	2,860	$	2,948				$	1,183	$	1,637	$	4,043	$	4,585
OCI, net of tax:	OCI, net of tax:											OCI, net of tax:
Net change in net pension and postretirement costs	Net change in net pension and postretirement costs	8		5		(6)		13				Net change in net pension and postretirement costs	23		6		17		19
Net change in cash flow hedges	Net change in cash flow hedges	(317)		49		(192)		54				Net change in cash flow hedges	(255)		(139)		(447)		(85)
Net change in AFS securities	Net change in AFS securities	(550)		(2,849)		303		(7,838)				Net change in AFS securities	(2,015)		(3,051)		(1,712)		(10,889)
Net change in HTM securities	Net change in HTM securities	65		92		120		136				Net change in HTM securities	63		80		183		216
Other, net	Other, net	1		(2)		2		(1)				Other, net	(1)		(6)		1		(7)
Total OCI, net of tax	Total OCI, net of tax	(793)		(2,705)		227		(7,636)				Total OCI, net of tax	(2,185)		(3,110)		(1,958)		(10,746)
Total OCI	Total OCI	$	552	$	(1,173)	$	3,087	$	(4,688)			Total OCI	$	(1,002)	$	(1,473)	$	2,085	$	(6,161)
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 costs	Net change in net pension and postretirement costs	$	3	$	3	$	—	$	5			Net change in net pension and postretirement costs	$	—	$	1	$	—	$	6
Net change in cash flow hedges	Net change in cash flow hedges	(97)		15		(59)		16				Net change in cash flow hedges	(79)		(42)		(138)		(26)
Net change in AFS securities	Net change in AFS securities	(187)		(867)		75		(2,380)				Net change in AFS securities	(618)		(927)		(543)		(3,307)
Net change in HTM securities	Net change in HTM securities	17		27		32		40				Net change in HTM securities	19		25		51		65

Total income taxes related to OCI	Total income taxes related to OCI	$	(264)	$	(822)	$	48	$	(2,319)			Total income taxes related to OCI	$	(678)	$	(943)	$	(630)	$	(3,262)

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 Stock	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		AOCI		Noncontrolling Interests		Total Shareholders’ Equity		Unaudited (Dollars in millions, shares in thousands)	Shares of Common Stock	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		AOCI		Noncontrolling Interests		Total Shareholders’ Equity
Balance, April 1, 2022		1,331,414	$	6,673	$	6,657	$	34,539	$	23,687	$	(6,535)	$	23	$	65,044
Balance, July 1, 2022																	Balance, July 1, 2022	1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999
Net income	Net income	—	—		—		—		1,531		—		1		1,532		Net income	—	—		—		—		1,633		—		4		1,637
OCI	OCI	—	—		—		—		—		(2,705)		—		(2,705)		OCI	—	—		—		—		—		(3,110)		—		(3,110)

Issued in connection with equity awards, net	Issued in connection with equity awards, net	87	—		1		(1)		(2)		—		—		(2)		Issued in connection with equity awards, net	373	—		2		(5)		(1)		—		—		(4)

Repurchase of common stock		(5,108)	—		(26)		(224)		—		—		—		(250)

Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—		—		(639)		—		—		(639)		Cash dividends declared on common stock	—	—		—		—		(691)		—		—		(691)
Cash dividends declared on preferred stock	Cash dividends declared on preferred stock	—	—		—		—		(77)		—		—		(77)		Cash dividends declared on preferred stock	—	—		—		—		(97)		—		—		(97)
Equity-based compensation expense	Equity-based compensation expense	—	—		—		96		—		—		—		96		Equity-based compensation expense	—	—		—		82		—		—		—		82

Balance, June 30, 2022		1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999
Balance, April 1, 2023		1,331,918	$	6,673	$	6,660	$	34,582	$	27,038	$	(12,581)	$	22	$	62,394
Other, net																	Other, net	—	—		—		—		—		—		(5)		(5)
Balance, September 30, 2022																	Balance, September 30, 2022	1,326,766	$	6,673	$	6,634	$	34,487	$	25,344	$	(12,350)	$	23	$	60,811
Balance, July 1, 2023																	Balance, July 1, 2023	1,331,976	$	6,673	$	6,660	$	35,990	$	27,577	$	(13,374)	$	155	$	63,681
Net income	Net income	—	—		—		—		1,309		—		36		1,345		Net income	—	—		—		—		1,177		—		6		1,183
OCI	OCI	—	—		—		—		—		(793)		—		(793)		OCI	—	—		—		—		—		(2,185)		—		(2,185)
Received in connection with IH minority stake sale, net		—	—		—		1,317		—		—		96		1,413

Issued in connection with equity awards, net	Issued in connection with equity awards, net	58	—		—		1		(2)		—		—		(1)		Issued in connection with equity awards, net	1,692	—		8		43		(4)		—		—		47

Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—		—		(693)		—		—		(693)		Cash dividends declared on common stock	—	—		—		—		(693)		—		—		(693)
Cash dividends declared on preferred stock	Cash dividends declared on preferred stock	—	—		—		—		(75)		—		—		(75)		Cash dividends declared on preferred stock	—	—		—		—		(106)		—		—		(106)
Equity-based compensation expense	Equity-based compensation expense	—	—		—		90		—		—		—		90		Equity-based compensation expense	—	—		—		78		—		—		—		78
Other, net	Other, net	—	—		—		—		—		—		1		1		Other, net	—	—		—		3		(7)		—		6		2
Balance, June 30, 2023		1,331,976	$	6,673	$	6,660	$	35,990	$	27,577	$	(13,374)	$	155	$	63,681
Balance, September 30, 2023																	Balance, September 30, 2023	1,333,668	$	6,673	$	6,668	$	36,114	$	27,944	$	(15,559)	$	167	$	62,007

Balance, January 1, 2022	Balance, January 1, 2022	1,327,818	$	6,673	$	6,639	$	34,565	$	22,998	$	(1,604)	$	—	$	69,271	Balance, January 1, 2022	1,327,818	$	6,673	$	6,639	$	34,565	$	22,998	$	(1,604)	$	—	$	69,271
Net income	Net income	—	—		—		—		2,946		—		2		2,948		Net income	—	—		—		—		4,579		—		6		4,585
OCI	OCI	—	—		—		—		—		(7,636)		—		(7,636)		OCI	—	—		—		—		—		(10,746)		—		(10,746)

Issued in connection with equity awards, net	Issued in connection with equity awards, net	3,683	—		19		(107)		(3)		—		—		(91)		Issued in connection with equity awards, net	4,056	—		21		(112)		(4)		—		—		(95)

Repurchase of common stock	Repurchase of common stock	(5,108)	—		(26)		(224)		—		—		—		(250)		Repurchase of common stock	(5,108)	—		(26)		(224)		—		—		—		(250)

Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—		—		(1,276)		—		—		(1,276)		Cash dividends declared on common stock	—	—		—		—		(1,967)		—		—		(1,967)
Cash dividends declared on preferred stock	Cash dividends declared on preferred stock	—	—		—		—		(165)		—		—		(165)		Cash dividends declared on preferred stock	—	—		—		—		(262)		—		—		(262)
Equity-based compensation expense	Equity-based compensation expense	—	—		—		176		—		—		—		176		Equity-based compensation expense	—	—		—		258		—		—		—		258

Other, net	Other, net	—	—		—		—		—		—		22		22		Other, net	—	—		—		—		—		—		17		17
Balance, June 30, 2022		1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999
Balance, September 30, 2022																	Balance, September 30, 2022	1,326,766	$	6,673	$	6,634	$	34,487	$	25,344	$	(12,350)	$	23	$	60,811
Balance, January 1, 2023	Balance, January 1, 2023	1,326,829	$	6,673	$	6,634	$	34,544	$	26,264	$	(13,601)	$	23	$	60,537	Balance, January 1, 2023	1,326,829	$	6,673	$	6,634	$	34,544	$	26,264	$	(13,601)	$	23	$	60,537
Net income	Net income	—	—		—		—		2,822		—		38		2,860		Net income	—	—		—		—		3,999		—		44		4,043
OCI	OCI	—	—		—		—		—		227		—		227		OCI	—	—		—		—		—		(1,958)		—		(1,958)
Received in connection with IH minority stake sale, net	Received in connection with IH minority stake sale, net	—	—		—		1,317		—		—		96		1,413		Received in connection with IH minority stake sale, net	—	—		—		1,317		—		—		96		1,413
Issued in connection with equity awards, net	Issued in connection with equity awards, net	5,147	—		26		(44)		(3)		—		—		(21)		Issued in connection with equity awards, net	6,839	—		34		(1)		(7)		—		—		26

Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—		—		(1,384)		—		—		(1,384)		Cash dividends declared on common stock	—	—		—		—		(2,077)		—		—		(2,077)
Cash dividends declared on preferred stock	Cash dividends declared on preferred stock	—	—		—		—		(178)		—		—		(178)		Cash dividends declared on preferred stock	—	—		—		—		(284)		—		—		(284)
Equity-based compensation expense	Equity-based compensation expense	—	—		—		173		—		—		—		173		Equity-based compensation expense	—	—		—		251		—		—		—		251

Other, net	Other, net	—	—		—		—		56		—		(2)		54		Other, net	—	—		—		3		49		—		4		56
Balance, June 30, 2023		1,331,976	$	6,673	$	6,660	$	35,990	$	27,577	$	(13,374)	$	155	$	63,681
Balance, September 30, 2023																	Balance, September 30, 2023	1,333,668	$	6,673	$	6,668	$	36,114	$	27,944	$	(15,559)	$	167	$	62,007

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 (Dollars in millions)	Unaudited (Dollars in millions)	Six Months Ended June 30,				Unaudited (Dollars in millions)	Nine Months Ended September 30,
		2023		2022				Unaudited (Dollars in millions)	2023		2022
Cash Flows From Operating Activities:	Cash Flows From Operating Activities:
Net income	Net income	$	2,860	$	2,948			Net income	$	4,043	$	4,585
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 losses	Provision for credit losses	1,040		76				Provision for credit losses	1,537		310

Depreciation	Depreciation	350		397				Depreciation	522		581

Amortization of intangibles	Amortization of intangibles	267		280				Amortization of intangibles	397		420

Securities (gains) losses	Securities (gains) losses	—		70				Securities (gains) losses	—		71
Net change in operating assets and liabilities:	Net change in operating assets and liabilities:							Net change in operating assets and liabilities:
LHFS	LHFS	(580)		395				LHFS	(204)		1,676
Loan servicing rights	Loan servicing rights	(45)		(638)				Loan servicing rights	(187)		(850)
Pension asset	Pension asset	(1,388)		(468)				Pension asset	(1,425)		(526)
Derivative assets and liabilities	Derivative assets and liabilities	414		2,143				Derivative assets and liabilities	852		3,850
Trading assets	Trading assets	808		(807)				Trading assets	521		(1,441)
Other assets and other liabilities	Other assets and other liabilities	592		(228)				Other assets and other liabilities	262		(247)

Other, net	Other, net	(470)		(391)				Other, net	(63)		(882)
Net cash from operating activities	Net cash from operating activities	3,848		3,777				Net cash from operating activities	6,255		7,547
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:							Cash Flows From Investing Activities:
Proceeds from sales of AFS securities	Proceeds from sales of AFS securities	4		3,198				Proceeds from sales of AFS securities	15		3,311
Proceeds from maturities, calls and paydowns of AFS securities	Proceeds from maturities, calls and paydowns of AFS securities	3,518		8,285				Proceeds from maturities, calls and paydowns of AFS securities	6,340		10,619
Purchases of AFS securities	Purchases of AFS securities	(282)		(8,658)				Purchases of AFS securities	(2,261)		(9,025)
Proceeds from maturities, calls and paydowns of HTM securities	Proceeds from maturities, calls and paydowns of HTM securities	1,918		2,567				Proceeds from maturities, calls and paydowns of HTM securities	3,023		4,006
Purchases of HTM securities	Purchases of HTM securities	—		(3,020)				Purchases of HTM securities	—		(3,020)
Originations and purchases of loans and leases, net of sales and principal collected	Originations and purchases of loans and leases, net of sales and principal collected	3,258		(13,356)				Originations and purchases of loans and leases, net of sales and principal collected	9,332		(24,135)

Net cash received (paid) for FHLB stock								Net cash received (paid) for FHLB stock	(5)		(609)
Net cash received (paid) for securities borrowed or purchased under agreements to resell	Net cash received (paid) for securities borrowed or purchased under agreements to resell	866		1,378				Net cash received (paid) for securities borrowed or purchased under agreements to resell	1,163		1,460

Net cash received (paid) for asset acquisitions, business combinations, and divestitures	Net cash received (paid) for asset acquisitions, business combinations, and divestitures	—		(505)				Net cash received (paid) for asset acquisitions, business combinations, and divestitures	(15)		(1,325)

Other, net	Other, net	235		(694)				Other, net	273		(491)
Net cash from investing activities	Net cash from investing activities	9,517		(10,805)				Net cash from investing activities	17,865		(19,209)
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:							Cash Flows From Financing Activities:
Net change in deposits	Net change in deposits	(7,452)		8,275				Net change in deposits	(13,471)		(490)
Net change in short-term borrowings	Net change in short-term borrowings	1,003		8,444				Net change in short-term borrowings	47		20,395
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	40,884		943				Proceeds from issuance of long-term debt	48,172		3,461
Repayment of long-term debt	Repayment of long-term debt	(39,152)		(5,831)				Repayment of long-term debt	(49,609)		(6,991)
Repurchase of common stock	Repurchase of common stock	—		(250)				Repurchase of common stock	—		(250)

Cash dividends paid on common stock	Cash dividends paid on common stock	(1,384)		(1,276)				Cash dividends paid on common stock	(2,077)		(1,967)
Cash dividends paid on preferred stock	Cash dividends paid on preferred stock	(178)		(165)				Cash dividends paid on preferred stock	(284)		(262)
Net cash received (paid) for hedge unwinds	Net cash received (paid) for hedge unwinds	(378)		(198)				Net cash received (paid) for hedge unwinds	(424)		(198)
Net cash from IH minority stake sale	Net cash from IH minority stake sale	1,922		—				Net cash from IH minority stake sale	1,922		—
Other, net	Other, net	(41)		(96)				Other, net	15		(106)
Net cash from financing activities	Net cash from financing activities	(4,776)		9,846				Net cash from financing activities	(15,709)		13,592
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	8,589		2,818				Net Change in Cash and Cash Equivalents	8,411		1,930
Cash and Cash Equivalents, January 1	Cash and Cash Equivalents, January 1	21,421		20,295				Cash and Cash Equivalents, January 1	21,421		20,295
Cash and Cash Equivalents, June 30		$	30,010	$	23,113
Cash and Cash Equivalents, September 30								Cash and Cash Equivalents, September 30	$	29,832	$	22,225
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 expense	Interest expense	$	4,041	$	430			Interest expense	$	6,430	$	982
Income taxes	Income taxes	560		418				Income taxes	785		422

Noncash investing activities:	Noncash investing activities:							Noncash investing activities:

Transfer of AFS securities to HTM	Transfer of AFS securities to HTM	—		59,436				Transfer of AFS securities to HTM	—		59,436

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, 2022 should be referred to in connection with these unaudited interim consolidated financial statements. The Company updated its accounting policies in connection with recently adopted accounting standards, which are described in this footnote. There were no other 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, 2022 that could have a material effect on the Company’s financial statements.

Reclassifications

During the first quarter of 2023, Truist reclassified certain portfolios within the consumer portfolio segment to delineate home equity from other consumer portfolios. Additionally, Truist realigned Prime Rate Premium Finance Corporation, which includes AFCO Credit Corporation and CAFO Holding Company, into the C&CB segment from the IH segment. Prior period results have been revised to conform to the current presentation.

During the second quarter of 2023, Truist updated its segment cost allocation methodology. Results for the first quarter of 2023 have been revised to conform to the current presentation. Management concluded the impact to 2022 was not material.

Certain other 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 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 securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets; income taxes; and pension and postretirement benefit obligations.

Loan Modifications

In certain circumstances, the Company enters into agreements to modify the terms of loans to borrowers that are experiencing financial difficulty. The scope of these loan modifications varies from portfolio to portfolio but generally falls into one of the following categories:

•Renewals: represent the renewal of a loan where the Company has concluded that the borrower is experiencing financial difficulty. Commercial renewals result in an extension of the maturity date of the loan (or in some cases a contraction of the loan term), and other significant terms of the loan (e.g., interest rate, collateral, guarantor support, etc.) are re-evaluated in connection with the renewal event.

•Term extensions: represent an adjustment to the maturity date of the loan that typically results in a reduction to the borrower’s scheduled payment over the remainder of the loan.

•Capitalizations: represents the capitalization of forborne loan payments and/or other amounts advanced on behalf of the borrower into the principal balance of a residential mortgage loan.

•Payment delays: provide the borrower with a temporary postponement of loan payments that is considered other-than-insignificant, which has been defined as a payment delay that exceeds 90 days, or three payment cycles, over a rolling 12-month period. These postponed loan payments may result in an extension of the ultimate maturity date of the loan or may be capitalized into the principal balance of the loan in certain circumstances.

•Combinations: in certain circumstances more than one type of a modification is provided to a borrower (e.g., interest rate reduction and term extension).

•Other: represents other types of loan modifications that are not considered significant for disclosure purposes.

Truist Financial Corporation 9

The Company has identified borrowers that are included in the Loan Modifications disclosures in “Note 5. Loans and ACL” as follows:

•Commercial: the Company evaluates all modifications of loans to commercial borrowers that are rated substandard or worse and includes the modifications in its disclosure to the extent that the modification is considered other-than-insignificant.

•Consumer and credit card: loan modifications to consumer and credit card borrowers are generally limited to borrowers that are experiencing financial difficulty. As a result, the Company evaluates all modifications of consumer and credit card loans and includes them in the disclosure to the extent that they are considered other-than insignificant.

Refer to the Annual Report on Form 10-K for the year ended December 31, 2022 for accounting policies related to prior period, including the Company’s TDR policies.

ALLL

The ALLL represents management’s best estimate of expected future credit losses related to its loan and lease portfolio at the balance sheet date. The Company’s ALLL estimation process gives consideration to relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. The quantitative models used to forecast expected credit losses use portfolio balances, macroeconomic forecast data, portfolio composition and loan attributes as the primary inputs. Loss estimates are informed by historical loss experience that includes losses incurred on loans that were previously modified by the Company. As a result, the Company has concluded that aside from the limited circumstances where principal forgiveness is granted to a borrower, the financial effect of loan modifications is already inherently included in the ALLL.

Income Taxes

The Company’s provision for income taxes is based on income and expense reported for financial statement purposes after adjustments for permanent differences such as interest income from lending to tax-exempt entities, tax credits, and amortization expense related to qualified tax credit investments. In computing the provision for income taxes, the Company evaluates the technical merits of its income tax positions based on current legislative, judicial, and regulatory guidance. The proportional amortization method of accounting is used on affordable housing and other qualified tax credit investments, such that the initial cost of the investment giving rise to tax credits is amortized in proportion to the allocation of tax credits in each period as a component of the provision for income taxes. Truist includes the initial investment cash flows and subsequent credits within operating activities in the Consolidated Statement of Cash Flows.

Changes in Accounting Principles and Effects of New Accounting Pronouncements


Standard / Adoption Date	Description	Effects on the Financial Statements
Standards Adopted During the Current Year
Troubled Debt Restructurings and Vintage Disclosures January 1, 2023	Eliminates 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 adopted this standard on a modified-retrospective basis. Upon adoption, the Company eliminated the separate ACL estimation process for loans classified as TDRs. The adoption of this standard did not have a material impact on the financial statements. The Company’s revised disclosures in accordance with the new standard are included in “Note 5. Loans and ACL.”
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. 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 and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.	The adoption of this standard did not have a material impact on the Company’s active last-of-layer hedges.
Investments in Tax Credit Structures January 1, 2023	Allows reporting entities to elect to account for qualifying ~~tax~~ equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. Previously, reporting entities were only permitted to apply the proportional amortization method only to qualifying ~~tax~~ equity investments in low-income housing tax credit structures.	Truist adopted this standard early on a modified-retrospective basis. The adoption of this standard did not have a material impact on the financial statements. Refer to “Note 14. Commitments and Contingencies” for additional information regarding tax credit investments.

10 Truist Financial Corporation

NOTE 2. Business Combinations, Divestitures, and Noncontrolling Interests

Noncontrolling Interest

On April 3, 2023, the Company completed its sale of a 20% stake of the common equity in IH, which was previously wholly owned by Truist, to an investor group led by Stone Point Capital, LLC for $1.9 billion, with the proceeds, net of tax, recognized as an increase to shareholders’ equity. In connection with the transaction, the noncontrolling interest holder received profits interest representing 3.75% coverage on IH’s fully diluted equity value at transaction close, and certain consent and exit rights commensurate with a noncontrolling investor. Including these profits interests, the noncontrolling interest holder is allocated approximately 23% of IH pretax net income. The transaction allows Truist to maintain strategic flexibility and future upside in IH, which will continue to benefit from Truist’s operations, access to capital, and client relationships, while creating additional opportunities for the growth of IH through the support of a strong blue-chip investor in Stone Point Capital, LLC. Also in conjunction with the same transaction, IH granted certain event-vested profits interests and appreciation units, representing 4.50% coverage on IH’s fully diluted equity value at grant, to various IH employees and officers in the second quarter of 2023. These awards, subject to continued employment through the applicable event or date, will vest either upon, or from 6 months to two years following, a change in control of IH, depending on the nature of the change in control. No compensation expense is recognized for these event-vested awards until such an event is probable. The Company intends these awards to strengthen IH’s ability to incent and retain top talent, and realize IH’s full potential.

NOTE 3. Securities Financing Activities

Securities purchased under 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. The following table presents securities borrowed or purchased under agreements to resell:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Securities purchased under agreements to resell	Securities purchased under agreements to resell	$	998	$	2,415	Securities purchased under agreements to resell	$	826	$	2,415
Securities borrowed	Securities borrowed	1,317		766		Securities borrowed	1,192		766
Total securities borrowed or purchased under agreements to resell	Total securities borrowed or purchased under agreements to resell	$	2,315	$	3,181	Total securities borrowed or purchased under agreements to resell	$	2,018	$	3,181

Fair value of collateral permitted to be resold or repledged	Fair value of collateral permitted to be resold or repledged	$	2,044	$	3,058	Fair value of collateral permitted to be resold or repledged	$	1,789	$	3,058
Fair value of securities resold or repledged	Fair value of securities resold or repledged	491		864		Fair value of securities resold or repledged	—		864

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:


		June 30, 2023				December 31, 2022						September 30, 2023						December 31, 2022
(Dollars in millions)	(Dollars in millions)	Overnight and Continuous		Up to 30 days		Total		Overnight and Continuous		Up to 30 days			Total		(Dollars in millions)	Overnight and Continuous		Up to 30 days		Total		Overnight and Continuous		Up to 30 days		Total
U.S. Treasury	U.S. Treasury	$	—	$	200	$	200	$	318	$	—		$	318	U.S. Treasury	$	—	$	—	$	—	$	318	$	—	$	318
State and Municipal	State and Municipal	195		—		195		272		—			272		State and Municipal	195		—		195		272		—		272
GSE	GSE	—		—		—		74		—			74		GSE	—		—		—		74		—		74
Agency MBS - residential	Agency MBS - residential	—		2,300		2,300		1,019		26			1,045		Agency MBS - residential	—		1,500		1,500		1,019		26		1,045
Corporate and other debt securities	Corporate and other debt securities	150		320		470		369		50			419		Corporate and other debt securities	230		205		435		369		50		419
Total securities sold under agreements to repurchase	Total securities sold under agreements to repurchase	$	345	$	2,820	$	3,165	$	2,052	$	76		$	2,128	Total securities sold under agreements to repurchase	$	425	$	1,705	$	2,130	$	2,052	$	76	$	2,128

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

Truist Financial Corporation 11

NOTE 4. Investment Securities

The following tables summarize the Company’s AFS and HTM securities:


June 30, 2023 (Dollars in millions)		Amortized Cost			Gross Unrealized					Fair Value
				Gains			Losses
September 30, 2023 (Dollars in millions)												September 30, 2023 (Dollars in millions)		Amortized Cost				Gross Unrealized							Fair Value
																	Gains				Losses
AFS securities:	AFS securities:																AFS securities:
U.S. Treasury	U.S. Treasury	$	10,423		$	—		$	705	$	9,718	U.S. Treasury			$	11,031			$	—			$	670			$	10,361
GSE	GSE	325			—			37		288		GSE		372				—				48				324
Agency MBS - residential	Agency MBS - residential	62,983			—			9,788		53,195		Agency MBS - residential		61,202				—				12,126			49,076
Agency MBS - commercial	Agency MBS - commercial	2,843			—			551		2,292		Agency MBS - commercial		2,827				—				692			2,135
States and political subdivisions	States and political subdivisions	425			14			21		418		States and political subdivisions		421				7				34			394
Non-agency MBS	Non-agency MBS	3,817			—			789		3,028		Non-agency MBS		3,754				—				946			2,808
Other	Other	26			—			—		26		Other		20				—				1			19
Total AFS securities	Total AFS securities	$	80,842		$	14		$	11,891	$	68,965	Total AFS securities		$	79,627			$	7			$	14,517		$	65,117
HTM securities:	HTM securities:											HTM securities:

Agency MBS - residential	Agency MBS - residential	$	55,958		$	—		$	10,002	$	45,956	Agency MBS - residential		$	54,942			$	—			$	12,441		$	42,501

December 31, 2022 (Dollars in millions)	December 31, 2022 (Dollars in millions)	Amortized Cost			Gross Unrealized					Fair Value		December 31, 2022 (Dollars in millions)		Amortized Cost				Gross Unrealized							Fair Value
				Gains			Losses						Gains					Losses
AFS securities:	AFS securities:														AFS securities:
U.S. Treasury	U.S. Treasury	$	11,080		$	—		$	785	$	10,295	U.S. Treasury		$	11,080			$	—			$	785		$	10,295
GSE	GSE	339			—			36		303		GSE		339				—				36			303
Agency MBS - residential	Agency MBS - residential	65,377			—			10,152		55,225		Agency MBS - residential		65,377				—				10,152			55,225
Agency MBS - commercial	Agency MBS - commercial	2,887			—			463		2,424		Agency MBS - commercial		2,887				—				463			2,424
States and political subdivisions	States and political subdivisions	425			15			24		416		States and political subdivisions		425				15				24			416
Non-agency MBS	Non-agency MBS	3,927			—			810		3,117		Non-agency MBS		3,927				—				810			3,117
Other	Other	21			—			—		21		Other		21				—				—			21
Total AFS securities	Total AFS securities	$	84,056		$	15		$	12,270	$	71,801	Total AFS securities		$	84,056			$	15			$	12,270		$	71,801
HTM securities:	HTM securities:											HTM securities:

Agency MBS - residential	Agency MBS - residential	$	57,713		$	—		$	9,922	$	47,791	Agency MBS - residential		$	57,713			$	—			$	9,922		$	47,791

The amortized cost and estimated fair value of certain MBS securities issued by FNMA and FHLMC that exceeded 10% of shareholders’ equity are shown in the table below:


		June 30, 2023					September 30, 2023
(Dollars in millions)	(Dollars in millions)	Amortized Cost		Fair Value		(Dollars in millions)	Amortized Cost		Fair Value
FNMA	FNMA	$	41,052	$	34,325	FNMA	$	40,167	$	31,590
FHLMC	FHLMC	41,601		34,612		FHLMC	40,710		31,724

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 have the right to prepay their obligations with or without penalties.


		Amortized Cost										Fair Value													Amortized Cost															Fair Value
June 30, 2023 (Dollars in millions)		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total
September 30, 2023 (Dollars in millions)																						September 30, 2023 (Dollars in millions)		Due in one year or less			Due after one year through five years			Due after five years through ten years			Due after ten years			Total			Due in one year or less			Due after one year through five years			Due after five years through ten years			Due after ten years			Total
AFS securities:	AFS securities:																						AFS securities:
U.S. Treasury	U.S. Treasury	$	2,885	$	7,492	$	17	$	29	$	10,423	$	2,803	$	6,874	$	15	$	26	$	9,718		U.S. Treasury		$	3,996		$	6,989		$	17		$	29		$	11,031		$	3,923		$	6,401		$	15		$	22		$	10,361
GSE	GSE	—		7		11		307		325		—		7		10		271		288			GSE		—			7			11			354			372			—			7			10			307			324
Agency MBS - residential	Agency MBS - residential	—		99		511		62,373		62,983		—		93		476		52,626		53,195			Agency MBS - residential		—			125			453			60,624			61,202			—			118			413			48,545			49,076
Agency MBS - commercial	Agency MBS - commercial	1		—		71		2,771		2,843		1		—		66		2,225		2,292			Agency MBS - commercial		—			—			71			2,756			2,827			—			—			63			2,072			2,135
States and political subdivisions	States and political subdivisions	3		94		139		189		425		4		92		144		178		418			States and political subdivisions		4			94			142			181			421			5			90			140			159			394
Non-agency MBS	Non-agency MBS	—		—		—		3,817		3,817		—		—		—		3,028		3,028			Non-agency MBS		—			—			222			3,532			3,754			—			—			165			2,643			2,808
Other	Other	5		8		13		—		26		5		8		13		—		26			Other		—			8			12			—			20			—			7			12			—			19
Total AFS securities	Total AFS securities	$	2,894	$	7,700	$	762	$	69,486	$	80,842	$	2,813	$	7,074	$	724	$	58,354	$	68,965		Total AFS securities		$	4,000		$	7,223		$	928		$	67,476		$	79,627		$	3,928		$	6,623		$	818		$	53,748		$	65,117
HTM securities:	HTM securities:																						HTM securities:

Agency MBS - residential	Agency MBS - residential	$	—	$	—	$	—	$	55,958	$	55,958	$	—	$	—	$	—	$	45,956	$	45,956		Agency MBS - residential		$	—		$	—		$	—		$	54,942		$	54,942		$	—		$	—		$	—		$	42,501		$	42,501

12 Truist Financial Corporation

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 months				12 months or more				Total					Less than 12 months				12 months or more				Total
June 30, 2023 (Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2023 (Dollars in millions)														September 30, 2023 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:	AFS securities:													AFS securities:
U.S. Treasury	U.S. Treasury	$	859	$	21	$	8,841	$	684	$	9,700	$	705	U.S. Treasury	$	567	$	6	$	9,177	$	664	$	9,744	$	670
GSE	GSE	110		7		169		30		279		37		GSE	75		3		248		45		323		48
Agency MBS - residential	Agency MBS - residential	888		47		52,284		9,741		53,172		9,788		Agency MBS - residential	307		7		48,743		12,119		49,050		12,126
Agency MBS - commercial	Agency MBS - commercial	116		7		2,176		544		2,292		551		Agency MBS - commercial	62		5		2,073		687		2,135		692
States and political subdivisions	States and political subdivisions	66		3		206		18		272		21		States and political subdivisions	60		1		234		33		294		34
Non-agency MBS	Non-agency MBS	—		—		3,028		789		3,028		789		Non-agency MBS	—		—		2,808		946		2,808		946
Other	Other	—		—		21		—		21		—		Other	—		—		20		1		20		1
Total	Total	$	2,039	$	85	$	66,725	$	11,806	$	68,764	$	11,891	Total	$	1,071	$	22	$	63,303	$	14,495	$	64,374	$	14,517
HTM securities:	HTM securities:													HTM securities:

Agency MBS - residential	Agency MBS - residential	$	—	$	—	$	45,956	$	10,002	$	45,956	$	10,002	Agency MBS - residential	$	—	$	—	$	42,501	$	12,441	$	42,501	$	12,441

		Less than 12 months				12 months or more				Total					Less than 12 months				12 months or more				Total
December 31, 2022 (Dollars in millions)	December 31, 2022 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		December 31, 2022 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

AFS securities:	AFS securities:													AFS securities:
U.S. Treasury	U.S. Treasury	$	2,069	$	49	$	8,186	$	736	$	10,255	$	785	U.S. Treasury	$	2,069	$	49	$	8,186	$	736	$	10,255	$	785
GSE	GSE	180		14		114		22		294		36		GSE	180		14		114		22		294		36
Agency MBS - residential	Agency MBS - residential	25,041		3,263		30,050		6,889		55,091		10,152		Agency MBS - residential	25,041		3,263		30,050		6,889		55,091		10,152
Agency MBS - commercial	Agency MBS - commercial	790		92		1,631		371		2,421		463		Agency MBS - commercial	790		92		1,631		371		2,421		463
States and political subdivisions	States and political subdivisions	251		21		20		3		271		24		States and political subdivisions	251		21		20		3		271		24
Non-agency MBS	Non-agency MBS	—		—		3,117		810		3,117		810		Non-agency MBS	—		—		3,117		810		3,117		810
Other	Other	21		—		—		—		21		—		Other	21		—		—		—		21		—
Total	Total	$	28,352	$	3,439	$	43,118	$	8,831	$	71,470	$	12,270	Total	$	28,352	$	3,439	$	43,118	$	8,831	$	71,470	$	12,270
HTM securities:	HTM securities:													HTM securities:

Agency MBS - residential	Agency MBS - residential	$	29,369	$	5,613	$	18,422	$	4,309	$	47,791	$	9,922	Agency MBS - residential	$	29,369	$	5,613	$	18,422	$	4,309	$	47,791	$	9,922

At ~~June~~September 30, 2023 and December 31, 2022, no 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 investment securities.

The following table presents gross securities gains and losses recognized in earnings:


(Dollars in millions)	(Dollars in millions)	Three Months Ended June 30,				Six Months Ended June 30,				(Dollars in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022		2023		2022				(Dollars in millions)	2023		2022		2023		2022
Gross realized gains	Gross realized gains	$	—	$	—	$	—	$	13				$	—	$	—	$	—	$	13
Gross realized losses	Gross realized losses	—		(1)		—		(83)				Gross realized losses	—		(1)		—		(84)

Securities gains (losses), net	Securities gains (losses), net	$	—	$	(1)	$	—	$	(70)			Securities gains (losses), net	$	—	$	(1)	$	—	$	(71)

Truist Financial Corporation 13

NOTE 5. Loans and ACL

In the first quarter of 2023, the Company adopted the Troubled Debt Restructurings and Vintage Disclosures accounting standard. Certain newly required disclosures in this footnote are presented as of and for the period ended ~~June~~September 30, 2023 only as the adoption of this guidance did not impact the prior periods. As such, disclosures were provided related to TDRs as of December 31, 2022 and for the three and ~~six~~nine months ended ~~June~~September 30, 2022 under prior accounting standards. Refer to “Note 1. Basis of Presentation” for additional information.

The following tables present loans and leases HFI by aging category. Government guaranteed loans are not placed on nonperforming status regardless of delinquency because collection of principal and interest is reasonably assured. Truist sold its student loan portfolio at the end of the second quarter of 2023, which had a carrying value of $4.7 billion. The ~~six~~nine months ended ~~June~~September 30, 2023 includes $98 million of charge-offs related to the sale, which was previously provided for in the allowance.


