TRUIST FINANCIAL CORP (TFC)

CIK: 0000092230. SIC: 6021 National Commercial Banks. Latest 10-K as of: 2026-02-24.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6021 National Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=92230. Latest filing source: 0000092230-26-000030.

Informational only - descriptive public-record data, not investment advice.

Selected Fundamentals

Metric	Value	Unit	FY	Filed
Revenue	24,542,000,000	USD	2025	2026-02-24
Net income	5,307,000,000	USD	2025	2026-02-24
Assets	547,538,000,000	USD	2025	2026-02-24

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-24. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000092230.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Revenue	7,066,000,000	7,374,000,000	8,120,000,000	9,409,000,000	15,548,000,000	13,774,000,000	16,634,000,000	24,452,000,000	25,066,000,000	24,542,000,000
Net income	2,442,000,000	2,415,000,000	3,257,000,000	3,237,000,000	4,492,000,000	6,437,000,000	6,267,000,000	-1,047,000,000	4,840,000,000	5,307,000,000
Diluted EPS	2.77	2.74	3.91	3.71	3.08	4.47	4.43	-1.09	3.36	3.82
Operating cash flow	3,115,000,000	4,635,000,000	4,349,000,000	1,520,000,000	7,437,000,000	7,892,000,000	11,081,000,000	8,631,000,000	2,164,000,000	5,739,000,000
Dividends paid	925,000,000	1,005,000,000	1,204,000,000	1,309,000,000	2,424,000,000	2,485,000,000	2,656,000,000	2,770,000,000	2,770,000,000	2,672,000,000
Share buybacks	520,000,000	1,613,000,000	1,205,000,000	0.00	0.00	1,616,000,000	250,000,000	0.00	1,000,000,000	2,500,000,000
Assets	219,276,000,000	221,642,000,000	225,697,000,000	473,078,000,000	509,228,000,000	541,241,000,000	555,255,000,000	535,349,000,000	531,176,000,000	547,538,000,000
Liabilities	189,350,000,000	191,947,000,000	195,519,000,000	406,520,000,000	438,316,000,000	471,970,000,000	494,718,000,000	476,096,000,000	467,497,000,000	482,349,000,000
Stockholders' equity									63,679,000,000	65,189,000,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric	2016	2017	2018	2019	2020	2021	2022	2023	2024	2025
Net margin	34.56%	32.75%	40.11%	34.40%	28.89%	46.73%	37.68%	-4.28%	19.31%	21.62%
Return on equity									7.60%	8.14%
Return on assets	1.11%	1.09%	1.44%	0.68%	0.88%	1.19%	1.13%	-0.20%	0.91%	0.97%
Liabilities / equity									7.34	7.40

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-01. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000092230.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarter	End Date	Revenue	Net Income	Diluted EPS	Method
2022-Q2	2022-06-30			1.09	reported discrete quarter
2022-Q3	2022-09-30			1.15	reported discrete quarter
2023-Q1	2023-03-31			1.05	reported discrete quarter
2023-Q2	2023-06-30	6,176,000,000	1,345,000,000	0.92	reported discrete quarter
2023-Q3	2023-09-30	6,229,000,000	1,183,000,000	0.80	reported discrete quarter
2023-Q4	2023-12-31	6,266,000,000	-5,090,000,000		derived Q4 = FY annual - nine-month YTD
2024-Q1	2024-03-31	6,184,000,000	1,200,000,000	0.81	reported discrete quarter
2024-Q2	2024-06-30	6,351,000,000	922,000,000	0.62	reported discrete quarter
2024-Q3	2024-09-30	6,352,000,000	1,442,000,000	0.99	reported discrete quarter
2024-Q4	2024-12-31	6,179,000,000	1,276,000,000		derived Q4 = FY annual - nine-month YTD
2025-Q1	2025-03-31	5,988,000,000	1,261,000,000	0.87	reported discrete quarter
2025-Q2	2025-06-30	6,154,000,000	1,240,000,000	0.90	reported discrete quarter
2025-Q3	2025-09-30	6,286,000,000	1,452,000,000	1.04	reported discrete quarter
2025-Q4	2025-12-31	6,114,000,000	1,354,000,000		derived Q4 = FY annual - nine-month YTD
2026-Q1	2026-03-31	5,855,000,000	1,481,000,000	1.09	reported discrete quarter

Quarterly Charts

Macro Cross-References

CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
UNRATE - Unemployment Rate
FEDFUNDS - Federal Funds Effective Rate
CES0500000003 - Average Hourly Earnings of All Employees, Total Private
DFEDTARU - Federal Funds Target Range - Upper Limit
DFEDTARL - Federal Funds Target Range - Lower Limit
DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
PCEPI - Personal Consumption Expenditures: Chain-type Price Index
PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
PPIACO - Producer Price Index by Commodity: All Commodities
T10YIE - 10-Year Breakeven Inflation Rate
U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
PAYEMS - All Employees, Total Nonfarm
CIVPART - Labor Force Participation Rate
EMRATIO - Employment-Population Ratio
UNEMPLOY - Unemployed
CE16OV - Employment Level
ICSA - Initial Claims
JTSJOL - Job Openings: Total Nonfarm
JTSQUR - Quits: Total Nonfarm
GDPC1 - Real Gross Domestic Product
A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
INDPRO - Industrial Production: Total Index
TCU - Capacity Utilization: Total Index
HOUST - New Privately-Owned Housing Units Started: Total Units
PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
RSAFS - Advance Retail Sales: Retail Trade
PCE - Personal Consumption Expenditures
DSPIC96 - Real Disposable Personal Income
PSAVERT - Personal Saving Rate
M2SL - M2
BOPGSTB - U.S. International Trade in Goods and Services: Balance
MSPUS - Median Sales Price of Houses Sold for the United States
HSN1F - New One Family Houses Sold: United States
RHORUSQ156N - Homeownership Rate in the United States
TTLCONS - Total Construction Spending: Total Construction in the United States
RRVRUSQ156N - Rental Vacancy Rate in the United States
TOTALSL - Total Consumer Credit Owned and Securitized
REVOLSL - Revolving Consumer Credit Owned and Securitized
DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
GDP - Gross Domestic Product
GPDI - Gross Private Domestic Investment
GCE - Government Consumption Expenditures and Gross Investment
PCEC - Personal Consumption Expenditures
NETEXP - Net Exports of Goods and Services
GFDEBTN - Federal Debt: Total Public Debt
GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
FYFSD - Federal Surplus or Deficit
FGRECPT - Federal Government Current Receipts
FGEXPND - Federal Government: Current Expenditures
MANEMP - All Employees, Manufacturing
USCONS - All Employees, Construction
USTRADE - All Employees, Retail Trade
USFIRE - All Employees, Financial Activities
USGOVT - All Employees, Government
AWHAETP - Average Weekly Hours of All Employees, Total Private
DGORDER - Manufacturers' New Orders: Durable Goods
NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
BUSINV - Total Business Inventories
EXPGS - Exports of Goods and Services
IMPGS - Imports of Goods and Services
IR - Import Price Index (End Use): All Commodities
PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0000092230-26-000062.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-01. Report date: 2026-03-31.

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

The following is management’s discussion and analysis of the financial condition and operating results of Truist, which should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, as well as with Truist’s Annual Report on Form 10-K for the year ended December 31, 2025.

A description of certain factors that may affect our future results and risk factors is set forth in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Executive Overview

We delivered strong earnings in the first quarter of 2026, with diluted EPS increasing 25% from the first quarter of 2025, driven by disciplined execution against our strategic priorities and continued momentum across the franchise.

We continued to build new client relationships, grow in attractive markets, and generate high‑quality loan and deposit growth that is translating into improved profitability.

We also maintained strong asset quality metrics, returned capital to shareholders at an accelerated pace, and continued to invest in scalable technology to better serve our clients and operate more efficiently.

During the first quarter of 2026, we returned $1.8 billion of capital to our common shareholders through $645 million of common stock dividends and $1.1 billion in common share repurchases. As of March 31, 2026, we had $8.9 billion remaining under our $10.0 billion common share repurchase authorization.

Table 1: Earnings Highlights
(Dollars in millions)	Three Months Ended March 31,		Change
2026		2025		2026 vs. 2025
Net interest income	$	3,599			$	3,507		$	92
TE adjustment(1)	45			48			(3)
Net interest income - TE(1)	3,644			3,555			89
Noninterest income	1,553			1,392			161
Total revenue	5,152			4,899			253
Total revenue - TE(1)	5,197			4,947			250
Noninterest expense	2,983			2,906			77
Income before income taxes	1,690			1,535			155
Provision for income taxes	209			274			(65)
Net income	1,481			1,261			220
Net income available to common shareholders	1,377			1,157			220

Diluted earnings per common share	$	1.09			$	0.87		$	0.22
Common shareholders’ equity per common share	47.60			44.85			2.75
TBVPS(1)	33.19			30.95			2.24
Return on average common shareholders’ equity	9.3	%		8.1	%		120 bps
ROTCE(1)	13.8			12.3			150 bps
NIM - TE(1)	3.02			3.01			1 bp

(1)Represents a non-GAAP measure. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the “Non-GAAP Financial Measures” section of this report or within the table above for TE measures. NIM – TE is calculated using net interest income on a TE basis to determine the total yield on interest-earning assets.

Net income available to common shareholders was $1.4 billion for the first quarter of 2026, an increase of 19% compared to the first quarter of 2025.

Total TE revenue was up 5.1% compared to the first quarter of 2025.

•Taxable-equivalent net interest income increased $89 million, or 2.5%, compared to the first quarter of 2025, driven by fixed-rate asset repricing and loan growth, partially offset by fixed-rate liability repricing. NIM - TE was 3.02%, up one basis point compared to the first quarter of 2025.

•Noninterest income increased $161 million, or 12%, compared to the first quarter of 2025, driven by increases in investment banking and trading income, wealth management income, and mortgage banking income.

46 Truist Financial Corporation

Noninterest expense was up $77 million, or 2.6%, compared to the first quarter of 2025 primarily due to higher personnel expense, partially offset by lower professional fees and outside processing expense.

The effective tax rate was 12.4% for the three months ended March 31, 2026, compared to 17.9% for the three months ended March 31, 2025. The lower effective tax rate was driven by discrete tax benefits and tax credit activity.

Asset quality:

•Nonperforming loans and leases HFI were 0.50% of loans and leases HFI at March 31, 2026, up two basis points compared to December 31, 2025.

•Loans 90 days or more past due and still accruing totaled $760 million at March 31, 2026, up two basis points as a percentage of loans and leases HFI compared to December 31, 2025. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing was 0.05% as a percentage of loans and leases HFI at March 31, 2026, flat compared to December 31, 2025.

•The ACL was $5.3 billion and included $5.0 billion for the ALLL and $309 million for the reserve for unfunded commitments. The ALLL as a percentage of loans and leases HFI was 1.53%, flat compared to December 31, 2025.

•The provision for credit losses was $479 million compared to $458 million for the first quarter of 2025.

•NCOs as a percentage of loans and leases were 61 basis points, up one basis point compared to the first quarter of 2025.

Capital and liquidity:

•Truist’s preliminary CET1 ratio was 10.8% as of March 31, 2026, flat compared to December 31, 2025 as capital returned to shareholders was largely offset by current quarter earnings.

•Truist declared common dividends of $0.52 per share during the first quarter of 2026 and repurchased $1.1 billion of common stock. For the first quarter of 2026, the dividend payout ratio was 47%, and the total payout ratio was 129%.

•Truist’s average consolidated LCR was 110% for the three months ended March 31, 2026, relative to the regulatory minimum of 100%.

Truist Financial Corporation 47

Analysis of Results of Operations

Net Interest Income and NIM - TE

Taxable-equivalent net interest income increased $89 million, or 2.5%, compared to the first quarter of 2025, driven by fixed-rate asset repricing and loan growth, partially offset by fixed-rate liability repricing. NIM - TE was 3.02%, up one basis point compared to the first quarter of 2025. Amounts presented on a TE basis represent a non-GAAP measure. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included within the “Executive Overview” section of this report. NIM – TE is calculated using net interest income on a TE basis to determine the total yield on interest-earning assets.

•Average earning assets increased $10.1 billion, or 2.1%, primarily due to an increase in average total loans of $21.4 billion, or 7.0%, partially offset by a decline in average securities of $7.9 billion, or 6.4%, and average other earning assets (primarily cash at the Federal Reserve) of $3.5 billion, or 9.1%.

•The yield on the average total loan portfolio was 5.71%, down 26 basis points. The yield on the average securities portfolio was 2.93%, down 23 basis points.

•Average deposits increased $6.7 billion, or 1.7%, average short-term borrowings increased $337 million, or 1.1%, and average long-term debt increased $4.7 billion, or 15%.

•The average cost of total deposits was 1.55%, down 24 basis points. The average cost of short-term borrowings was 3.78%, down 71 basis points. The average cost of long-term debt was 4.80%, down 25 basis points.

The major components of net interest income - TE 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.