		Accruing											Accruing
June 30, 2023 (Dollars in millions)		Current		30-89 Days Past Due		90 Days Or More Past Due(1)		Nonperforming		Total
September 30, 2023 (Dollars in millions)												September 30, 2023 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due(1)		Nonperforming		Total
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	166,413	$	142	$	36	$	562	$	167,153	Commercial and industrial	$	161,656	$	98	$	15	$	561	$	162,330
CRE	CRE	22,512		38		—		275		22,825		CRE	22,419		28		—		289		22,736
Commercial construction	Commercial construction	5,916		6		5		16		5,943		Commercial construction	6,313		1		—		29		6,343

Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	55,170		521		564		221		56,476		Residential mortgage	54,832		563		486		132		56,013
Home equity	Home equity	10,156		56		7		129		10,348		Home equity	9,967		61		9		123		10,160
Indirect auto	Indirect auto	24,948		549		—		262		25,759		Indirect auto	23,219		598		1		266		24,084
Other consumer	Other consumer	28,522		175		12		46		28,755		Other consumer	28,818		219		16		52		29,105

Credit card	Credit card	4,732		63		38		—		4,833		Credit card	4,813		68		47		—		4,928

Total	Total	$	318,369	$	1,550	$	662	$	1,511	$	322,092	Total	$	312,037	$	1,636	$	574	$	1,452	$	315,699
(1)Includes government guaranteed loans of $541 million in the residential mortgage portfolio.
(1)Includes government guaranteed loans of $456 million in the residential mortgage portfolio.												(1)Includes government guaranteed loans of $456 million in the residential mortgage portfolio.

		Accruing											Accruing
December 31, 2022 (Dollars in millions)	December 31, 2022 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due(1)		Nonperforming		Total		December 31, 2022 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due(1)		Nonperforming		Total
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	163,604	$	256	$	49	$	398	$	164,307	Commercial and industrial	$	163,604	$	256	$	49	$	398	$	164,307
CRE	CRE	22,568		25		1		82		22,676		CRE	22,568		25		1		82		22,676
Commercial construction	Commercial construction	5,844		5		—		—		5,849		Commercial construction	5,844		5		—		—		5,849

Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	55,005		614		786		240		56,645		Residential mortgage	55,005		614		786		240		56,645
Home equity	Home equity	10,661		68		12		135		10,876		Home equity	10,661		68		12		135		10,876
Indirect auto	Indirect auto	27,015		646		1		289		27,951		Indirect auto	27,015		646		1		289		27,951
Other consumer	Other consumer	27,289		187		13		44		27,533		Other consumer	27,289		187		13		44		27,533
Student	Student	4,179		402		706		—		5,287		Student	4,179		402		706		—		5,287
Credit card	Credit card	4,766		64		37		—		4,867		Credit card	4,766		64		37		—		4,867

Total	Total	$	320,931	$	2,267	$	1,605	$	1,188	$	325,991	Total	$	320,931	$	2,267	$	1,605	$	1,188	$	325,991
(1)Includes government guaranteed loans of $759 million in the residential mortgage portfolio and $702 million in the student portfolio.	(1)Includes government guaranteed loans of $759 million in the residential mortgage portfolio and $702 million in the student portfolio.											(1)Includes government guaranteed loans of $759 million in the residential mortgage portfolio and $702 million in the student portfolio.

14 Truist Financial Corporation

The following tables present the amortized cost basis of loans by origination year and credit quality indicator:


June 30, 2023 (Dollars in millions)		Amortized Cost Basis by Origination Year												Revolving Credit		Loans Converted to Term			Other(1)
		2023		2022		2021		2020		2019		Prior						Total
September 30, 2023 (Dollars in millions)																							September 30, 2023 (Dollars in millions)	Amortized Cost Basis by Origination Year													Revolving Credit				Loans Converted to Term				Other(1)
																								2023			2022		2021		2020		2019		Prior								Total
Commercial:	Commercial:																									Commercial:
Commercial and industrial:	Commercial and industrial:																						Commercial and industrial:
Pass	Pass	$	18,434	$	37,324	$	17,548	$	9,277	$	6,628	$	12,487	$	59,200	$	—		$	(240)	$	160,658	Pass	$	21,868		$	34,323	$	16,084	$	8,740	$	6,125	$	11,692			$	56,472			$	—			$	(235)			$	155,069
Special mention	Special mention	328		619		702		196		117		181		755		—			—		2,898		Special mention	420			712		663		142		145		238		939				—				—				3,259
Substandard	Substandard	133		780		420		188		385		431		698		—			—		3,035		Substandard	373			895		426		264		286		353		844				—				—				3,441
Nonperforming	Nonperforming	82		175		51		11		21		38		184		—			—		562		Nonperforming	7			158		141		11		31		27		186				—				—				561
Total	Total	18,977		38,898		18,721		9,672		7,151		13,137		60,837		—			(240)		167,153		Total	22,668			36,088		17,314		9,157		6,587		12,310		58,441				—				(235)				162,330
Gross charge-offs	Gross charge-offs	20		46		28		18		3		17		50		—			—		182		Gross charge-offs	11			51		83		21		3		21		90												280
CRE:	CRE:																						CRE:
Pass	Pass	2,463		5,055		3,025		2,179		3,139		3,324		997		—			(71)		20,111		Pass	3,215			5,000		2,740		2,051		2,982		2,948		1,102				—				(73)				19,965
Special mention	Special mention	237		446		39		86		123		56		55		—			—		1,042		Special mention	220			490		88		88		85		52		56				—				—				1,079
Substandard	Substandard	104		355		231		40		366		301		—		—			—		1,397		Substandard	75			382		268		51		332		295		—				—				—				1,403
Nonperforming	Nonperforming	—		110		2		2		85		76		—		—			—		275		Nonperforming	—			90		4		24		156		15		—				—				—				289
Total	Total	2,804		5,966		3,297		2,307		3,713		3,757		1,052		—			(71)		22,825		Total	3,510			5,962		3,100		2,214		3,555		3,310		1,158				—				(73)				22,736
Gross charge-offs	Gross charge-offs	—		11		1		—		—		29		—		—			—		41		Gross charge-offs	—			52		1		10		8		47		—				—				—				118
Commercial construction:	Commercial construction:																						Commercial construction:
Pass	Pass	423		1,806		1,640		419		149		135		852		—			—		5,424		Pass	689			2,020		1,550		305		158		129		969				—				—				5,820
Special mention	Special mention	39		135		90		129		—		—		15		—			—		408		Special mention	38			131		104		—		—		—		1				—				—				274
Substandard	Substandard	3		30		7		55		—		—		—		—			—		95		Substandard	22			46		25		110		—		—		17				—				—				220
Nonperforming	Nonperforming	15		—		—		—		1		—		—		—			—		16		Nonperforming	—			28		—		—		1		—		—				—				—				29
Total	Total	480		1,971		1,737		603		150		135		867		—			—		5,943		Total	749			2,225		1,679		415		159		129		987				—				—				6,343

Consumer:	Consumer:																						Consumer:
Residential mortgage:	Residential mortgage:																						Residential mortgage:

Current	Current	1,811		13,731		16,985		5,933		2,957		13,753		—		—			—		55,170		Current	2,468			13,609		16,733		5,827		2,884		13,311		—				—				—				54,832
30 - 89 days past due	30 - 89 days past due	4		33		37		26		30		391		—		—			—		521		30 - 89 days past due	3			39		40		36		35		410		—				—				—				563
90 days or more past due	90 days or more past due	—		17		29		45		42		431		—		—			—		564		90 days or more past due	3			26		25		33		34		365		—				—				—				486
Nonperforming	Nonperforming	—		6		10		11		16		178		—		—			—		221		Nonperforming	—			2		6		6		12		106		—				—				—				132
Total	Total	1,815		13,787		17,061		6,015		3,045		14,753		—		—			—		56,476		Total	2,474			13,676		16,804		5,902		2,965		14,192		—				—				—				56,013
Gross charge-offs	Gross charge-offs	—		—		2		—		—		—		—		—			—		2		Gross charge-offs	—			—		2		1		1		6		—				—				—				10
Home equity:	Home equity:																						Home equity:

Current	Current	—		—		—		—		—		—		6,350		3,806			—		10,156		Current	—			—		—		—		—		—		6,209				3,758				—				9,967
30 - 89 days past due	30 - 89 days past due	—		—		—		—		—		—		37		19			—		56		30 - 89 days past due	—			—		—		—		—		—		41				20				—				61
90 days or more past due	90 days or more past due	—		—		—		—		—		—		4		3			—		7		90 days or more past due	—			—		—		—		—		—		6				3				—				9
Nonperforming	Nonperforming	—		—		—		—		—		—		47		82			—		129		Nonperforming	—			—		—		—		—		—		42				81				—				123
Total	Total	—		—		—		—		—		—		6,438		3,910			—		10,348		Total	—			—		—		—		—		—		6,298				3,862				—				10,160
Gross charge-offs	Gross charge-offs	—		—		—		—		—		—		4		—			—		4		Gross charge-offs	—			—		—		—		—		—		8				—				—				8
Indirect auto:	Indirect auto:																						Indirect auto:

Current	Current	3,203		9,764		5,842		3,236		1,851		1,061		—		—			(9)		24,948		Current	3,893			8,865		5,236		2,835		1,574		829		—				—				(13)				23,219
30 - 89 days past due	30 - 89 days past due	25		166		135		80		70		73		—		—			—		549		30 - 89 days past due	48			187		140		83		71		69		—				—				—				598

90 days or more past due																							90 days or more past due	—			1		—		—		—		—		—				—				—				1
Nonperforming	Nonperforming	4		68		68		44		41		37		—		—			—		262		Nonperforming	11			78		66		42		37		32		—				—				—				266
Total	Total	3,232		9,998		6,045		3,360		1,962		1,171		—		—			(9)		25,759		Total	3,952			9,131		5,442		2,960		1,682		930		—				—				(13)				24,084
Gross charge-offs	Gross charge-offs	1		88		58		29		29		37		—		—			—		242		Gross charge-offs	10			138		88		44		44		53		—				—				—				377
Other consumer:	Other consumer:																						Other consumer:

Current	Current	6,258		9,337		4,638		2,445		1,363		1,499		2,964		15			3		28,522		Current	8,656			8,453		4,146		2,160		1,194		1,336		2,856				14				3				28,818
30 - 89 days past due	30 - 89 days past due	30		60		33		20		15		11		4		2			—		175		30 - 89 days past due	56			72		37		20		14		13		6				1				—				219
90 days or more past due	90 days or more past due	1		8		1		1		—		—		1		—			—		12		90 days or more past due	6			7		1		—		—		—		2				—				—				16
Nonperforming	Nonperforming	1		7		14		8		6		9		—		1			—		46		Nonperforming	3			11		14		8		7		8		—				1				—				52
Total	Total	6,290		9,412		4,686		2,474		1,384		1,519		2,969		18			3		28,755		Total	8,721			8,543		4,198		2,188		1,215		1,357		2,864				16				3				29,105
Gross charge-offs	Gross charge-offs	24		76		46		26		18		7		12		—			—		209		Gross charge-offs	53			116		69		37		26		11		17				—				—				329
Student:(2)	Student:(2)																						Student:(2)

Gross charge-offs	Gross charge-offs	—		—		—		—		—		108		—		—			—		108		Gross charge-offs	—			—		—		—		—		108		—				—				—				108
Credit card:	Credit card:																						Credit card:
Current	Current	—		—		—		—		—		—		4,715		17			—		4,732		Current	—			—		—		—		—		—		4,793				20				—				4,813
30 - 89 days past due	30 - 89 days past due	—		—		—		—		—		—		62		1			—		63		30 - 89 days past due	—			—		—		—		—		—		65				3				—				68
90 days or more past due	90 days or more past due	—		—		—		—		—		—		37		1			—		38		90 days or more past due	—			—		—		—		—		—		45				2				—				47

Total	Total	—		—		—		—		—		—		4,814		19			—		4,833		Total	—			—		—		—		—		—		4,903				25				—				4,928
Gross charge-offs	Gross charge-offs	—		—		—		—		—		—		103		1			—		104		Gross charge-offs	—			—		—		—		—		—		157				2				—				159
Total	Total	$	33,598	$	80,032	$	51,547	$	24,431	$	17,405	$	34,472	$	76,977	$	3,947		$	(317)	$	322,092	Total	$	42,074		$	75,625	$	48,537	$	22,836	$	16,163	$	32,228	$	74,651			$	3,903			$	(318)			$	315,699
Gross charge-offs	Gross charge-offs	$	45	$	221	$	135	$	73	$	50	$	198	$	169	$	1		$	—	$	892	Gross charge-offs	$	74		$	357	$	243	$	113	$	82	$	246	$	272			$	2			$	—			$	1,389

Truist Financial Corporation 15


December 31, 2022 (Dollars in millions)	Amortized Cost Basis by Origination Year												Revolving Credit		Loans Converted to Term		Other(1)
	2022		2021		2020		2019		2018		Prior								Total
Commercial:
Commercial and industrial:
Pass	$	45,890	$	21,642	$	11,219	$	8,258	$	4,977	$	9,686	$	57,854	$	—	$	(199)	$	159,327
Special mention	243		302		143		160		61		88		721		—		—		1,718
Substandard	518		387		113		413		249		187		997		—		—		2,864
Nonperforming	47		53		10		28		46		27		187		—		—		398
Total	46,698		22,384		11,485		8,859		5,333		9,988		59,759		—		(199)		164,307
CRE:
Pass	6,141		3,595		2,220		3,846		2,092		2,265		757		—		(70)		20,846
Special mention	106		118		74		229		281		5		18		—		—		831
Substandard	106		99		35		422		121		134		—		—		—		917
Nonperforming	—		3		—		—		77		2		—		—		—		82
Total	6,353		3,815		2,329		4,497		2,571		2,406		775		—		(70)		22,676
Commercial construction:
Pass	1,501		1,500		825		290		212		71		1,056		—		—		5,455
Special mention	80		—		93		—		—		—		35		—		—		208
Substandard	114		—		18		1		53		—		—		—		—		186

Total	1,695		1,500		936		291		265		71		1,091		—		—		5,849






Consumer:
Residential mortgage:

Current	13,824		17,340		6,167		3,084		1,384		13,206		—		—		—		55,005
30 - 89 days past due	55		61		32		37		43		386		—		—		—		614
90 or more days past due	5		31		62		62		91		535		—		—		—		786
Nonperforming	4		6		10		12		17		191		—		—		—		240
Total	13,888		17,438		6,271		3,195		1,535		14,318		—		—		—		56,645
Home equity:

Current	—		—		—		—		—		—		6,843		3,818		—		10,661
30 - 89 days past due	—		—		—		—		—		—		48		20		—		68
90 days or more past due	—		—		—		—		—		—		9		3		—		12
Nonperforming	—		—		—		—		—		—		44		91		—		135
Total	—		—		—		—		—		—		6,944		3,932		—		10,876
Indirect auto:

Current	11,646		7,141		4,105		2,461		1,096		559		—		—		7		27,015
30 - 89 days past due	147		174		111		100		60		54		—		—		—		646
90 days or more past due	1		—		—		—		—		—		—		—		—		1
Nonperforming	41		77		56		56		34		25		—		—		—		289
Total	11,835		7,392		4,272		2,617		1,190		638		—		—		7		27,951
Other consumer:

Current	11,270		5,805		3,167		1,814		865		1,061		3,278		29		—		27,289
30 - 89 days past due	68		44		26		20		10		7		10		2		—		187
90 days or more past due	8		1		1		1		—		—		2		—		—		13
Nonperforming	4		11		8		9		2		8		2		—		—		44
Total	11,350		5,861		3,202		1,844		877		1,076		3,292		31		—		27,533
Student:
Current	—		—		17		71		57		4,034		—		—		—		4,179
30 - 89 days past due	—		—		—		1		1		400		—		—		—		402
90 days or more past due	—		—		—		1		1		704		—		—		—		706

Total	—		—		17		73		59		5,138		—		—		—		5,287
Credit card:
Current	—		—		—		—		—		—		4,750		16		—		4,766
30 - 89 days past due	—		—		—		—		—		—		63		1		—		64
90 days or more past due	—		—		—		—		—		—		36		1		—		37

Total	—		—		—		—		—		—		4,849		18		—		4,867
Total	$	91,819	$	58,390	$	28,512	$	21,376	$	11,830	$	33,635	$	76,710	$	3,981	$	(262)	$	325,991

(1)Includes certain deferred fees and costs and other adjustments.

(2)Truist sold its student loan portfolio at the end of the second quarter of 2023. Charge-offs include $98 million related to the sale.

16 Truist Financial Corporation

ACL

The following tables present activity in the ACL:


(Dollars in millions)	(Dollars in millions)	Balance at Apr 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Jun 30, 2022		(Dollars in millions)	Balance at Jul 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2022
Commercial:	Commercial:													Commercial:
Commercial and industrial	Commercial and industrial	$	1,319	$	(17)	$	13	$	42	$	—	$	1,357	Commercial and industrial	$	1,357	$	(51)	$	43	$	(48)	$	—	$	1,301
CRE	CRE	283		(1)		6		(51)		—		237		CRE	237		—		—		(3)		—		234
Commercial construction	Commercial construction	53		—		1		(4)		—		50		Commercial construction	50		—		2		(5)		—		47

Consumer:	Consumer:													Consumer:
Residential mortgage	Residential mortgage	310		(2)		4		15		—		327		Residential mortgage	327		(4)		3		50		—		376
Home equity	Home equity	88		(3)		6		(3)		—		88		Home equity	88		(3)		8		(10)		—		83
Indirect auto	Indirect auto	957		(77)		26		46		—		952		Indirect auto	952		(103)		21		96		—		966
Other Consumer	Other Consumer	697		(100)		20		111		—		728		Other Consumer	728		(109)		21		115		—		755
Student	Student	115		(4)		—		(10)		(1)		100		Student	100		(7)		—		—		—		93
Credit card	Credit card	348		(40)		9		31		—		348		Credit card	348		(42)		8		36		—		350

ALLL	ALLL	4,170		(244)		85		177		(1)		4,187		ALLL	4,187		(319)		106		231		—		4,205
RUFC	RUFC	253		—		—		(6)		—		247		RUFC	247		—		—		3		—		250
ACL	ACL	$	4,423	$	(244)	$	85	$	171	$	(1)	$	4,434	ACL	$	4,434	$	(319)	$	106	$	234	$	—	$	4,455

(Dollars in millions)	(Dollars in millions)	Balance at Apr 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Jun 30, 2023		(Dollars in millions)	Balance at Jul 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2023
Commercial:	Commercial:													Commercial:
Commercial and industrial	Commercial and industrial	$	1,497	$	(107)	$	13	$	133	$	—	$	1,536	Commercial and industrial	$	1,536	$	(98)	$	28	$	(114)	$	(1)	$	1,351
CRE	CRE	251		(35)		—		186		—		402		CRE	402		(77)		2		278		—		605
Commercial construction	Commercial construction	87		—		—		22		—		109		Commercial construction	109		—		—		56		—		165

Consumer:	Consumer:													Consumer:
Residential mortgage	Residential mortgage	332		(1)		2		(13)		—		320		Residential mortgage	320		(8)		1		(12)		—		301
Home equity	Home equity	87		(2)		5		(5)		—		85		Home equity	85		(4)		7		(2)		—		86
Indirect auto	Indirect auto	993		(115)		31		72		—		981		Indirect auto	981		(135)		25		74		—		945
Other consumer	Other consumer	779		(104)		20		113		—		808		Other consumer	808		(120)		20		158		—		866
Student(2)		98		(103)		—		5		—		—

Credit card	Credit card	355		(53)		9		54		—		365		Credit card	365		(55)		9		55		—		374

ALLL	ALLL	4,479		(520)		80		567		—		4,606		ALLL	4,606		(497)		92		493		(1)		4,693
RUFC	RUFC	282		—		—		(9)		—		273		RUFC	273		—		—		4		—		277
ACL	ACL	$	4,761	$	(520)	$	80	$	558	$	—	$	4,879	ACL	$	4,879	$	(497)	$	92	$	497	$	(1)	$	4,970

(Dollars in millions)	(Dollars in millions)	Balance at Jan 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Jun 30, 2022		(Dollars in millions)	Balance at Jan 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2022
Commercial:	Commercial:													Commercial:
Commercial and industrial	Commercial and industrial	$	1,426	$	(48)	$	30	$	(51)	$	—	$	1,357	Commercial and industrial	$	1,426	$	(99)	$	73	$	(99)	$	—	$	1,301
CRE	CRE	350		(2)		7		(118)		—		237		CRE	350		(2)		7		(121)		—		234
Commercial construction	Commercial construction	52		(1)		2		(3)		—		50		Commercial construction	52		(1)		4		(8)		—		47

Consumer:	Consumer:													Consumer:
Residential mortgage	Residential mortgage	308		(4)		10		13		—		327		Residential mortgage	308		(8)		13		63		—		376
Home equity	Home equity	96		(4)		11		(15)		—		88		Home equity	96		(7)		19		(25)		—		83
Indirect auto	Indirect auto	1,022		(179)		49		60		—		952		Indirect auto	1,022		(282)		70		156		—		966
Other consumer	Other consumer	714		(176)		41		149		—		728		Other consumer	714		(285)		62		264		—		755
Student	Student	117		(10)		—		(7)		—		100		Student	117		(17)		—		(7)		—		93
Credit card	Credit card	350		(81)		18		61		—		348		Credit card	350		(123)		26		97		—		350

ALLL	ALLL	4,435		(505)		168		89		—		4,187		ALLL	4,435		(824)		274		320		—		4,205
RUFC	RUFC	260		—		—		(13)		—		247		RUFC	260		—		—		(10)		—		250
ACL	ACL	$	4,695	$	(505)	$	168	$	76	$	—	$	4,434	ACL	$	4,695	$	(824)	$	274	$	310	$	—	$	4,455

Truist Financial Corporation 17


(Dollars in millions)	(Dollars in millions)	Balance at Jan 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Jun 30, 2023		(Dollars in millions)	Balance at Jan 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2023
Commercial:	Commercial:													Commercial:
Commercial and industrial	Commercial and industrial	$	1,409	$	(182)	$	26	$	284	$	(1)	$	1,536	Commercial and industrial	$	1,409	$	(280)	$	54	$	170	$	(2)	$	1,351
CRE	CRE	224		(41)		1		218		—		402		CRE	224		(118)		3		496		—		605
Commercial construction	Commercial construction	46		—		1		62		—		109		Commercial construction	46		—		1		118		—		165

Consumer:	Consumer:													Consumer:
Residential mortgage	Residential mortgage	399		(2)		4		—		(81)		320		Residential mortgage	399		(10)		5		(12)		(81)		301
Home equity	Home equity	90		(4)		11		(12)		—		85		Home equity	90		(8)		18		(14)		—		86
Indirect auto	Indirect auto	981		(242)		57		172		13		981		Indirect auto	981		(377)		82		246		13		945
Other consumer	Other consumer	770		(209)		37		211		(1)		808		Other consumer	770		(329)		57		369		(1)		866
Student(2)	Student(2)	98		(108)		—		10		—		—		Student(2)	98		(108)		—		10		—		—
Credit card	Credit card	360		(104)		18		94		(3)		365		Credit card	360		(159)		27		149		(3)		374

ALLL	ALLL	4,377		(892)		155		1,039		(73)		4,606		ALLL	4,377		(1,389)		247		1,532		(74)		4,693
RUFC	RUFC	272		—		—		1		—		273		RUFC	272		—		—		5		—		277
ACL	ACL	$	4,649	$	(892)	$	155	$	1,040	$	(73)	$	4,879	ACL	$	4,649	$	(1,389)	$	247	$	1,537	$	(74)	$	4,970

(1)Includes the amounts for the ALLL for PCD acquisitions, the impact of adopting the Troubled Debt Restructurings and Vintage Disclosures accounting standard, and other activity.

(2)Truist sold its student loan portfolio at the end of the second quarter of 2023. Charge-offs include $98 million related to the sale.

The commercial ALLL increased ~~$212~~$74 million and ~~$368~~$442 million and the consumer ALLL ~~decreased $95~~increased $4 million and ~~$144~~decreased $140 million during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. The increase in the commercial ALLL primarily reflects an increase in reserves related to the CRE and commercial construction portfolios. The slight increase in the consumer ALLL compared to the prior quarter reflects loan growth in certain indirect consumer portfolios, offset by run-off primarily in indirect auto and ~~an updated economic outlook.~~residential mortgage. The decrease in the consumer ALLL ~~was~~for the year-to-date period primarily ~~driven by~~reflects the sale of the student portfolio in the ~~current~~second quarter as well as ~~first quarter 2023~~ impacts associated with the adoption of the Troubled Debt Restructurings and Vintage Disclosure accounting ~~standard. Considerations for~~standard in the ~~updated economic outlook include the potential impacts related to the risks associated with inflation, rising rates, geopolitical events, and recession.~~first quarter of 2023.

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. Forecasts of macroeconomic variables used in loss forecasting include, but are not limited to, unemployment trends, U.S. real GDP, corporate credit spreads, rental rates, property values, home price indices, and used car prices.

The overall 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 ~~June~~September 30, 2023 ACL, unchanged since December 31, 2022. While the scenario weightings were unchanged, each forecast scenario reflected deterioration in certain economic variables over the reasonable and supportable forecast period when compared to the prior period. The overall economic forecast shaping the ACL estimate at ~~June~~September 30, 2023 included GDP growth in the low-single digits and an unemployment rate near mid-single digits.

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 ~~June~~September 30, 2023 ACL estimate includes adjustments to consider the impact of current and expected events or risks not captured by the loss forecasting models, the outcomes of which are uncertain and may not be completely considered by quantitative models. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.

18 Truist Financial Corporation

NPAs

The following table provides a summary of nonperforming loans and leases, excluding LHFS:


		June 30, 2023				December 31, 2022								September 30, 2023				December 31, 2022
		Recorded Investment				Recorded Investment								Recorded Investment				Recorded Investment
(Dollars in millions)	(Dollars in millions)	Without an ALLL		With an ALLL		Without an ALLL		With an ALLL		(Dollars in millions)	Without an ALLL	With an ALLL		Without an ALLL		With an ALLL
Commercial:	Commercial:												Commercial:
Commercial and industrial	Commercial and industrial	$	93	$	469	$	120	$	278				Commercial and industrial	$	179	$	382	$	120	$	278
CRE	CRE	69		206		75		7					CRE	55		234		75		7
Commercial construction	Commercial construction	—		16		—		—					Commercial construction	—		29		—		—

Consumer:	Consumer:												Consumer:
Residential mortgage	Residential mortgage	1		220		4		236					Residential mortgage	2		130		4		236
Home equity	Home equity	1		128		2		133					Home equity	1		122		2		133
Indirect auto	Indirect auto	22		240		3		286					Indirect auto	23		243		3		286
Other consumer	Other consumer	—		46		—		44					Other consumer	—		52		—		44

Total	Total	$	186	$	1,325	$	204	$	984				Total	$	260	$	1,192	$	204	$	984

The following table presents a summary of nonperforming assets and residential mortgage loans in the process of foreclosure:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Nonperforming loans and leases HFI	Nonperforming loans and leases HFI	$	1,511	$	1,188	Nonperforming loans and leases HFI	$	1,452	$	1,188
Nonperforming LHFS	Nonperforming LHFS	13		—		Nonperforming LHFS	75		—
Foreclosed real estate	Foreclosed real estate	3		4		Foreclosed real estate	3		4
Other foreclosed property	Other foreclosed property	56		58		Other foreclosed property	54		58
Total nonperforming assets	Total nonperforming assets	$	1,583	$	1,250	Total nonperforming assets	$	1,584	$	1,250

Residential mortgage loans in the process of foreclosure	Residential mortgage loans in the process of foreclosure	$	229	$	248	Residential mortgage loans in the process of foreclosure	$	233	$	248

Loan Modifications

The following tables summarize the period-end amortized cost basis and the weighted average financial effect of loans to borrowers experiencing financial difficulty that were modified during the period, disaggregated by class of financing receivable and type of modification granted. These tables include modification activity that occurred on or after January 1, 2023. The volume of payment delay modifications is expected to increase throughout 2023 as the cumulative period over which such modifications are evaluated gradually extends to a full 12-month rolling period:


Three Months Ended June 30, 2023 (Dollars in millions)		Renewals		Term Extensions		Capitalizations		Payment Delays		Combination - Interest Rate Adjustment and Term Extension		Combination - Capitalization and Term Extension		Combination - Capitalization, Interest Rate and Term Extension		Other		Total Modified Loans		Percentage of Total Class of Financing Receivable
Three Months Ended September 30, 2023 (Dollars in millions)																						Three Months Ended September 30, 2023 (Dollars in millions)	Renewals	Term Extensions				Capitalizations			Payment Delays			Combination - Interest Rate Adjustment and Term Extension			Combination - Capitalization and Term Extension			Combination - Capitalization, Interest Rate and Term Extension			Other			Total Modified Loans			Percentage of Total Class of Financing Receivable
Commercial:	Commercial:																								Commercial:
Commercial and industrial	Commercial and industrial	$	265	$	—	$	—	$	21	$	44	$	—	$	—	$	—	$	330	0.20	%				Commercial and industrial	$	426		$	—		$	—		$	3		$	—		$	—		$	—		$	—		$	429	0.26	%
CRE	CRE	49		—		—		—		—		—		—		—		49		0.21					CRE	28			—			—			—			—			—			—			—			28		0.12
Commercial construction	Commercial construction	2		—		—		—		—		—		—		—		2		0.03					Commercial construction	21			—			—			—			—			—			—			—			21		0.33
Consumer:	Consumer:																								Consumer:
Residential mortgage	Residential mortgage	—		25		39		36		1		89		18		5		213		0.38					Residential mortgage	—			30			27			23			—			79			15			1			175		0.31
Home equity	Home equity	—		—		—		—		3		—		—		1		4		0.04					Home equity	—			—			—			2			2			—			—			1			5		0.05
Indirect auto	Indirect auto	—		7		—		141		4		—		—		7		159		0.62					Indirect auto	—			7			—			388			4			—			—			2			401		1.67
Other consumer	Other consumer	—		5		—		—		1		—		—		1		7		0.02					Other consumer	—			6			—			—			1			—			—			—			7		0.02
Credit card	Credit card	—		—		—		—		—		—		—		5		5		0.10					Credit card	—			—			—			—			—			—			—			4			4		0.08
Total	Total	$	316	$	37	$	39	$	198	$	53	$	89	$	18	$	19	$	769	0.24					Total	$	475		$	43		$	27		$	416		$	7		$	79		$	15		$	8		$	1,070	0.34

Truist Financial Corporation 19


Six Months Ended June 30, 2023 (Dollars in millions)		Renewals		Term Extensions		Capitalizations		Payment Delays		Combination - Interest Rate Adjustment and Term Extension		Combination - Capitalization and Term Extension		Combination - Capitalization, Interest Rate and Term Extension		Other		Total Modified Loans		Percentage of Total Class of Financing Receivable
Nine Months Ended September 30, 2023 (Dollars in millions)																						Nine Months Ended September 30, 2023 (Dollars in millions)	Renewals	Term Extensions				Capitalizations			Payment Delays			Combination - Interest Rate Adjustment and Term Extension			Combination - Capitalization and Term Extension			Combination - Capitalization, Interest Rate and Term Extension			Other			Total Modified Loans			Percentage of Total Class of Financing Receivable
Commercial:	Commercial:																								Commercial:
Commercial and industrial	Commercial and industrial	$	499	$	—	$	—	$	21	$	44	$	—	$	—	$	—	$	564	0.34	%				Commercial and industrial	$	884		$	51		$	—		$	23		$	44		$	—		$	—		$	—		$	1,002	0.62	%
CRE	CRE	139		—		—		48		—		—		—		—		187		0.82					CRE	173			—			—			72			—			—			—			—			245		1.08
Commercial construction	Commercial construction	3		—		—		—		—		—		—		—		3		0.05					Commercial construction	24			—			—			—			—			—			—			—			24		0.38
Consumer:	Consumer:																								Consumer:
Residential mortgage	Residential mortgage	—		53		69		54		2		180		37		8		403		0.71					Residential mortgage	—			82			95			62			2			254			52			4			551		0.98
Home equity	Home equity	—		—		—		—		5		—		—		2		7		0.07					Home equity	—			—			—			2			7			—			—			2			11		0.11
Indirect auto	Indirect auto	—		12		—		145		9		—		—		11		177		0.69					Indirect auto	—			19			—			483			13			—			—			5			520		2.16
Other consumer	Other consumer	—		9		—		1		3		—		—		2		15		0.05					Other consumer	—			15			—			1			4			—			—			1			21		0.07
Credit card	Credit card	—		—		—		—		—		—		—		9		9		0.19					Credit card	—			—			—			—			—			—			—			14			14		0.28
Total	Total	$	641	$	74	$	69	$	269	$	63	$	180	$	37	$	32	$	1,365	0.42					Total	$	1,081		$	167		$	95		$	643		$	70		$	254		$	52		$	26		$	2,388	0.76

Three Months Ended ~~June~~September 30, 2023

Loan Type

Financial Effect

Renewals

Commercial and industrial

Extended the term by 59 months and increased the interest rate by ~~0.3%.~~0.7%

CRE

Extended the term by ~~11 months.~~15 months and increased the interest rate by 0.9%

Commercial construction

Extended the term by 2 ~~months.~~months

Term Extensions

Residential mortgage

Extended the term by ~~145~~117 months.

Indirect auto

Extended the term by 24 months.

Other consumer

Extended the term by 24 months.

Capitalizations

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.

Payment Delays

Commercial and industrial

Provided 120 days of payment deferral.

Residential mortgage

Provided 214 days of payment deferral.

Home equity

Provided 177 days of payment deferral.

Indirect auto

Provided 135 days of payment deferral.

Combination - Interest Rate Adjustment and Term Extension

Home equity

Extended the term by 322 months and decreased the interest rate by 5%.

Indirect auto

Extended the term by 12 months and decreased the interest rate by 5%.

Other consumer

Extended the term by 56 months and decreased the interest rate by 1%.

Combination - Capitalization and Term Extension

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 101 months.

Combination - Capitalization, Interest Rate and Term Extension

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 144 months, and decreased the interest rate by 0.4%.

20 Truist Financial Corporation

Nine Months Ended September 30, 2023

Loan Type

Financial Effect

Renewals

Commercial and industrial

Extended the term by 8 months and increased the interest rate by 0.6%

CRE

Extended the term by 11 months and increased the interest rate by 0.2%

Commercial construction

Extended the term by 2 months

Term Extensions

Commercial and industrial

Extended the term by 3 months.

Residential mortgage

Extended the term by 139 months.

Indirect auto

Extended the term by 22 months.

Other consumer

Extended the term by 24 months.

Capitalizations

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.