48 Truist Financial Corporation

[[GREPCENT_TABLE]]
[["Table 2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis"],["Three Months Ended March 31, (Dollars in millions)","Average Balances(1)","","Annualized Yield/Rate(2)","","Income/Expense(2)","","Incr. (Decr.)","","Change due to"],["2026","","2025","","2026","","2025","","2026","","2025","","","Rate","","Volume"],["Assets"],["AFS and HTM securities at amortized cost:"],["U.S. Treasury","$","13,138","","","$","14,867","","","4.48","%","","5.19","%","","$","145","","","$","191","","","$","(46)","","","$","(25)","","","$","(21)"],["GSE","474","","","462","","","3.98","","","3.75","","","5","","","4","","","1","","","1","","","\u2014"],["Agency MBS","102,089","","","108,345","","","2.73","","","2.87","","","696","","","777","","","(81)","","","(37)","","","(44)"],["States and political subdivisions","347","","","370","","","4.30","","","4.20","","","3","","","4","","","(1)","","","\u2014","","","(1)"],["Other","70","","","17","","","1.65","","","4.72","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Total securities","116,118","","","124,061","","","2.93","","","3.16","","","849","","","976","","","(127)","","","(61)","","","(66)"],["Interest earning trading assets","5,807","","","5,628","","","5.09","","","5.72","","","74","","","80","","","(6)","","","(8)","","","2"],["Other earning assets(3)","35,457","","","38,997","","","3.77","","","4.53","","","333","","","441","","","(108)","","","(70)","","","(38)"],["Loans and leases, net of unearned income:"],["Commercial and industrial","166,636","","","155,214","","","5.30","","","5.70","","","2,179","","","2,184","","","(5)","","","(160)","","","155"],["CRE","24,165","","","19,832","","","5.64","","","6.12","","","339","","","302","","","37","","","(25)","","","62"],["Commercial Construction","7,845","","","8,734","","","6.21","","","6.84","","","117","","","145","","","(28)","","","(13)","","","(15)"],["Residential mortgage","56,458","","","55,658","","","4.13","","","4.04","","","582","","","562","","","20","","","12","","","8"],["Home equity","9,666","","","9,569","","","6.99","","","7.48","","","167","","","177","","","(10)","","","(12)","","","2"],["Indirect auto","25,342","","","23,248","","","7.08","","","7.19","","","443","","","412","","","31","","","(6)","","","37"],["Other consumer","32,053","","","29,291","","","8.38","","","8.33","","","662","","","602","","","60","","","4","","","56"],["Credit card","4,857","","","4,849","","","10.79","","","11.60","","","129","","","138","","","(9)","","","(9)","","","\u2014"],["Total loans and leases HFI","327,022","","","306,395","","","5.71","","","5.97","","","4,618","","","4,522","","","96","","","(209)","","","305"],["LHFS","1,950","","","1,133","","","5.24","","","5.93","","","26","","","17","","","9","","","(2)","","","11"],["Total loans and leases","328,972","","","307,528","","","5.71","","","5.97","","","4,644","","","4,539","","","105","","","(211)","","","316"],["Total earning assets","486,354","","","476,214","","","4.90","","","5.12","","","5,900","","","6,036","","","(136)","","","(350)","","","214"],["Nonearning assets","57,767","","","55,416"],["Total assets","$","544,121","","","$","531,630"],["Liabilities and Shareholders\u2019 Equity"],["Interest-bearing deposits:"],["Interest-checking","$","120,110","","","$","109,208","","","2.09","","","2.37","","","619","","","640","","","(21)","","","(80)","","","59"],["Money market and savings","136,106","","","136,897","","","1.81","","","2.20","","","609","","","743","","","(134)","","","(130)","","","(4)"],["Time deposits","39,337","","","40,204","","","3.06","","","3.56","","","297","","","353","","","(56)","","","(49)","","","(7)"],["Total interest-bearing deposits","295,553","","","286,309","","","2.09","","","2.46","","","1,525","","","1,736","","","(211)","","","(259)","","","48"],["Short-term borrowings","30,669","","","30,332","","","3.78","","","4.49","","","286","","","336","","","(50)","","","(54)","","","4"],["Long-term debt","37,141","","","32,418","","","4.80","","","5.05","","","445","","","409","","","36","","","(21)","","","57"],["Tota

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-02-24. Report date: 2025-12-31.

ITEM 7. 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 the accompanying Notes to the Consolidated Financial Statements. It should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to the Consolidated Financial Statements in this Form 10-K, and other information contained in this document. For discussion of 2024 results as compared to 2023 results, refer to MD&A in the Annual Report on Form 10-K for the year ended December 31, 2024.

A description of certain factors that may affect our future results and risk factors is set forth in “Item 1A. Risk Factors.”

Executive Overview

During 2025, we focused on delivering strong, purpose-driven performance by deepening client relationships, enhancing operational efficiency, investing in talented teammates and innovative technology, and increasing capital return to shareholders. Through disciplined risk management and sound governance, we believe we strengthened our foundation and positioned Truist for sustainable growth.

During 2025, we returned $5.2 billion of capital to our common shareholders through $2.7 billion of common stock dividends and $2.5 billion in common share repurchases. In December 2025, we announced that the Board authorized the repurchase of up to $10.0 billion of common stock effective immediately with no expiration date, replacing the previous repurchase authority, as part of Truist’s overall capital distribution strategy.

Key Areas of Focus

In 2025, our work centered around five core strategic priorities:

•Execute strategic growth and profitability initiatives in both WB and CSBB including:

◦In WB, capture more of the commercial middle market with an industry banking strategy, continue momentum in Investment Banking and Capital Markets, generate additional fee income from existing clients in Wealth, and deepen and grow existing client relationships in Wholesale Payments.

◦In CSBB, grow deposits with a focus on Premier clients, increase client acquisition, deepen client relationships, and drive digital acquisition and client engagement.

•Drive positive operating leverage through revenue growth and expense discipline.

•Invest in talent, technology, and our risk infrastructure.

•Maintain our credit and risk discipline.

•Return capital to shareholders through our common stock dividend and share repurchases.

Looking ahead, our strategic priorities remain unchanged. By successfully executing on them, we seek to accelerate revenue growth, drive greater positive operating leverage, and return more capital to shareholders, all while maintaining our risk discipline. These outcomes are central to driving improved profitability.

Financial Results

Net income to common shareholders totaled $5.0 billion, or $3.82 per share, for 2025, compared to $4.5 billion, or $3.36 per share, for the prior year.

•Results from continuing operations for 2025 included charges primarily related to severance of $156 million ($119 million after-tax, or $0.09 per share), an incremental accrual related to executing a settlement agreement in a specific legal matter of $130 million ($99 million after-tax, or $0.08 per share), and securities losses of $19 million ($15 million after-tax or $0.01 per share).

•Results from continuing operations for 2024 included securities losses of $6.7 billion ($5.1 billion after-tax or $3.82 per share) from a balance sheet repositioning executed in connection with the TIH sale, a charitable contribution to the Truist Foundation of $150 million ($115 million after-tax, or $0.09 per share), and charges primarily related to severance of $120 million ($92 million after-tax, or $0.07 per share).

•Results from discontinued operations of $4.9 billion for 2024 included a gain on the sale of TIH of $6.9 billion ($4.8 billion after-tax, or $3.64 per share), the accelerated recognition of TIH equity compensation expense for certain event-driven awards of $99 million ($76 million after tax, or $0.06 per share), and restructuring charges of $82 million ($62 million after-tax, or $0.05 per share). Truist did not have discontinued operations in 2025.

Truist Financial Corporation 49

Table 6: Earnings Highlights
(Dollars in millions)		As of / for the Year Ended December 31,		Change
	2025		2024		2023		2025 vs. 2024		2024 vs. 2023
Net interest income		$	14,423			$	14,091			$	14,524		$	332	$	(433)
TE adjustment(1)		196			212			220
Net interest income - TE(1)		14,619			14,303			14,744			316		(441)
Noninterest income		5,896			(813)			5,498			6,709		(6,311)
Total revenue		20,319			13,278			20,022			7,041		(6,744)
Total revenue-TE(1)		20,515			13,490			20,242			7,025		(6,752)
Noninterest expense		12,076			12,009			18,678			67		(6,669)
Income (loss) before income taxes		6,349			(601)			(765)			6,950		164
Provision (benefit) for income taxes		1,042			(556)			738			1,598		(1,294)
Net income (loss) from continuing operations		5,307			(45)			(1,503)			5,352		1,458
Net income from discontinued operations		—			4,885			456			(4,885)		4,429
Net income (loss)		5,307			4,840			(1,047)			467		5,887
Net income (loss) available to common shareholders		4,974			4,469			(1,452)			505		5,921
Diluted earnings per common share		$	3.82			$	3.36			$	(1.09)		$	0.46	$	4.45
Common shareholders’ equity per common share		47.74			43.90					3.84
TBVPS(1)		33.48			30.01					3.47
Return on average common shareholders’ equity		8.4	%		8.0	%		(2.6)	%		40 bps	NM
ROTCE(1)		12.7			13.3			18.9			(60) bps	(560) bps
Net interest margin - TE(1)		3.03			3.03			2.98			— bps	5 bps

(1)Represents a non-GAAP measure. A reconciliation of each non-GAAP measure to the most directly comparable GAAP measure is included within the table above or in the “Non-GAAP Financial Measures” section in this report.

Net interest income - TE for the year ended December 31, 2025 was up $316 million, or 2.2%, compared to the year ended December 31, 2024 primarily due to loan and deposit growth, fixed-rate asset repricing, and the balance sheet repositioning in the second quarter of 2024, partially offset by the impact of reductions in interest rates throughout 2025. Net interest margin - TE was 3.03%, flat compared to the prior year.

•The yield on the average total loan portfolio was 5.96% for 2025, down 38 basis points, compared to the prior year, primarily due to the impact of variable-rate loans repricing, partially offset by fixed-rate loan repricing. The yield on the average securities portfolio was 3.13% for 2025, up 30 basis points compared to the prior year, reflecting the impact of balance sheet repositioning in 2024 and the reinvestment of cash flows into higher yielding securities.

•The average cost of total deposits was 1.78% for 2025, down 24 basis points compared to the prior year. The average cost of short-term borrowings was 4.36% for 2025, down 100 basis points compared to the prior year. The average cost of long-term debt was 5.01% for 2025, stable compared to the prior year. The decline in the cost of deposits and short-term borrowings was driven by the impact of reductions in interest rates.

The provision for credit losses was $1.9 billion for the year ended December 31, 2025, up $24 million, or 1.3%, compared to the year ended December 31, 2024. The net charge-off ratio for the year ended December 31, 2025 was 0.54%, down five basis points compared to the prior year.

•The provision for credit losses for the year ended December 31, 2025 reflected a higher allowance build and lower net charge-offs compared to the prior year.

•The net charge-off ratio was down compared to the prior year driven by lower net charge-offs combined with growth in average loans and leases. Net charge-offs were lower in the CRE and credit card portfolios, partially offset by increases in the commercial and industrial, indirect auto, and other consumer portfolios.

Noninterest income was up $6.7 billion for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to securities losses resulting from the balance sheet repositioning in 2024, as well as higher other income and card and treasury management fees, partially offset by lower investment banking and trading income.

Noninterest expense was up $67 million, or 0.6%, for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to higher personnel expense, professional fees and outside processing, software expense, and marketing and customer development, partially offset by lower regulatory costs, other expense, and amortization of intangibles.

Truist had a provision for income taxes of $1.0 billion for 2025, compared to a benefit from income taxes of $556 million in 2024. The 2024 benefit from income taxes was driven by the discrete impact of the balance sheet repositioning of securities.

50 Truist Financial Corporation

Truist’s total assets at December 31, 2025, were $547.5 billion, an increase of $16.4 billion, or 3.1%, compared to December 31, 2024, as loans and leases, net of ALLL, increased $22.0 billion, or 7.3%, partially offset by a decrease of $5.9 billion, or 5.0%, in total securities.

•Average earning assets increased $9.6 billion, or 2.0%, compared to the prior year primarily due to an increase in average total loans of $11.1 billion, or 3.6%, and an increase in other earning assets of $1.2 billion, or 3.3%, partially offset by a decline in average securities of $3.2 billion, or 2.6%. The increase in average other earning assets and decrease in average securities primarily reflect the impact of the balance sheet repositioning in the second quarter of 2024.

Total liabilities at December 31, 2025, were $482.3 billion, an increase of $14.9 billion, or 3.2%, compared to December 31, 2024, reflecting an increase of $9.9 billion, or 2.5%, in deposits and an increase of $7.0 billion, or 20%, in long-term debt, partially offset by a decrease of $1.4 billion, or 4.7%, in short-term borrowings.

•Average deposits increased $8.5 billion, or 2.2%, average short-term borrowings increased $3.6 billion, or 15%, and average long-term debt increased $125 million, or 0.3%, compared to the prior year.

Total shareholders’ equity was $65.2 billion at December 31, 2025, an increase of $1.5 billion from December 31, 2024. This increase includes $5.3 billion in net income and $2.4 billion in OCI, partially offset by $3.0 billion in common and preferred dividends, $2.5 billion in common share repurchases, and $1.0 billion for the redemption of series P preferred stock. Truist’s book value per common share at December 31, 2025, was $47.74, compared to $43.90 at December 31, 2024. Truist’s TBVPS of $33.48 at December 31, 2025, increased 12% compared to December 31, 2024. Refer to the “Non-GAAP Financial Measures“ section in MD&A for additional information on TBVPS, which is a non-GAAP measure.

Asset quality was solid for the year ended December 31, 2025.

•Nonperforming loans and leases held for investment totaled $1.6 billion or 0.48% of loans and leases held for investment at December 31, 2025, up one basis point compared to December 31, 2024.

•Loans 90 days or more past due and still accruing totaled $684 million or 0.21% of loans and leases held for investment at December 31, 2025, up two basis points as a percentage of loans and leases compared with December 31, 2024. 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 0.05% at December 31, 2025, flat compared to December 31, 2024.

•The allowance for credit losses at December 31, 2025, was $5.3 billion and included $5.0 billion for the allowance for loan and lease losses and $317 million for the reserve for unfunded commitments. The ALLL ratio was 1.53% at December 31, 2025, down six basis points compared with December 31, 2024.

Capital and liquidity ratios remained strong during 2025.

•Truist’s CET1 ratio was 10.8% as of December 31, 2025, down 70 basis points since December 31, 2024, as capital was returned to shareholders and an increase in risk-weighted assets outpaced current year earnings.

•Truist returned $5.2 billion to common shareholders through declared common dividends of $2.7 billion, or $2.08 per share, during 2025 and repurchases of $2.5 billion of common stock, resulting in a dividend payout ratio of 54% and total payout ratio of 104%.

•Truist redeemed all outstanding shares of its perpetual preferred stock series P and the corresponding depositary shares representing fractional interests in such series for $1.0 billion.

•Truist’s average consolidated LCR was 111% for the three months ended December 31, 2025, compared to the regulatory minimum of 100%.

Truist Financial Corporation 51

Analysis of Results of Operations

Net Interest Income and NIM - TE

•The average cost of total deposits was 1.78% for 2025, down 24 basis points compared to the prior year. The average cost of short-term borrowings was 4.36% for 2025, down 100 basis points compared to the prior year. The average cost of long-term debt was 5.01% for 2025, up seven basis points compared to the prior year. The decline in the cost of deposits and short-term borrowings was driven by the impact of reductions in interest rates.

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.