Payment Delays

Commercial and industrial

Provided ~~payment deferral of 189 days.~~

~~Residential mortgage~~

~~Provided payment deferral of 214 days.~~

~~Indirect auto~~

~~Provided payment deferral of 125 days.~~

~~Combination - Interest Rate Adjustment and Term Extension~~

~~Commercial and industrial~~

~~Extended the term by 76 months and increased the interest rate by 3%.~~

~~Residential mortgage~~

~~Extended the term by 123 months and increased the interest rate by 1%.~~

~~Home equity~~

~~Extended the term by 169 months and decreased the interest rate by 3%.~~

~~Indirect auto~~

~~Extended the term by 10 months and decreased the interest rate by 7%.~~

~~Other consumer~~

~~Extended the term by 26 months and decreased the interest rate by 1%.~~

~~Combination - Capitalization and Term Extension~~

~~Residential mortgage~~

~~Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 103 months.~~

~~Combination - Capitalization, Interest Rate and Term Extension~~

~~Residential mortgage~~

~~Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 169 months, and increased the interest rate by 0.1%.~~

~~20 Truist Financial Corporation~~

~~Six Months Ended June 30, 2023~~

~~Loan Type~~

~~Financial Effect~~

~~Renewals~~

~~Commercial and industrial~~

~~Extended the term by 5 months and increased the interest rate by 0.3%.~~

~~CRE~~

~~Extended the term by 10 months and increased the interest rate by 0.1%.~~

~~Commercial construction~~

~~Extended the term by 3 months.~~

~~Term Extensions~~

~~Residential mortgage~~

~~Extended the term by 151 months.~~

~~Indirect auto~~

~~Extended the term by 22 months.~~

~~Other consumer~~

~~Extended the term by 24 months.~~

~~Capitalizations~~

~~Residential mortgage~~

~~Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.~~

~~Payment Delays~~

~~Commercial and industrial~~

~~Provided 189~~183 days of payment deferral.

CRE

Provided 232 days of payment deferral.

Residential mortgage

Provided ~~209~~212 days of payment deferral.

Home equity

Provided 167 days of payment deferral.

Indirect auto

Provided ~~125~~133 days of payment deferral.

Other consumer

Provided ~~151~~153 days of payment deferral.

Combination - Interest Rate Adjustment and Term Extension

Commercial and industrial

Extended the term by 76 months and increased the interest rate by 3%.

Residential mortgage

Extended the term by ~~114~~124 months and increased the interest rate by ~~0.4%~~0.5%.

Home equity

Extended the term by ~~229~~258 months and decreased the interest rate by 3%.

Indirect auto

Extended the term by 11 months and decreased the interest rate by 7%.

Other consumer

Extended the term by 6361 months and decreased the interest rate by 2%1%.

Combination - Capitalization and Term Extension

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by ~~107~~105 months.

Combination - Capitalization, Interest Rate and Term Extension

Residential mortgage

Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by ~~125~~130 months, and decreased the interest rate by ~~0.1%~~0.2%.

The tables above exclude trial modifications totaling ~~$88~~$77 million as of ~~June~~September 30, 2023. Such modifications will be included in the modification activity disclosure if the borrower successfully completes the trial period and the loan modification is finalized.

As of ~~June~~September 30, 2023, Truist had ~~$419~~$594 million in unfunded lending commitments related to the modified obligations summarized in the tables above.

Upon Truist’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

Truist Financial Corporation 21

Truist closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table summarizes the period-end delinquency status and amortized cost of loans that were modified since January 1, 2023. The period-end delinquency status of loans that were ~~modified:~~modified are disclosed at amortized cost and reflect the impact of any paydowns, payoffs, and/or charge-offs that occurred subsequent to modification.


		Payment Status (Amortized Cost Basis)									Payment Status (Amortized Cost Basis)
June 30, 2023 (Dollars in millions)		Current		30-89 Days Past Due		90 Days or More Past Due		Total
September 30, 2023 (Dollars in millions)										September 30, 2023 (Dollars in millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Total
Commercial:	Commercial:									Commercial:
Commercial and industrial	Commercial and industrial	$	528	$	3	$	33	$	564	Commercial and industrial	$	743	$	2	$	32	$	777
CRE	CRE	187		—		—		187		CRE	120		—		21		141
Commercial construction	Commercial construction	3		—		—		3		Commercial construction	21		—		—		21
Consumer:	Consumer:									Consumer:
Residential mortgage	Residential mortgage	282		77		44		403		Residential mortgage	354		104		74		532
Home equity	Home equity	6		—		1		7		Home equity	9		—		—		9
Indirect auto	Indirect auto	157		17		3		177		Indirect auto	438		65		7		510
Other consumer	Other consumer	14		1		—		15		Other consumer	18		1		—		19
Credit card	Credit card	7		1		1		9		Credit card	9		1		1		11
Total	Total	$	1,184	$	99	$	82	$	1,365	Total	$	1,712	$	173	$	135	$	2,020
Total nonaccrual loans included above	Total nonaccrual loans included above	$	291	$	23	$	47	$	361	Total nonaccrual loans included above	$	227	$	28	$	82	$	337

The following table provides the amortized cost basis of financing receivables that were modified and were in payment default:


June 30, 2023 (Dollars in millions)		Renewals		Term Extensions		Capitalizations		Payment Delays		Combination - Capitalization and Term Extension		Combination - Capitalization, Interest Rate and Term Extension		Other		Total
September 30, 2023 (Dollars in millions)																		September 30, 2023 (Dollars in millions)	Renewals		Term Extensions		Capitalizations		Payment Delays		Combination - Capitalization and Term Extension		Combination - Capitalization, Interest Rate and Term Extension		Other		Total
Commercial:	Commercial:																	Commercial:
Commercial and industrial	Commercial and industrial	$	33	$	—	$	—	$	—	$	—	$	—	$	—	$	33	Commercial and industrial	$	32	$	—	$	—	$	—	$	—	$	—	$	—	$	32

CRE																		CRE	21		—		—		—		—		—		—		21

Consumer:	Consumer:																	Consumer:
Residential mortgage	Residential mortgage	—		5		3		18		14		2		2		44		Residential mortgage	—		7		8		28		25		4		2		74
Home equity		—		—		—		—		—		—		1		1

Indirect auto	Indirect auto	—		—		—		—		—		—		3		3		Indirect auto	—		—		—		5		—		—		2		7

Credit card	Credit card	—		—		—		—		—		—		1		1		Credit card	—		—		—		—		—		—		1		1
Total	Total	$	33	$	5	$	3	$	18	$	14	$	2	$	7	$	82	Total	$	53	$	7	$	8	$	33	$	25	$	4	$	5	$	135

TDRs

The following table presents a summary of TDRs:


(Dollars in millions)	Dec 31, 2022
Performing TDRs:
Commercial:
Commercial and industrial	$	136
CRE	5
Commercial construction	1

Consumer:
Residential mortgage	1,252
Home equity	51
Indirect auto	462
Other consumer	31
Student	30
Credit card	18
Total performing TDRs	1,986
Nonperforming TDRs	214
Total TDRs	$	2,200
ALLL attributable to TDRs	$	152

The primary type of modification for TDRs designated in 2022 is summarized in the tables below. 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.

22 Truist Financial Corporation


		As of / For the Three Months Ended June 30, 2022										As of / For the Six Months Ended June 30, 2022												As of / For the Three Months Ended September 30, 2022											As of / For the Nine Months Ended September 30, 2022
		Type of Modification				Prior Quarter Loan Balance			Related ALLL at Period End			Type of Modification						Prior Quarter Loan Balance				Related ALLL at Period End		Type of Modification						Prior Quarter Loan Balance			Related ALLL at Period End		Type of Modification				Prior Quarter Loan Balance		Related ALLL at Period End
(Dollars in millions)	(Dollars in millions)	Rate		Structure						Rate			Structure						(Dollars in millions)		Rate				Structure							Rate			Structure
Newly designated TDRs:	Newly designated TDRs:																						Newly designated TDRs:
Commercial	Commercial	$	—	$	1		$	1		$	—		$	—		$	9		$	11				$	—	Commercial	$	66	$		—		$	66	$	9	$	66	$	9	$	77	$	9

Consumer	Consumer	97		197		293			14			245			388			622				29	Consumer	123				117		236			12		368		505		858		41

Credit card	Credit card	2		—		2			1			4			—			4				2	Credit card	2				—		2			1		6		—		6		3
Re-modification of previously designated TDRs	Re-modification of previously designated TDRs	9		29								30			40								Re-modification of previously designated TDRs	43				50							73		90

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)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Unearned income, discounts, and net deferred loan fees and costs	Unearned income, discounts, and net deferred loan fees and costs	$	401	$	269	Unearned income, discounts, and net deferred loan fees and costs	$	528	$	269

NOTE 6. Goodwill and Other Intangible Assets

During the third quarter of 2023, the Company observed continuing declines in its financial forecasts for its CB&W and C&CB reporting units. The Company considered such declines in the context of industry related factors, including a decline in bank share prices, concluding that a triggering event had occurred for its CB&W and C&CB reporting units, and therefore Truist performed a ~~qualitative assessment~~quantitative test for these reporting units as of ~~current~~August 1, 2023. Based on the results of the impairment analyses, the Company concluded that the fair values of the reporting units exceed their respective carrying values; therefore, there was no goodwill impairment. However, for the CB&W, and C&CB reporting units, the fair value of the reporting unit exceeded its carrying value by less than 10%, indicating that the goodwill of these reporting units may be at risk of impairment. The Company monitored events and circumstances during the period from August 1, 2023 through September 30, 2023, 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~~August 1, ~~2022 qualitative~~2023 quantitative impairment ~~test. Truist~~test, and the sensitivity of the August 1, 2023 quantitative test results to changes in assumptions through September 30, 2023. Based on these considerations, the Company concluded 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 ~~June~~September 30, ~~2023, and therefore no triggering event occurred that required a quantitative goodwill impairment test.~~2023. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. Activity during 2023 relates to the realignment of Prime Rate Premium Finance Corporation into the C&CB segment from the IH segment. Activity during 2022 reflects the acquisition of BankDirect Capital Finance, BenefitMall, and Kensington Vanguard National Land Services. Refer to “Note 2. Business Combinations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the acquisitions and “Note 18. Operating Segments” for additional information on segments.


(Dollars in millions)	(Dollars in millions)	CB&W		C&CB		IH		Total		(Dollars in millions)	CB&W		C&CB		IH		Total

Goodwill, January 1, 2022	Goodwill, January 1, 2022	$	16,870	$	6,149	$	3,079	$	26,098	Goodwill, January 1, 2022	$	16,870	$	6,149	$	3,079	$	26,098
Mergers and acquisitions	Mergers and acquisitions	—		—		912		912		Mergers and acquisitions	—		—		912		912
Adjustments and other	Adjustments and other	(5)		5		3		3		Adjustments and other	(5)		5		3		3
Goodwill, December 31, 2022	Goodwill, December 31, 2022	16,865		6,154		3,994		27,013		Goodwill, December 31, 2022	16,865		6,154		3,994		27,013

Adjustments and other	Adjustments and other	—		216		(216)		—		Adjustments and other	—		215		(249)		(34)
Goodwill, June 30, 2023		$	16,865	$	6,370	$	3,778	$	27,013
Goodwill, September 30, 2023										Goodwill, September 30, 2023	$	16,865	$	6,369	$	3,745	$	26,979

The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:


			June 30, 2023									December 31, 2022										September 30, 2023						December 31, 2022
(Dollars in millions)	(Dollars in millions)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount	(Dollars in millions)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
CDI	CDI		$	2,473		$	(1,527)		$	946		$	2,473		$	(1,403)		$	1,070		CDI	$	2,473	$	(1,589)	$	884	$	2,473	$	(1,403)	$	1,070
Other, primarily client relationship intangibles	Other, primarily client relationship intangibles		3,791			(1,334)			2,457			3,812			(1,210)			2,602			Other, primarily client relationship intangibles	3,807		(1,399)		2,408		3,812		(1,210)		2,602
Total	Total		$	6,264		$	(2,861)		$	3,403		$	6,285		$	(2,613)		$	3,672		Total	$	6,280	$	(2,988)	$	3,292	$	6,285	$	(2,613)	$	3,672

Truist Financial Corporation 23

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 other consumer loans. Servicing rights are capitalized by the Company as Loan servicing rights on the Consolidated Balance Sheets. Income earned by the Company on its loan 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)	(Dollars in millions)	Jun 30, 2023			Dec 31, 2022			(Dollars in millions)	Sep 30, 2023			Dec 31, 2022
UPB of residential mortgage loan servicing portfolio	UPB of residential mortgage loan servicing portfolio	$	280,064		$	274,028		UPB of residential mortgage loan servicing portfolio	$	271,632		$	274,028
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	222,917			217,046			UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	214,953			217,046
Mortgage loans sold with recourse	Mortgage loans sold with recourse	184			200			Mortgage loans sold with recourse	180			200
Maximum recourse exposure from mortgage loans sold with recourse liability	Maximum recourse exposure from mortgage loans sold with recourse liability	115			127			Maximum recourse exposure from mortgage loans sold with recourse liability	114			127
Indemnification, recourse and repurchase reserves	Indemnification, recourse and repurchase reserves	53			56			Indemnification, recourse and repurchase reserves	52			56

As of / For the Six Months Ended June 30, (Dollars in millions)		2023			2022
As of / For the Nine Months Ended September 30, (Dollars in millions)								As of / For the Nine Months Ended September 30, (Dollars in millions)	2023			2022
UPB of residential mortgage loans sold from LHFS	UPB of residential mortgage loans sold from LHFS	$	7,101		$	15,907		UPB of residential mortgage loans sold from LHFS	$	10,643		$	22,971
Pre-tax gains recognized on mortgage loans sold and held for sale	Pre-tax gains recognized on mortgage loans sold and held for sale	34			66			Pre-tax gains recognized on mortgage loans sold and held for sale	49			62
Servicing fees recognized from mortgage loans serviced for others	Servicing fees recognized from mortgage loans serviced for others	364			297			Servicing fees recognized from mortgage loans serviced for others	517			462
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.27		%	0.30		%	Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.27		%	0.30		%
Weighted average interest rate on mortgage loans serviced for others	Weighted average interest rate on mortgage loans serviced for others	3.54			3.42			Weighted average interest rate on mortgage loans serviced for others	3.51			3.45

The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:


(Dollars in millions)	(Dollars in millions)	2023		2022		(Dollars in millions)	2023		2022
Residential MSRs, carrying value, January 1	Residential MSRs, carrying value, January 1	$	3,428	$	2,305	Residential MSRs, carrying value, January 1	$	3,428	$	2,305
Acquired	Acquired	123		195		Acquired	123		321
Additions	Additions	129		257		Additions	199		372
Sales	Sales	(429)		—		Sales	(531)		—
Change in fair value due to changes in valuation inputs or assumptions(1)	Change in fair value due to changes in valuation inputs or assumptions(1)	64		606		Change in fair value due to changes in valuation inputs or assumptions(1)	207		771

Realization of expected net servicing cash flows, passage of time, and other	Realization of expected net servicing cash flows, passage of time, and other	(133)		(215)		Realization of expected net servicing cash flows, passage of time, and other	(204)		(306)
Residential MSRs, carrying value, June 30		$	3,182	$	3,148
Residential MSRs, carrying value, September 30						Residential MSRs, carrying value, September 30	$	3,222	$	3,463

(1)The ~~six~~nine months ended ~~June~~September 30, 2023 includes realized gains on the portfolio sale of excess servicing.

The sensitivity of the fair value of the Company’s residential MSRs to changes in key assumptions is presented in the following table:


		June 30, 2023									December 31, 2022												September 30, 2023														December 31, 2022
		Range				Weighted Average					Range								Weighted Average				Range										Weighted Average				Range								Weighted Average
(Dollars in millions)	(Dollars in millions)	Min		Max					Min				Max				(Dollars in millions)	Min						Max							Min						Max
Prepayment speed	Prepayment speed	7.4	%	14.8	%				8.1	%			8.6	%			12.5	%					9.0		%	Prepayment speed	6.6		%			11.3		%		7.1		%		8.6		%		12.5		%		9.0	%
Effect on fair value of a 10% increase	Effect on fair value of a 10% increase					$	(88)												$	(110)		Effect on fair value of a 10% increase												$	(83)											$	(110)
Effect on fair value of a 20% increase	Effect on fair value of a 20% increase					(170)													(211)			Effect on fair value of a 20% increase											(160)												(211)
OAS	OAS	2.1	%	12.2	%	4.7		%			1.2	%			11.4	%			4.0		%	OAS	2.3		%			12.3		%			4.8		%		1.2		%		11.4		%		4.0		%
Effect on fair value of a 10% increase	Effect on fair value of a 10% increase					$	(60)												$	(55)		Effect on fair value of a 10% increase											$	(63)											$	(55)
Effect on fair value of a 20% increase	Effect on fair value of a 20% increase					(119)													(108)			Effect on fair value of a 20% increase											(124)												(108)
Composition of loans serviced for others:	Composition of loans serviced for others:																					Composition of loans serviced for others:
Fixed-rate residential mortgage loans	Fixed-rate residential mortgage loans					99.6		%											99.5		%	Fixed-rate residential mortgage loans											99.6		%										99.5		%
Adjustable-rate residential mortgage loans	Adjustable-rate residential mortgage loans					0.4													0.5			Adjustable-rate residential mortgage loans											0.4												0.5
Total	Total					100.0		%											100.0		%	Total											100.0		%										100.0		%
Weighted average life	Weighted average life					7.2 years													6.8 years			Weighted average life											7.7 years												6.8 years

The sensitivity calculations above are hypothetical and should not be considered 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.

24 Truist Financial Corporation

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
UPB of CRE mortgages serviced for others	UPB of CRE mortgages serviced for others	$	35,076	$	36,622	UPB of CRE mortgages serviced for others	$	34,179	$	36,622
CRE mortgages serviced for others covered by recourse provisions	CRE mortgages serviced for others covered by recourse provisions	9,698		9,955		CRE mortgages serviced for others covered by recourse provisions	9,718		9,955
Maximum recourse exposure from CRE mortgages sold with recourse liability	Maximum recourse exposure from CRE mortgages sold with recourse liability	2,819		2,861		Maximum recourse exposure from CRE mortgages sold with recourse liability	2,827		2,861
Recorded reserves related to recourse exposure	Recorded reserves related to recourse exposure	17		17		Recorded reserves related to recourse exposure	17		17
CRE mortgages originated during the year-to-date period	CRE mortgages originated during the year-to-date period	2,046		7,779		CRE mortgages originated during the year-to-date period	2,866		7,779
Commercial MSRs at fair value	Commercial MSRs at fair value	292		301		Commercial MSRs at fair value	295		301

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:


		June 30, 2023						December 31, 2022							September 30, 2023						December 31, 2022

(Dollars in millions)	(Dollars in millions)	Operating Leases			Finance Leases			Operating Leases			Finance Leases			(Dollars in millions)	Operating Leases			Finance Leases			Operating Leases			Finance Leases
ROU assets	ROU assets	$	1,128		$	22		$	1,193		$	20		ROU assets	$	1,112		$	11		$	1,193		$	20

Total lease liabilities	Total lease liabilities	1,460			25			1,545			23			Total lease liabilities	1,436			12			1,545			23
Weighted average remaining term	Weighted average remaining term	6.3 years			5.8 years			6.6 years			5.6 years			Weighted average remaining term	6.2 years			5.6 years			6.6 years			5.6 years
Weighted average discount rate	Weighted average discount rate	2.9		%	3.6		%	2.7		%	3.4		%	Weighted average discount rate	3.0		%	4.8		%	2.7		%	3.4		%


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	2023		2022		2023		2022			(Dollars in millions)	2023		2022		2023		2022
Operating lease costs	Operating lease costs	$	74	$	75	$	156	$	160		Operating lease costs	$	74	$	81	$	230	$	241

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.~~leases held for investment. This table excludes subleases on assets included in premises and equipment.


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Assets held under operating leases~~(1)~~(2)	Assets held under operating leases~~(1)~~(2)	$	2,065	$	2,090	Assets held under operating leases~~(1)~~(2)	$	2,028	$	2,090

Accumulated depreciation	Accumulated depreciation	(561)		(550)		Accumulated depreciation	(575)		(550)
Net	Net	$	1,504	$	1,540	Net	$	1,453	$	1,540

(1)Includes certain land parcels subject to operating leases that have indefinite lives.

(2)Excludes operating leases held-for-sale that totaled $421 million and $516 million at September 30, 2023 and December 31, 2022, respectively.

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain teammates for which the Company is the beneficiary. The carrying value of bank-owned life insurance was $7.7 billion at ~~June~~September 30, 2023 and $7.6 billion at December 31, 2022.

Truist Financial Corporation 25

NOTE 9. Borrowings

The following table presents a summary of short-term borrowings:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022			(Dollars in millions)	Sep 30, 2023		Dec 31, 2022

FHLB advances	FHLB advances	$	18,900		$	18,900			FHLB advances	$	18,900	$	18,900
Securities sold under agreements to repurchase	Securities sold under agreements to repurchase	3,165			2,128				Securities sold under agreements to repurchase	2,130		2,128
Securities sold short	Securities sold short	1,585			1,551				Securities sold short	1,718		1,551
Collateral in excess of derivative exposures	Collateral in excess of derivative exposures	463			403				Collateral in excess of derivative exposures	451		403
Master notes	Master notes	242			370				Master notes	200		370
Other short-term borrowings	Other short-term borrowings	101			70				Other short-term borrowings	86		70
Total short-term borrowings	Total short-term borrowings	$	24,456		$	23,422			Total short-term borrowings	$	23,485	$	23,422

The following table presents a summary of long-term debt:


(Dollars in millions)	(Dollars in millions)				Jun 30, 2023				Dec 31, 2022			(Dollars in millions)				Sep 30, 2023				Dec 31, 2022
							(Dollars in millions)
		(Dollars in millions)
Truist Financial Corporation:	Truist Financial Corporation:							Truist Financial Corporation:
Fixed rate senior notes	Fixed rate senior notes		$	19,093				$	14,107		Fixed rate senior notes					$	18,801			$	14,107
Floating rate senior notes	Floating rate senior notes				999						999				Floating rate senior notes				999				999
Fixed rate subordinated notes(1)	Fixed rate subordinated notes(1)				1,857					1,882				Fixed rate subordinated notes(1)				1,824				1,882
Capital notes(1)	Capital notes(1)				627				625				Capital notes(1)				628				625
Structured notes(2)	Structured notes(2)				—				12			Structured notes(2)				—				12
Truist Bank:	Truist Bank:											Truist Bank:
Fixed rate senior notes	Fixed rate senior notes				4,634				6,982			Fixed rate senior notes				4,142				6,982
Floating rate senior notes	Floating rate senior notes				1,250				1,749			Floating rate senior notes				1,250				1,749
Fixed rate subordinated notes(1)	Fixed rate subordinated notes(1)				4,758				4,767			Fixed rate subordinated notes(1)				4,740				4,767
Fixed rate FHLB advances	Fixed rate FHLB advances				2				2			Fixed rate FHLB advances				2				2
Floating rate FHLB advances	Floating rate FHLB advances				10,300				10,800			Floating rate FHLB advances				7,600				10,800
Other long-term debt(3)	Other long-term debt(3)				1,229				1,278			Other long-term debt(3)				1,246				1,278

Total long-term debt	Total long-term debt				$	44,749			$	43,203		Total long-term debt				$	41,232			$	43,203

(1)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.

(2)Consist of notes with various terms that include fixed or floating rate interest or returns that are linked to an equity index.

(3)Includes debt associated with finance leases, tax credit investments, and other.

26 Truist Financial Corporation

NOTE 10. Shareholders’ Equity

Common Stock

The following table presents total dividends declared per share of common stock:
Three Months Ended June 30, Six Months Ended June 30,
2023 2022 2023 2022
Cash dividends declared per share $ 0.52 $ 0.48 $ 1.04 $ 0.96


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash dividends declared per share	$	0.52	$	0.52	$	1.56	$	1.48

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.


(Dollars in millions)	(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total		(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total
AOCI balance, April 1, 2022		$	(78)	$	(4)	$	(3,627)	$	(2,828)	$	2	$	(6,535)
AOCI balance, July 1, 2022														AOCI balance, July 1, 2022	$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)
OCI before reclassifications, net of tax	OCI before reclassifications, net of tax	—		46		(2,873)		—		(2)		(2,829)		OCI before reclassifications, net of tax	—		(140)		(3,047)		—		(6)		(3,193)

Amounts reclassified from AOCI:	Amounts reclassified from AOCI:													Amounts reclassified from AOCI:
Before tax	Before tax	8		5		32		119		—		164		Before tax	6		1		(6)		105		—		106
Tax effect	Tax effect	3		2		8		27		—		40		Tax effect	—		—		(2)		25		—		23
Amounts reclassified, net of tax	Amounts reclassified, net of tax	5		3		24		92		—		124		Amounts reclassified, net of tax	6		1		(4)		80		—		83
Total OCI, net of tax	Total OCI, net of tax	5		49		(2,849)		92		(2)		(2,705)		Total OCI, net of tax	6		(139)		(3,051)		80		(6)		(3,110)
AOCI balance, June 30, 2022		$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)
AOCI balance, April 1, 2023		$	(1,549)	$	47	$	(8,542)	$	(2,533)	$	(4)	$	(12,581)
AOCI balance, September 30, 2022														AOCI balance, September 30, 2022	$	(67)	$	(94)	$	(9,527)	$	(2,656)	$	(6)	$	(12,350)
AOCI balance, July 1, 2023														AOCI balance, July 1, 2023	$	(1,541)	$	(270)	$	(9,092)	$	(2,468)	$	(3)	$	(13,374)
OCI before reclassifications, net of tax	OCI before reclassifications, net of tax	(5)		(321)		(496)		—		1		(821)		OCI before reclassifications, net of tax	10		(268)		(1,938)		—		(1)		(2,197)

Amounts reclassified from AOCI:	Amounts reclassified from AOCI:													Amounts reclassified from AOCI:
Before tax	Before tax	17		5		(71)		82		—		33		Before tax	16		17		(100)		82		—		15
Tax effect	Tax effect	4		1		(17)		17		—		5		Tax effect	3		4		(23)		19		—		3
Amounts reclassified, net of tax	Amounts reclassified, net of tax	13		4		(54)		65		—		28		Amounts reclassified, net of tax	13		13		(77)		63		—		12
Total OCI, net of tax	Total OCI, net of tax	8		(317)		(550)		65		1		(793)		Total OCI, net of tax	23		(255)		(2,015)		63		(1)		(2,185)
AOCI balance, June 30, 2023		$	(1,541)	$	(270)	$	(9,092)	$	(2,468)	$	(3)	$	(13,374)
AOCI balance, September 30, 2023														AOCI balance, September 30, 2023	$	(1,518)	$	(525)	$	(11,107)	$	(2,405)	$	(4)	$	(15,559)

(Dollars in millions)	(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total		(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total

AOCI balance, January 1, 2022	AOCI balance, January 1, 2022	$	(86)	$	(9)	$	(1,510)	$	—	$	1	$	(1,604)	AOCI balance, January 1, 2022	$	(86)	$	(9)	$	(1,510)	$	—	$	1	$	(1,604)
OCI before reclassifications, net of tax	OCI before reclassifications, net of tax	2		46		(7,909)		—		(1)		(7,862)		OCI before reclassifications, net of tax	2		(94)		(10,956)		—		(7)		(11,055)
AFS Securities transferred to HTM, net of tax	AFS Securities transferred to HTM, net of tax	—		—		2,872		(2,872)		—		—		AFS Securities transferred to HTM, net of tax	—		—		2,872		(2,872)		—		—
Amounts reclassified from AOCI:	Amounts reclassified from AOCI:													Amounts reclassified from AOCI:
Before tax	Before tax	16		11		93		176		—		296		Before tax	22		12		87		281		—		402
Tax effect	Tax effect	5		3		22		40		—		70		Tax effect	5		3		20		65		—		93
Amounts reclassified, net of tax	Amounts reclassified, net of tax	11		8		71		136		—		226		Amounts reclassified, net of tax	17		9		67		216		—		309
Total OCI, net of tax	Total OCI, net of tax	13		54		(7,838)		136		(1)		(7,636)		Total OCI, net of tax	19		(85)		(10,889)		216		(7)		(10,746)
AOCI balance, June 30, 2022		$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)
AOCI balance, September 30, 2022														AOCI balance, September 30, 2022	$	(67)	$	(94)	$	(9,527)	$	(2,656)	$	(6)	$	(12,350)
AOCI balance, January 1, 2023	AOCI balance, January 1, 2023	$	(1,535)	$	(78)	$	(9,395)	$	(2,588)	$	(5)	$	(13,601)	AOCI balance, January 1, 2023	$	(1,535)	$	(78)	$	(9,395)	$	(2,588)	$	(5)	$	(13,601)
OCI before reclassifications, net of tax	OCI before reclassifications, net of tax	(31)		(196)		407		—		2		182		OCI before reclassifications, net of tax	(21)		(464)		(1,531)		—		1		(2,015)

Amounts reclassified from AOCI:	Amounts reclassified from AOCI:													Amounts reclassified from AOCI:
Before tax	Before tax	33		5		(136)		152		—		54		Before tax	49		22		(236)		234		—		69
Tax effect	Tax effect	8		1		(32)		32		—		9		Tax effect	11		5		(55)		51		—		12
Amounts reclassified, net of tax	Amounts reclassified, net of tax	25		4		(104)		120		—		45		Amounts reclassified, net of tax	38		17		(181)		183		—		57
Total OCI, net of tax	Total OCI, net of tax	(6)		(192)		303		120		2		227		Total OCI, net of tax	17		(447)		(1,712)		183		1		(1,958)
AOCI balance, June 30, 2023		$	(1,541)	$	(270)	$	(9,092)	$	(2,468)	$	(3)	$	(13,374)
AOCI balance, September 30, 2023														AOCI balance, September 30, 2023	$	(1,518)	$	(525)	$	(11,107)	$	(2,405)	$	(4)	$	(15,559)
Primary income statement location of amounts reclassified from AOCI	Primary income statement location of amounts reclassified from AOCI	Other expense		Net interest income and Other expense		Securities gains (losses) and Net interest income		Net interest income		Net interest income				Primary income statement location of amounts reclassified from AOCI	Other expense		Net interest income and Other expense		Securities gains (losses) and Net interest income		Net interest income		Net interest income

Truist Financial Corporation 27

NOTE 12. Income Taxes

For the three months ended ~~June~~September 30, 2023 and 2022, the provision for income taxes was ~~$287~~$245 million and ~~$372~~$363 million, respectively, representing effective tax rates of ~~17.6%~~17.2% and ~~19.5%~~18.2%, respectively. The lower effective tax rate for the three months ended September 30, 2023 was primarily driven by decreases in the full year forecasted effective tax rate, partially offset by changes in discrete tax items. For the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, the provision for income taxes was ~~$681~~$926 million and ~~$702 million,~~$1.1 billion, respectively, representing effective tax rates of ~~19.2% for both periods. The lower effective tax rate for the three months ended June 30, 2023 was primarily driven by lower income before taxes.~~18.6% and 18.8%, respectively. 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.

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 June 30,				Six Months Ended June 30,						Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	Income Statement Location	2023		2022		2023		2022		(Dollars in millions)	Income Statement Location	2023		2022		2023		2022
Service cost	Service cost	Personnel expense	$	93	$	140	$	186	$	279	Service cost	Personnel expense	$	77	$	139	$	263	$	418
Interest cost	Interest cost	Other expense	112		88		223		176		Interest cost	Other expense	112		87		334		263
Estimated return on plan assets	Estimated return on plan assets	Other expense	(228)		(270)		(456)		(539)		Estimated return on plan assets	Other expense	(226)		(269)		(682)		(808)
Amortization and other	Amortization and other	Other expense	19		9		39		17		Amortization and other	Other expense	19		10		59		27
Net periodic (benefit) cost	Net periodic (benefit) cost		$	(4)	$	(33)	$	(8)	$	(67)	Net periodic (benefit) cost		$	(18)	$	(33)	$	(26)	$	(100)

Truist makes contributions to the qualified pension plans up to the maximum amount deductible for federal income tax purposes. Discretionary contributions totaling $1.3 billion were made to the Truist pension plan during the ~~six~~nine months ended ~~June~~September 30, 2023.

28 Truist Financial Corporation

NOTE 14. Commitments and Contingencies

Truist utilizes a variety of financial instruments to mitigate exposure to risks and meet the financing needs and provide investment opportunities for clients. These financial instruments include commitments to extend credit, letters of credit and financial guarantees, derivatives, and 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 as a limited partner in certain projects through the New Market Tax Credit program, which is a Federal financial program aimed to stimulate business and real estate investment in underserved communities via a Federal tax credit. Following the first quarter of 2023 adoption of the Investments in Tax Credit Structures accounting standard, these tax credits, referred to as “Other qualified tax credits” below, qualify for the proportional amortization method. The Company also applied the proportional amortization method to investments through the Production Tax Credits program. Refer to “Note 1. Basis of Presentation” for additional information.

The following table summarizes certain tax credit and certain equity investments:

(Dollars in millions)

Balance Sheet Location

Jun 30, 2023

Dec 31, 2022

(Dollars in millions)

Balance Sheet Location

Sep 30, 2023

Dec 31, 2022

Investments in affordable housing projects and other qualified tax credits:

Carrying amount

Other assets

5,960

5,869

Carrying amount

Other assets

6,368

5,869

Amount of future funding commitments included in carrying amount

Other liabilities

1,796

1,762

Amount of future funding commitments included in carrying amount

Other liabilities

2,150

1,762

Lending exposure

Loans and leases for funded amounts

1,667

1,547

Lending exposure

Loans and leases for funded amounts

1,773

1,547

Renewable energy investments:

Carrying amount

Other assets

246

264

Carrying amount

Other assets

310

264

Amount of future funding commitments not included in carrying amount

662

361

Amount of future funding commitments not included in carrying amount

721

361

SBIC and certain other equity method investments:

Carrying amount

Other assets

633

596

Carrying amount

Other assets

670

596

Amount of future funding commitments not included in carrying amount

565

532

Amount of future funding commitments not included in carrying amount

603

532

The following table presents a summary of tax credits and amortization expense associated with the Company’s tax credit investment activity. Activity related to the Company’s renewable energy investments was immaterial.


			Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	Income Statement Location	2023		2022		2023		2022			(Dollars in millions)	Income Statement Location	2023		2022		2023		2022
Tax credits:	Tax credits:											Tax credits:

Investments in affordable housing projects, other qualified tax credits, and other community development investments	Investments in affordable housing projects, other qualified tax credits, and other community development investments	Provision for income taxes	$	160	$	151	$	317	$	302		Investments in affordable housing projects, other qualified tax credits, and other community development investments	Provision for income taxes	$	163	$	163	$	480	$	465

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 projects and other qualified tax credits(1)	Investments in affordable housing projects and other qualified tax credits(1)	Provision for income taxes	$	150	$	124	$	298	$	248		Investments in affordable housing projects and other qualified tax credits(1)	Provision for income taxes	$	153	$	143	$	451	$	391
Other community development investments(1)	Other community development investments(1)	Other noninterest income	3		20		5		39			Other community development investments(1)	Other noninterest income	3		21		8		60

(1)In the first quarter of 2023, the Company adopted the Investments in Tax Credit Structures accounting standard. As a result, amortization related to these tax credits started being recognized in the Provision for income taxes as of the adoption of this standard. This activity was previously recognized in Other income. Refer to “Note 1. Basis of Presentation” for additional information.

Truist Financial Corporation 29

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.

~~Truist Financial Corporation 29~~

The following is a summary of selected notional amounts of off-balance sheet financial instruments:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Commitments to extend, originate, or purchase credit and other commitments	Commitments to extend, originate, or purchase credit and other commitments	$	215,275	$	216,838	Commitments to extend, originate, or purchase credit and other commitments	$	212,827	$	216,838
Residential mortgage loans sold with recourse	Residential mortgage loans sold with recourse	184		200		Residential mortgage loans sold with recourse	180		200
CRE mortgages serviced for others covered by recourse provisions	CRE mortgages serviced for others covered by recourse provisions	9,698		9,955		CRE mortgages serviced for others covered by recourse provisions	9,718		9,955
Other loans serviced for others covered by recourse provisions	Other loans serviced for others covered by recourse provisions	759		723		Other loans serviced for others covered by recourse provisions	819		723
Letters of credit	Letters of credit	5,893		6,030		Letters of credit	6,306		6,030

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)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Total return swaps:	Total return swaps:					Total return swaps:
VIE assets	VIE assets	$	1,812	$	1,830	VIE assets	$	1,780	$	1,830
Trading loans and bonds	Trading loans and bonds	1,734		1,790		Trading loans and bonds	1,732		1,790
VIE liabilities	VIE liabilities	43		163		VIE liabilities	92		163

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, which could potentially be significant. 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.”

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 has capacity for secured financing from both the FRB and FHLB and letters of credit from the 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 nonqualified 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)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Pledged securities	Pledged securities	$	40,590	$	38,012	Pledged securities	$	39,702	$	38,012

Pledged loans:	Pledged loans:					Pledged loans:
FRB	FRB	72,823		71,234		FRB	74,463		71,234
FHLB	FHLB	68,987		68,988		FHLB	68,488		68,988
Unused borrowing capacity:	Unused borrowing capacity:					Unused borrowing capacity:
FRB	FRB	52,737		49,250		FRB	54,633		49,250
FHLB	FHLB	23,219		20,770		FHLB	23,615		20,770

30 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 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 many class members and can involve claims for substantial 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, 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, including those described below, if unfavorable, may be material to the consolidated financial position, consolidated results of operations, or consolidated cash flows of Truist, or cause significant reputational consequences.

~~30 Truist Financial Corporation~~

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 ~~June~~September 30, 2023. This estimate does not represent Truist’s maximum loss exposure, and actual losses may vary significantly. Also, the outcome of a particular matter may be one that the Company did not take into account in its estimate because the Company deemed the likelihood of that outcome to be remote. In addition, the matters underlying this estimate will change from time to time. Estimated losses are based upon currently available information and involve 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.

For certain matters, Truist may be unable to estimate the loss or range of loss, even if it believes that a loss is probable or reasonably possible, until developments in the case provide additional information sufficient to support such an estimate. Such matters are not accrued for and are not reflected in the estimate of reasonably possible losses.

The following is a description of certain legal proceedings 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~~alleges 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~~The amended complaint asserts claims for violations of civil and criminal usury laws, conversion, and money had and 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. ~~The Company previously filed~~On behalf of the certified class as currently defined, Plaintiff seeks a ~~motion~~return of up to $452 million in paid overdraft fees from the 2006 to 2017 period above, plus prejudgment interest. Truist intends to file motions to amend the class definition ~~in which it sought~~ to narrow the scope of the class, ~~and renewed motions~~ to compel arbitration against certain class members, ~~which~~and for summary judgment by the ~~court found were premature. On September 22, 2022, the trial court entered a scheduling order holding that the court will consider such motions after discovery, which is ongoing, is completed.~~current dispositive motion deadline of October 31, 2023. Trial is presently set to commence on April 29, 2024. The Company continues to believe that it has substantial defenses against the underlying ~~claims are without merit.~~claims.

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 (“RDC”) systems ~~infringe~~infringed three patents held by USAA. The complaint ~~seeks~~sought damages, including for alleged willful infringement and a corresponding request that the amount of actual damages be trebled, as well as injunctive and other equitable relief. USAA later amended its complaint to assert two additional RDC patents in the lawsuit. The Company filed its answer and affirmative defenses on October 11, 2022, denying that it ~~infringes~~infringed any of the patents at issue in the lawsuit and asserting that USAA’s patents ~~are~~were invalid or unenforceable. ~~On December 30, 2022, the~~The Company ~~filed a motion for leave to amend its answer to assert~~further asserted counterclaims seeking damages as well as injunctive relief against USAA for infringing ~~four~~six patents owned by the Company and practiced by USAA’s mobile ~~remote deposit capture~~RDC systems. ~~On March 13, 2023,~~The Company also filed petitions for inter partes review (“IPR”) at the Patent Trial and Appeal Board challenging the validity of each of the five patents asserted by USAA ~~filed a motion~~in the lawsuit, and review was granted for leave to file a first amended complaint asserting infringement claims related to a fourth USAA patent. On April 8, 2023, the Company’s motion for leave to amend its answer to assert counterclaims was granted. On April 14, 2023, USAA filed a motion seeking to sever the Company’s counterclaims from the case, and on May 1, 2023, USAA filed a motion to dismiss claims related to two of the ~~counterclaim~~patents and denied for one of the patents. On May 3, 2023, USAA filed a motion for leave to file a second amended complaint asserting infringement claims related to a fifth USAA patent. On May 15, 2023, the Company filed a motion for leave to file a second amended answer and counterclaims to bring claims against USAA for infringement related to two additional patents owned by the Company. On June 21, 2023, the district court entered an order granting both USAA’s and the Company’s pending motions for leave to amend their pleadings. On June 27, 2023, USAA filed an updated motion to sever, seeking to sever the two additional patents asserted by Truist from the case, and USAA also moved to dismiss claims related to these patents on July 6, 2023. Discovery in the district court proceedings is ongoing, and trial is presently set to commence on March 18, 2024.

Truist Financial Corporation 31

At the Patent Trial and Appeal Board, the Company filed separate petitions for inter partes review on October 11, November 7, and November 15, 2022 challenging the validity of each of the first three patents asserted by USAA in the lawsuit. In addition, on April 13,Effective September 29, 2023, the Company ~~filed~~and USAA entered into a ~~petition for inter partes review challenging~~Settlement and Patent License Agreement resolving the ~~validity~~lawsuit. The lawsuit was dismissed with prejudice on October 10, 2023, and the Company’s pending IPR proceedings regarding USAA’s RDC patents have been terminated. The financial impact of the ~~fourth patent USAA added to the lawsuit. On May 16, 2023, the Patent Trial and Appeal Board denied institution of~~resolution did not have a material adverse effect on the Company’s petitions for inter partes review challenging one of the first three USAA patents, and the Company has filed a Request for Rehearing by the Director of one of the decisions denying institution. On May 18 and June 14, 2023, the Patent Trial and Appeal Board granted institution of the Company’s petitions for inter partes review challenging the second and third patents originally brought by USAA in its lawsuit. For those patents for which institution of the petitions for inter partes review has been granted, the Patent Trial and Appeal Board will review the validity of the claims in the applicable patent(s) upon further proceedings which will include briefing by the parties and a hearing before the assigned panel.financial condition or operating results.

Recordkeeping Matters

The SEC and CFTC have requested information from various subsidiaries of the Company that conduct broker-dealer, investment adviser, and swap dealer activities regarding compliance with applicable recordkeeping requirements for business-related electronic communications. The Company is cooperating with these requests. The SEC and CFTC have been conducting similar investigations of other financial institutions regarding business-related communications sent over unapproved electronic messaging channels and have entered into a number of resolutions with various institutions to date.

FDIC Special Assessment

During the second quarter of 2023, the FDIC issued a proposed rule to impose a special assessment to recover the losses to the Deposit Insurance Fund following the recent bank failures. The assessment would be based on an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022. If the final rule is adopted as proposed, the special assessment for Truist is estimated at approximately $460 million to be recognized at the time the rule is finalized and paid in eight quarterly installments beginning in the first quarter of 2024. The actual assessment may vary as a result of the final rule, including any changes to the calculation methodology. Additionally, the FDIC would have the ability to cease collection early, extend the collection period to collect any difference between the estimated and actual losses to the Deposit Insurance Fund, and impose a final shortfall assessment on a one-time basis.

32 Truist Financial Corporation

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:


June 30, 2023 (Dollars in millions)		Total		Level 1		Level 2		Level 3		Netting Adjustments(1)
September 30, 2023 (Dollars in millions)												September 30, 2023 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments(1)
Assets:	Assets:											Assets:
Trading assets:	Trading assets:											Trading assets:
U.S. Treasury	U.S. Treasury	$	142	$	—	$	142	$	—	$	—	U.S. Treasury	$	117	$	—	$	117	$	—	$	—
GSE	GSE	50		—		50		—		—		GSE	47		—		47		—		—
Agency MBS - residential	Agency MBS - residential	—		—		—		—		—		Agency MBS - residential	—		—		—		—		—

States and political subdivisions	States and political subdivisions	466		—		466		—		—		States and political subdivisions	511		—		511		—		—

Corporate and other debt securities	Corporate and other debt securities	1,368		—		1,368		—		—		Corporate and other debt securities	1,480		—		1,480		—		—
Loans	Loans	1,701		—		1,701		—		—		Loans	1,775		—		1,775		—		—
Other	Other	370		306		64		—		—		Other	454		363		91		—		—
Total trading assets	Total trading assets	4,097		306		3,791		—		—		Total trading assets	4,384		363		4,021		—		—
AFS securities:	AFS securities:											AFS securities:
U.S. Treasury	U.S. Treasury	9,718		—		9,718		—		—		U.S. Treasury	10,361		—		10,361		—		—
GSE	GSE	288		—		288		—		—		GSE	324		—		324		—		—
Agency MBS - residential	Agency MBS - residential	53,195		—		53,195		—		—		Agency MBS - residential	49,076		—		49,076		—		—
Agency MBS - commercial	Agency MBS - commercial	2,292		—		2,292		—		—		Agency MBS - commercial	2,135		—		2,135		—		—
States and political subdivisions	States and political subdivisions	418		—		418		—		—		States and political subdivisions	394		—		394		—		—
Non-agency MBS	Non-agency MBS	3,028		—		3,028		—		—		Non-agency MBS	2,808		—		2,808		—		—
Other	Other	26		—		26		—		—		Other	19		—		19		—		—
Total AFS securities	Total AFS securities	68,965		—		68,965		—		—		Total AFS securities	65,117		—		65,117		—		—
LHFS at fair value	LHFS at fair value	1,645		—		1,645		—		—		LHFS at fair value	1,269		—		1,269		—		—
Loans and leases	Loans and leases	16		—		—		16		—		Loans and leases	16		—		—		16		—
Loan servicing rights at fair value	Loan servicing rights at fair value	3,497		—		—		3,497		—		Loan servicing rights at fair value	3,537		—		—		3,537		—
Other assets:	Other assets:											Other assets:
Derivative assets	Derivative assets	805		907		1,819		2		(1,923)		Derivative assets	749		685		2,090		1		(2,027)
Equity securities	Equity securities	910		803		107		—		—		Equity securities	330		227		103		—		—

Total assets	Total assets	$	79,935	$	2,016	$	76,327	$	3,515	$	(1,923)	Total assets	$	75,402	$	1,275	$	72,600	$	3,554	$	(2,027)
Liabilities:	Liabilities:											Liabilities:
Derivative liabilities	Derivative liabilities	$	3,128	$	486	$	4,665	$	33	$	(2,056)	Derivative liabilities	$	3,474	$	428	$	5,002	$	40	$	(1,996)
Securities sold short	Securities sold short	1,585		263		1,322		—		—		Securities sold short	1,718		214		1,504		—		—
Total liabilities	Total liabilities	$	4,713	$	749	$	5,987	$	33	$	(2,056)	Total liabilities	$	5,192	$	642	$	6,506	$	40	$	(1,996)

Truist Financial Corporation 33


December 31, 2022 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments(1)
Assets:
Trading assets:
U.S. Treasury	$	137	$	—	$	137	$	—	$	—
GSE	457		—		457		—		—
Agency MBS - residential	804		—		804		—		—
Agency MBS - commercial	62		—		62		—		—
States and political subdivisions	422		—		422		—		—

Corporate and other debt securities	761		—		761		—		—
Loans	1,960		—		1,960		—		—
Other	302		261		41		—		—
Total trading assets	4,905		261		4,644		—		—
AFS securities:
U.S. Treasury	10,295		—		10,295		—		—
GSE	303		—		303		—		—
Agency MBS - residential	55,225		—		55,225		—		—
Agency MBS - commercial	2,424		—		2,424		—		—
States and political subdivisions	416		—		416		—		—
Non-agency MBS	3,117		—		3,117		—		—
Other	21		—		21		—		—
Total AFS securities	71,801		—		71,801		—		—
LHFS at fair value	1,065		—		1,065		—		—
Loans and leases	18		—		—		18		—
Loan servicing rights at fair value	3,758		—		—		3,758		—
Other assets:
Derivative assets	684		472		1,980		1		(1,769)
Equity securities	898		796		102		—		—

Total assets	$	83,129	$	1,529	$	79,592	$	3,777	$	(1,769)
Liabilities:
Derivative liabilities	$	2,971	$	364	$	4,348	$	37	$	(1,778)
Securities sold short	1,551		114		1,437		—		—
Total liabilities	$	4,522	$	478	$	5,785	$	37	$	(1,778)

(1)Refer to “Note 16. Derivative Financial Instruments” for additional discussion on netting adjustments.

At ~~June~~September 30, 2023 and December 31, 2022, investments totaling ~~$379~~$402 million and $385 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, 2022.

34 Truist Financial Corporation

Activity for Level 3 assets and liabilities is summarized below:


Three Months Ended June 30, 2023 and 2022 (Dollars in millions)		Loans and Leases		Loan Servicing Rights		Net Derivatives
Balance at April 1, 2022		$	21	$	3,013	$	(74)
Three Months Ended September 30, 2023 and 2022 (Dollars in millions)								Three Months Ended September 30, 2023 and 2022 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives
Balance at July 1, 2022								Balance at July 1, 2022	$	20	$	3,466	$	(36)
Total realized and unrealized gains (losses):	Total realized and unrealized gains (losses):							Total realized and unrealized gains (losses):
Included in earnings	Included in earnings	—		260		(93)		Included in earnings	—		190		(61)

Purchases	Purchases	—		195		—		Purchases	—		126		—
Issuances	Issuances	—		123		23		Issuances	—		130		(30)
Sales	Sales	—		(1)		—		Sales	—		(6)		—
Settlements	Settlements	—		(124)		108		Settlements	—		(109)		56

Transfers out of level 3 and other		(1)		—		—
Balance at June 30, 2022		$	20	$	3,466	$	(36)
Balance at April 1, 2023		$	17	$	3,303	$	(18)
Other								Other	(1)		—		—
Balance at September 30, 2022								Balance at September 30, 2022	$	19	$	3,797	$	(71)
Balance at July 1, 2023								Balance at July 1, 2023	$	16	$	3,497	$	(31)
Total realized and unrealized gains (losses):	Total realized and unrealized gains (losses):							Total realized and unrealized gains (losses):
Included in earnings	Included in earnings	—		70		(20)		Included in earnings	—		151		(25)

Purchases		—		123		—

Issuances	Issuances	—		92		18		Issuances	—		78		1
Sales	Sales	—		(1)		—		Sales	—		(102)		—
Settlements	Settlements	(1)		(90)		(11)		Settlements	—		(87)		16

Balance at June 30, 2023		$	16	$	3,497	$	(31)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2023		$	—	$	71	$	(9)
Balance at September 30, 2023								Balance at September 30, 2023	$	16	$	3,537	$	(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023								Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023	$	—	$	150	$	(21)

Six Months Ended June 30, 2023 and 2022 (Dollars in millions)		Loans and Leases		Loan Servicing Rights		Net Derivatives
Nine Months Ended September 30, 2023 and 2022 (Dollars in millions)								Nine Months Ended September 30, 2023 and 2022 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives

Balance at January 1, 2022	Balance at January 1, 2022	$	23	$	2,633	$	(12)	Balance 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 earnings	Included in earnings	—		617		(263)		Included in earnings	—		807		(324)

Purchases	Purchases	—		195		—		Purchases	—		321		—
Issuances	Issuances	—		281		40		Issuances	—		411		10
Sales	Sales	—		(1)		—		Sales	—		(7)		—
Settlements	Settlements	—		(259)		199		Settlements	—		(368)		255

Other	Other	(3)		—		—		Other	(4)		—		—
Balance at June 30, 2022		$	20	$	3,466	$	(36)
Balance at September 30, 2022								Balance at September 30, 2022	$	19	$	3,797	$	(71)
Balance at January 1, 2023	Balance at January 1, 2023	$	18	$	3,758	$	(36)	Balance at January 1, 2023	$	18	$	3,758	$	(36)
Total realized and unrealized gains (losses):	Total realized and unrealized gains (losses):							Total realized and unrealized gains (losses):
Included in earnings	Included in earnings	—		65		(22)		Included in earnings	—		216		(47)

Purchases	Purchases	—		123		—		Purchases	—		123		—
Issuances	Issuances	—		140		16		Issuances	—		218		17
Sales	Sales	—		(429)		—		Sales	—		(531)		—
Settlements	Settlements	(2)		(160)		11		Settlements	(2)		(247)		27

Balance at June 30, 2023		$	16	$	3,497	$	(31)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2023		$	—	$	16	$	(20)
Balance at September 30, 2023								Balance at September 30, 2023	$	16	$	3,537	$	(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023								Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023	$	—	$	166	$	(39)
Primary income statement location of realized gains (losses) included in earnings	Primary income statement location of realized gains (losses) included in earnings	Other income		Mortgage banking income		Mortgage banking income		Primary income statement location of realized gains (losses) included in earnings	Other income		Mortgage banking income		Mortgage banking income

Truist Financial Corporation 35

Fair Value Option

The following table details the fair value and UPB of certain loans that were elected to be measured at fair value:
June 30, 2023 December 31, 2022
(Dollars in millions) Fair Value UPB Difference Fair Value UPB Difference
Trading loans $ 1,701 $ 1,819 $ (118) $ 1,960 $ 2,101 $ (141)
Loans and leases 16 18 (2) 18 20 (2)
LHFS at fair value 1,645 1,645 — 1,065 1,056 9

~~Truist Financial Corporation 35~~


	September 30, 2023						December 31, 2022
(Dollars in millions)	Fair Value		UPB		Difference		Fair Value		UPB		Difference
Trading loans	$	1,775	$	1,864	$	(89)	$	1,960	$	2,101	$	(141)
Loans and leases	16		17		(1)		18		20		(2)
LHFS at fair value	1,269		1,288		(19)		1,065		1,056		9

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)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Carrying value:	Carrying value:					Carrying value:
LHFS	LHFS	$	123	$	271	LHFS	$	119	$	271
Loans and leases	Loans and leases	738		500		Loans and leases	679		500
Other	Other	91		120		Other	506		120

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.


		Six Months Ended June 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	2023		2022			(Dollars in millions)	2023		2022
Valuation adjustments:	Valuation adjustments:						Valuation adjustments:
LHFS	LHFS	$	(27)	$	(4)		LHFS	$	(40)	$	(9)
Loans and leases	Loans and leases	(311)		(165)			Loans and leases	(428)		(280)
Other(1)	Other(1)	(86)		(50)			Other(1)	(198)		(87)

(1)Prior period amounts were revised.

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 LOCOM. The table above excludes ~~$155~~$25 million and $108 million of LHFS carried at cost at ~~June~~September 30, 2023 and December 31, 2022, respectively, that did not require a valuation adjustment during the period. Additionally, the table above excludes $98 million of charge-offs related to the student loan portfolio sale that occurred in the second quarter of 2023, which was previously provided for. The remainder of LHFS is carried at fair value.

Loans and leases consist of larger commercial loans and leases that are 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 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, 2022 for additional discussion of individually evaluated loans and leases.

Other includes foreclosed real estate, other foreclosed property, ROU assets, premises and equipment, OREO, and ~~OREO,~~held for sale operating leases, 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 LOCOM, less costs to sell.

36 Truist Financial Corporation

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:


			June 30, 2023				December 31, 2022						September 30, 2023				December 31, 2022
(Dollars in millions)	(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:	Financial assets:										Financial assets:
HTM securities	HTM securities	Level 2	$	55,958	$	45,956	$	57,713	$	47,791	HTM securities	Level 2	$	54,942	$	42,501	$	57,713	$	47,791
Loans and leases HFI, net of ALLL	Loans and leases HFI, net of ALLL	Level 3	317,470		308,846		321,596		308,738		Loans and leases HFI, net of ALLL	Level 3	310,990		299,829		321,596		308,738
Financial liabilities:	Financial liabilities:										Financial liabilities:
Time deposits	Time deposits	Level 2	42,227		41,992		23,474		23,383		Time deposits	Level 2	42,148		41,900		23,474		23,383
Long-term debt	Long-term debt	Level 2	44,749		43,072		43,203		40,951		Long-term debt	Level 2	41,232		39,705		43,203		40,951

The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was ~~$273~~$277 million and $272 million at ~~June~~September 30, 2023 and December 31, 2022, respectively.

Truist Financial Corporation 37

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:


		June 30, 2023						December 31, 2022										September 30, 2023								December 31, 2022
		Notional Amount		Fair Value				Notional Amount			Fair Value							Notional Amount			Fair Value					Notional Amount			Fair Value
(Dollars in millions)	(Dollars in millions)			Assets		Liabilities				Assets			Liabilities			(Dollars in millions)				Assets			Liabilities					Assets			Liabilities
Cash flow hedges:	Cash flow hedges:																		Cash flow hedges:
Interest rate contracts:	Interest rate contracts:																Interest rate contracts:

Swaps hedging commercial loans	Swaps hedging commercial loans	$	21,400	$	—	$	—	$	16,650		$	—		$	—		Swaps hedging commercial loans	$	20,900		$	—		$	—	$	16,650		$	—		$	—
Fair value hedges:	Fair value hedges:																Fair value hedges:
Interest rate contracts:	Interest rate contracts:																Interest rate contracts:
Swaps hedging long-term debt	Swaps hedging long-term debt	19,268		—		(66)		16,393			—			(68)			Swaps hedging long-term debt	19,268			—			(56)		16,393			—			(68)

Swaps hedging AFS securities	Swaps hedging AFS securities	8,627		—		—		7,097			—			—			Swaps hedging AFS securities	20,052			—			—		7,097			—			—

Total	Total	27,895		—		(66)		23,490			—			(68)			Total	39,320			—			(56)		23,490			—			(68)
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:
Swaps	Swaps	295,199		599		(2,620)		155,670			579			(2,665)			Swaps	158,550			618			(3,026)		155,670			579			(2,665)

Options	Options	44,020		164		(188)		29,840			172			(192)			Options	38,430			145			(168)		29,840			172			(192)
Forward commitments	Forward commitments	211		—		—		1,495			8			(2)			Forward commitments	372			4			(2)		1,495			8			(2)
Other	Other	3,337		—		—		3,823			1			—			Other	3,239			—			—		3,823			1			—
Equity contracts	Equity contracts	36,590		1,058		(1,481)		33,185			644			(901)			Equity contracts	40,653			824			(1,331)		33,185			644			(901)
Credit contracts:	Credit contracts:																Credit contracts:
Trading assets	Trading assets	120		—		—		140			—			—			Trading assets	600			—			—		140			—			—
Loans and leases	Loans and leases	465		—		(1)		394			—			—			Loans and leases	465			—			—		394			—			—
Risk participation agreements	Risk participation agreements	7,473		—		(2)		6,824			—			(3)			Risk participation agreements	7,638			—			(2)		6,824			—			(3)
Total return swaps	Total return swaps	1,802		62		(7)		1,729			81			(2)			Total return swaps	1,693			41			(10)		1,729			81			(2)

Foreign exchange contracts	Foreign exchange contracts	23,940		284		(277)		19,022			364			(380)			Foreign exchange contracts	21,679			346			(298)		19,022			364			(380)
Commodity	Commodity	9,062		439		(429)		4,881			444			(447)			Commodity	9,156			476			(465)		4,881			444			(447)

Total	Total	422,219		2,606		(5,005)		257,003			2,293			(4,592)			Total	282,475			2,454			(5,302)		257,003			2,293			(4,592)
Mortgage banking:	Mortgage banking:																Mortgage banking:
Interest rate contracts:	Interest rate contracts:																Interest rate contracts:
Swaps	Swaps	277		—		—		115			—			—			Swaps	148			—			—		115			—			—
Options(1)	Options(1)	400		1		—		400			1			—			Options(1)	400			3			—		400			1			—
Interest rate lock commitments	Interest rate lock commitments	1,426		2		(16)		999			1			(17)			Interest rate lock commitments	1,259			1			(23)		999			1			(17)
When issued securities, forward rate agreements and forward commitments(1)	When issued securities, forward rate agreements and forward commitments(1)	2,600		39		—		1,728			24			(6)			When issued securities, forward rate agreements and forward commitments(1)	2,013			56			—		1,728			24			(6)
Other	Other	99		—		—		140			1			—			Other	68			—			—		140			1			—

Total	Total	4,802		42		(16)		3,382			27			(23)			Total	3,888			60			(23)		3,382			27			(23)
MSRs:	MSRs:																MSRs:
Interest rate contracts:	Interest rate contracts:																Interest rate contracts:
Swaps	Swaps	14,605		—		—		14,566			—			—			Swaps	13,355			1			—		14,566			—			—

Options(1)	Options(1)	15,882		80		(89)		15,505			125			(48)			Options(1)	17,112			261			(77)		15,505			125			(48)
When issued securities, forward rate agreements and forward commitments(1)	When issued securities, forward rate agreements and forward commitments(1)	871		—		(7)		884			8			(15)			When issued securities, forward rate agreements and forward commitments(1)	712			—			(10)		884			8			(15)
Other	Other	2,161		—		(1)		1,532			—			(3)			Other	2,009			—			(2)		1,532			—			(3)
Total	Total	33,519		80		(97)		32,487			133			(66)			Total	33,188			262			(89)		32,487			133			(66)
Total derivatives not designated as hedges	Total derivatives not designated as hedges	460,540		2,728		(5,118)		292,872			2,453			(4,681)			Total derivatives not designated as hedges	319,551			2,776			(5,414)		292,872			2,453			(4,681)
Total derivatives	Total derivatives	$	509,835	2,728		(5,184)		$	333,012		2,453			(4,749)			Total derivatives	$	379,771		2,776			(5,470)		$	333,012		2,453			(4,749)
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 arrangements and exchange traded derivatives	Amounts subject to master netting arrangements and exchange traded derivatives			(1,344)		1,344					(1,223)			1,223			Amounts subject to master netting arrangements and exchange traded derivatives				(1,325)			1,325					(1,223)			1,223
Cash collateral (received) posted for amounts subject to master netting arrangements	Cash collateral (received) posted for amounts subject to master netting arrangements			(579)		712					(546)			555			Cash collateral (received) posted for amounts subject to master netting arrangements				(702)			671					(546)			555

Net amount	Net amount			$	805	$	(3,128)				$	684		$	(2,971)		Net amount				$	749		$	(3,474)				$	684		$	(2,971)

(1)In the second quarter of 2023, Truist reclassified TBA MBS options into the options line item. Prior periods were reclassified to conform to the current presentation.

38 Truist Financial Corporation 37

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:


June 30, 2023 (Dollars in millions)		Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
September 30, 2023 (Dollars in millions)												September 30, 2023 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:	Derivative assets:											Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	1,738	$	(1,438)	$	300	$	—	$	300	Derivatives subject to master netting arrangement or similar arrangement	$	2,014	$	(1,602)	$	412	$	—	$	412
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	83		—		83		—		83		Derivatives not subject to master netting arrangement or similar arrangement	77		—		77		—		77
Exchange traded derivatives	Exchange traded derivatives	907		(485)		422		—		422		Exchange traded derivatives	685		(425)		260		—		260
Total derivative assets	Total derivative assets	$	2,728	$	(1,923)	$	805	$	—	$	805	Total derivative assets	$	2,776	$	(2,027)	$	749	$	—	$	749
Derivative liabilities:	Derivative liabilities:											Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	(4,020)	$	1,571	$	(2,449)	$	126	$	(2,323)	Derivatives subject to master netting arrangement or similar arrangement	$	(4,207)	$	1,571	$	(2,636)	$	119	$	(2,517)
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	(678)		—		(678)		—		(678)		Derivatives not subject to master netting arrangement or similar arrangement	(835)		—		(835)		—		(835)
Exchange traded derivatives	Exchange traded derivatives	(486)		485		(1)		—		(1)		Exchange traded derivatives	(428)		425		(3)		—		(3)
Total derivative liabilities	Total derivative liabilities	$	(5,184)	$	2,056	$	(3,128)	$	126	$	(3,002)	Total derivative liabilities	$	(5,470)	$	1,996	$	(3,474)	$	119	$	(3,355)

December 31, 2022 (Dollars in millions)	December 31, 2022 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount		December 31, 2022 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:	Derivative assets:											Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	1,895	$	(1,408)	$	487	$	—	$	487	Derivatives subject to master netting arrangement or similar arrangement	$	1,895	$	(1,408)	$	487	$	—	$	487
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	86		—		86		—		86		Derivatives not subject to master netting arrangement or similar arrangement	86		—		86		—		86
Exchange traded derivatives	Exchange traded derivatives	472		(361)		111		—		111		Exchange traded derivatives	472		(361)		111		—		111
Total derivative assets	Total derivative assets	$	2,453	$	(1,769)	$	684	$	—	$	684	Total derivative assets	$	2,453	$	(1,769)	$	684	$	—	$	684
Derivative liabilities:	Derivative liabilities:											Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	(3,688)	$	1,417	$	(2,271)	$	43	$	(2,228)	Derivatives subject to master netting arrangement or similar arrangement	$	(3,688)	$	1,417	$	(2,271)	$	43	$	(2,228)
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	(697)		—		(697)		—		(697)		Derivatives not subject to master netting arrangement or similar arrangement	(697)		—		(697)		—		(697)
Exchange traded derivatives	Exchange traded derivatives	(364)		361		(3)		—		(3)		Exchange traded derivatives	(364)		361		(3)		—		(3)
Total derivative liabilities	Total derivative liabilities	$	(4,749)	$	1,778	$	(2,971)	$	43	$	(2,928)	Total derivative liabilities	$	(4,749)	$	1,778	$	(2,971)	$	43	$	(2,928)

The following table presents the carrying value of hedged items in fair value hedging relationships:


		June 30, 2023						December 31, 2022							September 30, 2023						December 31, 2022
				Hedge Basis Adjustment						Hedge Basis Adjustment							Hedge Basis Adjustment						Hedge Basis Adjustment
(Dollars in millions)	(Dollars in millions)	Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges		Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges		(Dollars in millions)	Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges		Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges
AFS securities(1)	AFS securities(1)	$	37,365	$	(576)	$	(4)	$	38,773	$	(630)	$	(4)	AFS securities(1)	$	45,402	$	(926)	$	(4)	$	38,773	$	(630)	$	(4)
Loans and leases	Loans and leases	347		—		9		353		—		10		Loans and leases	331		—		8		353		—		10

Long-term debt	Long-term debt	30,333		(579)		(141)		25,378		(780)		218		Long-term debt	28,242		(855)		(192)		25,378		(780)		218

(1)The amortized cost of AFS securities was ~~$44.6~~$57.2 billion at ~~June~~September 30, 2023 and $46.2 billion at December 31, 2022. Further, as of ~~June~~September 30, 2023, closed portfolios of securities hedged under the portfolio layer method have an amortized cost of ~~$23.0~~$51.5 billion, of which ~~$8.6~~$20.1 billion was designated as hedged. The remaining amount of amortized cost is from securities with terminated hedges where the basis adjustment is being amortized into earnings using the effective interest method over the contractual life of the security.

38 Truist Financial Corporation 39

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:


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	2023		2022		2023		2022			(Dollars in millions)	2023		2022		2023		2022
Pre-tax gain (loss) recognized in OCI:	Pre-tax gain (loss) recognized in OCI:										Pre-tax gain (loss) recognized in OCI:
Commercial loans	Commercial loans	$	(419)	$	59	$	(256)	$	59		Commercial loans	$	(351)	$	(182)	$	(607)	$	(123)

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:

Long-term debt	Long-term debt	—		(5)		—		(11)			Long-term debt	—		(1)		—		(12)
Commercial Loans	Commercial Loans	(5)		—		(5)		—			Commercial Loans	(17)		—		(22)		—

The following table summarizes the impact on net interest income related to fair value hedges:


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	2023		2022		2023		2022			(Dollars in millions)	2023		2022		2023		2022
Investment securities:	Investment securities:										Investment securities:
Amounts related to interest settlements	Amounts related to interest settlements	$	87	$	9	$	163	$	4		Amounts related to interest settlements	$	119	$	36	$	282	$	40
Recognized on derivatives	Recognized on derivatives	42		60		(53)		474			Recognized on derivatives	326		157		273		631
Recognized on hedged items	Recognized on hedged items	(31)		(42)		75		(444)			Recognized on hedged items	(323)		(142)		(248)		(586)
Net income (expense) recognized(1)	Net income (expense) recognized(1)	98		27		185		34			Net income (expense) recognized(1)	122		51		307		85
Loans and leases:	Loans and leases:										Loans and leases:

Recognized on hedged items	Recognized on hedged items	—		—		(1)		(1)			Recognized on hedged items	(1)		(1)		(2)		(2)
Net income (expense) recognized	Net income (expense) recognized	—		—		(1)		(1)			Net income (expense) recognized	(1)		(1)		(2)		(2)

Long-term debt:	Long-term debt:										Long-term debt:
Amounts related to interest settlements	Amounts related to interest settlements	(47)		3		(93)		19			Amounts related to interest settlements	(56)		(23)		(149)		(4)
Recognized on derivatives	Recognized on derivatives	(291)		(38)		(135)		(467)			Recognized on derivatives	(319)		(445)		(454)		(912)
Recognized on hedged items	Recognized on hedged items	299		82		157		568			Recognized on hedged items	326		482		483		1,050
Net income (expense) recognized	Net income (expense) recognized	(39)		47		(71)		120			Net income (expense) recognized	(49)		14		(120)		134
Net income (expense) recognized, total	Net income (expense) recognized, total	$	59	$	74	$	113	$	153		Net income (expense) recognized, total	$	72	$	64	$	185	$	217

(1)Includes $12 million and ~~$22~~$33 million of income recognized for the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively, and ~~$17~~$15 million and ~~$25~~$41 million for the three and ~~six~~nine months ended ~~June~~September 30, 2022, respectively, from securities with terminated hedges that were reclassified to HTM. The income recognized was offset by the amortization of the fair value mark.