52 Truist Financial Corporation

Table 7: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Year Ended December 31, (Dollars in millions)	Average Balances(1)		Annualized Yield/Rate(2)		Income/Expense(2)		Incr. (Decr.)		Change due to		Incr. (Decr.)		Change due to
2025		2024		2023		2025		2024		2023		2025		2024	2023			Rate		Volume			Rate		Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury	$	13,876			$	12,100			$	11,021			5.10	%	4.01	%		1.20	%		$	708			$	485			$	132			$	223			$	145			$	78			$	353			$	339	$	14
GSE	465			390			348			3.78			3.38		2.94			17			13			10			4			2			2			3			2			1
Agency MBS	105,955			109,652			121,923			2.87			2.70		2.31			3,036			2,958			2,821			78			181			(103)			137			441			(304)
States and political subdivisions	362			417			424			4.21			4.14		4.13			15			17			18			(2)			—			(2)			(1)			—			(1)
Non-agency MBS	—			1,282			3,816			—			2.85		2.34			—			37			89			(37)			(18)			(19)			(52)			16			(68)
Other	15			17			20			4.55			5.25		5.37			1			1			1			—			—			—			—			—			—
Total securities	120,673			123,858			137,552			3.13			2.83		2.23			3,777			3,511			3,071			266			310			(44)			440			798			(358)
Interest earning trading assets	5,884			5,320			4,739			5.69			6.12		6.64			336			326			314			10			(24)			34			12			(26)			38
Other earning assets(3)	37,818			36,622			29,335			4.42			5.48		5.31			1,693			2,008			1,557			(315)			(382)			67			451			51			400
Loans and leases, net of unearned income:
Commercial and industrial	160,004			155,674			163,983			5.64			6.36		6.34			9,025			9,897			10,389			(872)			(1,142)			270			(492)			33			(525)
CRE	20,984			21,585			22,741			6.14			6.81		6.71			1,300			1,480			1,535			(180)			(140)			(40)			(55)			22			(77)
Commercial Construction	8,403			7,729			6,125			6.76			7.67		7.62			557			583			459			(26)			(75)			49			124			3			121
Residential mortgage	56,812			54,486			56,131			4.10			3.88		3.78			2,328			2,114			2,121			214			122			92			(7)			55			(62)
Home equity	9,606			9,778			10,388			7.42			7.94		7.36			713			776			765			(63)			(50)			(13)			11			57			(46)
Indirect auto	24,510			22,326			25,621			7.27			7.00		6.10			1,781			1,563			1,563			218			62			156			—			215			(215)
Other consumer	30,904			28,748			28,412			8.35			8.18		7.25			2,581			2,351			2,061			230			50			180			290			265			25
Student	—			—			2,453			—			—		6.91			—			—			170			—			—			—			(170)			(85)			(85)
Credit card	4,903			4,907			4,876			11.39			11.96		11.59			559			587			565			(28)			(28)			—			22			18			4
Total loans and leases HFI	316,126			305,233			320,730			5.96			6.34		6.12			18,844			19,351			19,628			(507)			(1,201)			694			(277)			583			(860)
LHFS	1,483			1,305			1,605			5.94			6.31		6.37			88			82			102			6			(5)			11			(20)			(1)			(19)
Total loans and leases	317,609			306,538			322,335			5.96			6.34		6.12			18,932			19,433			19,730			(501)			(1,206)			705			(297)			582			(879)
Total earning assets	481,984			472,338			493,961			5.13			5.35		4.99			24,738			25,278			24,672			(540)			(1,302)			762			606			1,405			(799)
Nonearning assets	56,244			51,185			51,554
Assets of discontinued operations	—			2,542			7,617
Total assets	$	538,228			$	526,065			$	553,132
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	111,741			$	104,606			$	103,465			2.38		2.68			2.11			2,661			2,802			2,184			(141)			(325)			184			618			594			24
Money market and savings	136,786			136,217			138,841			2.14			2.54		2.04			2,926			3,457			2,834			(531)			(545)			14			623			677			(54)
Time deposits	41,839			39,406			36,803			3.49			4.04		3.83			1,461			1,590			1,409			(129)			(224)			95			181			79			102
Total interest-bearing deposits	290,366			280,229			279,109			2.43			2.80		2.30			7,048			7,849			6,427			(801)			(1,094)			293			1,422			1,350			72
Short-term borrowings	28,117			24,499			24,478			4.36			5.36		5.25			1,227			1,313			1,286			(86)			(264)			178			27			26			1
Long-term debt	36,838			36,713			49,678			5.01			4.94		4.46			1,844			1,813			2,215			31			25			6			(402)			220			(622)
Total interest-bearing liabilities	355,321			341,441			353,265			2.85			3.21		2.81			10,119			10,975			9,928			(856)			(1,333)			477			1,047			1,596			(549)
Noninterest-bearing deposits	105,969			107,639			122,018
Other liabilities	12,270			13,343			11,560
Liabilities of discontinued operations	—			1,049			3,190
Shareholders’ equity	64,668			62,593			63,099
Total liabilities and shareholders’ equity	$	538,228			$	526,065			$	553,132
Average interest-rate spread							2.28	%		2.14	%		2.18	%
NIM/net interest income - TE(2)							3.03	%		3.03	%		2.98	%	$	14,619			$	14,303			$	14,744			$	316			$	31			$	285			$	(441)			$	(191)			$	(250)
Less: TE adjustment(2)													196		212			$	220
Net interest income													$	14,423		$	14,091
Memo: Total deposits	$	396,335			$	387,868			$	401,127			1.78	%	2.02	%		1.60	%		$	7,048			$	7,849			$	6,427			$	(801)							$	1,422

(2)Yields are stated on a TE basis, which represents a non-GAAP measure, utilizing a federal tax rate of 21%. Interest income includes certain fees, deferred costs, and dividends. 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.

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

Truist Financial Corporation 53

Provision for Credit Losses

•The provision for credit losses for the year ended December 31, 2025 reflects a higher allowance build and lower net charge-offs compared to the prior year.

•The net charge-off ratio was down compared to the prior year driven by lower net charge-offs and growth in average loans and leases. Net charge-offs were lower in the CRE and credit card portfolios, partially offset by increases in the commercial and industrial, indirect auto, and other consumer portfolios.

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 8: Noninterest Income
	Year Ended December 31,	% Change
(Dollars in millions)		2025		2024		2023		2025 vs. 2024	2024 vs. 2023
Wealth management income		$	1,431			$	1,412		$	1,358	1.3	%		4.0	%
Card and treasury management fees(1)(2)		1,360			1,311			1,316		3.7	(0.4)
Investment banking and trading income		1,136			1,203			822		(5.6)	46.4
Other deposit revenue(1)(3)		471			511			493		(7.8)	3.7
Mortgage banking income		452			432			437		4.6	(1.1)
Lending related fees		395			366			447		7.9	(18.1)
Securities gains (losses)		(19)			(6,651)			—		(99.7)	NM
Other income(4)		670			603			625		11.1	(3.5)
Total noninterest income		$	5,896			$	(813)		$	5,498	NM		(114.8)

(1)Effective December 31, 2025, Truist reclassified treasury management fees to ‘Card and treasury management fees’ from ‘Other deposit revenue.’ Prior period balances have been conformed to current period presentation.

(2)Renamed from ‘Card and payment related fees.’

(3)Renamed from ‘Service charges on deposits.’

(4)Effective December 31, 2025, Truist reclassified operating lease income into ‘Other income.’ Prior period balances have been conformed to current period presentation.

Noninterest income was up $6.7 billion for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to securities losses resulting from the balance sheet repositioning in 2024 as well as higher other income and card and treasury management fees, partially offset by lower investment banking and trading income.

•Other income increased primarily due to higher income from certain solar and other investments, partially offset by the 2024 gain on the sale of Sterling Capital Management LLC.

•Card and treasury management fees increased primarily due to higher treasury management fees.

•Investment banking and trading income decreased due to lower trading income, merger and acquisition fees, and capital markets activity.

54 Truist Financial Corporation

Noninterest Expense

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

Table 9: Noninterest Expense
	Year Ended December 31,	% Change
(Dollars in millions)		2025		2024		2023		2025 vs. 2024	2024 vs. 2023
Personnel expense(1)		$	6,848			$	6,587		$	6,765		4.0	%	(2.6)	%
Professional fees and outside processing(1)		1,420			1,342			1,194		5.8		12.4
Software expense		936			896			868		4.5		3.2
Net occupancy expense(1)		710			695			732		2.2		(5.1)
Equipment expense		351			373			381		(5.9)		(2.1)
Marketing and customer development		299			268			260		11.6		3.1
Amortization of intangibles		290			345			395		(15.9)		(12.7)
Regulatory costs		163			344			824		(52.6)	(58.3)
Goodwill impairment		—			—			6,078		—	(100.0)
Other expense(1)(2)		1,059			1,159			1,181		(8.6)		(1.9)
Total noninterest expense		$	12,076			$	12,009		$	18,678		0.6		(35.7)

(1)Effective December 31, 2025, Truist reclassified the underlying activities of restructuring charges, which were previously reported in a separate financial statement caption, to their natural expense categories of ‘Personnel,’ ‘Net occupancy,’ ‘Professional fees and outside processing,’ and ‘Other expense.’ Prior period balances have been conformed to current period presentation.

(2)Effective December 31, 2025, Truist reclassified operating lease depreciation into ‘Other expense.’ Prior period balances have been conformed to current period presentation.

Noninterest expense was up $67 million, or 0.6%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to higher personnel expense, professional fees and outside processing, software expense, and marketing and customer development, partially offset by lower regulatory costs, other expense, and amortization of intangibles.

•Personnel expense increased due to higher investments in talent in revenue producing businesses as well as the technology and risk infrastructure organizations, incentives, insurance costs, and severance charges, partially offset by lower expenses for other employee benefits.

•Professional fees and outside processing expense increased due to higher investments in technology and risk infrastructure.

•Software expense increased primarily due to higher spending on certain projects.

•Marketing and customer development expense increased primarily due to marketing initiatives.

•Regulatory costs decreased primarily due to the additional accrual for the FDIC special assessment in 2024, and related adjustments to the special assessment in 2025.

•Other expense decreased primarily due to a charitable contribution in 2024 and lower operating losses in 2025, partially offset by a $130 million incremental accrual related to executing a settlement agreement in a specific legal matter.

•Amortization of intangibles decreased primarily due to the scheduled amortization for certain assets.

Truist Financial Corporation 55

Segment Results

Truist operates and measures business activity across two reportable segments: Consumer and Small Business Banking (CSBB) and Wholesale Banking (WB), with functional activities included in Other, Treasury, and Corporate (OT&C). The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. Refer to “Note 21. Operating Segments” for additional information on the Company’s reportable segments.

Table 10: Net Income from Continuing Operations by Reportable Segment
	Year Ended December 31,					% Change
(Dollars in millions)		2025		2024				2023				2025 vs. 2024	2024 vs. 2023
Consumer and Small Business Banking		$	2,529			$	3,075			$	(36)				(17.8)	%		NM
Wholesale Banking		4,102			3,856				169					6.4	NM
Other, Treasury & Corporate		(1,324)			(6,976)				(1,636)					81.0	NM
Truist Financial Corporation		$	5,307			$	(45)			$	(1,503)				NM		(97.0)

Consumer and Small Business Banking

CSBB net income was $2.5 billion for the year ended December 31, 2025, a decrease of $546 million compared to the prior year.

•Segment net interest income decreased $395 million primarily driven by lower funding credit on deposits.

•The allocated provision for credit losses increased $223 million primarily reflecting a net reserve build in the current year.

•Noninterest income increased $29 million primarily due to increased residential mortgage income, partially offset by lower deposit related revenue.

•Noninterest expense increased $113 million primarily driven by higher enterprise technology and payments support charges, partially offset by lower operating charge-offs.

CSBB average loans and leases held for investment increased $6.3 billion, or 5.0%, for the year ended December 31, 2025 compared to the prior year, primarily due to higher indirect lending in the prime auto and Service Finance portfolios, and increased real estate lending driven by the mortgage portfolio.

CSBB average total deposits increased $1.7 billion, or 0.8%, for the year ended December 31, 2025 compared to the prior year, primarily due to higher average money market and savings and noninterest-bearing deposits, partially offset by lower average interest-bearing checking deposits.

Wholesale Banking

WB net income was $4.1 billion for the year ended December 31, 2025, an increase of $246 million compared to the prior year.

•Segment net interest income increased $207 million primarily due to lower cost of deposits and higher funding credit on higher deposit balances, partially offset by lower loan yields.

•The allocated provision for credit losses decreased $196 million, which reflected a decrease in net charge-offs as well as an increase in the net reserve release compared to the prior year.

•Noninterest income increased $121 million primarily due to higher income from certain strategic investments, tax credit related investments, higher card and treasury management fees, and lending related fees, partially offset by lower income from investment banking and trading.

•Noninterest expense increased $165 million primarily due to higher charges for enterprise functional support and enterprise operations as well as increased personnel expenses driven by incentives expense, partially offset by lower regulatory costs.

WB average loans and leases held for investment increased $4.6 billion, or 2.6%, for the year ended December 31, 2025 compared to the prior year, primarily driven by higher balances in the commercial and industrial loan portfolio, partially offset by lower commercial real estate balances.

WB average total deposits increased $3.8 billion, or 2.7%, for the year ended December 31, 2025 compared to the prior year, primarily due to higher average interest-bearing checking balances, partially offset by lower average noninterest-bearing deposits and money market and savings balances.

56 Truist Financial Corporation

Other, Treasury, and Corporate

OT&C generated a net loss of $1.3 billion for the year ended December 31, 2025, compared to a net loss of $7.0 billion in the prior year.

•OT&C net interest income increased $520 million primarily due to lower inter-segment funding costs for deposits, the balance sheet repositioning in 2024, and reinvesting cash flows into higher yielding securities, partially offset by the lower funding charges primarily on loans to other segments.

•Noninterest income increased $6.6 billion primarily due to the securities losses from the balance sheet repositioning in 2024.

•Noninterest expense decreased $211 million primarily driven by recoveries received from the business segments for enterprise functional, technology, and operations support expenses, as well as lower other expense due to a charitable contribution to the Truist Foundation in 2024, partially offset by increased salaries driven by higher investments in talent for technology and risk infrastructures and an increase in non-fraud operational charge-offs.

Truist Financial Corporation 57

Analysis of Financial Condition

Investment Activities

Truist’s investment policy is approved and carried out by the ALCO, which meets regularly to review the economic environment and establish investment strategies. The ALCO also has broader responsibilities, which are discussed in the “Market Risk” section in MD&A.

Investment strategies are reviewed by the ALCO based on the interest rate environment, balance sheet mix, actual and anticipated loan demand, funding opportunities, and the overall interest rate sensitivity of the Company. In general, the goals of the investment portfolio are: (i) to provide sufficient liquid assets to meet unanticipated deposit and loan fluctuations and overall corporate treasury objectives; (ii) to provide eligible securities to secure public funds, trust deposits, and other borrowings; and (iii) to earn an optimal return on funds invested commensurate with meeting regulatory requirements, consistent with the Company’s risk appetite.

Truist Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies, GSEs (including MBS), bank eligible obligations of any state or political subdivision, structured notes, bank eligible corporate obligations (including corporate debentures), commercial paper, negotiable CDs, bankers’ acceptances, mutual funds, and limited types of equity securities.

Table 11: Composition of Securities Portfolio
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
AFS securities (at fair value):
U.S. Treasury	$	12,792			$	14,411
GSE	460			403
Agency MBS – residential	48,226			49,959
Agency MBS – commercial	3,200			2,293
States and political subdivisions	350			382
Other	14			16
Total AFS securities	65,042			67,464
HTM securities (at amortized cost):
Agency MBS – residential	47,186			50,640
Total securities	$	112,228			$	118,104

The securities portfolio totaled $112.2 billion at December 31, 2025, compared to $118.1 billion at December 31, 2024. U.S. Treasury, GSE, and agency MBS represented 99.7% of the total securities portfolio as of December 31, 2025 and December 31, 2024. The majority of the portfolio is agency MBS.

•The decrease in 2025 was driven by paydowns and maturities of $20.2 billion and sales of $2.7 billion, partially offset by purchases of $14.5 billion as well as an increase in the fair value of AFS securities.

•As of December 31, 2025, and December 31, 2024, 41% of the investment securities portfolio was classified as held-to-maturity at amortized cost, excluding portfolio-level basis adjustments associated with certain AFS securities.

•As of December 31, 2025, approximately 3.7% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 3.0% as of December 31, 2024.

•The effective duration of the AFS securities portfolio was 4.4 years at December 31, 2025, and 5.0 years at December 31, 2024, excluding the impact of swaps, or 2.9 years at December 31, 2025 and 3.3 years at December 31, 2024, including the impact of swaps. The effective duration of the HTM securities portfolio was 7.5 years at December 31, 2025, and 7.0 years at December 31, 2024.

58 Truist Financial Corporation

The following table presents the securities portfolio by major category of security holdings with ranges of maturities and average yields:

Table 12: Securities Yields by Major Category and Maturity
December 31, 2025 (Dollars in millions)	AFS		HTM
Fair Value		Effective Yield(1)		Amortized Cost		Effective Yield(1)
U.S. Treasury:
Within one year	$	4,752			4.41	%		$	—		—	%
One to five years	7,091			4.27			—			—
Five to ten years	228			3.61			—			—
After ten years	721			4.64			—			—
Total	12,792			4.33			—			—
GSE:
Five to ten years	3			2.78			—			—
After ten years	457			4.04			—			—
Total	460			4.03			—			—
Agency MBS – residential:(2)
Five to ten years	39			5.26			—			—
After ten years	48,187			3.88			47,186			1.79
Total	48,226			3.88			47,186			1.79
Agency MBS – commercial:(2)
One to five years	538			4.31			—			—
Five to ten years	421			4.36			—			—
After ten years	2,241			2.05			—			—
Total	3,200			2.73			—			—
States and political subdivisions:
Within one year	2			4.80			—			—
One to five years	83			6.87			—			—
Five to ten years	173			6.46			—			—
After ten years	92			5.17			—			—
Total	350			6.21			—			—
Other:
Within one year	7			2.87			—			—
Five to ten years	7			5.84			—			—
Total	14			4.31			—			—
Total securities	$	65,042			3.93			$	47,186		1.79

(1)Yields represent interest computed using the effective interest method on the amortized cost of securities inclusive of amortization of premiums or accretion of discounts, and excluding the impact of hedging. Weighted yield is represented on a TE basis with the exception of obligations of state and political subdivisions which are presented on a tax-effected basis.

(2)For purposes of maturity, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties.

Truist Financial Corporation 59

Lending Activities

Truist strives to meet the credit needs of its clients while pursuing a balanced strategy of loan profitability, loan growth, and loan quality. Management believes that this purpose can best be accomplished by building strong client relationships over time and developing in-depth local market knowledge. The Company employs underwriting criteria governing the degree of risk assumed and the diversity of the loan portfolio in terms of type, industry, and geographical concentration.

Truist aims to lend to a diverse client base that is managed to be geographically dispersed with the goal of mitigating concentration risk arising from local and regional economic downturns. The following discussion provides additional information on the Company’s loan and lease portfolios. Refer to the “Risk Management” section in MD&A for a discussion of the credit risk management policies used to manage the portfolios.

Commercial Loan and Lease Portfolio

Commercial loans and leases represent the largest category of the Company’s loan and lease portfolio. Commercial Banking and Small Business Banking generally target small-to-middle market businesses with annual sales between $2 million and $500 million, while Investment Banking and Capital Markets provides lending solutions to large corporate clients. The commercial loan and lease portfolio consists of lending to public and private business clients and includes commercial and industrial, owner-occupied, equipment leasing and financing, CRE, government and institutional financing, premium financing, and dealer floor plan financing.

In accordance with the Company’s lending policy, each commercial loan undergoes a detailed underwriting process. Commercial loans are typically priced with an interest rate tied to market indices, such as the prime rate or SOFR and are individually monitored and reviewed for deterioration in the ability of the client to repay the loan. The majority of Truist’s commercial loans are secured by real estate, business equipment, inventories, and other types of collateral.

Residential Mortgage Loan Portfolio

Truist primarily originates conforming mortgage loans, loans under FHA, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture programs, and higher quality jumbo and construction-to-permanent loans for one- to four-family residential properties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA and FHLMC. They are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, or have mortgage insurance as required by investors and are made to borrowers that meet Truist’s credit standards.

Risks associated with mortgage lending include interest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary mortgage market and an effective MSR hedging process. Credit risk is managed through underwriting procedures and mortgage insurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management believes that the retention of mortgage servicing diversifies income while enabling Truist to build long-term client relationships and offer high-quality client service. Truist also purchases residential mortgage loans from correspondent originators. The loans purchased from third-party originators are subject to substantially the same underwriting and risk-management criteria as loans originated internally.

Home Equity Loan Portfolio

The home equity portfolio is composed of loans offered through Truist’s branch network. These include home equity loans and revolving home equity lines of credit secured by first or second liens on residential real estate in Truist’s market areas.

Indirect Auto Loan Portfolio

The indirect auto portfolio primarily includes secured indirect installment loans to consumers for the purchase of new and used automobiles. The indirect auto portfolio also includes nonprime and near-prime automobile finance. Such loans are originated through approved franchised and independent dealers throughout the Truist market area and nationally through Regional Acceptance Corporation. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. Indirect auto loans are subject to lending policies and procedures and are underwritten with note amounts and credit limits that are consistent with the Company’s risk philosophy. In addition to its normal underwriting due diligence, Truist uses application systems and scoring systems to help underwrite and manage the credit risk in its indirect auto portfolio.

60 Truist Financial Corporation

Other Consumer Loan Portfolio

The other consumer loan portfolio includes: secured and unsecured loans originated through the Truist branch network marketed to qualifying clients and other creditworthy candidates in Truist’s market areas; LightStream, an online platform which originates fixed-rate, unsecured lending to consumers with strong credit; secured indirect installment loans to consumers for the purchase of new and used boats and recreational vehicles; Sheffield, a small ticket consumer lending division related to the purchase of power sports and outdoor power equipment; other indirect and point-of-sale lending to consumers, including through Service Finance, to finance home improvements, furniture purchases, certain elective health-care services; and unsecured loans originated via third-party partnerships, which are in runoff. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. These loans are originated in accordance with underwriting criteria as determined by Truist.

Credit Card Loan Portfolio

The credit card portfolio consists of the outstanding balances on credit cards for commercial and consumer clients. Truist markets credit cards to its existing client base and does not solicit cardholders through nationwide programs or other forms of mass marketing. Such balances are generally unsecured and actively managed.

Refer to “Note 5. Loans and ACL” for additional information.

The following table summarizes the loan portfolio:

Table 13: Loans and Leases as of Period End
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
Commercial:
Commercial and industrial	$	167,808			$	154,848
CRE	23,720			20,363
Commercial construction	7,783			8,520
Consumer:
Residential mortgage	56,807			55,599
Home equity	9,719			9,642
Indirect auto	25,659			23,089
Other consumer	32,181			29,395
Credit card	4,918			4,927
Total loans and leases HFI	328,595			306,383
LHFS	1,883			1,388
Total loans and leases	$	330,478			$	307,771

Loans and leases HFI were $328.6 billion at December 31, 2025, up $22.2 billion compared to 2024.

Commercial loans increased $15.6 billion during 2025 primarily due to an increase of $13.0 billion in the commercial and industrial portfolio and $3.4 billion in the CRE portfolio due to higher production.

Consumer loans and credit cards increased $6.6 billion during 2025 primarily due to a $2.8 billion increase in other consumer portfolio driven by growth of higher-return point-of-sale lending or online portfolios (Service Finance and LightStream), a $2.6 billion increase in indirect auto portfolio primarily due to higher production, and a $1.2 billion increase in residential mortgage portfolio due to additional purchases and correspondent production.

Truist Financial Corporation 61

The following table presents a summary of the loans and leases by scheduled repayment period and interest rate terms. Determinations of maturities are based on scheduled repayments, except when rollovers or extensions are included for purposes of measuring the ACL. Truist’s credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the client generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms, and conditions negotiated at that time.

Table 14: Loan Maturities
December 31, 2025 (Dollars in millions)	1 Year or Less		1 to 5 Years		5 to 15 Years		After 15 Years	Total
Fixed rate:
Commercial:
Commercial and industrial	$	10,558			$	13,331		$	9,153	$	2,146	$	35,188
CRE	556			1,646			188		7	2,397
Commercial construction	13			34			21		34	102
Total commercial	11,127			15,011			9,362		2,187	37,687
Consumer:
Residential mortgage	1,527			6,204			17,327		22,924	47,982
Home equity	282			880			1,412		337	2,911
Indirect auto	5,806			17,630			2,223		—	25,659
Other consumer	6,058			15,198			7,306		891	29,453
Total consumer	13,673			39,912			28,268		24,152	106,005
Credit card	251			—			—		—	251
Total fixed rate	25,051			54,923			37,630		26,339	143,943
Variable rate:
Commercial:
Commercial and industrial	39,774			82,733			8,161		1,952	132,620
CRE	4,812			15,869			633		9	21,323
Commercial construction	3,186			4,488			7		—	7,681
Total commercial	47,772			103,090			8,801		1,961	161,624
Consumer:
Residential mortgage	206			920			2,835		4,864	8,825
Home equity	640			2,129			4,026		13	6,808
Other consumer	1,183			1,267			276		2	2,728
Total consumer	2,029			4,316			7,137		4,879	18,361
Credit card	4,667			—			—		—	4,667
Total variable rate	54,468			107,406			15,938		6,840	184,652
Total loans and leases HFI	$	79,519			$	162,329		$	53,568	$	33,179	$	328,595

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $714 million and $647 million at December 31, 2025 and December 31, 2024, respectively.

62 Truist Financial Corporation

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

Table 15: Average Loans and Leases
	Three Months Ended
(Dollars in millions)	Dec 31, 2025		Sep 30, 2025		Jun 30, 2025		Mar 31, 2025	Dec 31, 2024
Commercial:
Commercial and industrial	$	163,990			$	162,207		$	158,491	$	155,214	$	153,209
CRE	23,205			21,171			19,687		19,832	20,504
Commercial construction	8,015			8,258			8,613		8,734	8,261
Consumer:
Residential mortgage	57,100			57,676			56,789		55,658	54,390
Home equity	9,679			9,588			9,586		9,569	9,675
Indirect auto	25,639			24,964			24,158		23,248	22,790
Other consumer	32,181			31,714			30,387		29,291	29,355
Credit card	4,956			4,915			4,890		4,849	4,926
Total average loans and leases HFI	$	324,765			$	320,493		$	312,601	$	306,395	$	303,110

Average loans and leases HFI were $324.8 billion for fourth quarter of 2025, an increase of $4.3 billion, or 1.3%, compared to the third quarter of 2025.

•Average commercial loans increased 1.9% due to an increase in the commercial and industrial and CRE portfolios.

•Average consumer loans increased 0.5% due to growth in the indirect auto and other consumer portfolios, partially offset by a decline in the residential mortgage portfolio.

Truist Financial Corporation 63

Asset Quality

The following tables summarize asset quality information:

Table 16: Asset Quality
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
NPAs:
NPLs:
Commercial and industrial	$	839			$	521
CRE	47			298
Commercial construction	41			3
Residential mortgage	213			166
Home equity	99			116
Indirect auto	267			259
Other consumer	71			66
Total NPLs HFI	1,577			1,429
Loans held for sale	—			—
Total nonperforming loans and leases	1,577			1,429
Foreclosed real estate	3			3
Other foreclosed property	53			45
Total nonperforming assets	$	1,633			$	1,477
Loans 90 days or more past due and still accruing:
Commercial and industrial	$	3			$	19
CRE	—			1
Lease financing
Residential mortgage – government guaranteed	532			430
Residential mortgage – nonguaranteed	38			51
Home equity	7			9
Other consumer	28			23
Credit card	76			54
Total loans 90 days or more past due and still accruing	$	684			$	587
Loans 30-89 days past due and still accruing:
Commercial and industrial	$	127			$	168
CRE	25			60
Commercial construction	36			3
Residential mortgage – government guaranteed	329			318
Residential mortgage – nonguaranteed	357			401
Home equity	69			60
Indirect auto	679			622
Other consumer	281			236
Credit card	77			81
Total loans 30-89 days past due and still accruing	$	1,980			$	1,949

Nonperforming assets totaled $1.6 billion at December 31, 2025, up $156 million compared to December 31, 2024 due to an increase in the commercial and industrial and residential mortgage portfolios, partially offset by a decline in the CRE portfolio. Nonperforming loans and leases represented 0.48% of total loans and leases HFI, up one basis point compared to December 31, 2024.

Effective January 1, 2026, the Company has enhanced its nonaccrual criteria for certain indirect auto loans to prospectively include accounts in which cumulative payment extensions are at or above 12 months. Management expects this change to accelerate the timing of nonaccrual recognition in future periods for such loans, but does not expect a material impact on earnings or cash flows.

Loans 90 days or more past due and still accruing totaled $684 million at December 31, 2025, up $97 million compared to the prior year. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases HFI was 0.05% at December 31, 2025, flat compared to December 31, 2024.

Loans 30-89 days past due and still accruing totaled $2.0 billion at December 31, 2025, up $31 million compared to the prior year due to increases in the indirect auto, other consumer, and commercial construction portfolios, partially offset by declines in the commercial and industrial, CRE, and residential mortgage portfolios. The ratio of loans 30-89 days past due and still accruing as a percentage of loans and leases HFI was 0.60% at December 31, 2025, down four basis points compared to the prior year.