40 Truist Financial Corporation 39

The following table presents information about the Company’s cash flow and fair value hedges:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Cash flow hedges:	Cash flow hedges:					Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI	Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI	$	(311)	$	(118)	Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI	$	(573)	$	(118)
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)	Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)	41		40		Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)	48		40
Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(142)		(31)		Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(201)		(31)
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 instruments	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 instruments	5 years		6 years		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 instruments	5 years		6 years
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 2033)(1)		$	290	$	669
Unrecognized pre-tax net gain (loss) on terminated hedges(1)						Unrecognized pre-tax net gain (loss) on terminated hedges(1)	$	229	$	669
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	39		163		Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	22		163

(1)Includes deferred gains that are recorded in AOCI as a result of the reclassification to HTM of previously hedged securities of ~~$436~~$425 million at ~~June~~September 30, 2023 and $457 million at December 31, 2022.

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 June 30,				Six Months Ended June 30,				Three Months Ended September 30,					Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	Income Statement Location	2023		2022		2023		2022			(Dollars in millions)	Income Statement Location	2023		2022		2023		2022
Client-related and other risk management:	Client-related and other risk management:											Client-related and other risk management:
Interest rate contracts	Interest rate contracts	Investment banking and trading income and other income	$	52	$	72	$	86	$	128		Interest rate contracts	Investment banking and trading income and other income	$	37	$	59	$	123	$	187
Foreign exchange contracts	Foreign exchange contracts	Investment banking and trading income and other income	(26)		147		(29)		179			Foreign exchange contracts	Investment banking and trading income and other income	118		202		89		381
Equity contracts	Equity contracts	Investment banking and trading income and other income	(22)		2		(20)		7			Equity contracts	Investment banking and trading income and other income	(14)		(57)		(34)		(50)
Credit contracts	Credit contracts	Investment banking and trading income and other income	(26)		83		(59)		91			Credit contracts	Investment banking and trading income and other income	(33)		(7)		(92)		84
Commodity contracts	Commodity contracts	Investment banking and trading income	7		(5)		17		—			Commodity contracts	Investment banking and trading income	3		9		20		9
Mortgage banking:	Mortgage banking:											Mortgage banking:
Interest rate contracts - residential	Interest rate contracts - residential	Mortgage banking income	23		217		22		478			Interest rate contracts - residential	Mortgage banking income	39		94		61		572
Interest rate contracts - commercial	Interest rate contracts - commercial	Mortgage banking income	(2)		—		(1)		(1)			Interest rate contracts - commercial	Mortgage banking income	—		6		(1)		5
MSRs:	MSRs:											MSRs:
Interest rate contracts - residential	Interest rate contracts - residential	Mortgage banking income	(83)		(265)		(82)		(614)			Interest rate contracts - residential	Mortgage banking income	(162)		(175)		(244)		(789)
Interest rate contracts - commercial	Interest rate contracts - commercial	Mortgage banking income	(7)		(5)		(4)		(14)			Interest rate contracts - commercial	Mortgage banking income	(9)		(9)		(13)		(23)
Total	Total		$	(84)	$	246	$	(70)	$	254		Total		$	(21)	$	122	$	(91)	$	376

Truist Financial Corporation 41

Credit Derivative Instruments

As part of the Company’s corporate and 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 ~~June~~September 30, 2023, the remaining terms on these risk participations ranged from less than one year to 14 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.

~~40 Truist Financial Corporation~~

The Company has also entered into TRS contracts on 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)

Jun 30, 2023

Dec 31, 2022

(Dollars in millions)

Sep 30, 2023

Dec 31, 2022

Risk participation agreements:

Maximum potential amount of exposure

543

575

Maximum potential amount of exposure

434

575

Total return swaps:

Cash collateral held

461

453

Cash collateral held

435

453

The following table summarizes collateral positions with counterparties:


(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Dealer and other counterparties:	Dealer and other counterparties:					Dealer and other counterparties:
Cash and other collateral received from counterparties	Cash and other collateral received from counterparties	$	579	$	542	Cash and other collateral received from counterparties	$	702	$	542
Derivatives in a net gain position secured by collateral received	Derivatives in a net gain position secured by collateral received	668		618		Derivatives in a net gain position secured by collateral received	787		618
Unsecured positions in a net gain with counterparties after collateral postings	Unsecured positions in a net gain with counterparties after collateral postings	89		76		Unsecured positions in a net gain with counterparties after collateral postings	83		76
Cash collateral posted to counterparties	Cash collateral posted to counterparties	837		590		Cash collateral posted to counterparties	789		590
Derivatives in a net loss position secured by collateral	Derivatives in a net loss position secured by collateral	944		692		Derivatives in a net loss position secured by collateral	855		692

Central counterparties clearing:	Central counterparties clearing:					Central counterparties clearing:
Cash collateral, including initial margin, received from central clearing parties	Cash collateral, including initial margin, received from central clearing parties	—		4		Cash collateral, including initial margin, received from central clearing parties	—		4
Cash collateral, including initial margin, posted to central clearing parties	Cash collateral, including initial margin, posted to central clearing parties	154		45		Cash collateral, including initial margin, posted to central clearing parties	12		45
Derivatives in a net loss position	Derivatives in a net loss position	2		13		Derivatives in a net loss position	—		13
Derivatives in a net gain position	Derivatives in a net gain position	10		12		Derivatives in a net gain position	16		12
Securities pledged to central counterparties clearing	Securities pledged to central counterparties clearing	1,000		639		Securities pledged to central counterparties clearing	1,112		639

42 Truist Financial Corporation

NOTE 17. Computation of EPS

Basic and diluted EPS calculations are presented in the following table:


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions, except per share data, shares in thousands)	(Dollars in millions, except per share data, shares in thousands)	2023		2022		2023		2022			(Dollars in millions, except per share data, shares in thousands)	2023		2022		2023		2022
Net income available to common shareholders	Net income available to common shareholders	$	1,234	$	1,454	$	2,644	$	2,781		Net income available to common shareholders	$	1,071	$	1,536	$	3,715	$	4,317
Weighted average number of common shares	Weighted average number of common shares	1,331,953		1,330,160		1,330,286		1,329,601			Weighted average number of common shares	1,333,522		1,326,539		1,331,377		1,328,569
Effect of dilutive outstanding equity-based awards	Effect of dilutive outstanding equity-based awards	5,354		8,704		8,060		10,624			Effect of dilutive outstanding equity-based awards	7,052		10,120		7,664		10,502
Weighted average number of diluted common shares	Weighted average number of diluted common shares	1,337,307		1,338,864		1,338,346		1,340,225			Weighted average number of diluted common shares	1,340,574		1,336,659		1,339,041		1,339,071
Basic EPS	Basic EPS	$	0.93	$	1.09	$	1.99	$	2.09		Basic EPS	$	0.80	$	1.16	$	2.79	$	3.25
Diluted EPS	Diluted EPS	$	0.92	$	1.09	$	1.98	$	2.08		Diluted EPS	$	0.80	$	1.15	$	2.77	$	3.22
Anti-dilutive awards	Anti-dilutive awards	9,123		4,843		4,251		130			Anti-dilutive awards	5,875		—		4,665		85

~~Truist Financial Corporation 41~~

NOTE 18. Operating Segments

Truist operates and measures business activity across three segments: CB&W, C&CB, and IH, with functional activities included in 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, 2022.

During the first quarter of 2023, Truist realigned Prime Rate Premium Finance Corporation, which includes AFCO Credit Corporation and CAFO Holding Company, into the C&CB segment from the IH segment. Prior period results have been revised to conform to the current presentation. During the second quarter of 2023, Truist updated its segment cost allocation methodology. Results for the first quarter of 2023 have been revised to conform to the current presentation. Management concluded the impact to 2022 was not material.

In conjunction with the Company’s April 3, 2023 sale of a 20% stake of the common equity in IH, IH issued $5.0 billion of 8.25% mandatorily redeemable preferred units to the Company, with the related interest expense, which is fully allocable to the Company, reported in Net intersegment interest income (expense).

Also related to the same transaction, ~~IH was~~IH’s recapitalized from a corporate entity to an LLC, such that each ~~member~~partner is allocated its share of ~~IH’s~~Insurance Holding’s income before taxes, and beginning in the second quarter of 2023 the Company recognizes its associated income tax provision through ~~Other, Treasury & Corporate.~~OT&C. The Company elected not to restate prior periods for this change based on IH’s previous status as a corporate entity. The Company recognized ~~$54~~$30 million and $84 million for the ~~second quarter~~three and nine months ended September 30, 2023, respectively, of tax provision related to IH in ~~Other, Treasury & Corporate.~~OT&C. In the third quarter of 2023, IH recognized $3 million of taxes for certain state jurisdictions that impose income taxes on partnerships and LLCs.

42 Truist Financial Corporation 43

The following table presents results by segment:


Three Months Ended June 30, (Dollars in millions)		CB&W				C&CB				IH				OT&C(1)				Total
		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
Three Months Ended September 30, (Dollars in millions)																						Three Months Ended September 30, (Dollars in millions)	CB&W		C&CB			IH						OT&C(1)						Total
																							2023	2022	2023	2022		2023			2022			2023			2022			2023			2022
Net interest income (expense)	Net interest income (expense)	$	1,454	$	1,568	$	2,420	$	1,305	$	1	$	1	$	(250)	$	533	$	3,625	$	3,407						Net interest income (expense)		$	1,269		$	1,690		$	2,427		$	1,635		$	1		$	1	$	(133)	$	419	$	3,564	$	3,745
Net intersegment interest income (expense)	Net intersegment interest income (expense)	1,214		725		(720)		54		(85)		5		(409)		(784)		—		—							Net intersegment interest income (expense)		1,388			992			(776)			10			(81)			10		(531)		(1,012)		—		—
Segment net interest income	Segment net interest income	2,668		2,293		1,700		1,359		(84)		6		(659)		(251)		3,625		3,407							Segment net interest income		2,657			2,682			1,651			1,645			(80)			11		(664)		(593)		3,564		3,745
Allocated provision for credit losses	Allocated provision for credit losses	224		199		312		(27)		—		—		2		(1)		538		171							Allocated provision for credit losses		248			283			254			(48)			—			—		(5)		(1)		497		234
Segment net interest income after provision	Segment net interest income after provision	2,444		2,094		1,388		1,386		(84)		6		(661)		(250)		3,087		3,236							Segment net interest income after provision		2,409			2,399			1,397			1,693			(80)			11		(659)		(592)		3,067		3,511
Noninterest income	Noninterest income	828		831		576		688		944		830		(55)		(101)		2,293		2,248							Noninterest income		756			836			584			645			801			731		(33)		(110)		2,108		2,102
Amortization of intangibles	Amortization of intangibles	68		79		31		33		32		31		—		—		131		143							Amortization of intangibles		67			76			31			33			32			31		—		—		130		140
Other noninterest expense	Other noninterest expense	1,980		1,848		841		782		673		579		123		228		3,617		3,437							Other noninterest expense		1,998			1,854			843			795			669			597		107		227		3,617		3,473
Income (loss) before income taxes	Income (loss) before income taxes	1,224		998		1,092		1,259		155		226		(839)		(579)		1,632		1,904							Income (loss) before income taxes		1,100			1,305			1,107			1,510			20			114		(799)		(929)		1,428		2,000
Provision (benefit) for income taxes	Provision (benefit) for income taxes	293		238		212		273		—		55		(218)		(194)		287		372							Provision (benefit) for income taxes		266			309			215			324			3			29		(239)		(299)		245		363
Segment net income (loss)	Segment net income (loss)	$	931	$	760	$	880	$	986	$	155	$	171	$	(621)	$	(385)	$	1,345	$	1,532						Segment net income (loss)		$	834		$	996		$	892		$	1,186		$	17		$	85	$	(560)	$	(630)	$	1,183	$	1,637

Identifiable assets (period end)	Identifiable assets (period end)	$	163,940	$	165,962	$	209,824	$	197,672	$	9,500	$	7,090	$	171,285	$	174,399	$	554,549	$	545,123						Identifiable assets (period end)		$	161,881		$	170,196		$	205,163		$	198,522		$	8,766		$	7,459	$	166,897	$	172,261	$	542,707	$	548,438

Six Months Ended June 30, (Dollars in millions)		CB&W				C&CB				IH				OT&C(1)				Total
		2023		2022		2023		2022		2023		2022		2023		2022		2023		2022
Nine Months Ended September 30, (Dollars in millions)																						Nine Months Ended September 30, (Dollars in millions)	CB&W		C&CB			IH						OT&C(1)						Total
																							2023	2022	2023	2022		2023			2022			2023			2022			2023			2022
Net interest income (expense)	Net interest income (expense)	$	3,057	$	3,095	$	4,726	$	2,424	$	2	$	1	$	(292)	$	1,070	$	7,493	$	6,590						Net interest income (expense)		$	4,335		$	4,794		$	7,144		$	4,050		$	3		$	2	$	(425)	$	1,489	$	11,057	$	10,335
Net intersegment interest income (expense)	Net intersegment interest income (expense)	2,359		1,387		(1,279)		220		(72)		7		(1,008)		(1,614)		—		—							Net intersegment interest income (expense)		3,773			2,395			(2,050)			225			(153)			17		(1,570)		(2,637)		—		—
Segment net interest income	Segment net interest income	5,416		4,482		3,447		2,644		(70)		8		(1,300)		(544)		7,493		6,590							Segment net interest income		8,108			7,189			5,094			4,275			(150)			19		(1,995)		(1,148)		11,057		10,335
Allocated provision for credit losses	Allocated provision for credit losses	498		272		544		(177)		—		—		(2)		(19)		1,040		76							Allocated provision for credit losses		746			556			797			(229)			—			—		(6)		(17)		1,537		310
Segment net interest income after provision	Segment net interest income after provision	4,918		4,210		2,903		2,821		(70)		8		(1,298)		(525)		6,453		6,514							Segment net interest income after provision		7,362			6,633			4,297			4,504			(150)			19		(1,989)		(1,131)		9,520		10,025
Noninterest income	Noninterest income	1,701		1,742		1,206		1,344		1,761		1,563		(141)		(259)		4,527		4,390							Noninterest income		2,457			2,578			1,790			1,988			2,562			2,295		(174)		(369)		6,635		6,492
Amortization of intangibles	Amortization of intangibles	137		153		62		66		68		61		—		—		267		280							Amortization of intangibles		204			229			93			100			100			91		—		—		397		420
Other noninterest expense	Other noninterest expense	3,968		3,661		1,693		1,538		1,323		1,095		188		680		7,172		6,974							Other noninterest expense		5,971			5,514			2,531			2,333			1,994			1,691		293		909		10,789		10,447
Income (loss) before income taxes	Income (loss) before income taxes	2,514		2,138		2,354		2,561		300		415		(1,627)		(1,464)		3,541		3,650							Income (loss) before income taxes		3,644			3,468			3,463			4,059			318			532		(2,456)		(2,409)		4,969		5,650
Provision (benefit) for income taxes	Provision (benefit) for income taxes	601		512		474		555		36		102		(430)		(467)		681		702							Provision (benefit) for income taxes		873			827			690			876			39			131		(676)		(769)		926		1,065
Segment net income (loss)	Segment net income (loss)	$	1,913	$	1,626	$	1,880	$	2,006	$	264	$	313	$	(1,197)	$	(997)	$	2,860	$	2,948						Segment net income (loss)		$	2,771		$	2,641		$	2,773		$	3,183		$	279		$	401	$	(1,780)	$	(1,640)	$	4,043	$	4,585

Identifiable assets (period end)	Identifiable assets (period end)	$	163,940	$	165,962	$	209,824	$	197,672	$	9,500	$	7,090	$	171,285	$	174,399	$	554,549	$	545,123						Identifiable assets (period end)		$	161,881		$	170,196		$	205,163		$	198,522		$	8,766		$	7,459	$	166,897	$	172,261	$	542,707	$	548,438

(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.

44 Truist Financial Corporation 43

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, 2022.

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, 2022.

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 certain updates since the filing of the Annual Report on Form 10-K for the year ended December 31, 2022 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, 2022 for additional disclosures.

In March 2023, the FRB created the Bank Term Funding Program to support American businesses and households by making additional funding available to eligible depository institutions. This program offers loans up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging any collateral eligible for purchase by the FRB in open market operations, such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities. These assets ~~will be~~are valued at par.

In July 2023, the ~~aftermath of~~SEC finalized rules requiring registrants to disclose material cybersecurity incidents that they experience on Form 8-K and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance. Annual disclosures will be required in Truist’s Annual Report on Form 10-K for the ~~recent bank failures, we expect that the banking~~year ended 2023. The Form 8-K disclosure requirements will become effective beginning on December 18, 2023.

Banking agencies ~~will propose~~have proposed certain actions ~~including reforms that may impose different capital~~described below. We continue to evaluate these proposals and ~~liquidity requirements, including increased requirements to issue long term debt. On~~the potential impacts, if adopted as proposed, on the Company and Truist Bank.

In July ~~27,~~ 2023, the U.S. banking regulators issued ~~the first~~a proposal to revise the risk-based capital standards applicable to the Company and Truist Bank. ~~We continue~~This proposal would introduce new approaches for credit risk, operational risk, market risk and credit valuation adjustment risk that generally align with the approaches for these risks under the global Basel Accord adopted by the Basel Committee. The proposal would introduce a new measure of risk-weighted assets, which would reflect the proposed new standardized approaches for credit risk, operational risk and credit valuation adjustment risk, as well as a proposed new measure for market risk that would be based on both internal models and standardized supervisory models of market risk. The proposal includes a proposed effective date of July 1, 2025, subject to ~~evaluate~~a three-year transition period ending July 1, 2028, over which the expanded total risk-weighted assets would be phased in.

In August 2023, the U.S. banking regulators proposed a rule that would require banking organizations with $100 billion or more in total assets to comply with long-term debt requirements and clean holding company requirements that currently apply only to global systemically important banking organizations. This proposal would also impose a long-term debt requirement on certain categories of insured depository institutions that are not consolidated subsidiaries of U.S. GSIBs, including insured depository institutions with $100 billion or more in total assets, such as Truist Bank. If adopted, this proposal would require the Company and Truist Bank to each maintain a minimum outstanding eligible long-term debt amount of no less than the greatest of (i) 6% of risk-weighted assets, (ii) 2.5% of total leverage exposure and (iii) 3.5% of average total consolidated assets. Truist Bank would be required to issue the minimum amount of eligible long-term debt to the Company, and the ~~potential impacts,~~Company would be required to issue the minimum amount of eligible long-term debt externally. In addition, if adopted as proposed, onthe clean holding company requirement would limit or prohibit the Company from entering into certain transactions that could impede its orderly resolution, including, for example, prohibiting the Company from entering into transactions that could spread losses to subsidiaries and third parties, as well as limiting the amount of the Company’s liabilities that are not eligible long-term debt.

Truist Financial Corporation 45

In August 2023, the FDIC issued a proposal to amend its rules requiring covered insured depository institutions, including Truist Bank, to periodically submit resolution plans to the FDIC. If adopted as proposed, Truist Bank would be required to submit a full resolution plan to the FDIC every two years and ~~Truist Bank’s capital requirements.~~submit an interim supplement in each year that it is not required to submit a full resolution plan. In addition, this proposal would increase the content requirements for plan submissions and introduce a new credibility standard for the FDIC’s evaluation of resolution plans, which would be enforceable against the covered insured depository institutions. Separately, the FRB and FDIC also proposed updated guidance on resolution planning requirements applicable to the Company under Section 165(d) of the Dodd-Frank Act.

In addition, the FDIC proposed a special assessment to repay losses to the FDIC’s Deposit Insurance Fund. If the final rule is adopted as proposed, the special assessment for Truist is estimated at approximately $460 million to be recognized at the time the rule is finalized and paid in eight quarterly installments beginning in the first quarter of 2024. Refer to the “Note 14. Commitments and Contingencies” for additional information related to the FDIC’s special assessments.

On July 26, 2023, the SEC finalized rules requiring registrants to disclose material cybersecurity incidents that they experience on Form 8-K and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy, and governance. Annual disclosures will be required in Truist’s Annual Report on Form 10-K for the year ended 2023. The Form 8-K disclosure requirements will become effective beginning on the later of 90 days after publication of the final rules in the Federal Register or December 18, 2023.

Executive Overview

~~During~~The transformative work we announced in the third quarter to improve our financial performance is well underway. We are driving swift and meaningful actions to simplify our organization and reduce expenses. Our continued focus on core clients, paring back non-core and lower-return portfolios, and paying down higher-cost borrowings has made our balance sheet more efficient and helped drive a modest improvement in our net interest margin.

Noninterest expense was flat compared to the second quarter, and down 50 basis points on an adjusted basis, reflecting our expense discipline. Our $750 million gross cost saves program and efforts to simplify the organization are underway and we ~~continued to make progress adapting to the new operating environment by strengthening our balance sheet and sharpening our strategic focus~~are focused on expense discipline while also investing in our core ~~businesses.~~

~~Second quarter financial results were mixed as revenue headwinds from higher funding costs~~franchise and lower-than-anticipated capital markets activity were partially offset by record insurance income. We prudently increased our provision and allowance amid the uncertain economic backdrop. Adjusted expenses were up as anticipated for the quarter. However, we are accelerating our plans to adjust our cost base to reflect efficiency opportunities and changing conditions.risk management systems.

Our CET1 capital ratio increased 50 basis points driven by the investment in IH and organic capital generation. The most recent FRB stress test highlighted our capacity to respond to stressed scenarios and we announced plans to maintain our strong quarterly common stock dividend at $0.52 per share, subject to board approval.

We are executing on our strategy to optimize our core businesses exemplified by the sale of our non-core student loan portfolio at net carrying value with no income impact. We also made solid progress towards shifting our loan mix towards higher-return assets.

~~44 Truist Financial Corporation~~

Our unwavering foundation of purpose to inspire and build better lives and communities, the dedication of our talented teammates, the momentum created by maximizing our diverse business model, and key leadership positions in growth markets are competitive advantages that are propelling Truist to reach its full potential.

Detailed below are actions that we have taken to fulfill our purpose to inspire and build better lives and communities, followed by a discussion of our financial results for the second quarter of 2023.cost save program includes:

•~~In May, we announced the launch~~Reductions in force

◦Spans and layers

◦Consolidation of Truist Long Game, our mobile app that leverages behavioral economics to reward clients for building financial wellness. This is also the first product from Truist Foundry, our very own start-up tasked with creating digital solutions to help meet clients where they are.redundant/similar functions

◦Select business restructuring

◦Geographic simplification

•~~Truist is also highlighting small business owners through our Small Business Community Heroes initiative, which is all about focusing on the small business owners who work tirelessly~~Organizational alignment and simplification

◦Consolidate businesses for operational efficiency

◦More efficient branch network and staffing structure

◦Simplified and streamlined compensation and benefits programs

◦Reallocate investments to ~~serve our neighbors, create jobs, build our communities, and help drive our economy.~~core businesses

•~~Truist teammates dedicated more than 16,000 hours during the second quarter of 2023 to volunteer~~Rationalize technology spend

◦Focus on opportunities in ~~their communities.~~core businesses

We remain strongly committed to improving our capital position, which increased 29 basis points in the third quarter. Asset quality continues to normalize but remains in-line with our expectations and allowance coverage ratios.

As we continue to diligently execute on this critical work to capitalize on our competitive advantages and drive efficiencies, we are fundamentally changing how we operate to drive revenue growth, franchise value and increased benefit to our shareholders, now and into the future.

On October 2, 2023, Truist announced changes to its Board of Directors. On December 31, 2023, the retirements of directors Kelly S. King, Nido R. Qubein, David M. Ratcliffe and Thomas N. Thompson will occur due to these directors reaching Truist’s mandatory retirement age. In addition, Board members Anna R. Cablik, Paul D. Donahue, Easter A. Maynard and Frank P. Scruggs, Jr. notified Truist on September 26, 2023, that they have chosen to conclude their service as directors effective as of December 31, 2023. Their decisions are to address other professional and personal commitments and are not due to any disagreement with Truist on any matter relating to Truist’s operations, policies or practices. The Board and Truist’s management express their deep appreciation to these directors for their dedicated service and many significant contributions to Truist.

46 Truist Financial Corporation

Financial Results

Net income available to common shareholders for the ~~second~~third quarter of 2023 of ~~$1.2~~$1.1 billion was down ~~15.1%~~30% compared with the ~~second~~third quarter of 2022. On a diluted per common share basis, earnings for the ~~second~~third quarter of 2023 were ~~$0.92,~~$0.80, a decrease of ~~$0.17,~~$0.35, or ~~15.6%~~30%, compared to the ~~second~~third quarter of 2022. Truist’s results of operations for the ~~second~~third quarter of 2023 produced an annualized return on average assets of ~~0.95%~~0.86% and an annualized return on average common shareholders’ equity of ~~8.6%~~7.5% compared to prior year returns of ~~1.14%~~1.19% and ~~10.3%~~10.7%, respectively.

•Results for the ~~second~~third quarter of 2023 included merger-related and restructuring charges of ~~$54~~$75 million ($4158 million after-tax, or ~~$0.03~~$0.04 per share) ~~and a small loss on extinguishment of debt.~~.

•Results for the ~~second~~third quarter of 2022 included ~~$121~~$62 million ($9248 million after-tax, or ~~$0.07~~$0.04 per share) of merger-related and restructuring charges ~~$117~~and $90 million ($8969 million after-tax, or ~~$0.07~~$0.05 per share) of incremental operating expenses related to the ~~Merger, and a gain on the redemption of FHLB advances of $39 million ($30 million after-tax, or $0.02 per share).~~Merger.

Taxable-equivalent net interest income for the ~~second~~third quarter of 2023 was ~~up $244~~down $162 million, or ~~7.1%~~4.3%, compared to the ~~second~~third quarter of 2022 primarily due to higher ~~market interest rates~~funding costs and ~~strong loan growth. These increases were~~lower purchase accounting accretion, partially offset by ~~lower purchase accounting accretion.~~higher market interest rates. Net interest margin was ~~2.91%~~2.95%, ~~up two~~down 17 basis points.

•The yield on the total loan portfolio was ~~6.07%~~6.25%, up ~~216~~176 basis points, primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was ~~2.17%~~2.26%, up 3531 basis points primarily due to the higher rate environment. Average deposits decreased $19.1 billion, or 4.5%, average short-term borrowings increased $7.5 billion, and average long-term debt increased $12.0 billion.

•The average cost of total deposits was ~~1.51%~~1.81%, up ~~142~~150 basis points. The average cost of short-term borrowings was ~~5.19%~~5.47%, up ~~393~~313 basis points. The average cost of long-term debt was ~~4.62%~~4.51%, up ~~287~~208 basis points. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

Noninterest income was ~~up $45 million, or 2.0%,~~relatively stable compared to the ~~second~~third quarter of 2022 due to higher ~~insurance~~other income and ~~other~~insurance income, partially offset by lower service charges on deposits and lower investment banking and trading income. Service charges on deposits include an $87 million reduction due to client refund accruals resulting from a revision in deposit service fee protocols.

Noninterest expense was up ~~$168~~$134 million, or ~~4.7%~~3.7%, compared to the ~~second~~third quarter of 2022 due to higher personnel expense, other expense, and regulatory costs, partially offset by lower professional fees and outside processing, marketing and customer development, and equipment expenses. Merger-related costs, which included merger-related and restructuring ~~charges. Merger-related and restructuring~~ charges, ~~and~~as well as incremental operating expenses related to the merger, decreased ~~$67~~$77 million, ~~and $117 million, respectively,~~primarily due to the completion of integration-related activities. Adjusted noninterest expenses, which exclude merger-related costs, the amortization of intangibles, and ~~the aforementioned~~ gains and losses on the early extinguishment of debt, increased ~~$321~~$221 million, or ~~9.9%.~~6.7%, and includes the impact of $70 million of higher other expenses due to costs associated with the change to the deposit service fee protocols and resolution of certain legal matters.

The effective tax rate decreased compared to the ~~second~~third quarter of 2022 primarily driven by ~~lower income before taxes.~~decreases in the full year forecasted effective tax rate, partially offset by changes in discrete tax items.

~~Asset quality~~An increase in the loan loss reserve reflects normalization ~~and modest deterioration in commercial portfolios.~~of asset quality.

•Nonperforming loans and leases held for investment were ~~0.47%~~0.46% of loans and leases held for investment at September 30, 2023, down one basis point compared to June 30, ~~2023, up 11 basis points compared to March 31,~~ 2023. ~~The increase in nonperforming assets was concentrated in the CRE and commercial and industrial portfolios.~~

~~Truist Financial Corporation 45~~

•The allowance for credit losses was ~~$4.9~~$5.0 billion and includes ~~$4.6~~$4.7 billion for the allowance for loan and lease losses and ~~$273~~$277 million for the reserve for unfunded commitments. The ALLL ratio was ~~1.43%~~1.49%, up six basis points compared with ~~March 31, 2023 primarily due to an updated economic outlook.~~June 30, 2023.

•The provision for credit losses was ~~$538~~$497 million compared to ~~$171~~$234 million for the ~~second~~third quarter of 2022. The increase in the current quarter provision expense primarily reflects higher net charge-offs and an ~~updated economic outlook.~~allowance build.

•The net charge-off ratio was 5451 basis points, up 3224 basis points compared to the ~~second~~third quarter of 2022 ~~driven by the sale of the student loan portfolio, which had a 12 basis point impact, as well as~~due to higher charge-offs in the CRE, commercial and industrial, ~~CRE,~~ and indirect auto portfolios.

Capital ~~and liquidity~~ strengthened during the ~~second~~third quarter of 2023.

•~~Truist~~Truist’s CET1 ratio was ~~9.6%~~9.9% as of ~~June~~September 30, 2023. The increase since ~~March 31,~~June 30, 2023 resulted from ~~the minority stake sale in IH and~~ organic capital ~~generation. Truist closed the sale of the minority stake in IH on April 3, 2023, which added 31 basis points to the risk-based regulatory capital ratios.~~generation and RWA optimization.

•Truist declared common dividends of $0.52 per share during the ~~second~~third quarter of 2023. The dividend payout ratio for the ~~second~~third quarter of 2023 was ~~56%~~65%. Truist did not repurchase any shares in the ~~second~~third quarter of 2023.

•Truist’s average consolidated LCR was ~~112%~~110% for the three months ended ~~June~~September 30, 2023, compared to the regulatory minimum of 100%.

•~~Truist has significant and strong access to liquidity with $178 billion of available liquidity as of June 30, 2023 compared to $171 billion as of December 31, 2022.~~

46 Truist Financial Corporation 47

Analysis of Results of Operations

Net Interest Income and NIM

•Average earning assets increased ~~$30.3~~$6.4 billion, or ~~6.4%~~1.3%, primarily due to growth in average total loans of ~~$28.4~~$8.0 billion, or ~~9.5%~~2.6%, and growth in other earning assets of ~~$13.8~~$9.4 billion, or ~~65%~~48%, primarily due to an increase in balances held at the Federal Reserve to support liquidity, ~~build,~~ partially offset by a decrease in average securities of ~~$10.3~~$9.9 billion, or ~~6.9%~~6.8%.

•Average deposits decreased ~~$23.9~~$19.1 billion, or ~~5.6%~~4.5%, average short-term borrowings increased ~~$14.4~~$7.5 billion, and average long-term debt increased ~~$32.4 billion, or 104%.~~$12.0 billion.

Taxable-equivalent net interest income for the ~~six~~nine months ended ~~June~~September 30, 2023 was up ~~$954~~$792 million, or ~~14%~~7.6%, compared to the same period in 2022 primarily due to higher market interest rates and strong loan growth. These increases were partially offset by lower purchase accounting accretion. Net interest margin was ~~3.04%~~3.01% for the ~~six~~nine months ended ~~June~~September 30, 2023, up 21eight basis points compared to the prior period.

•Average earning assets increased ~~$29.7~~$21.9 billion, or ~~6.3%~~4.6%, compared to the prior period primarily due to growth in average total loans of ~~$31.7~~$23.7 billion, or ~~11%~~7.9%, and growth in other earning assets of ~~$10.2~~$9.9 billion, or ~~51%~~50%, primarily due to an increase in balances held at the Federal Reserve to support liquidity build, partially offset by a ~~$11.2~~$10.8 billion, or ~~7.4%~~7.2%, decrease in average securities.

•The yield on the total loan portfolio was ~~5.94%~~6.04% for the ~~six~~nine months ended ~~June~~September 30, 2023, up ~~214~~200 basis points, compared to the prior period primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was ~~2.16%~~2.19% for the ~~six~~nine months ended ~~June~~September 30, 2023, up 4137 basis points compared to the prior period primarily due to the higher rate environment.

•Average deposits decreased ~~$15.4~~$16.6 billion, or ~~3.7%~~4.0%, while average short-term borrowings increased ~~$15.7~~$13.0 billion, or ~~190%~~114%, compared to the prior period and average long-term debt increased ~~$24.1~~$20.0 billion, or ~~72%~~61%.

•The average cost of total deposits was ~~1.31%~~1.48% for the ~~six~~nine months ended ~~June~~September 30, 2023, up ~~125~~133 basis points compared to the prior period. The average cost of short-term borrowings was ~~4.94%~~5.13% for the ~~six~~nine months ended ~~June~~September 30, 2023, up ~~396~~345 basis points compared to the prior period. The average cost on long-term debt was ~~4.37%~~4.41% for the ~~six~~nine months ended ~~June~~September 30, 2023, up ~~276~~253 basis points compared to the prior period. The ~~increase~~increases in rates on deposits and other funding sources was largely attributable to the higher rate environment.

As of ~~June~~September 30, 2023, the remaining unamortized fair value marks on the loan and lease portfolio and long-term debt were ~~$579~~$528 million and ~~$59~~$49 million, respectively. As of December 31, 2022, the remaining unamortized fair value marks on the loan and lease portfolio and long-term debt were $741 million and $81 million, respectively.