64 Truist Financial Corporation

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 16. 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 17: Asset Quality Ratios
	Dec 31, 2025		Dec 31, 2024
Loans 30-89 days past due and still accruing as a percentage of loans and leases	0.60	%		0.64	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases	0.21			0.19
NPLs as a percentage of loans and leases	0.48			0.47
NPLs as a percentage of total loans and leases(1)	0.48			0.46
NPAs as a percentage of:
Total assets(1)	0.30			0.28
Loans and leases plus foreclosed property	0.50			0.48
ALLL as a percentage of loans and leases	1.53			1.59
Ratio of ALLL to nonperforming loans and leases	3.2x		3.4x
Loans 90 days or more past due and still accruing as a percentage of loans and leases, excluding government guaranteed(2)	0.05	%		0.05	%

(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 on government guaranteed loans is reasonably assured.

Table 18: Asset Quality Ratios
	Year Ended December 31,
		2025		2024		2023
Net charge-offs as a percentage of average loans and leases:
Commercial:
Commercial and industrial		0.23	%		0.20	%	0.20	%
CRE		0.62			1.31		0.71
Commercial construction		(0.03)			(0.03)		0.04
Consumer:
Residential mortgage		—			(0.01)		0.01
Home equity		(0.06)			(0.07)		(0.12)
Indirect auto		2.00			2.11		1.66
Other consumer		1.66			1.73		1.40
Student		—			—		4.39
Credit card		4.45			5.26		3.85
Total		0.54			0.59		0.50
Ratio of ALLL to net charge-offs		3.0x		2.7x		3.0x

The following table presents activity related to NPAs:

Table 19: Rollforward of NPAs
(Dollars in millions)	2025		2024
Balance, January 1	$	1,477			$	1,488
New NPAs	3,298			3,331
Advances and principal increases	390			454
Disposals of foreclosed assets(1)	(634)			(616)
Disposals of NPLs(2)	(316)			(223)
Charge-offs and losses	(1,208)			(1,313)
Payments	(1,109)			(1,308)
Transfers to performing status	(265)			(309)
Other, net	—			(27)
Ending balance, December 31	$	1,633			$	1,477

(1)Includes charge-offs and losses recorded upon sale of $285 million and $260 million for the years ended December 31, 2025 and 2024, respectively.

(2)Includes gains, net of charge-offs and losses recorded upon sale, of $2 million and $14 million for the years ended December 31, 2025 and 2024, respectively.

Truist Financial Corporation 65

Commercial Credit Concentrations

Truist has established the following general practices to manage commercial credit risk:

•limiting the amount of credit that Truist may extend to a borrower;

•establishing a process for credit approval accountability;

•initial underwriting and analysis of borrower, transaction, market, and collateral risks;

•evaluating the diversity of the loan portfolio in terms of type, industry, and geographical concentration;

•ongoing servicing and monitoring of individual loans and lending relationships;

•continuous monitoring of the portfolio, market dynamics, and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market, and other relevant conditions change.

Truist monitors various segments of its credit portfolios to assess potential concentration risks. Management is involved in the credit approval and review process, and risk acceptance criteria are adjusted as needed to reflect the Company’s risk appetite. Consistent with established risk management objectives, the Company utilizes various risk mitigation techniques, including collecting collateral and security interests, obtaining guarantees, and, to a limited extent, through the purchase of credit loss protection via third-party insurance or use of credit derivatives such as credit default swaps.

In the commercial portfolio, risk concentrations are evaluated regularly on both an aggregate portfolio level and on an individual client basis. The Company manages its commercial exposure through portfolio targets, limits, and transactional risk acceptance criteria as well as other techniques, including loan syndications/participations, loan sales, collateral, structure, covenants, and other risk reduction techniques.

The following tables provide industry distribution by major types of commercial credit exposure and the geographical distribution of commercial exposures. Industry classification for commercial and industrial loans is based on the North American Industry Classification System. CRE loans are classified based on type of property. For the geographic disclosures, amounts are generally assigned to a state based on the physical billing address of the client or physical property address.

66 Truist Financial Corporation

Table 20: Commercial and Industrial Portfolio Industry and Geography
	December 31, 2025				December 31, 2024
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:
Finance and insurance	$	30,464			18.2	%			$	2			$	24,271	15.7	%		$	28
Manufacturing	13,418			8.0				91				12,298		7.9			62
Real estate and rental and leasing	11,993			7.1				1				11,354		7.3			3
Retail trade	11,940			7.1				24				12,488		8.1			66
Health care and social assistance	11,779			7.0				67				12,154		7.8			129
Public administration	8,658			5.2				2				8,860		5.7			—
Wholesale trade	7,655			4.6				212				7,428		4.8			45
Information	7,523			4.5				158				5,235		3.4			66
Utilities	6,582			3.9				—				4,096		2.6			—
Professional, scientific, and technical services	5,043			3.0				5				4,125		2.7			8
Educational services	4,868			2.9				—				4,478		2.9			—
Transportation and warehousing	4,497			2.7				22				4,634		3.0			34
Arts, entertainment, and recreation	4,182			2.5				1				3,599		2.3			6
Construction	3,350			2.0				4				2,607		1.7			10
Administrative and support and waste management and remediation services	3,108			1.9				36				3,022		2.0			—
Accommodation and food services	2,990			1.8				24				2,935		1.9			9
Other(1)	11,903			7.0				115				12,211		7.9			23
Subtotal	149,953			89.4				764				135,795		87.7			489
Business owner occupied	17,855			10.6				75				19,053		12.3			32
Total commercial and industrial	$	167,808			100.0	%			$	839			$	154,848	100.0	%		$	521
Geography:
Florida	$	18,532			11.0	%			$	30			$	18,258	11.8	%		$	172
Texas	17,001			10.1				157				14,728		9.5			47
New York	12,719			7.6				70				11,379		7.3			50
California	12,460			7.4				34				8,115		5.2			8
North Carolina	12,154			7.2				11				12,167		7.9			16
Georgia	11,452			6.8				149				11,240		7.3			10
Virginia	9,061			5.4				3				9,343		6.0			7
Maryland	7,057			4.2				4				6,781		4.4			3
Pennsylvania	6,890			4.1				131				6,466		4.2			9
Tennessee	5,873			3.5				42				5,729		3.7			51
New Jersey	4,743			2.8				5				3,947		2.5			5
South Carolina	4,213			2.5				4				4,151		2.7			23
Illinois	3,970			2.4				12				3,639		2.4			20
Ohio	3,624			2.2				—				3,482		2.2			1
Other(2)	38,059			22.8				187				35,423		22.9			99
Total commercial and industrial	$	167,808			100.0	%			$	839			$	154,848	100.0	%		$	521

(1)Represents other remaining industries that are deemed to be individually insignificant.

(2)Represents other remaining states, U.S. territories, and non-U.S. loans that are deemed to be individually insignificant.

The Finance and insurance industry includes various types of nonbank financial institutions, including asset securitization, securities-based lending, and certain REITs, which together comprise approximately 59% of Truist’s funded loans within that industry category. Asset securitization facilities are structured to provide funding to clients based on advance rates that are applied to pools of eligible collateral that generally result in over collateralization of the funded exposures. Securities-based lending arrangements are collateralized by marketable securities that are maintained in a restricted account and monitored by Truist on a daily basis to help determine whether the value of the underlying securities collateral complies with the terms of the margin agreement established with the origination of the loan.

Truist Financial Corporation 67

Table 21: CRE Portfolio Property Type and Geography
	December 31, 2025		December 31, 2024
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:
Multifamily	$	8,055			34.0	%			$	4			$	5,508	27.0	%		$	27
Industrial	5,521			23.3				—				4,303		21.1			3
Retail	4,244			17.9				5				3,530		17.3			33
Office	2,435			10.3				36				3,459		17.0			228
Hotel	1,558			6.6				—				1,891		9.3			—
Other(1)	1,907			7.9				2				1,672		8.3			7
Total CRE	$	23,720			100.0	%			$	47			$	20,363	100.0	%		$	298
Geography:
Florida	$	2,668			11.2	%			$	2			$	2,594	12.7	%		$	26
Georgia	2,586			10.9				1				2,010		9.9			80
Texas	2,411			10.2				1				1,599		7.9			6
North Carolina	2,324			9.8				1				2,212		10.9			10
New York	2,323			9.8				6				1,491		7.3			2
California	1,628			6.9				—				1,683		8.3			—
Pennsylvania	1,566			6.6				—				1,218		6.0			1
Illinois	1,178			5.0				13				624		3.1			—
New Jersey	1,118			4.7				3				439		2.2			35
Virginia	1,034			4.4				—				1,108		5.4			3
Maryland	883			3.7				2				713		3.5			8
Other(2)	4,001			16.8				18				4,672		22.8			127
Total CRE	$	23,720			100.0	%			$	47			$	20,363	100.0	%		$	298

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Represents other remaining states, U.S. territories, and non-U.S. loans that are deemed to be individually insignificant.

Table 22: Commercial Construction Portfolio Property Type and Geography
	December 31, 2025		December 31, 2024
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:
Multifamily	$	3,871			49.7	%			$	—			$	4,918	57.7	%		$	—
Industrial	1,884			24.2				—				1,680		19.7			—
Single family - construction to permanent	1,070			13.7				—				664		7.8			2
Office	392			5.0				40				627		7.4			—
Single family - acquisition and development and commercial land	208			2.7				—				187		2.2			1
Other(1)	358			4.7				1				444		5.2			—
Total commercial construction	$	7,783			100.0	%			$	41			$	8,520	100.0	%		$	3
Geography:
Florida	$	1,453			18.7				$	—			$	1,138	13.4			$	—
Georgia	1,188			15.3				—				1,294		15.2			—
Texas	1,088			14.0				—				1,345		15.8			—
North Carolina	748			9.6				—				992		11.6			1
California	431			5.5				—				492		5.8			—
Other(2)	2,875			36.9				41				3,259		38.2			2
Total commercial construction	$	7,783			100.0	%			$	41			$	8,520	100.0	%		$	3

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Represents other remaining states, U.S. territories, and non-U.S. loans that are deemed to be individually insignificant.

Refer to “Note 5. Loans and ACL” for additional information on the commercial portfolios, including loans by origination year and credit quality indicator.

68 Truist Financial Corporation

ACL

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

Table 23: Activity in ACL
	Year Ended December 31,
(Dollars in millions)		2025		2024		2023
Balance, beginning of period		$	5,161			$	5,093		$	4,649
Provision for credit losses		1,894			1,870			2,109
Charge-offs:
Commercial and industrial		(461)			(395)			(390)
CRE		(147)			(316)			(166)
Commercial construction		—			—			(5)
Residential mortgage		(6)			(3)			(10)
Home equity		(10)			(9)			(10)
Indirect auto		(591)			(591)			(531)
Other consumer		(633)			(606)			(477)
Student		—			—			(108)
Credit card		(260)			(296)			(223)
Total charge-offs		(2,108)			(2,216)			(1,920)
Recoveries:
Commercial and industrial		98			87			70
CRE		18			34			3
Commercial construction		2			2			3
Residential mortgage		5			6			6
Home equity		16			16			23
Indirect auto		102			120			107
Other consumer		120			110			78
Credit card		42			38			35
Total recoveries		403			413			325
Net charge-offs		(1,705)			(1,803)			(1,595)
Other(1)		(3)			1			(70)
Balance, end of period		$	5,347			$	5,161		$	5,093
ACL:
ALLL		5,030			4,857			4,798
RUFC		317			304			295
Total ACL		$	5,347			$	5,161		$	5,093

(1)2023 includes the impact from the adoption of the Troubled Debt Restructurings and Vintage Disclosures accounting standard.

Net charge-offs during 2025 totaled $1.7 billion, or 0.54% as a percentage of average loans, and were down five basis points compared to the prior year, primarily driven by lower net charge-offs and growth in average loans and leases. Net charge-offs were lower in the CRE and credit card portfolios, partially offset by increases in the commercial and industrial, indirect auto, and other consumer portfolios.

The allowance for credit losses was $5.3 billion at December 31, 2025 and includes $5.0 billion for the allowance for loan and lease losses and $317 million for the reserve for unfunded commitments. The ALLL ratio was 1.53% at December 31, 2025, compared to 1.59% at December 31, 2024. Refer to “Note 5. Loans and ACL.” for additional information on the fluctuations in the ALLL. The ALLL covered nonperforming loans and leases held for investment 3.2x at December 31, 2025 compared to 3.4x at December 31, 2024. At December 31, 2025, the ALLL was 3.0x net charge-offs, compared to 2.7x at December 31, 2024.

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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 24: Allocation of ALLL by Category
	December 31, 2025		December 31, 2024
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,326			26.3	%		51.0	%		$	1,284			26.4	%		50.7	%
CRE	476			9.5			7.2			643			13.2			6.6
Commercial construction	246			4.9			2.4			257			5.3			2.8
Residential mortgage	198			3.9			17.3			204			4.2			18.1
Home equity	84			1.7			3.0			89			1.8			3.1
Indirect auto	1,036			20.6			7.8			955			19.7			7.5
Other consumer	1,238			24.6			9.8			994			20.5			9.6
Credit card	426			8.5			1.5			431			8.9			1.6
Total ALLL	5,030			100.0	%		100.0	%		4,857			100.0	%		100.0	%
RUFC	317							304
Total ACL	$	5,347							$	5,161

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.

Other Assets

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

Table 25: Other Assets as of Period End
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
Tax credit and other private equity investments	$	9,882			$	9,303
Bank-owned life insurance	8,515			7,801
Pension assets, net	7,920			7,238
Accrued income	2,028			2,069
Accounts receivable	1,624			1,904
FHLB stock	1,521			965
DTA	1,507			1,945
Leased assets and related assets	1,359			1,352
Derivative assets	1,343			966
Prepaid expenses	1,075			1,061
ROU assets	1,045			1,015
Other	1,151			1,513
Total other assets	$	38,970			$	37,132

70 Truist Financial Corporation

Funding Activities

Deposits are the primary source of funds for the Company’s lending and investing activities. Management also uses short-term borrowings, long-term debt, and scheduled payments and maturities from portfolios of loans and investment securities as a supplementary funding source for loan growth and other balance sheet management purposes. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed funds, as well as long-term debt issued through the capital markets, all provide supplemental liquidity sources. Funding activities are monitored and governed through Truist’s overall ALM process under the governance and oversight of the ALCO, which is further discussed in the “Market Risk” section in MD&A. The following section provides a brief description of the various sources of funds.

Deposits

Deposits are obtained principally from individuals and businesses within Truist’s geographic area and include noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market deposit accounts, CDs, and IRAs. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit, and service charge schedules. Interest rates paid on specific deposit types are determined based on (i) competitor deposit rates, (ii) the anticipated amount and timing of funding needs, (iii) the availability and cost of alternative sources of funding, and (iv) anticipated future economic conditions and interest rates. Deposits are attractive sources of funding because of their stability and relative cost.

The following table presents a summary of deposits:

Table 26: Deposits as of Period End
(Dollars in millions)	Dec 31, 2025			Dec 31, 2024
Noninterest-bearing deposits		$	105,092			$	107,451
Interest checking		117,830			109,042
Money market and savings		139,044			137,307
Time deposits		38,432			36,724
Total deposits		$	400,398			$	390,524

Deposits totaled $400.4 billion at December 31, 2025, an increase of $9.9 billion, or 2.5%, from December 31, 2024 primarily due to increases in interest checking deposits, money market and savings, and time deposits, partially offset by a decline in noninterest-bearing deposits. Brokered deposits were $29.8 billion at December 31, 2025 compared to $28.1 billion at December 31, 2024.

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Approximately 62% of deposits were insured or collateralized at both December 31, 2025 and December 31, 2024. Truist deposit accounts are typically based on long-term relationships that include multiple products and services. The amount of deposits above the FDIC’s insurance limit of $250,000 was $177.6 billion and $170.7 billion as of December 31, 2025 and 2024, respectively, calculated using the same methodology as the Call Report for Truist Bank.

The following table summarizes the maturities of time deposit accounts above $250,000:

Table 27: Scheduled Maturities of Time Deposits $250,000 and Greater
December 31, 2025 (Dollars in millions)
Three months or less	$	8,140
Over three through six months	1,832
Over six through twelve months	617
Over twelve months	416
Total	$	11,005

The following table presents average deposits:

Table 28: Average Deposits
	Three Months Ended
(Dollars in millions)	Dec 31, 2025		Sep 30, 2025		Jun 30, 2025		Mar 31, 2025	Dec 31, 2024
Noninterest-bearing deposits	$	105,552			$	105,751		$	106,686	$	105,895	$	107,968
Interest checking	112,313			109,244			116,193		109,208	107,075
Money market and savings	138,114			136,515			135,607		136,897	138,242
Time deposits	40,031			45,090			41,997		40,204	36,757
Total average deposits	$	396,010			$	396,600		$	400,483	$	392,204	$	390,042

Average deposits for the fourth quarter of 2025 were $396.0 billion, flat compared to the third quarter of 2025.

Average noninterest-bearing deposits decreased 0.2% compared to the prior quarter and represented 26.7% of total deposits for both the fourth and third quarters of 2025. Average interest checking deposits increased 2.8%. Average money market and savings accounts increased 1.2%. Average time deposits decreased 11.2%.

72 Truist Financial Corporation

Borrowings

The following table summarizes certain information for the past three years with respect to short-term borrowings excluding trading liabilities, hedges, and collateral in excess of derivative exposure:

Table 29: Short-Term Borrowings
	As Of / For The Year Ended December 31,
(Dollars in millions)	2025		2024		2023
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end during the year	$	8,425			$	9,675			$	4,120
Balance outstanding at end of year	3,103			9,675			2,427
Average outstanding during the year	5,845			2,947			2,472
Average interest rate during the year	4.36	%		5.13	%		5.18	%
Average interest rate at end of year	3.84			4.42			5.39
Federal funds purchased and short-term borrowed funds:
Maximum outstanding at any month-end during the year	$	29,332			$	28,218			$	26,453
Balance outstanding at end of year	24,736			19,530			22,401
Average outstanding during the year	22,273			21,552			22,007
Average interest rate during the year	4.36	%		5.39	%		5.26	%
Average interest rate at end of year	3.47			4.04			5.15

At December 31, 2025, short-term borrowings totaled $27.8 billion, a decrease of $1.4 billion compared to December 31, 2024. Average short-term borrowings were $28.1 billion and $24.5 billion for the years ended December 31, 2025 and 2024, respectively.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by the Parent Company and Truist Bank. Long-term debt totaled $42.0 billion at December 31, 2025, an increase of $7.0 billion compared to December 31, 2024. During the year ended December 31, 2025, the Company had:

•Issuances of $7.1 billion of primarily fixed-to-floating rate senior notes with a weighted average interest rate of 4.68% due between May 20, 2027 and October 23, 2036 and $500 million of floating rate senior notes due July 24, 2028.

•Net issuances of $7.1 billion floating rate FHLB advances.

•Maturities and redemptions of $6.7 billion of senior notes and $1.3 billion of subordinated notes.

In January 2026, the Parent Company issued $1.3 billion principal amount of fixed-to-floating rate senior notes with an interest rate of 4.60% due January 27, 2032. Additionally, Truist Bank issued $1.3 billion principal amount of fixed-to-floating rate senior notes with an interest rate of 4.14% due January 27, 2029 and $350 million principal amount of floating rate senior notes due January 27, 2029.

In February 2026, the Parent Company announced that it will redeem $1.3 billion principal amount of senior notes due on March 2, 2027 on the redemption date of March 2, 2026.

Refer to “Note 11. Borrowings” for additional information on short-term borrowings and long-term debt.

Shareholders’ Equity

Total shareholders’ equity was $65.2 billion at December 31, 2025, an increase of $1.5 billion from December 31, 2024. This increase includes $5.3 billion in net income and $2.4 billion in OCI, partially offset by $3.0 billion in common and preferred dividends, $2.5 billion in common share repurchases, and $1.0 billion for the redemption of series P preferred stock. Truist’s book value per common share at December 31, 2025 was $47.74, compared to $43.90 at December 31, 2024. Truist’s TBVPS was $33.48 at December 31, 2025, up 12% compared to December 31, 2024.

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Risk Management

Truist seeks to maintain a comprehensive risk management framework supported by people, processes, and systems designed to identify, assess, measure, monitor, control, mitigate, govern, and report on risks arising from exposures and business activities. Truist has developed a risk taxonomy to provide for the identification, measurement, and reporting of primary risk types and classification of risk elements at Truist. Primary risk types are defined across eight categories including credit, market, liquidity, strategic, operational, technology, compliance, and financial crimes.

Truist has established an enterprise risk management framework to enable the execution of strategic goals and objectives in alignment with its risk appetite.

Truist is committed to fostering a culture that prioritizes and supports the 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 influences 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 must be evaluated and prioritized to identify those that are within the Company’s risk appetite and present attractive risk-adjusted returns, while preserving asset value and capital.

Truist’s compensation plans are designed to consider teammates’ adherence to and successful implementation of Truist’s risk values and associated policies and procedures. The Company’s compensation structure is designed to support its core values and sound risk management practices and to promote judicious risk-taking behavior.

Truist’s risk appetite is defined as the level of risk exposure Truist is willing to assume to realize its purpose, mission, and values, as well as to achieve its strategic objectives, deliver shareholder returns, and maintain the safety and soundness of Truist. The Board oversees the development of, and reviews, approves, and periodically monitors, the Company’s strategy and risk appetite with a long-term perspective on risks and rewards that is consistent with the capacity of Truist’s risk-management framework. The BRC assists the Board in overseeing the stature and performance of the RMO and the Company’s risk management framework and policies, including quantitative and qualitative statements of the Company’s risk appetite and risk limits, thresholds, and other parameters designed to supplement them.

The BRC appoints the CRO to lead the RMO and oversee the identification, assessment, measurement, monitoring, mitigating, and reporting of risks to Truist. The CRO reports functionally to the BRC and administratively to the CEO and has direct access to the Board to escalate risks (current or emerging) and report on the performance of risk management activities across the enterprise.

Truist’s RMO provides independent oversight and guidance for risk-taking across the enterprise. In keeping with the belief that consistent values drive long-term behaviors, Truist’s RMO has established four key behaviors all teammates are expected to practice daily, regardless of role:

•Awareness: demonstrate an appropriate understanding of enterprise and business unit risks and the controls required to effectively mitigate those risks. Complete required risk and compliance training within deadlines. Comply with applicable risk-related Truist policies.

•Identification: proactively recognize business concerns, issues, risks, or emerging risks as they arise in day-to-day activities.

•Escalation: speak up, report, and elevate concerns, issues, and risks as soon as possible through the appropriate reporting channel. Based on role, escalate and open issues timely.

•Mitigation: consistently execute applicable risk-related procedures and processes as designed for day-to-day activities. Maintain and execute effective controls to manage risk within the Company’s risk appetite. As applicable, complete successful and timely remediation of assigned issues.

The risk management framework is supported by a three-lines-of-defense structure with unique roles and responsibilities for executing risk management activities, maintaining independent oversight, and providing independent assurance. The first line of defense comprises the business units that originate the risks and are responsible for managing them through risk management activities. The second line of defense is the independent risk management oversight and challenge function provided by the RMO. The third line of defense is the independent assurance function provided by Truist Audit Services.

Centralized first-line risk execution and management has been standardized across the Company in partnership with the business units and enterprise functions. Dedicated first line of defense risk partners provide risk advice and oversight, issues management, testing, reporting, and business continuity expertise. First line of defense coordinates closely with the RMO in executing these responsibilities.

74 Truist Financial Corporation

The second line of defense is led by the CRO and is responsible for providing independent risk management, oversight, and effective challenge of the first line of defense. The key responsibilities of the second line of defense include (i) establishing policies and procedures to guide and oversee the execution of risk management framework requirements across Truist, (ii) overseeing first line of defense identification and assessment of current and emerging risks, as well as the effectiveness of governance, processes, and controls to mitigate risks, (iii) controlling the selection of key risk indicators and the establishment of risk limits to measure and monitor risk exposures relative to the Company’s established risk appetite, (iv) independently identifying and escalating issues, including opportunities to strengthen the internal control environment, and (v) acting in a consultative role to assist the first line of defense with identifying, monitoring, and mitigating risks.

As the third line of defense, Truist Audit Services provides independent and objective assurance for Truist. Truist Audit Services independently evaluates the adequacy and effectiveness of Truist's risk management, governance, and oversight, consistent with regulatory expectations and Truist's size, complexity, and risk profile. Truist Audit Services is led by the Chief Audit Officer, who reports functionally to the Audit Committee and administratively to the CEO.

Truist’s Committee and Risk Reporting Governance Program is designed to provide comprehensive Board and management risk oversight, maintaining a committee governance structure that supports alignment and execution of the risk management framework. The committee structure provides a mechanism to allow for efficient aggregation and escalation of risk information from the business units up to management and ultimately the Board. Truist’s committee structure is broken down into three levels of committees:

•Level I committees: Board committees established by the Board to assist in its oversight of the Company. Level I committees are subject to governance directly by the Board, Board committee charters, Truist Bylaws, and Corporate Governance Guidelines.

•Level II committees: Management committees appointed by a Level I committee. Level II committees report to the appointing Level I committee. The appointing Level I committee conducts an annual review of the Level II committee and its charter.

•Level III committees: Management committees appointed by a Level I or II committee. Level III committees report to the appointing Level I or II committee. The appointing Level I or II committee conducts an annual review of the Level III committee and its charter.

This committee structure includes management committees that are responsible for providing independent risk oversight of each of Truist’s primary risk types and comprehensive coverage of Truist’s strategy, risk-taking and execution activities. Examples of such committees include the ERC and Management Compensation Oversight Committee.

The BRC authorized the ERC to provide broad strategic oversight of all risk types and establish an integrated view of risks across Truist at the enterprise level. The ERC is responsible for maintaining a risk management framework and monitoring its adoption and execution across the enterprise. The ERC is chaired by the CRO, and its membership includes the CEO, CFO, Chief Audit Officer, and other designated members of Truist management.

Under our risk management taxonomy, the primary risk types consist of credit, market, liquidity, strategic, operational, technology, compliance, and financial crimes. Truist also uses models as a key component of its risk management activities, which are overseen by the MRO. The following is a discussion of each primary risk type.

Credit Risk

Credit risk is the risk to current or anticipated earnings or capital arising when a borrower, obligor, issuer, or counterparty may not meet its financial obligations. Credit risk is inherent in the financial services business and is primarily incurred through lending activities in the Company’s WB and CSBB operating segments. Several products expose the Company to credit risk, including loans and leases, lending commitments, derivatives, trading assets, and investment securities. Changes in credit quality can have a significant impact on the Company’s earnings and capital position.

The Level II ECRC, established by the BRC, oversees credit risk governance. The ECRC is responsible for maintaining an effective credit risk and portfolio management program. The ECRC utilizes Level III committees to oversee Truist’s WB and CSBB loan portfolios. The BRC reviews and approves the Level I Enterprise Credit Risk Management Policy on an annual basis. That policy authorizes the ECRC and its Level III committees to review, monitor, and approve Truist’s credit policies and key risk indicators, including limits.

Truist Financial Corporation 75

Truist manages credit risk in a manner consistent with Truist’s strategy and risk appetite by:

•establishing credit policies and underwriting requirements that are aligned with our strategy and risk appetite and periodically reevaluated per credit, market, economic and other relevant factors;

•setting portfolio asset quality, concentration and underwriting exception limits and transactional thresholds, as appropriate, in alignment with our risk appetite;

•monitoring current and emerging credit risks, early warning indicators and portfolio performance;

•monitoring criticized exposures and delinquent loans; and

•estimating credit losses and supporting appropriate levels of reserves and credit risk-based capital management.

Underwriting Approach

The loan portfolio is a primary source of profitability and risk. Proper loan underwriting is critical to Truist’s long-term financial success. The most significant underwriting criteria used to evaluate new loans and loan renewals are:

•Cash flow and debt service coverage - cash flow adequacy is a necessary condition of creditworthiness, meaning that loans must either be clearly supported by a borrower’s cash flow or, if not, must be justified by secondary repayment sources.

•Secondary sources of repayment - alternative repayment funds are a significant risk-mitigating factor as long as they are liquid, can be easily accessed, and provide adequate resources to supplement the primary cash flow source.

•Value of any underlying collateral - loans are generally secured by the asset being financed. Because an analysis of the primary and secondary sources of repayment is the most important factor, collateral, unless it is liquid, does not justify loans that cannot be serviced by the borrower’s primary and secondary cash flows.

•Overall creditworthiness of the client, taking into account the client’s relationships, both past and current, with Truist and other lenders - Truist’s success depends on building lasting and mutually beneficial relationships with clients, which involves assessing their financial position and background.

•Level of equity invested in the transaction - in general, borrowers are required to contribute or invest a portion of their own funds prior to any loan advances.