The remaining unamortized purchase accounting fair value mark on loans and leases consists of ~~$389~~$367 million for consumer loans and leases, and ~~$190~~$161 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 47~~

Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Three Months Ended June 30,
(Dollars in millions)
Average Balances(1)
Annualized Yield/Rate(2)
Income/Expense Incr.
(Decr.) Change due to
2023 2022 2023 2022 2023 2022 Rate Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury $ 11,115 $ 10,544 1.10 % 0.86 % $ 30 $ 22 $ 8 $ 7 $ 1
GSE 329 255 2.70 1.96 3 1 2 2 —
Agency MBS 122,647 133,339 2.25 1.88 690 625 65 117 (52)
States and political subdivisions 425 371 4.18 3.83 5 4 1 — 1
Non-agency MBS 3,852 4,097 2.32 2.30 22 23 (1) — (1)
Other 25 75 5.20 3.66 — 1 (1) — (1)
Total securities 138,393 148,681 2.17 1.82 750 676 74 126 (52)
Interest earning trading assets 4,445 6,073 6.73 3.55 75 55 20 37 (17)
Other earning assets(3)
34,988 21,203 5.02 0.85 437 45 392 346 46
Loans and leases, net of unearned income:
Commercial and industrial 166,588 145,558 6.28 3.24 2,610 1,174 1,436 1,244 192
CRE 22,706 22,508 6.73 3.41 384 193 191 189 2
Commercial Construction 5,921 5,256 7.64 3.46 111 43 68 62 6
Residential mortgage 56,320 49,237 3.77 3.58 531 440 91 24 67
Home equity 10,478 10,677 7.26 4.52 190 118 72 74 (2)
Indirect auto 26,558 26,496 6.01 5.47 398 362 36 35 1
Other consumer 28,189 25,918 7.10 6.00 499 391 108 73 35
Student 4,766 6,331 6.76 4.20 80 66 14 33 (19)
Credit card 4,846 4,728 11.48 8.91 137 105 32 29 3
Total loans and leases HFI 326,372 296,709 6.07 3.91 4,940 2,892 2,048 1,763 285
LHFS 1,886 3,152 5.94 4.20 28 33 (5) 11 (16)
Total loans and leases 328,258 299,861 6.07 3.91 4,968 2,925 2,043 1,774 269
Total earning assets 506,084 475,818 4.93 3.12 6,230 3,701 2,529 2,283 246
Nonearning assets 59,738 64,750
Total assets $ 565,822 $ 540,568
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking $ 102,105 $ 112,375 1.91 0.15 487 43 444 448 (4)
Money market and savings 138,149 148,632 1.99 0.13 686 50 636 640 (4)
Time deposits 35,844 14,133 3.73 0.17 333 6 327 305 22
Total interest-bearing deposits 276,098 275,140 2.19 0.14 1,506 99 1,407 1,393 14
Short-term borrowings 23,991 9,618 5.19 1.26 311 30 281 190 91
Long-term debt 63,665 31,263 4.62 1.75 734 137 597 366 231
Total interest-bearing liabilities 363,754 316,021 2.81 0.34 2,551 266 2,285 1,949 336
Noninterest-bearing deposits 123,728 148,610
Other liabilities 14,239 12,437
Shareholders’ equity 64,101 63,500
Total liabilities and shareholders’ equity $ 565,822 $ 540,568
Average interest-rate spread 2.12 % 2.78 %
NIM/net interest income - taxable equivalent 2.91 % 2.89 % $ 3,679 $ 3,435 $ 244 $ 334 $ (90)
Taxable-equivalent adjustment $ 54 $ 28
Memo: Total deposits $ 399,826 $ 423,750 1.51 % 0.09 % $ 1,506 $ 99 $ 1,407

~~(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.~~

~~(2)~~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.

~~(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.~~

48 Truist Financial Corporation


Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis

Six Months Ended June 30, (Dollars in millions)		Average Balances(1)				Annualized Yield/Rate(2)			Income/Expense		Incr. (Decr.)			Change due to
		2023		2022			2023		2022				2023			2022			Rate				Volume
Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis																					Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Three Months Ended September 30, (Dollars in millions)																					Three Months Ended September 30, (Dollars in millions)	Average Balances(1)				Annualized Yield/Rate(2)		Income/Expense					Incr. (Decr.)				Change due to
																						2023			2022	2023	2022	2023		2022						Rate			Volume
Assets	Assets																												Assets
AFS and HTM securities at amortized cost:	AFS and HTM securities at amortized cost:																												AFS and HTM securities at amortized cost:
U.S. Treasury	U.S. Treasury	$	11,116	$	10,219		1.08	%	0.79	%	$	60		$	40		$	20	$	16			$	4					U.S. Treasury		$	10,886		$	10,925			1.27	%	0.93	%	$	34	$	26	$	8	$	8	$	—
GSE	GSE	332		685			2.78		2.11		5			7			(2)		2				(4)						GSE		339			305				2.92		2.56		3		1		2		1		1
Agency MBS	Agency MBS	123,692		135,185			2.24		1.80		1,384			1,215			169		277				(108)						Agency MBS		120,078			129,703				2.33		2.02		701		655		46		97		(51)
States and political subdivisions	States and political subdivisions	425		372			4.12		3.77		9			7			2		1				1						States and political subdivisions		423			395				4.12		3.92		4		4		—		—		—
Non-agency MBS	Non-agency MBS	3,879		4,161			2.33		2.27		45			47			(2)		1				(3)						Non-agency MBS		3,781			4,016				2.33		2.32		22		24		(2)		—		(2)
Other	Other	22		51			5.24		3.22		—			1			(1)		—				(1)						Other		20			52				5.55		3.94		1		—		1		—		1

Total securities	Total securities	139,466		150,673			2.16		1.75		1,503			1,317			186		297				(111)						Total securities		135,527			145,396				2.26		1.95		765		710		55		106		(51)
Interest earning trading assets	Interest earning trading assets	4,951		5,956			6.38		3.30		158			98			60		79				(19)						Interest earning trading assets		4,380			5,446				6.91		4.49		76		62		14		28		(14)
Other earning assets(3)	Other earning assets(3)	30,314		20,074			4.87		0.75		732			75			657		601				56						Other earning assets(3)		29,006			19,631				5.68		2.24		415		109		306		234		72
Loans and leases, net of unearned income:	Loans and leases, net of unearned income:																												Loans and leases, net of unearned income:

Commercial and industrial	Commercial and industrial	165,846		142,233			6.13		3.06		5,046			2,161			2,885		2,476				409						Commercial and industrial		164,022			152,123				6.50		4.08		2,686		1,564		1,122		991		131
CRE	CRE	22,698		23,029			6.52		3.12		739			361			378		383				(5)						CRE		22,812			22,245				6.85		4.32		396		245		151		145		6
Commercial Construction	Commercial Construction	5,892		5,152			7.39		3.26		212			78			134		120				14						Commercial Construction		6,194			5,284				7.83		4.83		120		62		58		45		13

Residential mortgage	Residential mortgage	56,370		48,610			3.75		3.57		1,057			868			189		45				144						Residential mortgage		56,135			53,271				3.79		3.59		532		478		54		27		27
Home equity	Home equity	10,606		10,747			7.03		4.43		370			234			136		139				(3)						Home equity		10,243			10,767				7.61		5.17		196		142		54		61		(7)
Indirect auto	Indirect auto	27,147		26,293			5.91		5.51		796			719			77		53				24						Indirect auto		24,872			28,057				6.16		5.40		386		382		4		50		(46)
Other consumer	Other consumer	27,876		25,424			6.93		6.12		958			774			184		106				78						Other consumer		28,963			26,927				7.43		6.21		542		419		123		88		35
Student	Student	4,947		6,489			6.91		4.02		169			129			40		76				(36)						Student		—			5,958				—		5.64		1		85		(84)		—		(84)
Credit card	Credit card	4,815		4,705			11.45		8.94		273			209			64		59				5						Credit card		4,875			4,755				11.62		9.97		143		119		24		21		3

Total loans and leases HFI	Total loans and leases HFI	326,197		292,682			5.94		3.81		9,620			5,533			4,087		3,457				630						Total loans and leases HFI		318,116			309,387				6.25		4.49		5,002		3,496		1,506		1,428		78
LHFS	LHFS	1,708		3,511			6.28		3.47		53			61			(8)		34				(42)						LHFS		1,765			2,489				6.20		4.81		28		30		(2)		7		(9)
Total loans and leases	Total loans and leases	327,905		296,193			5.94		3.80		9,673			5,594			4,079		3,491				588						Total loans and leases		319,881			311,876				6.25		4.49		5,030		3,526		1,504		1,435		69
Total earning assets	Total earning assets	502,636		472,896			4.83		3.01		12,066			7,084			4,982		4,468				514						Total earning assets		488,794			482,349				5.11		3.63		6,286		4,407		1,879		1,803		76
Nonearning assets	Nonearning assets	60,105		65,391																									Nonearning assets		58,910			63,257
Total assets	Total assets	$	562,741	$	538,287																								Total assets		$	547,704		$	545,606
Liabilities and Shareholders’ Equity	Liabilities and Shareholders’ Equity																												Liabilities and Shareholders’ Equity
Interest-bearing deposits:	Interest-bearing deposits:																												Interest-bearing deposits:
Interest-checking	Interest-checking	$	105,477	$	112,268		1.75		0.10		917			57			860		864				(4)						Interest-checking		$	101,252		$	111,645			2.29		0.56		584		158		426		442		(16)
Money market and savings	Money market and savings	138,972		145,085			1.69		0.08		1,162			61			1,101		1,104				(3)						Money market and savings		139,961			147,659				2.35		0.43		829		159		670		679		(9)
Time deposits	Time deposits	32,276		14,885			3.45		0.18		552			13			539		506				33						Time deposits		40,920			14,751				4.05		0.40		418		14		404		338		66

Total interest-bearing deposits	Total interest-bearing deposits	276,725		272,238			1.92		0.10		2,631			131			2,500		2,474				26						Total interest-bearing deposits		282,133			274,055				2.57		0.48		1,831		331		1,500		1,459		41
Short-term borrowings	Short-term borrowings	24,023		8,289			4.94		0.98		589			40			549		374				175						Short-term borrowings		24,894			17,392				5.47		2.34		343		103		240		181		59
Long-term debt	Long-term debt	57,396		33,289			4.37		1.61		1,248			269			979		689				290						Long-term debt		43,353			31,381				4.51		2.43		491		190		301		208		93
Total interest-bearing liabilities	Total interest-bearing liabilities	358,144		313,816			2.51		0.28		4,468			440			4,028		3,537				491						Total interest-bearing liabilities		350,380			322,828				3.02		0.77		2,665		624		2,041		1,848		193
Noninterest-bearing deposits	Noninterest-bearing deposits	127,393		147,279																									Noninterest-bearing deposits		118,905			146,041
Other liabilities	Other liabilities	14,109		12,052																									Other liabilities		15,107			13,227
Shareholders’ equity	Shareholders’ equity	63,095		65,140																									Shareholders’ equity		63,312			63,510
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	562,741	$	538,287																								Total liabilities and shareholders’ equity		$	547,704		$	545,606
Average interest-rate spread	Average interest-rate spread						2.32	%	2.73	%																			Average interest-rate spread									2.09	%	2.86	%
NIM/net interest income - taxable equivalent	NIM/net interest income - taxable equivalent						3.04	%	2.83	%	$	7,598		$	6,644		$	954	$	931			$	23					NIM/net interest income - taxable equivalent									2.95	%	3.12	%	$	3,621	$	3,783	$	(162)	$	(45)	$	(117)
Taxable-equivalent adjustment	Taxable-equivalent adjustment										$	105		$	54														Taxable-equivalent adjustment													$	57	$	38
Memo: Total deposits	Memo: Total deposits	$	404,118	$	419,517		1.31	%	0.06	%	$	2,631		$	131		$	2,500											Memo: Total deposits		$	401,038		$	420,096			1.81	%	0.31	%	$	1,831	$	331	$	1,500

(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.

(2)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.

(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.

Truist Financial Corporation 49




Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis

Nine Months Ended September 30, (Dollars in millions)	Average Balances(1)				Annualized Yield/Rate(2)			Income/Expense		Incr. (Decr.)			Change due to
	2023		2022			2023		2022				2023			2022			Rate		Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury	$	11,039	$	10,457		1.14	%	0.84	%	$	94		$	66		$	28	$	24	$	4
GSE	334		557			2.83		2.19		8			8			—		3		(3)
Agency MBS	122,473		133,338			2.27		1.87		2,085			1,870			215		376		(161)
States and political subdivisions	424		380			4.12		3.82		13			11			2		1		1
Non-agency MBS	3,846		4,112			2.33		2.29		67			71			(4)		1		(5)
Other	23		51			5.34		3.46		1			1			—		1		(1)

Total securities	138,139		148,895			2.19		1.82		2,268			2,027			241		406		(165)
Interest earning trading assets	4,759		5,784			6.54		3.67		234			160			74		106		(32)
Other earning assets(3)	29,872		19,924			5.13		1.24		1,147			184			963		831		132
Loans and leases, net of unearned income:

Commercial and industrial	165,231		145,566			6.26		3.42		7,732			3,725			4,007		3,447		560
CRE	22,736		22,765			6.64		3.52		1,135			606			529		530		(1)
Commercial Construction	5,994		5,196			7.54		3.80		332			140			192		166		26


Residential mortgage	56,291		50,180			3.76		3.58		1,589			1,346			243		71		172
Home equity	10,483		10,755			7.22		4.68		566			376			190		200		(10)
Indirect auto	26,381		26,888			5.99		5.47		1,182			1,101			81		102		(21)
Other consumer	28,242		25,930			7.10		6.15		1,500			1,193			307		195		112
Student	3,280		6,310			6.92		4.54		170			214			(44)		84		(128)
Credit card	4,836		4,721			11.51		9.29		416			328			88		80		8

Total loans and leases HFI	323,474		298,311			6.04		4.04		14,622			9,029			5,593		4,875		718
LHFS	1,727		3,167			6.25		3.82		81			91			(10)		42		(52)
Total loans and leases	325,201		301,478			6.04		4.04		14,703			9,120			5,583		4,917		666
Total earning assets	497,971		476,081			4.92		3.22		18,352			11,491			6,861		6,260		601
Nonearning assets	59,703		64,673
Total assets	$	557,674	$	540,754
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	104,053	$	112,058		1.93		0.26		1,501			215			1,286		1,303		(17)
Money market and savings	139,305		145,953			1.91		0.20		1,991			220			1,771		1,781		(10)
Time deposits	35,189		14,840			3.68		0.25		970			27			943		858		85

Total interest-bearing deposits	278,547		272,851			2.14		0.23		4,462			462			4,000		3,942		58
Short-term borrowings	24,317		11,356			5.13		1.68		932			143			789		507		282
Long-term debt	52,663		32,646			4.41		1.88		1,739			459			1,280		879		401
Total interest-bearing liabilities	355,527		316,853			2.68		0.45		7,133			1,064			6,069		5,328		741
Noninterest-bearing deposits	124,533		146,862
Other liabilities	14,446		12,448
Shareholders’ equity	63,168		64,591
Total liabilities and shareholders’ equity	$	557,674	$	540,754
Average interest-rate spread						2.24	%	2.77	%
NIM/net interest income - taxable equivalent						3.01	%	2.93	%	$	11,219		$	10,427		$	792	$	932	$	(140)
Taxable-equivalent adjustment										$	162		$	92
Memo: Total deposits	$	403,080	$	419,713		1.48	%	0.15	%	$	4,462		$	462		$	4,000

(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.

(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.

50 Truist Financial Corporation

Provision for Credit Losses

The provision for credit losses was ~~$538~~$497 million compared to $234 million for the ~~second~~third quarter of ~~2023~~2022. The net charge-off ratio for the current quarter of 0.51% was up 24 basis points compared to ~~$171 million for~~ the ~~second quarter of 2022.~~prior quarter.

•The increase in the current quarter provision expense primarily reflects an allowance build and higher net ~~charge-offs and an updated economic outlook.~~charge-offs.

•The net charge-off ratio was up compared to the ~~second~~third quarter of 2022 driven by ~~the sale of the student loan portfolio as well as~~ higher charge-offs in the CRE, commercial and industrial, ~~CRE,~~ and indirect auto portfolios.

The provision for credit losses was ~~$1.0~~$1.5 billion for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to ~~$76~~$310 million in the same period in 2022. The net charge-off ratio for the current period of ~~0.46%~~0.47% was up 2322 basis points compared to the prior period.

•The increase in the current ~~quarter~~period provision expense primarily reflects an allowance build and higher net ~~charge-offs and an updated economic outlook.~~charge-offs.

•The net charge-off ratio was up compared to the prior period driven by higher charge-offs in the commercial and industrial, CRE, indirect auto, other consumer, and ~~CRE~~credit card portfolios as well as the sale of the student loan portfolio.

Refer to “Note 5. Loans and ACL” for additional discussion of the ACL.

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. The following table provides a breakdown of Truist’s noninterest income:


Table 2: Noninterest Income	Table 2: Noninterest Income												Table 2: Noninterest Income
		Three Months Ended June 30,				% Change		Six Months Ended June 30,				% Change		Three Months Ended September 30,		% Change		Nine Months Ended September 30,				% Change
(Dollars in millions)	(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022			2023 vs. 2022		(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
Insurance income	Insurance income	$	935	$	825	13.3	%	$	1,748	$	1,552		12.6	%	Insurance income	$	793	$	725	9.4	%	$	2,541	$	2,277	11.6	%
Wealth management income	Wealth management income	330		337		(2.1)		669		680			(1.6)		Wealth management income	343		334		2.7		1,012		1,014		(0.2)
Investment banking and trading income	Investment banking and trading income	211		255		(17.3)		472		516			(8.5)		Investment banking and trading income	185		222		(16.7)		657		738		(11.0)
Service charges on deposits	Service charges on deposits	240		254		(5.5)		489		506			(3.4)		Service charges on deposits	152		263		(42.2)		641		769		(16.6)
Card and payment related fees	Card and payment related fees	236		246		(4.1)		466		458			1.7		Card and payment related fees	238		241		(1.2)		704		699		0.7
Mortgage banking income	Mortgage banking income	99		100		(1.0)		241		221			9.0		Mortgage banking income	102		122		(16.4)		343		343		—
Lending related fees	Lending related fees	86		100		(14.0)		192		185			3.8		Lending related fees	102		80		27.5		294		265		10.9
Operating lease income	Operating lease income	64		66		(3.0)		131		124			5.6		Operating lease income	63		66		(4.5)		194		190		2.1
Securities gains (losses)	Securities gains (losses)	—		(1)		NM		—		(70)			NM		Securities gains (losses)	—		(1)		NM		—		(71)		NM
Other income	Other income	92		66		39.4		119		218			(45.4)		Other income	130		50		160.0		249		268		(7.1)
Total noninterest income	Total noninterest income	$	2,293	$	2,248	2.0		$	4,527	$	4,390		3.1		Total noninterest income	$	2,108	$	2,102	0.3		$	6,635	$	6,492	2.2

Noninterest income was ~~up $45 million, or 2.0%, for the second quarter of 2023~~relatively stable compared to the ~~second~~third quarter of 2022 due to higher ~~insurance~~other income and ~~other~~insurance income, partially offset by lower service charges on deposits and lower investment banking and trading income.

•~~Insurance~~Other income increased primarily due to ~~strong 9.1% organic growth~~higher income on certain equity investments and ~~acquisitions.~~

•~~Other income increased primarily due to~~ higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense)~~, partially offset by derivative collateral related costs.~~.

•Insurance income increased primarily due to 6.3% organic growth and acquisitions.

•Service charges on deposits decreased primarily due to an $87 million reduction in deposit service charge fees due to client refund accruals resulting from a revision in deposit service fee protocols, as well as reduced overdraft fees.

•Investment banking and trading income decreased due to lower structured real estate income, partially offset by higher merger and ~~lower trading income.~~acquisition activity and equity originations.

Noninterest income was up ~~$137~~$143 million, or ~~3.1%~~2.2%, for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the same period in 2022 due to higher insurance income, partially offset by lower service charges on deposits, investment banking and trading income, and ~~lower~~ other income. The prior period included ~~$70~~$71 million of securities losses and a $74 million gain on the redemption of noncontrolling equity interest (included in other income).

•Insurance income increased primarily due to ~~strong 7.0%~~6.8% organic growth and acquisitions.

•Service charges on deposits decreased primarily due to the aforementioned service fee protocol revision, as well as reduced overdraft fees.

•Investment banking and trading income decreased due to lower structured real estate income, partially offset by higher merger and acquisition ~~fees.~~fees as well as higher equity and bond originations.

Truist Financial Corporation 51

•Other income decreased primarily due to higher derivative collateral related costs and the aforementioned gain on the redemption of noncontrolling equity in the prior period, ~~and higher derivative collateral related costs,~~ partially offset by higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense).

~~50 Truist Financial Corporation~~

Noninterest Expense

The following table provides a breakdown of Truist’s noninterest expense:


Table 3: Noninterest Expense	Table 3: Noninterest Expense												Table 3: Noninterest Expense
		Three Months Ended June 30,				% Change		Six Months Ended June 30,				% Change		Three Months Ended September 30,		% Change		Nine Months Ended September 30,				% Change
(Dollars in millions)	(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022			2023 vs. 2022		(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
Personnel expense	Personnel expense	$	2,256	$	2,102	7.3	%	$	4,437	$	4,153		6.8	%	Personnel expense	$	2,200	$	2,116	4.0	%	$	6,637	$	6,269	5.9	%
Professional fees and outside processing	Professional fees and outside processing	352		349		0.9		666		712			(6.5)		Professional fees and outside processing	317		352		(9.9)		983		1,064		(7.6)
Software expense	Software expense	237		234		1.3		451		466			(3.2)		Software expense	238		225		5.8		689		691		(0.3)
Net occupancy expense	Net occupancy expense	180		181		(0.6)		363		389			(6.7)		Net occupancy expense	180		176		2.3		543		565		(3.9)
Amortization of intangibles	Amortization of intangibles	131		143		(8.4)		267		280			(4.6)		Amortization of intangibles	130		140		(7.1)		397		420		(5.5)
Equipment expense	Equipment expense	92		114		(19.3)		202		232			(12.9)		Equipment expense	97		122		(20.5)		299		354		(15.5)
Marketing and customer development	Marketing and customer development	79		93		(15.1)		157		177			(11.3)		Marketing and customer development	78		105		(25.7)		235		282		(16.7)
Operating lease depreciation	Operating lease depreciation	44		47		(6.4)		90		95			(5.3)		Operating lease depreciation	43		45		(4.4)		133		140		(5.0)
Regulatory costs	Regulatory costs	73		44		65.9		148		79			87.3		Regulatory costs	77		52		48.1		225		131		71.8
Merger-related and restructuring charges	Merger-related and restructuring charges	54		121		(55.4)		117		337			(65.3)		Merger-related and restructuring charges	75		62		21.0		192		399		(51.9)
Other expense	Other expense	250		152		64.5		541		334			62.0		Other expense	312		218		43.1		853		552		54.5
Total noninterest expense	Total noninterest expense	$	3,748	$	3,580	4.7		$	7,439	$	7,254		2.6		Total noninterest expense	$	3,747	$	3,613	3.7		$	11,186	$	10,867	2.9

Noninterest expense was up ~~$168~~$134 million, or ~~4.7%~~3.7%, compared to the third quarter of 2022 due to higher personnel expense, other expense, and regulatory costs, partially offset by lower professional fees and outside processing and marketing and customer development. Merger-related costs, which included merger-related and restructuring charges, as well as incremental operating expenses related to the merger decreased $77 million, primarily due to the completion of integration-related activities. Adjusted noninterest expenses, which exclude merger-related costs, the amortization of intangibles, and gains and losses on the early extinguishment of debt increased $221 million, or 6.7%.

•Personnel expense increased due to investments in teammates by increasing Truist’s minimum wage, the impact from acquisitions, and investments in revenue producing businesses and enterprise technology, as well as higher other post-retirement benefit expense (which is almost entirely offset by higher other income). These increases were partially offset by lower pension expenses and lower incentives.

•Other expense increased primarily due to higher pension expense (driven primarily by lower plan assets) and includes $70 million of costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, partially offset by lower operating losses.

•Regulatory costs increased primarily due to an increase in the FDIC’s deposit insurance assessment rate.

•Professional fees and outside processing expenses decreased due to prior period incremental operating expenses related to the merger, partially offset by higher enterprise technology and other investments.

•Marketing and customer development decreased due to reduced marketing compared to the prior year.

52 Truist Financial Corporation

Noninterest expense was up $319 million, or 2.9%, for the ~~second quarter of~~nine months ended September 30, 2023 compared to the ~~second quarter of~~same period in 2022 due to higher personnel expense, other expense, and regulatory costs, partially offset by lower merger-related and restructuring ~~charges.~~charges, professional fees and outside processing expenses, equipment expense, and marketing and customer development expense. Merger-related and restructuring charges and incremental operating expenses related to the merger decreased ~~$67~~$207 million and ~~$117~~$409 million, respectively, due to the completion of integration-related activities. The ~~second quarter of 2022~~prior period also included a gain on the redemption of FHLB advances of $39 million. Adjusted noninterest expenses, which exclude merger-related costs, the amortization of intangibles, and gains and losses on the early extinguishment of debt, increased ~~$321~~$915 million, or ~~9.9%~~9.5%.

•Personnel expense increased due to investments in teammates by increasing Truist’s minimum wage, the impact from acquisitions, investments in revenue producing businesses and enterprise technology, and higher other post-retirement benefit expense (which is almost entirely offset by higher other income), partially offset by lower pension expenses.

•Other expense increased primarily due to higher pension expense (driven primarily by lower plan assets), and includes $70 million of costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, partially offset by lower operating losses.

•Regulatory costs increased primarily due to an increase in the FDIC’s deposit insurance assessment rate.

•

~~Noninterest~~Professional fees and outside processing expense ~~was up $185 million, or 2.6%, for the six months ended June 30, 2023 compared to the same period in 2022~~decreased due to ~~higher personnel expense, other expense, and regulatory costs, partially offset by lower merger-related and restructuring charges. Merger-related and restructuring charges and~~prior period incremental operating expenses related to the merger, ~~decreased $220 million~~partially offset by higher enterprise technology and $319 million, respectively, due to the completion of integration-related activities. The prior period included a gain on the redemption of FHLB advances of $39 million. Adjusted noninterest expenses, which exclude merger-related costs, the amortization of intangibles, and gains and losses on the early extinguishment of debt, increased $694 million, or 11%.

other investments.

•~~Personnel~~Equipment expense ~~increased~~decreased due to ~~investments in teammates by increasing Truist’s minimum wage, the impact from acquisitions, investments in revenue producing businesses and enterprise~~retirement of certain technology ~~and higher other post-retirement benefit expense (which is almost entirely offset by higher other income), partially offset by lower pension expenses.~~related equipment.

•~~Other~~Marketing and customer development expense ~~increased primarily~~decreased due to ~~higher pension expense (driven primarily by lower plan assets), partially offset by lower operating losses.~~

•~~Regulatory costs increased primarily due~~reduced marketing compared to ~~an increase in~~ the ~~FDIC’s deposit insurance assessment rate.~~prior year.

~~Truist Financial Corporation 51~~

Merger-Related and Restructuring Charges

The following table presents a summary of merger-related and restructuring charges and the related accruals. The 2023 merger-related and restructuring costs predominately reflect various restructuring initiatives, including costs for severance and other benefits and costs related to exiting facilities.


Table 4: Merger-Related and Restructuring Accrual Activity	Table 4: Merger-Related and Restructuring Accrual Activity										Table 4: Merger-Related and Restructuring Accrual Activity
		Three Months Ended June 30, 2023								Six Months Ended June 30, 2023								Three Months Ended September 30, 2023								Nine Months Ended September 30, 2023
(Dollars in millions)	(Dollars in millions)	Accrual at Apr 1, 2023		Expense		Utilized		Accrual at Jun 30, 2023				Accrual at Jan 1, 2023		Expense		Utilized			Accrual at Jun 30, 2023		(Dollars in millions)	Accrual at Jul 1, 2023		Expense		Utilized		Accrual at Sep 30, 2023		Accrual at Jan 1, 2023		Expense		Utilized		Accrual at Sep 30, 2023
Severance and personnel-related	Severance and personnel-related	$	17	$	40	$	(39)	$	18			$	9	$	79	$	(70)		$	18	Severance and personnel-related	$	18	$	60	$	(61)	$	17	$	9	$	139	$	(131)	$	17
Occupancy and equipment	Occupancy and equipment	—		11		(11)		—				—		30		(30)			—		Occupancy and equipment	—		5		(5)		—		—		35		(35)		—
Professional services	Professional services	1		2		(3)		—				12		3		(15)			—		Professional services	—		4		(4)		—		12		7		(19)		—

Other	Other	4		1		(3)		2				5		5		(8)			2		Other	2		6		(6)		2		5		11		(14)		2
Total	Total	$	22	$	54	$	(56)	$	20			$	26	$	117	$	(123)		$	20	Total	$	20	$	75	$	(76)	$	19	$	26	$	192	$	(199)	$	19

Provision for Income Taxes

The provision for income taxes was ~~$287~~$245 million for the three months ended ~~June~~September 30, 2023, compared to ~~$372~~$363 million for the ~~earlier quarter.~~same quarter in 2022. The effective tax rate for three months ended ~~June~~September 30, 2023 was ~~17.6%~~17.2% compared to ~~19.5%~~18.2% for the earlier quarter. The effective tax rate decreased compared to the ~~second~~third quarter of 2022 primarily driven by ~~lower income before taxes.~~decreases in the full year forecasted effective tax rate, partially offset by changes in discrete tax items.

The provision for income taxes was ~~$681~~$926 million for the ~~six~~nine months ended ~~June~~September 30, 2023, compared to ~~$702 million~~$1.1 billion for the same period in 2022. The effective tax rate for ~~six~~nine months ended ~~June~~September 30, 2023 and 2022 was ~~19.2%.~~18.6% and 18.8%, respectively.

Truist Financial Corporation 53

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.

In conjunction with the Company’s April 3, 2023 sale of a 20% stake of the common equity in IH, IH issued $5 billion of 8.25% mandatorily redeemable preferred units to the Company, with the related interest expense, which is fully allocable to the Company, reported in Net intersegment interest income (expense).

Also related to the same transaction, IH was recapitalized from a corporate entity to an LLC, such that each member is allocated its share of IH’s income before taxes, and beginning in the second quarter of 2023 the Company recognizes its associated income tax provision through ~~Other, Treasury & Corporate.~~OT&C. The Company elected not to restate prior periods for this change based on IH’s previous status as a corporate entity. The Company recognized ~~$54~~$30 million and $84 million for the ~~second quarter~~three and nine months ended September 30, 2023, respectively, of tax provision related to IH in ~~Other, Treasury & Corporate.~~OT&C. In the third quarter of 2023, IH recognized $3 million of taxes for certain state jurisdictions that impose income taxes on partnerships and LLCs.

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, 2022 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 Segment	Table 5: Net Income by Reportable Segment											Table 5: Net Income by Reportable Segment
		Three Months Ended June 30,				% Change		Six Months Ended June 30,					% Change		Three Months Ended September 30,		% Change		Nine Months Ended September 30,				% Change
(Dollars in millions)	(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022			2023 vs. 2022			(Dollars in millions)	2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
Consumer Banking and Wealth	Consumer Banking and Wealth	$	931	$	760	22.5	%	$	1,913	$	1,626		17.7	%		Consumer Banking and Wealth	$	834	$	996	(16.3)	%	$	2,771	$	2,641	4.9	%
Corporate and Commercial Banking	Corporate and Commercial Banking	880		986		(10.8)		1,880		2,006			(6.3)			Corporate and Commercial Banking	892		1,186		(24.8)		2,773		3,183		(12.9)
Insurance Holdings	Insurance Holdings	155		171		(9.4)		264		313			(15.7)			Insurance Holdings	17		85		(80.0)		279		401		(30.4)
Other, Treasury & Corporate	Other, Treasury & Corporate	(621)		(385)		(61.3)		(1,197)		(997)			(20.1)			Other, Treasury & Corporate	(560)		(630)		11.1		(1,780)		(1,640)		(8.5)
Truist Financial Corporation	Truist Financial Corporation	$	1,345	$	1,532	(12.2)		$	2,860	$	2,948		(3.0)			Truist Financial Corporation	$	1,183	$	1,637	(27.7)		$	4,043	$	4,585	(11.8)

~~52 Truist Financial Corporation~~

Consumer Banking and Wealth

CB&W net income was ~~$931~~$834 million for the ~~second~~third quarter of 2023, ~~an increase~~a decrease of ~~$171~~$162 million compared to the ~~second~~third quarter of 2022.

•Segment net interest income ~~increased $375~~decreased $25 million primarily driven by ~~favorable funding credit on deposits attributable to the higher rate environment~~lower average deposit balances, decrease in loan spread and ~~higher~~lower average loan balances, partially offset by ~~a decrease in loan spread, lower average deposit balances, and lower purchase accounting accretion.~~higher funding credit on deposits.

•The provision for credit losses ~~increased $25~~decreased $35 million reflecting an allowance release whereas the earlier period included an allowance build, partially offset by higher charge offs in the indirect auto and other consumer ~~portfolios as well as an updated economic outlook. The impact of the student loan sale in the current quarter was net neutral to provision.~~portfolios.

•Noninterest income ~~was flat~~decreased $80 million compared to earlier ~~quarter.~~quarter primarily due to decreased service charge fees on deposits driven by client refund accruals resulting from a revision in deposit service fee protocols as well as reduced overdraft fees, partially offset by higher residential mortgage income and wealth brokerage fees and commissions.

•Noninterest expense increased ~~$121~~$135 million compared to the earlier quarter driven by higher corporate technology, ~~costs, salaries expense, pension cost~~risk, and ~~corporate risk~~operations support expenses along with higher ~~operations support expenses~~pension cost and FDIC’s deposit insurance assessment rate, partially offset by lower ~~operational losses, merger-related and restructuring charges,~~ marketing and customer development and professional fees and outside processing.

CB&W average loans and leases held for investment ~~increased $8.6~~decreased $3.7 billion, or ~~6.4%~~2.6%, for the ~~second~~third quarter of 2023 compared to the ~~second~~third quarter of 2022, primarily driven by the sale of the student loan portfolio at the end of the second quarter of 2023 and a decrease in indirect auto balances, partially offset by increases in residential mortgage, ~~balances,~~ Service Finance, and Sheffield ~~loans along with an increase in commercial lending in Wealth, partially offset by runoff in the student loan portfolio and other partnership lending programs and lower mortgage warehouse lending.~~balances.

CB&W average total deposits decreased ~~$19.1~~$14.8 billion, or ~~7.4%~~5.9%, for the ~~second~~third quarter of 2023 compared to the ~~second~~third quarter of 2022, primarily driven by decreases in interest-bearing checking, money market and savings, and noninterest-bearing deposits, partially offset by an increase in time deposits.

54 Truist Financial Corporation

Corporate and Commercial Banking

C&CB net income was ~~$880~~$892 million for the ~~second~~third quarter of 2023, a decrease of ~~$106~~$294 million compared to the ~~second~~third quarter of 2022.

•Segment net interest income ~~increased $341 million primarily due~~was flat compared to ~~higher funding credit on deposits and higher average loan balances, partially offset by lower purchase accounting accretion.~~the earlier quarter.

•The provision for credit losses increased ~~$339~~$302 million which reflects ~~an increase in reserves driven by an updated economic outlook,~~ higher commercial and industrial loan charge offs, an allowance build, and loan growth in the current quarter as well as an allowance release in the earlier quarter.

•Noninterest income decreased ~~$112~~$61 million compared to the earlier quarter primarily due to lower structured real estate fees ~~core trading revenues,~~and commercial mortgage income, partially offset by higher income from ~~credit default swaps, and~~ lending related ~~fees.~~fees, merger and acquisition activity, and equity originations.

•Noninterest expense increased ~~$57~~$46 million compared to the earlier quarter primarily due to higher corporate technology expenses and merger-related and restructuring charges, partially offset by lower corporate marketing expense.

C&CB average loans held for investment increased ~~$18.8~~$12.3 billion, or ~~11%~~7.3%, for the ~~second~~third quarter of 2023 compared to the ~~second~~third quarter of 2022, primarily due to increases in core commercial and industrial loans.