Refer to the “Lending Activities” section in MD&A for a discussion of each loan and lease portfolio.

Market Risk

Market risk is the risk to current or anticipated earnings, capital, or economic value arising from changes in interest rates, spreads, or prices of financial instruments, and the corresponding impact on the composition of the balance sheet or trading and fair value positions. 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.

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 of instruments held 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);

•changing rate relationships among different yield curves affecting bank activities (basis risk);

•changing rate relationships across the spectrum of maturities (yield curve risk); and

•interest-related options inherently embedded in bank products (options risk).

The primary objectives of 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.

Market Risk - Interest Rate

As a financial institution, Truist is exposed to interest rate risk from assets, liabilities, and off-balance sheet positions. Truist primarily monitors this risk through two measurement types, (i) NII at risk and (ii) economic value of equity. Truist manages this interest rate risk with securities, derivatives, and broader asset liability management activities. Truist uses derivatives to hedge interest income variability of floating rate loans and to hedge valuation changes of long-term debt and investment securities.

76 Truist Financial Corporation

Corporate Treasury is responsible for the management of Truist’s IRR position as part of an integrated balance sheet management strategy. The TMRO team within the RMO monitors Corporate Treasury’s execution of these responsibilities. The ALCO and the BRC approve the policies governing interest rate management and, along with the ERC, receive periodic updates. IRR measurement is reported monthly through the ALCO. Monthly IRR reporting includes exposure and historical trends relative to risk limit scenarios, impacts to a wide range of rate scenarios, and sensitivity tests of key assumptions. IRR reporting is provided to the BRC quarterly.

IRR measurement is influenced by data, assumptions, and models. Due to their high sensitivity to market rates, mortgage (loan and security) prepayments leverage an industry model that results in varying prepayment speeds across rate scenarios. Prepayments for non-mortgage loans leverage a mix of dynamic models (varying results based on market rates) and static prepayment assumptions based on historical experience. Our analysis incorporates dynamic client deposit balance levels, the mix across product types, and deposit rate paid across alternate rate scenarios based on modeled changes in client and bank behavior. The use of dynamic deposit balance models results in rotation to higher cost funding products (e.g., CDs) when market rates increase and to lower cost funding products (e.g., non-maturity deposits) when market rates decrease. The use of dynamic rate paid models results in varying deposit betas based on the timing and conditions within market rate cycles.

NII at risk measures the change in NII under alternate interest rate scenarios relative to Truist’s baseline scenario, which incorporates Truist’s current balance sheet and off-balance sheet hedges as well as expectations for new business over the forecast horizon. Truist’s baseline scenario relies on assumptions including expectations of the economy and interest rates – which are influenced by market conditions, new business volume, pricing, and client behavior. In measuring NII at risk, Truist assumes that changes in key factors, such as prepayments and deposit pricing (betas), largely move in line with those Truist has experienced in prior rate cycles. However, future behavior of key factors may vary from Truist’s assumptions. NII at risk measurement assumes, when applicable, that U.S. interest rates floor at zero and Truist does not take any balance sheet or hedging actions in response to the rate scenarios.

Truist evaluates a wide range of alternate scenarios including instantaneous and gradual as well as parallel and non-parallel changes in interest rates. The table below presents the estimated change to NII over the following 12 months for select parallel alternate scenarios, expressed as a percentage change relative to baseline NII. From December 31, 2024 to December 31, 2025, the Company’s net interest income sensitivity to changes in interest rates decreased. This change was primarily driven by the addition of interest rate hedging instruments executed as part of Truist’s ongoing interest rate risk management activities.

Table 30: Interest Sensitivity Simulation Analysis
	Dec 31, 2025		Dec 31, 2024
Up 200bps gradual change in interest rates	(0.9)	%		1.1	%
Up 50bps instantaneous change in interest rates	(0.1)			0.6
Down 50bps instantaneous change in interest rates	(0.2)			(0.8)
Down 200bps gradual change in interest rates	(0.3)			(2.1)

Truist performs and monitors sensitivity tests of key assumptions used in NII risk including:

•Asset prepayment speeds

•New loan volume pricing spreads

•Interest-bearing deposit betas

•Non-interest-bearing demand deposit balance runoff, replaced by market funding

EVE measures changes in the economic value of Truist’s current balance sheet and off-balance sheet hedges under alternate rate scenarios relative to starting economic value. Truist uses EVE as a longer-term measure of interest rate risk. Truist performs and monitors sensitivity tests of key assumptions used in EVE including:

•Asset prepayment speeds

•Mortgage spreads (mortgage loan and security valuations)

•Interest-bearing deposit beta

•Deposit runoff / decay

Key assumption tests are generally performed by increasing and decreasing the assumption, whether static or dynamically modeled, relative to their respective starting values and then measuring the resulting impact to NII and EVE under baseline and alternate rate scenarios.

The identification and testing of key assumptions are influenced by market conditions and management’s views on key risks. The results of key assumption sensitivity tests are reported to the ALCO and the BRC at least quarterly. Key assumptions and their associated sensitivity tests are reviewed with the ALCO and the BRC at least annually.

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Market Risk - 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 multi-faceted risk management approach, which includes measuring risk using VaR, stress testing, and sensitivity analysis. Risk metrics are monitored against a suite of limits at both the trading desk level and at the aggregate portfolio level.

Truist is also subject to risk-based capital guidelines for market risk under the Market Risk Rule. The Capital Markets Risk Management team within the RMO selects, calibrates and monitors compliance with key risk indicators and other risk measures, designed to establish risk-taking parameters for the trading desks within WB. The Capital Markets Risk Committee, ERC and BRC establish policies governing trading activities and receive regular updates to support the oversight of those activities.

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. Refer to the “Critical Accounting Policies” section in MD&A, “Note 18. Fair Value Disclosures,” and “Note 19. Derivative Financial Instruments” for discussion of valuation policies and methodologies.

Securitizations

As of December 31, 2025, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule, which were non-agency asset backed securities positions, was $94 million. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics, including deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s 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 December 31, 2025.

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. 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 we use to measure and manage market risk. Other tools used to manage market risk include stress testing, scenario analysis, and stop loss limits.

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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 years ended December 31, 2025 and 2024. Average VaR measures in the year ended December 31, 2025 were higher compared to the year ended December 31, 2024, primarily due to elevated market volatility in April 2025.

Table 31: VaR-based Measures
	Year Ended December 31,
		2025	2024
(Dollars in millions)				10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum				$	63			$	15			$	28	$	12
Average				22			8			21			7
Minimum				9			4			12			4
Period-end				10			4			16			6
VaR by Risk Class:
Interest Rate Risk						4					6
Credit Spread Risk						3					6
Equity Price Risk						3					6
Foreign Exchange Risk						—					1
Portfolio Diversification						(6)					(12)
Period-end						4					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 32: Stressed VaR-based Measures - 10 Day Holding Period
	Year Ended December 31,
(Dollars in millions)		2025		2024
Maximum		$	287			$	234
Average		120			145
Minimum		45			69
Period-end		52			105

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.

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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 was one Company-wide VaR backtesting exception during the twelve months ended December 31, 2025. The backtesting exception was driven by tariff-related market volatility. 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 reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.

Model Risk Oversight

The MRO is responsible for the independent model validation of all decision models, including trading market risk models. As part of ongoing monitoring efforts, the performance of all trading risk models is reviewed regularly to evaluate model performance with emerging developments in financial markets, assess evolving modeling approaches, and identify potential model enhancements.

Stress Testing

The Company uses a 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 risk factor sensitivities, historical repeats, and hypothetical scenarios with varying liquidity horizons of key risk factors. All trading positions within each applicable market risk category (i.e., interest rate risk, equity risk, foreign exchange rate risk, credit spread risk, and commodity price risk) are included in the Company’s stress testing framework. Management reviews stress testing scenarios and makes updates on an ongoing basis. Management also utilizes stress analyses to support the Company’s capital adequacy assessment standards. Refer to the “Capital” section in MD&A for additional discussion of capital adequacy.

Liquidity Risk

Liquidity risk is the risk that Truist will be unable, or that market participants may perceive Truist to be unable, to fund increases in its assets and meet its financial obligations at a reasonable cost and in a timely manner. Corporate Treasury is responsible for Truist’s Liquidity Risk Management as part of an integrated balance sheet management strategy, subject to the oversight of the TMRO team within the RMO. The ALCO, the BRC, and the Board approve the policies governing Liquidity Risk Management and, along with the ERC, receive periodic updates regarding the execution of the Liquidity Risk Management program.

Refer to the “Liquidity” section in MD&A for additional discussion.

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Strategic Risk

Strategic risk is the risk to earnings, capital, franchise value, stakeholder confidence, and human capital arising from ineffective strategy, inability to adapt to changes in the operating environment, adverse business decisions, or improper execution of strategic initiatives. Truist manages strategic risk through continuous monitoring of several key factors, including the Company’s earnings performance, human capital strength, capital adequacy, progress against strategic objectives, and external conditions such as market dynamics and client sentiment.

Strategic risk is managed by and the responsibility of the Corporate Finance & Strategy team, with governance through the Enterprise Strategy & Execution Committee. Independent oversight is provided by Strategic Risk Oversight within the RMO, with escalation through the Liquidity, Market, and Strategic Risk Committee to the ERC and, ultimately, the BRC.

Operational Risk

Operational risk is the risk of loss associated with external events or inadequate or failed internal processes, people, or systems. It includes legal risk, which is the risk of loss arising from defective transactions, litigation, claims, or the failure to adequately protect Company-owned assets. An operational loss occurs when an event results in a loss or reserve originating from operational risk. The Company executes business activities in diverse markets and relies on the ability of its teammates and systems to process a high number of transactions. Operational risk is inherent in all business activities, and the management of this risk is important to the achievement of the Company’s objectives. Business units and enterprise functions have primary responsibility and accountability for identifying, mitigating, and monitoring operational risks embedded in their business activities, including additional or increased risks created by economic and financial disruptions. Business continuity and disaster recovery planning are critical to effectively managing operational risks. Each business unit and enterprise function is required to develop, maintain, and test these plans at least annually to identify recovery activities that, if needed, can support mission critical functions, including technology, networks and data centers supporting client applications and business operations. While the Company strives to design processes to minimize operational risks, there is no absolute assurance that business disruptions or operational losses will not occur as a result of an external event or internal control breakdown. On an ongoing basis, management makes process changes and investments to enhance Truist’s systems of internal controls and business continuity and disaster recovery plans.

Model Risk

Model risk is the risk of adverse consequences to earnings, capital, compliance, operations, reputation, or client outcomes arising from decisions based on incorrect or misused model outputs. While model risk is not a primary risk type, Truist uses models for many purposes across our businesses, including the valuation of financial positions, estimation of credit losses, and the measurement of risk. Models also support activities such as pricing and profitability analysis, capital and liquidity planning, stress testing, scenario analysis, customer segmentation, fraud detection, marketing optimization, and strategic decision-making. Given their widespread use, model risk may adversely affect multiple risk areas, including credit, market, liquidity, and operational risks, among others. Models are managed by the applicable business units, which are responsible for their development, implementation, and use. Oversight of these activities is provided by the MRO, which is a component of the RMO. All models must meet pre-established validation criteria and undergo independent model testing prior to approval. Once models have been approved by the MRO, the applicable business units are responsible for the maintenance of an appropriate operating environment and must monitor and evaluate the performance of the models on a recurring basis. Models are updated in response to changes in portfolio composition, industry and economic conditions, technological capabilities, and other developments.

The MRO manages model risk through a suite of model governance and validation activities. The risk of each model is assessed and classified into risk tiers. Additionally, the MRO maintains an enterprise-wide model inventory containing relevant model lifecycle information. Regarding model validation, the MRO employs internal validation analysts and managers with relevant skill sets and expertise to conduct thorough reviews of model development, conceptual soundness, and implementation. On certain occasions, the MRO will also engage external parties to assist with validation efforts. Once in a production environment, the MRO assesses a model’s performance on a periodic basis through ongoing monitoring reviews. The MRO is also responsible for tracking issues that have been identified during model validation or through ongoing monitoring and engages with the applicable business unit to drive timely remediation. The MRO gauges model risk utilizing a collection of key risk indicators, which are periodically reported to relevant committees, including the Model Risk Management Committee and the ERC. The MRO also presents model risk topics to the BRC as necessary.

Technology Risk

Technology risk is the risk associated with the disruption or failure of technology that negatively impacts business operations. Truist has defined and adopted a technology risk framework that provides the foundation for its technology risk strategy, program, and oversight and defines key objectives, operating model components, risk domains, and capabilities to manage this risk.

Refer to “Item 1C. Cybersecurity” for a discussion regarding Truist’s cybersecurity risk management, strategy, and governance.

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Data Analytics, AI, and Generative AI Risks

Data risk is the risk to current or projected financial condition, operations, strategic objectives, and regulatory compliance arising from inadequate data accuracy, completeness, consistency, timeliness, relevance, integrity, and validity (i.e., data fidelity). Inadequate data fidelity can negatively impact regulatory and management reporting, public disclosures, and business decisions.

Truist recognizes the importance of maintaining accurate and reliable data and maintains a formal Data Risk Management program that is designed to mitigate risks related to data fidelity. Through active data risk monitoring and accuracy testing, Truist seeks to provide reasonable assurance regarding data-related processes, risks, and controls, as well as the quality and retention of key data used for operational, strategic, regulatory, and compliance purposes. Management and the Board provide oversight of the Data Risk Management program and receive regular updates from the RMO.

Truist’s AI program is foundationally based on the National Institute of Standards and Technology AI Risk Management Framework Core, which provides outcomes and actions that enable dialogue, understanding, and activities to manage AI risks and develop trustworthy AI systems. Oversight of Truist’s AI program is a regular focus of the Board, the BRC, and the BTC.

Compliance Risk

Compliance risk is the risk of legal or regulatory sanctions, financial loss, or damage to reputation as a result of noncompliance with (i) applicable laws, regulations, rules or other regulatory requirements (for example, the risk of consumers experiencing economic loss or other legal harm as a result of noncompliance with consumer protection laws, regulations and requirements); (ii) internal policies and procedures, standards of best practice, or codes of conduct; and (iii) principles of integrity and fair dealing applicable to Truist’s activities and functions. Truist recognizes that these compliance requirements are increasingly complex. Truist’s Compliance and Ethics Risk Management program provides independent oversight of first line of defense activities for compliance with the requirements applicable to the products and services provided by Truist through risk identification and evaluation, monitoring, and independent testing, among other activities. The program also oversees aspects of the Code of Ethics. The ERC and the BRC receive regular reporting from the program.