C&CB average total deposits decreased ~~$16.3~~$16.2 billion, or 11%, for the ~~second~~third quarter of 2023 compared to the ~~second~~third quarter of 2022, primarily due to declines in average noninterest-bearing deposits, partially offset by increases in money market and savings.

Insurance Holdings

IH net income was ~~$155~~$17 million for the ~~second~~third quarter of 2023, a decrease of ~~$16~~$68 million compared to the ~~second~~third quarter of 2022.

•Segment net interest income decreased ~~$90~~$91 million driven primarily by interest expense accruals on new intercompany mandatorily redeemable preferred units resulting from the recapitalization of IH.

•Noninterest income increased ~~$114~~$70 million primarily due to continued organic growth and acquisitions.

•Noninterest expense increased ~~$95~~$73 million primarily due to the impact of acquisitions, investments in new hires and teammates, performance-driven incentive expense, and higher professional fees and outside processing.

~~Truist Financial Corporation 53~~

Other, Treasury & Corporate

OT&C generated a net loss of ~~$621~~$560 million in the ~~second~~third quarter of 2023, compared to a net loss of ~~$385~~$630 million in the ~~second~~third quarter of 2022.

•~~Net~~Segment net interest income decreased ~~$408~~$71 million primarily due to higher rates on Treasury funding and funding credit on deposits to other segments, partially offset by ~~higher~~ funding charges to other segments and interest income on cash balances and securities resulting from the higher rate environment.

•The provision for credit losses was flat compared to the earlier quarter.

•Noninterest income increased ~~$46~~$77 million primarily due to higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense).

•Noninterest expense decreased ~~$105~~$120 million compared to the earlier quarter primarily due to a decrease in incremental operating expenses related to the merger as well as credit from other segments for corporate technology project support, partially offset by an increase in operating charge-offs due to costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, professional fees and outside processing and personnel ~~expenses.~~expenses excluding merger related costs.

~~Six~~Nine Months of 2023 compared to ~~Six~~Nine Months of 2022

Consumer Banking and Wealth

CB&W net income was ~~$1.9~~$2.8 billion for the ~~six~~nine months ended ~~June~~September 30, 2023, an increase of ~~$287~~$130 million, or ~~18%~~4.9%, compared to the prior year.

•Segment net interest income increased ~~$934~~$919 million driven by favorable funding credit on deposits attributable to the higher rate environment and higher average loans, partially offset by higher funding costs, lower average deposits, and lower purchase accounting accretion.

•The provision for credit losses increased ~~$226~~$190 million reflecting ~~an updated economic outlook in the current period, a reserve release in the earlier period, and~~ higher charge offs in the indirect auto and other consumer ~~portfolios.~~portfolios, an allowance build in the current period, and a reserve release in the earlier period. The impact of the student loan sale in the ~~current~~second quarter was net neutral to provision.

Truist Financial Corporation 55

•Noninterest income decreased ~~$41~~$121 million primarily due to decreased service charge fees on deposits driven by client refund accruals resulting from a revision in deposit service fee protocols and a gain on the redemption of noncontrolling equity interest in the earlier period, ~~as well as lower service charges on deposits and lower wealth management income,~~ partially offset by higher mortgage banking income in the current period.

•Noninterest expense increased ~~$291~~$432 million primarily driven by higher corporate technology costs, salaries expense, pension cost, ~~and~~ corporate risk ~~support along with higher~~and operations support expenses, and FDIC’s deposit insurance assessment rate, partially offset by lower ~~operational losses,~~ marketing and customer development, ~~merger-related and restructuring charges, and~~ professional fees and outside ~~processing.~~processing, operational losses, and amortization of intangibles.

CB&W average loans and leases held for investment increased ~~$9.9~~$5.3 billion, or ~~8.0%~~3.9%, for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the prior year driven primarily by an increase in residential mortgage ~~loans as well as increases in the~~and Service Finance ~~prime auto, and recreational lending portfolios. These increases were~~loans, partially offset by ~~runoff in~~the sale of the student loan portfolio ~~and other partnership lending programs and lower mortgage warehouse lending.~~in second quarter 2023.

CB&W average total deposits decreased ~~$17.1~~$16.8 billion, or ~~6.7%~~6.5%, for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the prior year primarily due to decreases in average interest-bearing checking, money market and savings, and noninterest-bearing deposits, partially offset by an increase in time deposits.

Truist Wealth had assets under management of ~~$191~~$188 billion as of ~~June~~September 30, 2023, an increase of ~~$11~~$14 billion, or ~~6.0%~~8.2%, compared to the prior year primarily due to higher markets and positive net asset flows.

Corporate and Commercial Banking

C&CB net income was ~~$1.9~~$2.8 billion for the ~~six~~nine months ended ~~June~~September 30, 2023, a decrease of ~~$126~~$410 million, or ~~6.3%~~12.9%, compared to the prior year.

•Segment net interest income increased ~~$803~~$819 million primarily due to higher funding credit on deposits and higher average loan balances, partially offset by lower purchase accounting accretion.

•The provision for credit losses increased ~~$721 million~~$1.0 billion which reflects an ~~increase in reserves driven by an updated economic outlook,~~allowance build, higher charge offs, and loan growth in the current period as well as an allowance release in the earlier period.

•Noninterest income decreased ~~$138~~$198 million primarily due to lower structured real estate fees, ~~other investment income,~~higher derivative collateral related costs, and lower commercial mortgage income, ~~as well as lower income from credit default swaps,~~ partially offset by increases in merger and acquisition ~~fees.~~fees, lending related fees, and equity originations.

•Noninterest expense increased ~~$151~~$191 million primarily due to higher corporate technology expenses, ~~personnel expenses,~~ merger-related and restructuring charges, personnel expenses, and FDIC insurance expense, partially offset by lower corporate marketing expense.

~~54 Truist Financial Corporation~~

C&CB average loans and leases held for investment increased ~~$22.7~~$19.7 billion, or ~~14%~~12%, for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the prior year driven by an increase in the commercial and industrial portfolio loans.

C&CB average total deposits decreased ~~$13.5~~$14.0 billion, or ~~9.1%~~9.6%, for the ~~six~~nine months ended ~~June~~September 30, 2023 compared to the prior year primarily due to a decrease in average noninterest-bearing deposits, partially offset by an increase in money market and savings.

Insurance Holdings

IH net income was ~~$264~~$279 million for the ~~six~~nine months ended ~~June~~September 30, 2023, a decrease of ~~$49~~$122 million, or ~~16%~~30%, compared to the prior year.

•Segment net interest income decreased ~~$78~~$169 million driven primarily by interest expense accruals on new intercompany mandatorily redeemable preferred units resulting from the recapitalization of IH.

•Noninterest income increased ~~$198~~$267 million primarily due to continued organic growth and acquisitions.

•Noninterest expense increased ~~$235~~$312 million primarily due to the impact of acquisitions, investments in new hires and teammates, performance-driven incentive expense, and higher operational loss reserves.

Other, Treasury, and Corporate

OT&C generated a net loss of ~~$1.2~~$1.8 billion for the ~~six~~nine months ended ~~June~~September 30, 2023, compared to a net loss of ~~$997 million~~$1.6 billion in the prior year.

•Segment net interest income decreased ~~$756~~$847 million due to higher funding credit on deposits to other segments and higher rates on Treasury funding, partially offset by higher funds transfer charges to other segments for loans and higher earnings on cash balances and in the securities portfolio ~~from~~driven by the higher rate environment.

56 Truist Financial Corporation

•The provision for credit losses increased ~~$17~~$11 million, which reflects a reserve release in the prior year as well as an ~~updated economic outlook~~allowance build in the current period.

•Noninterest income increased ~~$118~~$195 million primarily due to ~~losses on the sale of securities in the earlier period and~~ valuation changes from assets held for certain post-retirement benefits in the current period, which is primarily offset by higher personnel ~~expense.~~expense and losses on the sale of securities in the earlier period.

•Noninterest expense decreased ~~$492~~$616 million primarily due to a decrease in incremental operating expenses related to the merger and credit from other segments for corporate technology project support, partially offset by an increase in professional fees and outside processing, personnel expenses, operating charge-offs due to costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, and a gain on the redemption of FHLB advances in the prior year.

~~Truist Financial Corporation 55~~

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled ~~$124.9~~$120.1 billion at ~~June~~September 30, 2023, compared to $129.5 billion at December 31, 2022. U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of ~~June~~September 30, 2023 and December 31, 2022. 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.

•The decrease includes paydowns and maturities of ~~$5.4~~$9.4 billion during 2023.

•As of ~~June~~September 30, 2023, 41% of the investment securities portfolio was classified as held-to-maturity based on amortized cost.

•As of ~~June~~September 30, 2023 and December 31, 2022, approximately 5.7% of the securities portfolio was variable rate, excluding the impact of swaps.

•The effective duration of the AFS securities portfolio was 5.8 years at September 30, 2023 and 6.2 years at ~~June 30, 2023 and~~ December 31, ~~2022.~~2022, excluding the impact of swaps. The effective duration of the HTM securities portfolio was ~~7.4~~7.0 years at ~~June~~September 30, 2023 and 7.3 years at December 31, 2022.

Lending Activities

The following table presents the composition of average loans and leases:


Table 6: Average Loans and Leases	Table 6: Average Loans and Leases											Table 6: Average Loans and Leases
		Three Months Ended											Three Months Ended
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		(Dollars in millions)	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	166,588	$	165,095	$	159,308	$	152,123	$	145,558	Commercial and industrial	$	164,022	$	166,588	$	165,095	$	159,308	$	152,123
CRE	CRE	22,706		22,689		22,497		22,245		22,508		CRE	22,812		22,706		22,689		22,497		22,245
Commercial construction	Commercial construction	5,921		5,863		5,711		5,284		5,256		Commercial construction	6,194		5,921		5,863		5,711		5,284

Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	56,320		56,422		56,292		53,271		49,237		Residential mortgage	56,135		56,320		56,422		56,292		53,271
Home equity	Home equity	10,478		10,735		10,887		10,767		10,677		Home equity	10,243		10,478		10,735		10,887		10,767
Indirect auto	Indirect auto	26,558		27,743		28,117		28,057		26,496		Indirect auto	24,872		26,558		27,743		28,117		28,057
Other consumer	Other consumer	28,189		27,559		27,479		26,927		25,918		Other consumer	28,963		28,189		27,559		27,479		26,927
Student	Student	4,766		5,129		5,533		5,958		6,331		Student	—		4,766		5,129		5,533		5,958
Credit card	Credit card	4,846		4,785		4,842		4,755		4,728		Credit card	4,875		4,846		4,785		4,842		4,755

Total average loans and leases HFI	Total average loans and leases HFI	$	326,372	$	326,020	$	320,666	$	309,387	$	296,709	Total average loans and leases HFI	$	318,116	$	326,372	$	326,020	$	320,666	$	309,387

Average loans held for investment ~~increased $352 million,~~decreased $8.3 billion, or ~~0.1%~~2.5%, compared to the prior quarter, ~~while period-end loans held for investment were $322.1 billion, down $5.6 billion compared to March 31, 2023,~~ primarily due to the sale of the student loan portfolio at the end of the second quarter of 2023 and ~~loan growth moderation~~balance sheet optimization in lower return portfolios. Excluding the student loan sale, average loans held for investment declined 1.1% compared to the prior quarter.

•Average commercial loans ~~increased 0.8%~~decreased 1.1% due to a ~~seasonal increase~~decline in ~~mortgage warehouse lending and growth within~~ the ~~core~~ commercial and industrial portfolio.

•Average consumer loans decreased ~~1.0%~~4.8% due to ~~lower indirect auto production,~~ the ~~continued run-off~~sale of the student loan portfolio ~~(prior to the sale at the end of the period),~~ and lower ~~home equity balances,~~indirect auto production, partially offset by growth in higher-return point-of-sale lending in the other consumer portfolio (Service Finance and Sheffield).

At ~~June~~September 30, 2023 and December 31, 2022, 53% of loans and leases HFI were variable rate.

Truist Financial Corporation 57

Asset Quality

The following tables summarize asset quality information:


Table 7: Asset Quality	Table 7: Asset Quality											Table 7: Asset Quality
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		(Dollars in millions)	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022
NPAs:	NPAs:											NPAs:
NPLs:	NPLs:											NPLs:
Commercial and industrial	Commercial and industrial	$	562	$	394	$	398	$	443	$	393	Commercial and industrial	$	561	$	562	$	394	$	398	$	443
CRE	CRE	275		117		82		5		19		CRE	289		275		117		82		5
Commercial construction	Commercial construction	16		1		—		—		—		Commercial construction	29		16		1		—		—

Residential mortgage	Residential mortgage	221		233		240		227		269		Residential mortgage	132		221		233		240		227
Home equity	Home equity	129		132		135		132		133		Home equity	123		129		132		135		132
Indirect auto	Indirect auto	262		270		289		260		244		Indirect auto	266		262		270		289		260
Other consumer	Other consumer	46		45		44		39		32		Other consumer	52		46		45		44		39

Total NPLs HFI	Total NPLs HFI	1,511		1,192		1,188		1,106		1,090		Total NPLs HFI	1,452		1,511		1,192		1,188		1,106
Loans held for sale	Loans held for sale	13		—		—		72		33		Loans held for sale	75		13		—		—		72
Total nonaccrual loans and leases	Total nonaccrual loans and leases	1,524		1,192		1,188		1,178		1,123		Total nonaccrual loans and leases	1,527		1,524		1,192		1,188		1,178
Foreclosed real estate	Foreclosed real estate	3		3		4		4		3		Foreclosed real estate	3		3		3		4		4
Other foreclosed property	Other foreclosed property	56		66		58		58		47		Other foreclosed property	54		56		66		58		58
Total nonperforming assets	Total nonperforming assets	$	1,583	$	1,261	$	1,250	$	1,240	$	1,173	Total nonperforming assets	$	1,584	$	1,583	$	1,261	$	1,250	$	1,240

Loans 90 days or more past due and still accruing:	Loans 90 days or more past due and still accruing:											Loans 90 days or more past due and still accruing:
Commercial and industrial	Commercial and industrial	$	36	$	35	$	49	$	44	$	27	Commercial and industrial	$	15	$	36	$	35	$	49	$	44
CRE	CRE	—		—		1		1		3		CRE	—		—		—		1		1
Commercial construction	Commercial construction	5		—		—		—		3		Commercial construction	—		5		—		—		—

Residential mortgage - government guaranteed	Residential mortgage - government guaranteed	541		649		759		808		884		Residential mortgage - government guaranteed	456		541		649		759		808
Residential mortgage - nonguaranteed	Residential mortgage - nonguaranteed	23		25		27		26		27		Residential mortgage - nonguaranteed	30		23		25		27		26
Home equity	Home equity	7		10		12		9		8		Home equity	9		7		10		12		9
Indirect auto	Indirect auto	—		—		1		1		1		Indirect auto	1		—		—		1		1
Other consumer	Other consumer	12		10		13		9		5		Other consumer	16		12		10		13		9
Student - government guaranteed	Student - government guaranteed	—		590		702		770		796		Student - government guaranteed	—		—		590		702		770
Student - nonguaranteed	Student - nonguaranteed	—		4		4		5		5		Student - nonguaranteed	—		—		4		4		5
Credit card	Credit card	38		38		37		36		28		Credit card	47		38		38		37		36

Total loans 90 days or more past due and still accruing	Total loans 90 days or more past due and still accruing	$	662	$	1,361	$	1,605	$	1,709	$	1,787	Total loans 90 days or more past due and still accruing	$	574	$	662	$	1,361	$	1,605	$	1,709
Loans 30-89 days past due and still accruing:	Loans 30-89 days past due and still accruing:											Loans 30-89 days past due and still accruing:
Commercial and industrial	Commercial and industrial	$	142	$	125	$	256	$	162	$	223	Commercial and industrial	$	98	$	142	$	125	$	256	$	162
CRE	CRE	38		34		25		15		10		CRE	28		38		34		25		15
Commercial construction	Commercial construction	6		3		5		3		4		Commercial construction	1		6		3		5		3

Residential mortgage - government guaranteed	Residential mortgage - government guaranteed	267		232		268		234		233		Residential mortgage - government guaranteed	293		267		232		268		234
Residential mortgage - nonguaranteed	Residential mortgage - nonguaranteed	254		259		346		300		302		Residential mortgage - nonguaranteed	270		254		259		346		300
Home equity	Home equity	56		65		68		67		68		Home equity	61		56		65		68		67
Indirect auto	Indirect auto	549		511		646		591		584		Indirect auto	598		549		511		646		591
Other consumer	Other consumer	175		164		187		152		166		Other consumer	219		175		164		187		152
Student - government guaranteed	Student - government guaranteed	—		350		396		375		447		Student - government guaranteed	—		—		350		396		375
Student - nonguaranteed	Student - nonguaranteed	—		6		6		6		6		Student - nonguaranteed	—		—		6		6		6
Credit card	Credit card	63		56		64		52		48		Credit card	68		63		56		64		52

Total loans 30-89 days past due and still accruing	Total loans 30-89 days past due and still accruing	$	1,550	$	1,805	$	2,267	$	1,957	$	2,091	Total loans 30-89 days past due and still accruing	$	1,636	$	1,550	$	1,805	$	2,267	$	1,957

Nonperforming assets totaled $1.6 billion at ~~June~~September 30, 2023, ~~up $322 million~~flat compared to ~~March 31,~~June 30, 2023. Nonperforming loans and leases held for investment were ~~0.47%~~0.46% of loans and leases held for investment at September 30, 2023, down one basis point compared to June 30, ~~2023, up 11 basis points compared to March 31,~~ 2023. ~~The increase in nonperforming assets was concentrated in the CRE and commercial and industrial portfolios.~~

Loans 90 days or more past due and still accruing totaled ~~$662~~$574 million at ~~June~~September 30, 2023, down ~~$699~~$88 million, or ~~twenty-one~~three basis points as a percentage of loans and leases, compared with the prior quarter primarily due to ~~the sale of government guaranteed student loans and~~ a decline in government guaranteed residential 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 0.04% at ~~June~~September 30, 2023, unchanged from ~~March 31,~~June 30, 2023.

Loans 30-89 days past due and still accruing of $1.6 billion at ~~June~~September 30, 2023 were ~~down $255~~up $86 million, or 7four basis points as a percentage of loans and leases, compared to the prior quarter primarily due to ~~declines~~increases in ~~government guaranteed student loans as a result of exiting that~~the consumer portfolio, partially offset by decreases in the commercial portfolio.

58 Truist Financial Corporation 57

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 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 NPLs.


Table 8: Asset Quality Ratios	Table 8: Asset Quality Ratios											Table 8: Asset Quality Ratios
		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022			Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.48	%	0.55	%	0.70	%	0.62	%	0.69	%	Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.52	%	0.48	%	0.55	%	0.70	%	0.62	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.21		0.42		0.49		0.54		0.59		Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.18		0.21		0.42		0.49		0.54
NPLs as a percentage of loans and leases HFI	NPLs as a percentage of loans and leases HFI	0.47		0.36		0.36		0.35		0.36		NPLs as a percentage of loans and leases HFI	0.46		0.47		0.36		0.36		0.35
NPLs as a percentage of total loans and leases(1)	NPLs as a percentage of total loans and leases(1)	0.47		0.36		0.36		0.37		0.37		NPLs as a percentage of total loans and leases(1)	0.48		0.47		0.36		0.36		0.37
NPAs as a percentage of:	NPAs as a percentage of:											NPAs as a percentage of:
Total assets(1)	Total assets(1)	0.29		0.22		0.23		0.23		0.22		Total assets(1)	0.29		0.29		0.22		0.23		0.23
Loans and leases HFI plus foreclosed property	Loans and leases HFI plus foreclosed property	0.49		0.38		0.38		0.37		0.38		Loans and leases HFI plus foreclosed property	0.48		0.49		0.38		0.38		0.37

ALLL as a percentage of loans and leases HFI	ALLL as a percentage of loans and leases HFI	1.43		1.37		1.34		1.34		1.38		ALLL as a percentage of loans and leases HFI	1.49		1.43		1.37		1.34		1.34

Ratio of ALLL to NPLs	Ratio of ALLL to NPLs	3.0x		3.8x		3.7x		3.8x		3.8x		Ratio of ALLL to NPLs	3.2x		3.0x		3.8x		3.7x		3.8x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)	Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)	0.04	%	0.04	%	0.04	%	0.04	%	0.04	%	Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)	0.04	%	0.04	%	0.04	%	0.04	%	0.04	%

(1)Includes LHFS.

(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio because collection of principal 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)	Table 9: Asset Quality Ratios (Continued)																Table 9: Asset Quality Ratios (Continued)
												As of/For the Year-to-Date																As of/For the Year-to-Date
		Three Months Ended										Period Ended June 30				Three Months Ended								Period Ended Sept. 30
		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		2023		2022				Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		2023		2022
Net charge-offs as a percentage of average loans and leases HFI:	Net charge-offs as a percentage of average loans and leases HFI:																Net charge-offs as a percentage of average loans and leases HFI:
Commercial:	Commercial:																Commercial:
Commercial and industrial	Commercial and industrial	0.23	%	0.15	%	0.08	%	0.02	%	0.01	%	0.19	%	0.03	%		Commercial and industrial	0.17	%	0.23	%	0.15	%	0.08	%	0.02	%	0.18	%	0.02	%
CRE	CRE	0.62		0.09		0.19		(0.01)		(0.10)		0.35		(0.04)			CRE	1.31		0.62		0.09		0.19		(0.01)		0.68		(0.03)
Commercial construction	Commercial construction	(0.02)		(0.04)		(0.06)		(0.10)		(0.08)		(0.03)		(0.05)			Commercial construction	(0.03)		(0.02)		(0.04)		(0.06)		(0.10)		(0.03)		(0.07)

Consumer:	Consumer:																Consumer:
Residential mortgage	Residential mortgage	(0.01)		—		(0.02)		0.01		(0.02)		(0.01)		(0.02)			Residential mortgage	0.05		(0.01)		—		(0.02)		0.01		0.01		(0.01)
Home equity	Home equity	(0.12)		(0.15)		(0.01)		(0.13)		(0.17)		(0.14)		(0.14)			Home equity	(0.10)		(0.12)		(0.15)		(0.01)		(0.13)		(0.13)		(0.14)
Indirect auto	Indirect auto	1.28		1.47		1.52		1.15		0.77		1.38		1.00			Indirect auto	1.75		1.28		1.47		1.52		1.15		1.50		1.05
Other consumer	Other consumer	1.20		1.29		1.11		1.31		1.27		1.25		1.07			Other consumer	1.37		1.20		1.29		1.11		1.31		1.29		1.16
Student	Student	8.67		0.42		0.34		0.40		0.30		4.42		0.31			Student	—		8.67		0.42		0.34		0.40		4.40		0.34
Credit card	Credit card	3.66		3.54		3.68		2.80		2.63		3.60		2.70			Credit card	3.78		3.66		3.54		3.68		2.80		3.66		2.74
Total(1)	Total(1)	0.54		0.37		0.34		0.27		0.22		0.46		0.23			Total(1)	0.51		0.54		0.37		0.34		0.27		0.47		0.25

Ratio of ALLL to net charge-offs(2)	Ratio of ALLL to net charge-offs(2)	2.6x		3.7x		4.1x		5.0x		6.5x		3.1x		6.2x			Ratio of ALLL to net charge-offs(2)	2.9x		2.6x		3.7x		4.1x		5.0x		3.1x		5.7x

Ratios are annualized, as applicable.

(1)2Q23 includes 12 basis point impact from student loan portfolio sale.

(2)Excluding the impact from the student loan charge-offs, the ALLL to annualized net charge-offs was 3.4X at June 30, 2023.

58 Truist Financial Corporation 59

The following table presents activity related to NPAs:


Table 10: Rollforward of NPAs	Table 10: Rollforward of NPAs					Table 10: Rollforward of NPAs
(Dollars in millions)	(Dollars in millions)	2023		2022		(Dollars in millions)	2023		2022
Balance, January 1	Balance, January 1	$	1,250	$	1,163	Balance, January 1	$	1,250	$	1,163
New NPAs	New NPAs	1,563		836		New NPAs	2,365		1,452
Advances and principal increases	Advances and principal increases	463		175		Advances and principal increases	648		307
Disposals of foreclosed assets(1)	Disposals of foreclosed assets(1)	(300)		(215)		Disposals of foreclosed assets(1)	(449)		(331)
Disposals of NPLs(2)	Disposals of NPLs(2)	(80)		(68)		Disposals of NPLs(2)	(132)		(80)
Charge-offs and losses	Charge-offs and losses	(414)		(194)		Charge-offs and losses	(708)		(332)
Payments	Payments	(628)		(347)		Payments	(1,022)		(590)
Transfers to performing status	Transfers to performing status	(263)		(190)		Transfers to performing status	(359)		(364)
Other, net	Other, net	(8)		13		Other, net	(9)		15
Ending balance, June 30		$	1,583	$	1,173
Ending balance, September 30						Ending balance, September 30	$	1,584	$	1,240

(1)Includes charge-offs and losses recorded upon sale of ~~$84~~$131 million and ~~$50~~$87 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

(2)Includes charge-offs and losses recorded upon sale of ~~$24~~$31 million and a net gain upon sale of $1 million for the ~~six~~nine months ended ~~June~~September 30, 2023 and 2022, respectively.

CRE and Commercial Construction

Truist has noted that the CRE and commercial construction portfolios have the potential for heightened risk in the current environment. Truist maintains a high-quality portfolio through disciplined risk management and prudent client selection. In addition, the Company’s exposure to large CRE tends to have more institutional sponsorship and the Company has reduced exposure to smaller CRE. Truist’s CRE and commercial construction portfolios were ~~$28.8~~$29.1 billion as of ~~June~~September 30, 2023.

Our office portfolio, which makes up approximately ~~18%~~17% of total CRE and commercial construction loans, is weighted towards Class A properties as of ~~June~~September 30, 2023. Truist maintains rigorous credit risk management surveillance routines across all loan portfolios. During 2023, Truist performed multiple reviews of the CRE office portfolio. Nonperforming loans ~~and criticized loans~~ in this portfolio have increased in this period.


Table 11: CRE and Commercial Construction by Type	Table 11: CRE and Commercial Construction by Type									Table 11: CRE and Commercial Construction by Type
		June 30, 2023				December 31, 2022					September 30, 2023				December 31, 2022
(Dollars in millions)	(Dollars in millions)	LHFI		NPL		LHFI		NPL		(Dollars in millions)	LHFI		NPL		LHFI		NPL
CRE and commercial construction:	CRE and commercial construction:									CRE and commercial construction:
Multifamily	Multifamily	$	8,590	$	17	$	7,762	$	—	Multifamily	$	9,161	$	30	$	7,762	$	—
Office	Office	5,158		264		5,258		75		Office	5,070		278		5,258		75
Industrial										Industrial	4,846		3		4,329		—
Retail	Retail	4,548		4		4,668		2		Retail	4,345		5		4,668		2
Industrial		4,731		—		4,329		—
Hotel	Hotel	2,601		—		2,965		—		Hotel	2,542		—		2,965		—
Other	Other	3,140		6		3,543		5		Other	3,115		2		3,543		5
Total	Total	$	28,768	$	291	$	28,525	$	82	Total	$	29,079	$	318	$	28,525	$	82

See additional information on the CRE and commercial construction portfolios in “Note 5. Loans and ACL,” including loans by origination year and credit quality indicator.

60 Truist Financial Corporation 59

ACL

Activity related to the ACL is presented in the following tables:


Table 12: Activity in ACL	Table 12: Activity in ACL																Table 12: Activity in ACL
		Three Months Ended										Six Months Ended June 30,				Three Months Ended										Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		2023		2022			(Dollars in millions)	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		2023		2022
Balance, beginning of period(1)	Balance, beginning of period(1)	$	4,761	$	4,649	$	4,455	$	4,434	$	4,423	$	4,649	$	4,695		Balance, beginning of period(1)	$	4,879	$	4,761	$	4,649	$	4,455	$	4,434	$	4,649	$	4,695

Provision for credit losses	Provision for credit losses	558		482		467		234		171		1,040		76			Provision for credit losses	497		558		482		467		234		1,537		310

Charge-offs:	Charge-offs:																Charge-offs:
Commercial and industrial	Commercial and industrial	(107)		(75)		(44)		(51)		(17)		(182)		(48)			Commercial and industrial	(98)		(107)		(75)		(44)		(51)		(280)		(99)
CRE	CRE	(35)		(6)		(11)		—		(1)		(41)		(2)			CRE	(77)		(35)		(6)		(11)		—		(118)		(2)
Commercial construction	Commercial construction	—		—		—		—		—		—		(1)			Commercial construction	—		—		—		—		—		—		(1)

Residential mortgage	Residential mortgage	(1)		(1)		(1)		(4)		(2)		(2)		(4)			Residential mortgage	(8)		(1)		(1)		(1)		(4)		(10)		(8)
Home equity	Home equity	(2)		(2)		(6)		(3)		(3)		(4)		(4)			Home equity	(4)		(2)		(2)		(6)		(3)		(8)		(7)
Indirect auto	Indirect auto	(115)		(127)		(129)		(103)		(77)		(242)		(179)			Indirect auto	(135)		(115)		(127)		(129)		(103)		(377)		(282)
Other consumer	Other consumer	(104)		(105)		(96)		(109)		(100)		(209)		(176)			Other consumer	(120)		(104)		(105)		(96)		(109)		(329)		(285)
Student	Student	(103)		(5)		(5)		(7)		(4)		(108)		(10)			Student	—		(103)		(5)		(5)		(7)		(108)		(17)
Credit card	Credit card	(53)		(51)		(53)		(42)		(40)		(104)		(81)			Credit card	(55)		(53)		(51)		(53)		(42)		(159)		(123)

Total charge-offs	Total charge-offs	(520)		(372)		(345)		(319)		(244)		(892)		(505)			Total charge-offs	(497)		(520)		(372)		(345)		(319)		(1,389)		(824)
Recoveries:	Recoveries:																Recoveries:
Commercial and industrial	Commercial and industrial	13		13		14		43		13		26		30			Commercial and industrial	28		13		13		14		43		54		73
CRE	CRE	—		1		1		—		6		1		7			CRE	2		—		1		1		—		3		7
Commercial construction	Commercial construction	—		1		1		2		1		1		2			Commercial construction	—		—		1		1		2		1		4

Residential mortgage	Residential mortgage	2		2		3		3		4		4		10			Residential mortgage	1		2		2		3		3		5		13
Home equity	Home equity	5		6		6		8		6		11		11			Home equity	7		5		6		6		8		18		19
Indirect auto	Indirect auto	31		26		21		21		26		57		49			Indirect auto	25		31		26		21		21		82		70
Other consumer	Other consumer	20		17		17		21		20		37		41			Other consumer	20		20		17		17		21		57		62
Student	Student	—		—		1		—		—		—		—			Student	—		—		—		1		—		—		—
Credit card	Credit card	9		9		8		8		9		18		18			Credit card	9		9		9		8		8		27		26
Total recoveries	Total recoveries	80		75		72		106		85		155		168			Total recoveries	92		80		75		72		106		247		274
Net charge-offs	Net charge-offs	(440)		(297)		(273)		(213)		(159)		(737)		(337)			Net charge-offs	(405)		(440)		(297)		(273)		(213)		(1,142)		(550)
Other(2)	Other(2)	—		(73)		—		—		(1)		(73)		—			Other(2)	(1)		—		(73)		—		—		(74)		—
Balance, end of period	Balance, end of period	$	4,879	$	4,761	$	4,649	$	4,455	$	4,434	$	4,879	$	4,434		Balance, end of period	$	4,970	$	4,879	$	4,761	$	4,649	$	4,455	$	4,970	$	4,455

ACL:(1)	ACL:(1)																ACL:(1)
ALLL	ALLL	$	4,606	$	4,479	$	4,377	$	4,205	$	4,187						ALLL	$	4,693	$	4,606	$	4,479	$	4,377	$	4,205
RUFC	RUFC	273		282		272		250		247							RUFC	277		273		282		272		250
Total ACL	Total ACL	$	4,879	$	4,761	$	4,649	$	4,455	$	4,434						Total ACL	$	4,970	$	4,879	$	4,761	$	4,649	$	4,455

(1)Excludes provision for credit losses and allowances related to other financial assets at amortized cost.

(2)The first quarter of 2023 includes the impact from the adoption of the Troubled Debt Restructurings and Vintage Disclosures accounting standard.

The allowance for credit losses was ~~$4.9~~$5.0 billion and includes ~~$4.6~~$4.7 billion for the allowance for loan and lease losses and ~~$273~~$277 million for the reserve for unfunded commitments. The ALLL ratio was ~~1.43%~~1.49%, up six basis points compared with ~~March 31, 2023 primarily due to an updated economic outlook.~~June 30, 2023. The ALLL covered nonperforming loans and leases held for investment ~~3.0X~~3.2X compared to ~~3.8X~~3.0X at ~~March 31,~~June 30, 2023. At ~~June~~September 30, 2023, the ALLL was ~~2.6X~~2.9X annualized net charge-offs, compared to ~~3.7X~~2.6X at ~~March 31,~~June 30, 2023. The ALLL to annualized net charge-offs for the ~~current~~prior quarter was impacted by the charge-off related to the sale of the student loan portfolio. Excluding the impact from the student loan charge-offs, the ALLL to annualized net charge-offs was 3.4X at June 30, 2023.

60 Truist Financial Corporation 61

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 13: Allocation of ALLL by Category	Table 13: Allocation of ALLL by Category													Table 13: Allocation of ALLL by Category
		June 30, 2023						December 31, 2022							September 30, 2023						December 31, 2022
(Dollars in millions)	(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category		(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	Commercial and industrial	$	1,536	33.5	%	52.0	%	$	1,409	32.3	%	50.3	%	Commercial and industrial	$	1,351	28.8	%	51.5	%	$	1,409	32.3	%	50.3	%
CRE	CRE	402		8.7		7.1		224		5.1		7.0		CRE	605		12.9		7.2		224		5.1		7.0
Commercial construction	Commercial construction	109		2.4		1.8		46		1.1		1.8		Commercial construction	165		3.5		2.0		46		1.1		1.8

Residential mortgage	Residential mortgage	320		6.9		17.5		399		9.1		17.4		Residential mortgage	301		6.4		17.7		399		9.1		17.4
Home equity	Home equity	85		1.8		3.2		90		2.0		3.3		Home equity	86		1.8		3.2		90		2.0		3.3
Indirect auto	Indirect auto	981		21.3		8.0		981		22.4		8.6		Indirect auto	945		20.1		7.6		981		22.4		8.6
Other consumer	Other consumer	808		17.5		8.9		770		17.6		8.5		Other consumer	866		18.5		9.2		770		17.6		8.5
Student	Student	—		—		—		98		2.2		1.6		Student	—		—		—		98		2.2		1.6
Credit card	Credit card	365		7.9		1.5		360		8.2		1.5		Credit card	374		8.0		1.6		360		8.2		1.5
Total ALLL	Total ALLL	4,606		100.0	%	100.0	%	4,377		100.0	%	100.0	%	Total ALLL	4,693		100.0	%	100.0	%	4,377		100.0	%	100.0	%
RUFC	RUFC	273						272						RUFC	277						272
Total ACL	Total ACL	$	4,879					$	4,649					Total ACL	$	4,970					$	4,649

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 ~~June~~September 30, 2023, Truist held or serviced the first lien on 32% of its second lien positions.

Other Assets

The components of other assets are presented in the following table:


Table 14: Other Assets as of Period End	Table 14: Other Assets as of Period End					Table 14: Other Assets as of Period End
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Bank-owned life insurance	Bank-owned life insurance	$	7,667	$	7,618	Bank-owned life insurance	$	7,694	$	7,618
Tax credit and other private equity investments	Tax credit and other private equity investments	6,943		6,825		Tax credit and other private equity investments	7,449		6,825
Prepaid pension assets	Prepaid pension assets	5,927		4,539		Prepaid pension assets	5,964		4,539
DTAs	DTAs	2,682		3,027		DTAs	3,545		3,027
Accounts receivable	Accounts receivable	3,129		2,682		Accounts receivable	2,659		2,682
Accrued income	Accrued income	2,133		2,265		Accrued income	2,335		2,265
Leased assets and related assets	Leased assets and related assets	2,045		2,082		Leased assets and related assets	1,914		2,082
FHLB stock	FHLB stock	1,258		1,279		FHLB stock	1,284		1,279
ROU assets	ROU assets	1,128		1,193		ROU assets	1,112		1,193
Prepaid expenses	Prepaid expenses	1,204		1,162		Prepaid expenses	1,143		1,162
Equity securities at fair value	Equity securities at fair value	910		898		Equity securities at fair value	330		898
Derivative assets	Derivative assets	805		684		Derivative assets	749		684
Other	Other	598		874		Other	615		874
Total other assets	Total other assets	$	36,429	$	35,128	Total other assets	$	36,793	$	35,128

62 Truist Financial Corporation 61

Funding Activities

Deposits

The following table presents average deposits:


Table 15: Average Deposits	Table 15: Average Deposits									Table 15: Average Deposits
		Three Months Ended											Three Months Ended
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		(Dollars in millions)	Sep 30, 2023		Jun 30, 2023		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022
Noninterest-bearing deposits	Noninterest-bearing deposits	$	123,728	$	131,099	$	141,032	$	146,041	$	148,610	Noninterest-bearing deposits	$	118,905	$	123,728	$	131,099	$	141,032	$	146,041
Interest checking	Interest checking	102,105		108,886		110,001		111,645		112,375		Interest checking	101,252		102,105		108,886		110,001		111,645
Money market and savings	Money market and savings	138,149		139,802		144,730		147,659		148,632		Money market and savings	139,961		138,149		139,802		144,730		147,659
Time deposits	Time deposits	35,844		28,671		17,513		14,751		14,133		Time deposits	40,920		35,844		28,671		17,513		14,751

Total average deposits	Total average deposits	$	399,826	$	408,458	$	413,276	$	420,096	$	423,750	Total average deposits	$	401,038	$	399,826	$	408,458	$	413,276	$	420,096

Average deposits for the ~~second~~third quarter of 2023 were ~~$399.8~~$401.0 billion, ~~a decrease~~an increase of ~~$8.6~~$1.2 billion, or ~~2.1%~~0.3%, compared to the prior quarter. ~~The decrease in deposits was primarily due to the impact of client tax payments and prior quarter activity.~~

Average noninterest-bearing deposits decreased ~~5.6%~~3.9% compared to the prior quarter and represented ~~30.9%~~29.6% of total deposits for the third quarter of 2023 compared to 30.9% for the second quarter of 2023 ~~compared to 32.1% for the first quarter of 2023~~ and ~~35.1%~~34.8% compared to the year ago quarter. Average ~~interest checking and money market and savings declined 6.2% and 1.2%, respectively, compared to the prior quarter. Average~~ time deposits increased ~~25%~~14% due to ~~an increase~~increases in retail client time deposits, primarily due to migration from other deposit products, and brokered time deposits. Average brokered deposits were ~~$26.2~~$33.0 billion, up ~~$5.0~~$6.8 billion compared to the prior quarter.

Truist has a very granular and relationship-based deposit franchise. Approximately ~~63%~~64% of deposits are insured or collateralized. Truist deposit accounts are typically based on long-term relationships and include multiple products and services.

The estimated amount of deposits that are uninsured was $164.5 billion, $171.8 billion, $175.9 billion, and $189.6 billion as of September 30, 2023, June 30, 2023, March 31, 2023, and December 31, 2022, respectively, calculated using the same methodology as the Call Report for Truist Bank. The decrease in uninsured deposits from December 31, 2022 to June 30, 2023 was largely due to commercial clients that chose to diversify into money market mutual funds or across multiple banks late in the first quarter. These outflows were primarily higher-cost, non-operational deposits. The decrease in uninsured deposits during the third quarter of 2023 was primarily due to the maturity of large denominated negotiable certificates of deposit.

Borrowings

At ~~June~~September 30, 2023, short-term borrowings totaled ~~$24.5~~$23.5 billion, an increase of ~~$1.0 billion~~$63 million compared to December 31, 2022. Average short-term borrowings were ~~$24.0~~$24.3 billion, or ~~4.9%~~5.1% of total funding, for the ~~six~~nine months ended ~~June~~September 30, 2023, as compared to ~~$8.3~~$11.4 billion, or ~~1.8%~~2.4%, for the same period in the prior year.

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 ~~$44.7~~$41.2 billion at ~~June~~September 30, 2023, ~~an increase~~a decrease of ~~$1.5~~$2.0 billion compared to December 31, 2022. During the ~~six~~nine months ended ~~June~~September 30, 2023, the Company had:

•Maturities and redemptions of ~~$4.0~~$4.5 billion of senior notes.

•Issued $6.3 billion fixed-to-floating rate senior notes with interest rates between 4.87% and 6.05% due from June 8, 2027 to June 8, 2034.

•Net redemptions of ~~$500 million~~$3.2 billion of FHLB floating rate advances as issuances in the first quarter of 2023 were ~~redeemed~~more than offset by redemptions in the second ~~quarter.~~and third quarters.

In July 2023, Truist announced it will redeem all $500 million principal amount outstanding of its 3.69% fixed-to-floating rate senior bank notes due August 2, 2024 on the redemption date of August 2, 2023.

62 Truist Financial Corporation 63

Shareholders’ Equity

Truist’s book value per common share and TBVPS are presented in the following table:


Table 16: Book Value per Common Share	Table 16: Book Value per Common Share					Table 16: Book Value per Common Share
(Dollars in millions, except per share data, shares in thousands)	(Dollars in millions, except per share data, shares in thousands)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions, except per share data, shares in thousands)	Sep 30, 2023		Dec 31, 2022
Common equity per common share	Common equity per common share	$	42.68	$	40.58	Common equity per common share	$	41.37	$	40.58
Non-GAAP capital measure:(1)	Non-GAAP capital measure:(1)					Non-GAAP capital measure:(1)
Tangible common equity per common share	Tangible common equity per common share	$	20.44	$	18.04	Tangible common equity per common share	$	19.25	$	18.04
Calculation of tangible common equity:(1)	Calculation of tangible common equity:(1)					Calculation of tangible common equity:(1)
Total shareholders’ equity	Total shareholders’ equity	$	63,681	$	60,537	Total shareholders’ equity	$	62,007	$	60,537
Less:	Less:					Less:
Preferred stock	Preferred stock	6,673		6,673		Preferred stock	6,673		6,673
Noncontrolling interests	Noncontrolling interests	155		23		Noncontrolling interests	167		23
Goodwill and intangible assets, net of deferred taxes	Goodwill and intangible assets, net of deferred taxes	29,628		29,908		Goodwill and intangible assets, net of deferred taxes	29,491		29,908
Tangible common equity	Tangible common equity	$	27,225	$	23,933	Tangible common equity	$	25,676	$	23,933

Common shares outstanding at end of period	Common shares outstanding at end of period	1,331,976		1,326,829		Common shares outstanding at end of period	1,333,668		1,326,829

(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 profitability, returns relative to balance sheet risk, and shareholder value.

Total shareholders’ equity was ~~$63.7~~$62.0 billion at ~~June~~September 30, 2023, an increase of ~~$3.1~~$1.5 billion from December 31, 2022. This increase includes ~~$2.9~~$4.0 billion in net income and $1.4 billion received in connection with the IH minority stake sale, net of tax, ~~and a $227 million increase in AOCI,~~ partially offset by ~~$1.6~~$2.4 billion in common and preferred ~~dividends.~~dividends and a $2.0 billion decrease in AOCI. Truist’s book value per common share at ~~June~~September 30, 2023 was ~~$42.68,~~$41.37, compared to $40.58 at December 31, 2022. Truist TBVPS of ~~$20.44~~$19.25 at ~~June~~September 30, 2023, increased ~~13%~~6.7% compared to December 31, 2022.

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 framework 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 measurement and monitoring and enables Truist to clearly and transparently communicate to stakeholders the level of potential risk the Company faces and the Company’s position on managing risk to acceptable levels.

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.

Truist’s compensation plans are designed to consider 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.

Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 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.

64 Truist Financial Corporation 63

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 from assets, liabilities, and 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. Truist primarily uses ~~three~~two 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 instantaneous and gradual changes in interest ~~rates;~~rates and (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, 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 deposit beta assumptions to 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 applies an average deposit beta of approximately 50% to its interest-bearing accounts when determining its interest rate sensitivity, which is consistent with Truist’s long-term expectations. 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.

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 17: Interest Sensitivity Simulation Analysis
Interest Rate Scenario Annualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps) Prime Rate
Jun 30, 2023 Jun 30, 2022 Jun 30, 2023 Jun 30, 2022
Up 100 9.25 % 5.75 % (1.00) % 1.68 %
Up 50 8.75 5.25 (0.61) 1.65
No Change 8.25 4.75 — —
Down 50(1)
7.75 4.25 (0.04) (2.86)
Down 100(1)
7.25 3.75 0.09 (3.94)

~~(1)The Down 50 and 100 rate scenarios incorporate a floor of one basis point.~~




Table 17: Interest Sensitivity Simulation Analysis
Interest Rate Scenario					Annualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)	Prime Rate
	Sep 30, 2023		Sep 30, 2022		Sep 30, 2023		Sep 30, 2022
Up 100	9.50	%	7.25	%	(1.03)	%	0.37	%
Up 50	9.00		6.75		(0.67)		0.39
No Change	8.50		6.25		—		—
Down 50	8.00		5.75		0.11		(1.77)
Down 100	7.50		5.25		0.29		(2.43)

~~Rate sensitivity decreased compared~~Net interest income is liability sensitive as elevated rates and quantitative tightening have led to ~~prior periods, primarily driven by higher starting rates,~~a reduction in deposits, rotation into interest bearing deposits, and higher deposit ~~betas as rates~~betas.

Interest rate scenarios in table 17 assume no change in deposit mix. Further rotation from non-interest bearing into interest bearing deposits would increase ~~and move into~~ the ~~highest beta tiers, and the addition~~liability sensitivity of ~~forward starting swaps.~~Truist’s balance sheet.

Management considers how the interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry was very strong post-COVID-19, which resulted in growth in noninterest-bearing demand deposits. However, with the significant increase in rates in 2022 and the first half of 2023, noninterest-bearing deposits have begun to shift to interest-bearing accounts. Additional movement above what is currently projected would reduce the asset sensitivity of Truist’s balance sheet because the Company may increase interest-bearing funds to offset the loss of these advantageous noninterest-bearing deposits. 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 behavior of these noninterest-bearing deposits is one of the most important assumptions used in determining the interest rate risk position of Truist.

~~64 Truist Financial Corporation~~

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%

Truist Financial Corporation 65


Table 18: Deposit Mix Sensitivity Analysis	Table 18: Deposit Mix Sensitivity Analysis								Table 18: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)	Gradual Change in Rates (bps)	Base Scenario at June 30, 2023(1)			Results Assuming a Decrease in Noninterest-Bearing Demand Deposits				Gradual Change in Rates (bps)				Base Scenario at September 30, 2023(1)		Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
			td0 Billion			$40 Billion					td0 Billion				$40 Billion
Up 100	Up 100		(1.00)	%		(1.77)	%			(2.54)		%		Up 100	(1.03)	%	(1.81)	%	(2.58)	%
Up 50	Up 50	(0.61)			(1.17)			(1.74)	Up 50				(0.67)		(1.23)		(1.80)

(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at ~~June~~September 30, 2023 as presented in the preceding table.

Truist uses financial instruments including derivatives to manage interest rate risk related to securities, commercial loans, MSRs, mortgage banking operations, long-term debt, and other funding sources. Truist has utilized derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of ~~June~~September 30, 2023, Truist had derivative financial instruments outstanding with notional amounts totaling ~~$509.8~~$379.8 billion. See “Note 16. Derivative Financial Instruments” for additional disclosures. In the ~~second~~third quarter of 2023, there was a ~~$135~~$125 billion ~~increase~~decrease in notional amounts on derivatives with central clearing parties as a result of ~~the~~ conversion from LIBOR to SOFR. ~~This increased~~The decline in notional ~~amount~~ is ~~a short term impact~~due to the maturity of short-term LIBOR swaps entered into in the second quarter of 2023 to maintain LIBOR cashflows until the phase out of the LIBOR reference rate on June 30th, 2023. All remaining short-term impacts of the conversion ~~with most of the increase maturing~~are expected to mature in the ~~third and~~ fourth quarter of 2023.

LIBOR Transition

The remaining tenors of U.S. dollar LIBOR ceased publication on June 30, 2023. 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 risks related to the transition from LIBOR to a new index or multiple indices and provides updates to Executive Leadership and the Board on progress. Training has been provided for impacted teammates and will continue during the second half of 2023. Truist provided timely notices and information to impacted clients about the transition ~~during the first half~~to new interest rates post cessation. Most contracts were transitioned to new rates in July and August 2023. A small number of ~~2023.~~contracts utilize longer tenor LIBOR rates and will transition by late 2023 (3-month LIBOR) or early 2024 (6-month and 12-month LIBOR) based on contractual agreements. Truist ~~continues to manage the impact~~has materially completed LIBOR transition efforts, primarily utilizing SOFR replacement rates, and closed formal project efforts as of ~~LIBOR-based contracts and other financial instruments, systems implications, hedging strategies, and related operational and market risks.~~September 2023.

Contract fallback language for LIBOR contracts was reviewed to identify required remediation to support the transition away from LIBOR. Impacted lines of business have remediated substantially all of these contracts to include standardized fallback language or amended contracts to new reference rates ahead of cessation. Fallback language used to remediate loan agreements was generally consistent with ARRC recommendations and included use of “hardwired fallback” language, which ~~will transition~~transitioned loans to a SOFR based rate after June 30, 2023. ~~Similarly, fallback language used to remediate LIBOR based derivatives was generally consistent with ISDA publications.~~

~~Loan contracts, excluding mortgage loans, that mature post June 30, 2023 will transition primarily to SOFR following the cessation date.~~ For contracts remaining without fallback language, Truist leveraged the LIBOR Act and corresponding safe harbor provision to transition these loans to SOFR. Truist’s adjustable-rate mortgage products had consistent and adequate fallback language to transition to SOFR, based on lender discretion and as supported by the LIBOR Act; therefore, these contracts did not require remediation. For many consumer lending portfolios, LIBOR ~~will transition~~transitioned to the SOFR rate specified in the LIBOR Act and the rules promulgated thereunder by the FRB and ~~will~~ benefit from the safe harbor provisions of the LIBOR Act.

Derivatives that reference LIBOR ~~will transition~~transitioned to a SOFR-based replacement rate as set forth in the ISDA protocol addressing LIBOR fallbacks between the Company and its counterparties which have adhered to the protocol, through bilateral amendments between the Company and each of its counterparties, or as established under the LIBOR Act and rules promulgated thereunder by the FRB. Fallback language used to remediate LIBOR based derivatives was generally consistent with ISDA publications.

The Company’s preferred securities and the Company’s and Truist Bank’s floating rate notes that reference LIBOR ~~will transition~~transitioned to a SOFR based rate utilizing application of the LIBOR Act and the rules promulgated thereunder by the FRB. Truist ~~recently~~ announced that these securities would move to a 3-month adjusted ~~term~~Term SOFR in accordance with the LIBOR Act. See “Note 12. Shareholders’ Equity” in Truist’s Annual Report on Form 10-K for information about preferred stock using LIBOR.

Alternatives, such as SOFR, may react differently from LIBOR in times of economic stress. Truist expects SOFR to be the primary pricing benchmark used across the industry and will continue to offer additional SOFR based products. Additional alternative reference rates will be supported based on market demand. For a further discussion of the various risks associated with the 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, 2022.

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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.

Securitizations

As of ~~June~~September 30, 2023, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was ~~$56~~$91 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 ~~June~~September 30, 2023.

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 ~~six~~nine months ended ~~June~~September 30, 2023 and 2022. Average one and ten-day VaR measures for the ~~second quarter~~three months ended ~~June~~September 30, 2023 increased from the same period of last year, primarily driven by higher market making inventory.

66 Truist Financial Corporation 67


Table 19: VaR-based Measures	Table 19: VaR-based Measures																	Table 19: VaR-based Measures
		Three Months Ended June 30,								Six Months Ended June 30,									Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022					2023				2022				2023				2022
(Dollars in millions)	(Dollars in millions)	10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period		(Dollars in millions)	10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:	VaR-based Measures:																	VaR-based Measures:
Maximum	Maximum	$	24	$	9	$	26	$	7	$	24	$	9	$	38	$	14	Maximum	$	22	$	9	$	27	$	7	$	24	$	9	$	38	$	14
Average	Average	18		7		13		4		17		6		16		5		Average	18		7		18		5		17		6		17		5
Minimum	Minimum	14		5		6		3		10		4		6		3		Minimum	15		5		13		4		10		4		6		3
Period-end	Period-end	17		7		26		7		17		7		26		7		Period-end	17		7		20		6		17		7		20		6
VaR by Risk Class:	VaR by Risk Class:																	VaR by Risk Class:
Interest Rate Risk	Interest Rate Risk			4				4				4				4		Interest Rate Risk			6				8				6				8
Credit Spread Risk	Credit Spread Risk			6				6				6				6		Credit Spread Risk			6				7				6				7
Equity Price Risk	Equity Price Risk			4				3				4				3		Equity Price Risk			4				2				4				2
Foreign Exchange Risk	Foreign Exchange Risk			1				—				1				—		Foreign Exchange Risk			—				—				—				—
Portfolio Diversification	Portfolio Diversification			(8)				(7)				(8)				(7)		Portfolio Diversification			(10)				(11)				(10)				(11)
Period-end	Period-end			7				7				7				7		Period-end			6				6				6				6

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 20: Stressed VaR-based Measures - 10 Day Holding Period	Table 20: Stressed VaR-based Measures - 10 Day Holding Period									Table 20: Stressed VaR-based Measures - 10 Day Holding Period
		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	(Dollars in millions)	2023		2022		2023		2022		(Dollars in millions)	2023		2022		2023		2022
Maximum	Maximum	$	96	$	87	$	96	$	109	Maximum	$	130	$	91	$	130	$	109
Average	Average	54		66		49		71		Average	85		65		61		69
Minimum	Minimum	25		40		25		40		Minimum	44		48		25		40
Period-end	Period-end	96		81		96		81		Period-end	119		65		119		65

Compared to the prior year, Stressed VaR measures decreased over the nine months ended September 30 this year, primarily due to higher diversification benefits in 2023.

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, there were no Company-wide VaR backtesting exceptions during the twelve months ended ~~June~~September 30, 2023. 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.

68 Truist Financial Corporation 67

Model Risk Oversight

MRO 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 MRO 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 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.

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.

68 Truist Financial Corporation 69

Internal Liquidity Stress Testing

Liquidity stress testing is designed to ensure that Truist and Truist Bank have sufficient liquidity for a variety of institution-specific and 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 liquidity buffer is substantially the same in composition to what qualifies as HQLA under the LCR Rule.

Contingency Funding Plan

Truist has a contingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and commitments, particularly in the event of a liquidity contraction. This plan is designed to examine and 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 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.

LCR and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient to meet its estimated total net cash outflows over 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. Truist and Truist Bank are subject to the Category III reduced LCR requirements. Truist held average weighted eligible HQLA of ~~$84.8~~$83.8 billion and Truist’s average LCR was ~~112%~~110% for the three months ended ~~June~~September 30, 2023.

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 ~~June~~September 30, 2023, ~~and March 31, 2023, Truist’s NSFR~~Truist was ~~127%.~~compliant with this requirement.

Sources of Funds

Management 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 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. Available investment securities could be pledged to create additional secured borrowing capacity. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the FRB:


Table 21: Selected Liquidity Sources	Table 21: Selected Liquidity Sources					Table 21: Selected Liquidity Sources
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023		Dec 31, 2022		(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Unused borrowing capacity:	Unused borrowing capacity:					Unused borrowing capacity:
FRB	FRB	$	52,737	$	49,250	FRB	$	54,633	$	49,250
FHLB	FHLB	23,219		20,770		FHLB	23,615		20,770
Available investment securities (after haircuts)	Available investment securities (after haircuts)	77,875		85,401		Available investment securities (after haircuts)	73,010		85,401
Available secured borrowing capacity	Available secured borrowing capacity	153,831		155,421		Available secured borrowing capacity	151,258		155,421
Eligible cash at the FRB	Eligible cash at the FRB	24,658		15,556		Eligible cash at the FRB	24,177		15,556
Total	Total	$	178,489	$	170,977	Total	$	175,435	$	170,977

At ~~June~~September 30, 2023, Truist Bank’s available secured borrowing capacity represented approximately ~~3.2~~3.5 times the amount of wholesale funding maturities in one-year or less. Truist additionally has the ability to increase sources of funding by pledging available investment securities to receive the par value of the collateral under the FRB Bank Term Funding Program.

70 Truist Financial Corporation 69

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 and, from time-to-time, potential repurchases or redemptions of a portion of an outstanding tranche of the long-term ~~debt.~~debt of the Parent Company or the Bank (as may be permitted by the terms of each respective series). See “Note 22. Parent Company Financial Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 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 ~~June~~September 30, 2023 and December 31, 2022, the Parent Company had 4742 months and 37 months, respectively, of cash on hand to satisfy projected cash outflows, and 25 months and 22 months, respectively, when including the payment of common stock dividends.

Credit Ratings

Credit 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, 2022 for additional information regarding factors that influence credit ratings and potential risks that could materialize in the event of downgrade in the Company’s credit ratings: Recent changes in the Company’s credit ratings and outlooks include:

•On March ~~31,2023,~~31, 2023, S&P Global Ratings affirmed the ratings of Truist and Truist Bank and revised the outlook on those ratings to “stable” from “positive,” citing heightened market volatility in the wake of recent bank failures and, with inflation still elevated, higher uncertainty, and greater downside risk in the economic outlook. The change in outlook was part of a broader action by S&P Global Ratings whereby the “positive” outlook on three other large U.S. banks was revised to “stable.”

•On August 7, 2023, Moody’s Investors Service placed the long-term ratings and certain short-term ratings of Truist and Truist Bank “under review for downgrade,” citing Truist’s comparatively low, though improving, level of capitalization, along with weaknesses in asset-liability management. The review also reflects Moody’s Investor Service view that the stability of U.S. banks’ deposit funding has declined, as reflected in the agency’s decision to lower the U.S. macro profile.

•On August 11, 2023, DBRS, Inc. affirmed the ratings of Truist and Truist Bank and maintained a “stable” ratings outlook, citing Truist’s highly scaled and diversified regional banking franchise, conservative risk profile, and sound liquidity management and capital levels. In affirming the ratings, DBRS, Inc. also noted the ratings take into account the more challenging operating environment and the expectation that funding costs and asset quality metrics could worsen from current levels, providing some pressure to earnings, and that credit deterioration associated with normalization of the credit cycle would be manageable.

•On August 21, 2023, S&P Global Ratings affirmed the ratings of Truist and Truist Bank and maintained a “stable” ratings outlook, citing Truist’s strong market position and diversified business model as a substantial offset to deposit and margin pressures. S&P Global Ratings viewed Truist’s capital ratios unfavorably after considering unrealized losses on securities but also wrote that Truist has the earnings capacity to build its capital ratios and support franchise growth over time.

•After the end of the third quarter, on October 16, 2023, Fitch Ratings affirmed the ratings of Truist and Truist Bank and revised the ratings outlook to “negative” from “stable.” In affirming Truist’s ratings, Fitch Ratings cited the company’s diverse revenue model, solid asset quality, and expected capital build over the rating horizon; however, “negative” ratings outlook reflects the view of Fitch Ratings that Truist currently has less “headroom” to face increasing earnings pressures than similarly-rated peers.

Truist Financial Corporation 71

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.

~~70 Truist Financial Corporation~~

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 objective is to maintain capital at levels that are in excess of internal capital limits, which are above the regulatory “well capitalized” minimums. Management has implemented internal stress capital ratio minimums to evaluate whether capital ratios calculated after the effect of alternative capital actions are likely to remain above internal minimums. Breaches of internal stressed minimums prompt a review of the planned capital actions included in Truist’s capital plan.


Table 22: Capital Requirements
	Minimum Capital		Well Capitalized				Minimum Capital Plus Stress Capital Buffer(1)
			Truist		Truist Bank
CET1	4.5	%	NA		6.5	%	7.0	%
Tier 1 capital	6.0		6.0	%	8.0		8.5
Total capital	8.0		10.0		10.0		10.5
Leverage ratio	4.0		NA		5.0		NA
Supplementary leverage ratio	3.0		NA		NA		NA

(1)Reflects ~~a SCB requirement of 2.5% applicable to Truist as of June 30, 2023.~~ Truist’s SCB requirement, received in the CCAR 2022 ~~CCAR~~ process, ~~is effective~~of 2.5% applicable from October 1, 2022 tothrough September 30, 2023. ~~Under the 2023 CCAR process, Truist was notified its preliminary SCB requirement would remain 2.9% from~~Beginning on October 1, 2023, through September 30, ~~2024.~~2024, Truist will be subject to a 2.9% SCB received in the CCAR 2023 process.

Truist’s capital ratios are presented in the following table:


Table 23: Capital Ratios - Truist Financial Corporation	Table 23: Capital Ratios - Truist Financial Corporation							Table 23: Capital Ratios - Truist Financial Corporation
(Dollars in millions)	(Dollars in millions)	Jun 30, 2023			Dec 31, 2022			(Dollars in millions)	Sep 30, 2023			Dec 31, 2022
Risk-based:	Risk-based:	(preliminary)						Risk-based:	(preliminary)
CET1	CET1	9.6		%	9.0		%	CET1	9.9		%	9.0		%
Tier 1 capital	Tier 1 capital	11.1			10.5			Tier 1 capital	11.4			10.5
Total capital	Total capital	13.2			12.4			Total capital	13.5			12.4
Leverage ratio	Leverage ratio	8.8			8.5			Leverage ratio	9.2			8.5
Supplementary leverage ratio	Supplementary leverage ratio	7.5			7.3			Supplementary leverage ratio	7.8			7.3
Risk-weighted assets	Risk-weighted assets	$	434,985		$	434,413		Risk-weighted assets	$	428,682		$	434,413

Capital ratios remained strong compared to the regulatory requirements for well capitalized banks. Truist declared common dividends of $0.52 per share during the ~~second~~third quarter of 2023. The dividend payout ratio for the ~~second~~third quarter of 2023 was ~~56%~~65%. Truist did not repurchase any shares in the ~~second~~third quarter of 2023.

~~Truist~~Truist’s CET1 ratio was ~~9.6%~~9.9% as of ~~June~~September 30, 2023. The increase since ~~December 31, 2022~~June 30, 2023 resulted from ~~the minority stake sale in IH and~~ organic capital ~~generation. Truist closed the sale of the minority stake in IH on April 3, 2023, which added 31 basis points to the risk-based regulatory capital ratios.~~generation and RWA optimization.

Truist completed the 2023 CCAR process and received the ~~preliminary~~ SCB requirement of 2.9% for the period October 1, 2023 to September 30, 2024. ~~The Federal Reserve will provide Truist with its final SCB requirement by August 31, 2023.~~

72 Truist Financial Corporation

Share Repurchase Activity


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(3)
~~April~~July 1, 2023 to ~~April 30,~~July 31, 2023	—	$	—	—	$	4,100
~~May~~August 1, 2023 to ~~May~~August 31, 2023	—	—		—	4,100
~~June~~September 1, 2023 to ~~June~~September 30, 2023	—	—		—	~~4,100~~—
Total	—	$	—	—

(1)Includes shares exchanged or surrendered in connection with the exercise of equity-based awards under equity-based compensation plans.

(2)Excludes commissions.

(3)~~In July 2022,~~The repurchase authority previously approved by the Board of Directors ~~approved, effective October 1, 2022, new repurchase authority to effectuate repurchases up to an aggregate of $4.1 billion in shares of the Company’s common stock through~~expired on September 30, 2023.

~~Truist Financial Corporation 71~~

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. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets; income taxes; and pension and postretirement benefit 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, 2022. 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, 2022. Disclosures regarding the effects of new accounting pronouncements are included in “Note 1. Basis of Presentation” in this report. There have been no changes to the significant accounting policies during 2023.

Goodwill and Other Intangible Assets

The Company performs goodwill impairment analysis annually as of October 1 or more often if events or circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit is below its carrying value. During the third quarter of 2023, the Company observed continuing declines in its financial forecasts for its CB&W and C&CB reporting units. The Company considered such declines in the context of industry related factors, including a decline in bank share prices, concluding that a triggering event had occurred for its CB&W and C&CB reporting units, and therefore Truist performed a quantitative test for these reporting units as of August 1, 2023. Truist also elected to perform a quantitative test for the IH reporting unit concurrent with the other units. The quantitative impairment test estimates the fair value of the reporting units using the income approach (weighted 50%) and two market based approaches: the guideline public company (weighted 30%) and guideline transaction (weighted 20%) methods. The income approach utilizes a discounted cash flow analysis. The guideline public company approach utilizes comparable public company information, key valuation multiples, and considers a market control premium associated with cost synergies and other cash flow benefits that arise from obtaining control over a reporting unit, and guideline transactions, when applicable. The guideline transaction method uses market observable transaction multiples for non-regulatory assisted transactions occurring within the past 12 months, which inherently incorporate a premium associated with the benefits of obtaining control.

The inputs and assumptions specific to each reporting unit are incorporated in the valuations, including projections of future cash flows, discount rates, applicable valuation multiples based on the comparable public company information, and guideline transaction information. Truist also assesses the reasonableness of the aggregate estimated fair value of the reporting units by comparison to its market capitalization over a reasonable period of time, including consideration of expected acquirer expense synergies, historic bank control premiums, and the current market.

Multi-year financial forecasts are developed for each reporting unit by considering several inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital. The projection of net interest margin and noninterest expense are the most significant inputs to the financial projections of the CB&W and C&CB reporting units. The long-term growth rate used in determining the terminal value of each reporting unit was 3% as of August 1, 2023, based on management’s assessment of the minimum expected terminal growth rate of each reporting unit. Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk adjustments specific to a particular reporting unit. The discount rates are also calibrated based on risks related to the projected cash flows of each reporting unit. The discount rates utilized for the CB&W, C&CB, and IH reporting units as of August 1, 2023 were 12.5%, 11.5%, and 10.0%, respectively.

Truist Financial Corporation 73

Based on the Company’s interim impairment test of goodwill, it was determined for the CB&W, C&CB, and IH reporting units that the respective reporting units’ fair value was in excess of its respective carrying value as of August 1, 2023; however, for the CB&W and C&CB reporting units the fair value of the reporting unit exceeded its carrying value by less than 10%, indicating that the goodwill of these reporting units may be at risk of impairment. Circumstances that could negatively impact the fair value for the CB&W and C&CB reporting units in the future include sustained decrease in Truist stock price, continued decline in industry peer multiples, an increase in the applicable discount rate and further deterioration in the reporting units’ forecasts.

The estimated fair value of a reporting unit is highly sensitive to changes in management’s estimates and assumptions; therefore, in some instances, changes in these assumptions could impact whether the fair value of a reporting unit is greater than its carrying value. The Company performs sensitivity analyses around these assumptions in order to assess the reasonableness of the assumptions, and the resulting estimated fair values. The analysis of the CB&W and C&CB reporting unit at August 1, 2023, indicated that if the discount rates were increased 120 basis points and 100 basis points, respectively, the reporting unit’s fair value would be less than its carrying value, resulting in goodwill impairment. Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. Additionally, a reporting unit’s carrying value could change based on market conditions, change in the underlying makeup of the reporting unit, or the risk profile of those reporting units, which could impact whether the fair value of a reporting unit is less than carrying value.

The Company monitored events and circumstances during the period from August 1, 2023 through September 30, 2023, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, a comparison of management’s forecast and assumptions to those used in its August 1, 2023 quantitative impairment test, and the sensitivity of the August 1, 2023 quantitative test results to changes in assumptions through September 30, 2023. Based on these considerations, management concluded 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, 2023.

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 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 ~~June~~September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

74 Truist Financial Corporation

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, 2022. 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, AND ISSUER PURCHASE OF EQUITY SECURITIES

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

ITEM 5. OTHER INFORMATION

(c) During the three months ended ~~June~~September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

72 Truist Financial Corporation 75

ITEM 6. EXHIBITS

Exhibit No.

Description

Location

3.1

Bylaws of Truist Financial Corporation, as Amended and Restated, Effective September 27, 2023.

Incorporated herein by reference to Exhibit 3.1 of the of the Current Report on Form 8-K, filed October 2, 2023.

10.1*

Sixth Amendment to the Truist Financial Corporation ~~Non-Qualified Deferred Compensation Trust~~Pension Plan (October 1, 2020 Restatement)

Filed herewith.

10.2*

~~First~~Fifth Amendment ~~and Resolutions~~ to the Truist Financial Corporation ~~Non-Qualified Deferred Compensation~~401(k) Savings Plan (August 1, 2020 Restatement)

Filed herewith.

Statement re computation of earnings per share.

Filed herewith as Computation of EPS note to the consolidated financial statements.

31.1

Certification 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.

Filed herewith.

31.2

Certification 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.

Filed herewith.

Certification 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.

Filed herewith.

101.INS

XBRL 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.SCH

XBRL Taxonomy Extension Schema.

Filed herewith.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

Filed herewith.

101.LAB

XBRL Taxonomy Extension Label Linkbase.

Filed herewith.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

Filed herewith.

101.DEF

XBRL Taxonomy Definition Linkbase.

Filed herewith.

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits101).

Filed herewith.

* Management compensatory plan or arrangement.

76 Truist Financial Corporation 73

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:

~~July 31,~~October 30, 2023

By:

/s/ Michael B. Maguire

Michael B. Maguire

Senior Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date:

~~July 31,~~October 30, 2023

By:

/s/ Cynthia B. Powell

Cynthia B. Powell

Executive Vice President and Corporate Controller

(Principal Accounting Officer)

74 Truist Financial Corporation 77