Financial Crimes Risk

Financial crimes risk is the risk of criminal charges, prosecutions, and penalties, as well as supervisory fines or supervisory actions due to noncompliance with applicable AML, sanctions, and anti-bribery/corruption laws and regulations. This includes the BSA, as amended, and its implementing regulations, Office of Foreign Assets Control prohibitions, and the Foreign Corrupt Practices Act. Key risks involve enforcement actions, monetary penalties, financial losses, reputational damage, and the risks related to mitigating money laundering, the financing of terrorism, engaging in prohibited activity with persons, entities, countries, and territories that are the subject of sanctions, and related illegal activities as required by applicable law. Truist’s AML Program provides risk identification, independent oversight of activities for compliance with BSA requirements, transaction monitoring, independent testing, issues management, training, and the creation and maintenance of compliance policies and procedures. Truist’s Financial Crimes Risk Management team is responsible for oversight of financial crimes risk. This team reports to the CRO and provides periodic updates to the ERC, the BRC, and the Board. The Board approves the appointment of the chief officer in charge of the AML Program, which includes a review of the AML policy on an annual basis.

Liquidity

Liquidity is the ability to fund increases in assets and meet obligations as they come due, all without incurring unacceptable costs. In addition to the level of liquid assets, such as cash, cash equivalents, and highly liquid unencumbered 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.

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Truist has a liquidity risk management process designed to identify, measure, and monitor key liquidity risks to assess whether Truist is operating within its liquidity risk appetite. The liquidity risk appetite is outlined using a qualitative statement and more granular detailed risk appetite statements aligned to Truist’s risk taxonomy. Risk statements form the basis for aligning risk appetite with risk management goals and strategy. Using the risk appetite statements, key risk indicators are developed that represent quantitative metrics which measure current risk exposure relative to Truist’s risk appetite, which help the Board oversee and management monitor liquidity risk-taking activity. Truist’s key risk indicators are designed to support the following objectives:

•maintain (i) a diversified, but client deposit centric, funding base, (ii) a level of liquid, readily monetized assets sufficient to satisfy business as usual and stressed cash flow needs across multiple liquidity horizons, and (iii) an appropriate level of contingent funding to meet any unexpected needs;

•limit concentration risk from individual, correlated counterparties, and funding concentrations in tenors that may negatively impact Truist from an unforeseen idiosyncratic or market event; and

•maintain sufficient liquidity in the holding company to serve as a source of strength to its subsidiaries.

Internal Liquidity Stress Testing

Liquidity stress testing is conducted for Truist and Truist Bank using 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, increased draws on unfunded commitments, and the potential need to post additional collateral for derivatives. 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 designed to meet the projected 30-day net stressed cash-flow needs. Truist’s liquidity buffer is substantially the same in composition to what qualifies as HQLA under the LCR rule. Truist periodically monetizes a representative sample of the liquidity buffer to assess operational readiness through available monetization channels.

Contingency Funding Plan

Truist has a contingency funding plan designed to address 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. On a quarterly basis, Truist conducts testing of market access for alternative sources of funds (e.g., FRB, discount window, standing repo facility, etc.) to test operational readiness. On a periodic basis, Truist conducts a tabletop test of the Contingency Funding Plan to assess reliability of the plan during liquidity stress events and to simulate the operational elements of the plan such as communications, coordination, and decision-making.

LCR, NSFR, and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient within the parameters of the rule to meet their 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 satisfies 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 $91.7 billion and Truist’s average LCR was 111% for the three months ended December 31, 2025.

The NSFR rule defines a minimum amount of stable, long-term funding that Truist and Truist Bank must maintain in relation to their asset composition and off-balance sheet activities. Truist and Truist Bank are subject to the Category III reduced NSFR requirements. At December 31, 2025, Truist was compliant with this requirement.

Sources of Funds

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.

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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 Federal Reserve 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 Federal Reserve:

Table 33: Selected Liquidity Sources
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
Unused borrowing capacity:
Federal Reserve	$	84,160			$	72,040
FHLB	23,464			31,411
Available investment securities (at fair value)	70,150			68,212
Available secured borrowing capacity	177,774			171,663
Eligible cash at the Federal Reserve	29,973			33,717
Total	$	207,747			$	205,380

At December 31, 2025, Truist Bank’s available secured borrowing capacity represented approximately 4.8 times the amount of wholesale funding maturities in one year or less.

As of December 31, 2025, the Company had $1.3 billion in obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the total amount of obligations based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in determining the total amount of obligations. Refer to “Note 9. Other Assets and Liabilities,” “Note 11. Borrowings,” and “Note 16. Commitments and Contingencies” for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

Parent Company

The Parent Company serves as the primary source of capital for its operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, and advances to subsidiaries, including 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, payments on and, from time to time, potential repurchases or redemptions of a portion of an outstanding tranche of long-term debt of the Parent Company (as may be permitted by the terms of each respective series), and the redemption of preferred stock. Refer to “Note 22. Parent Company Financial Information” 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 manages cash levels at the Parent Company to exceed a minimum of 12 months of projected 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 December 31, 2025, the Parent Company held cash on hand to meet these requirements.

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.

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The following table presents the credit ratings and outlooks of the Parent Company and Truist Bank as of December 31, 2025:

Table 34: Credit Ratings of Truist Financial Corporation and Truist Bank
	Moody’s	S&P	Fitch	DBRS Morningstar
Truist Financial Corporation:
Issuer	Baa1	A- / A-2	A / F1	AAL / R-1M
Senior unsecured	Baa1	A-	A-	AAL
Subordinated	Baa1	BBB+	BBB+	AH
Preferred stock	Baa3(hyb)	BBB-	BBB-	AL
Truist Bank:
Issuer	A3	A / A-1	A / F1	AA / R-1H
Senior unsecured	A3	A	A	AA
Deposits	A1 / P-1	NA	A+ / F1	AA
Subordinated	A3	A-	A-	AAL
Ratings outlook:
Credit trend	Stable	Stable	Stable	Stable

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; for the Parent Company to remain a source of strength for the Parent Company’s 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.

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. Truist also 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 has implemented internal stress capital ratio minimums that serve as limits which are measured under internally-developed stress testing scenarios to evaluate whether capital ratios calculated under hypothetical stress, and after the effect of alternative capital actions, are likely to remain above internal stressed minimums. Breaches of internal capital limits, or projected breaches of internal stress capital ratio minimums under hypothetical stress, result in the activation of Truist’s capital contingency plan.

Table 35: 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 an SCB requirement of 2.5% applicable to Truist as of December 31, 2025. Truist’s SCB requirement, received in the 2025 CCAR process, is effective from October 1, 2025 to September 30, 2027.

Payments of cash dividends and repurchases of common shares are among the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company’s double leverage ratio (investments in subsidiaries as a percentage of shareholders’ equity). The active management of the subsidiaries’ equity capital is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of Truist’s capital position.

Management intends to maintain capital at Truist Bank at levels that exceed the minimum capital plus CCB. This will also result in Truist Bank being “well-capitalized” for regulatory purposes. The CCB is a regulatory requirement for banks to hold a specific amount of capital in addition to the minimum capital requirements. Truist Bank’s CCB is 2.5% of its risk-weighted assets.

Management’s capital deployment plan is to focus on (i) organic growth, (ii) dividends, (iii) share repurchases, and (iv) strategic opportunities and acquisitions.

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

Table 36: Capital Ratios - Truist Bank
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
Risk-based:
CET1	11.8	%		12.6	%
Tier 1 capital	11.8			12.6
Total capital	13.3			14.3
Leverage ratio	9.8			10.1
Supplementary leverage ratio	8.2			8.5
Risk-weighted assets	$	434,977			$	407,778

The Parent Company’s capital ratios are presented in the following table:

Table 37: Capital Ratios - Truist Financial Corporation
(Dollars in millions)	Dec 31, 2025		Dec 31, 2024
Risk-based:
CET1	10.8	%		11.5	%
Tier 1 capital	11.9			12.9
Total capital	13.8			15.0
Leverage ratio	10.0			10.5
Supplementary leverage ratio	8.3			8.8
Risk-weighted assets	$	443,257			$	418,337

Truist’s CET1 ratio was 10.8% as of December 31, 2025, down 70 basis points since December 31, 2024 as capital returned to shareholders and an increase in risk-weighted assets outpaced current year earnings.

Truist paid $2.7 billion in common stock dividends, or $2.08 per share, during 2025 and $2.8 billion, or $2.08 per share, during 2024. Truist repurchased $2.5 billion and $1.0 billion in common stock during 2025 and 2024, respectively. In early 2026, Truist declared common dividends of $0.52 per share for the first quarter of 2026.

In December 2025, Truist announced that the Board authorized the repurchase of up to $10.0 billion of common stock effective immediately with no expiration date, replacing the previous repurchase authority, as part of Truist’s overall capital distribution strategy.

86 Truist Financial Corporation

Non-GAAP Financial Measures

Tangible common equity, average tangible common equity, and related measures, including ROTCE and TBVPS, are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization and impairment charges. 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. These measures should not be considered in isolation or as a substitute for the related GAAP financial measures presented in this report and are not necessarily comparable to similar non-GAAP financial measures that may be presented by other companies. The following tables reconcile each non-GAAP financial measure to the most directly comparable GAAP financial measure.

Table 38: Reconciliation of ROTCE
		Year Ended December 31,
(Dollars in millions)		2025		2024		2023
Calculation of tangible net income available to common shareholders:
Net income available to common shareholders	(a)	$	4,974			$	4,469			$	(1,452)
Goodwill impairment		—			—			6,078
Amortization of intangibles		290			345			527
Applicable income taxes related to amortization of intangibles(1)		(69)			(65)			(125)
Tangible net income available to common shareholders	(b)	$	5,195			$	4,749			$	5,028
Calculation of average tangible common shareholders’ equity:
Average common shareholders’ equity	(c)	$	58,902			$	55,876			$	56,306
Average intangible assets		(18,560)			(20,636)			(30,441)
Applicable deferred taxes related to intangible assets(1)		416			550			790
Average tangible common shareholders’ equity	(d)	$	40,758			$	35,790			$	26,655
Return on average common shareholders’ equity	(a)/(c)	8.4	%		8.0	%		(2.6)	%
ROTCE	(b)/(d)	12.7			13.3			18.9

(1)Calculated using the applicable marginal tax rate.

Table 39: Reconciliation of Tangible Common Equity
(Dollars in millions, except per share data, shares in thousands)		Dec 31, 2025		Dec 31, 2024
Calculation of period end tangible common equity:
Total shareholders’ equity		$	65,189			$	63,679
Preferred stock		(4,916)			(5,907)
Common shareholders’ equity	(a)	$	60,273			$	57,772
Intangible assets		(18,416)			(18,702)
Applicable deferred taxes related to intangible assets(1)		407			428
Tangible common equity	(b)	$	42,264			$	39,498
Common shares outstanding at end of period	(c)	1,262,470			1,315,936
Common shareholders’ equity per common share	(a)/(c)	$	47.74			$	43.90
TBVPS	(b)/(c)	33.48			30.01

(1)Calculated using the applicable marginal tax rate.

Truist Financial Corporation 87

Reclassifications

In certain circumstances, reclassifications have been made to prior period information to conform to the current presentation. Such reclassifications had no effect on previously reported shareholders’ equity or net income. Refer to “Note 1. Basis of Presentation” for additional discussion regarding reclassifications.

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. The 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 or consolidated results of operations and related disclosures. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, Truist’s significant accounting policies and the effects of new accounting pronouncements are discussed in detail in “Note 1. Basis of Presentation.”

The following is a summary of Truist’s critical accounting policies that are highly dependent on estimates, assumptions, and judgments. These critical accounting policies are reviewed with the Audit Committee of the Board on a periodic basis.

Allowance for Credit Losses (ACL)

Truist’s ACL represents management’s best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgment. The ACL estimation process includes both quantitatively calculated components as well as qualitative components. Quantitative models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. Certain loans or leases that do not have similar risk characteristics are individually evaluated when establishing an allowance for expected credit losses. The macroeconomic forecast data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period, the models gradually revert to long-term historical loss conditions over a one-year period. As a means of addressing uncertainty related to future economic conditions, the quantitative allowance components include an adjustment that reflects model outputs calculated using a range of potential future economic conditions. Expected losses are estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or to capture the losses expected at the balance sheet date.

The qualitative components of the ACL incorporate management’s judgment in determining adjustments where model outputs are inconsistent with management’s expectations of expected credit losses. The qualitative components are used to adjust for limitations in modeled results related to current economic conditions, as well as considerations with respect to the impact of current and expected events or risks, the outcomes of which are uncertain and may not be completely considered by quantitative models.

Management considers a range of macroeconomic forecast data in the allowance estimation process. Under the range of scenarios considered as of December 31, 2025, use of the Company’s pessimistic scenario would have resulted in an increase to the modeled allowance results of approximately $2.4 billion. This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

The methodology used to determine an estimate of the reserve for unfunded commitments (RUFC) is similar to that used to determine the funded component of the ALLL and is measured over the period for which there is a contractual obligation to extend credit that is not unconditionally cancellable. The RUFC is adjusted for factors specific to binding commitments, including the probability of funding and exposure at default. A detailed discussion of the methodology used in determining the ACL is included in “Note 1. Basis of Presentation.”

Fair Value of Financial Instruments

The vast majority of assets and liabilities measured at fair value on a recurring basis are based on either quoted market prices or market prices for similar instruments. The Enterprise Valuation Committee provides oversight to Truist’s enterprise-wide IPV function, which is responsible for the comparison of pricing information received from the third-party pricing service or internally to other third-party pricing sources, approving tolerance limits determined by IPV for price comparison exceptions, reviewing significant changes to pricing and valuation policies, and reviewing and approving the pricing decisions made on any illiquid and hard-to-price securities. Refer to “Note 18. Fair Value Disclosures” for additional disclosures regarding the fair value of financial instruments.

88 Truist Financial Corporation

Investment Securities

Truist generally utilizes a third-party pricing service in determining the fair value of its AFS investment securities. Fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Management performs procedures to evaluate the fair values provided by the third-party service provider. These procedures, which are performed independently of the responsible business unit, include comparison of pricing information received from the third-party pricing service to other third-party pricing sources, review of additional information provided by the third-party pricing service and other third-party sources for selected securities, and back-testing to compare the price realized on security sales to the daily pricing information received from the third-party pricing service. When market observable data is not available, which generally occurs due to the lack of liquidity or inactive markets for certain securities, the valuation of the security is subjective and may involve substantial judgment by management to reflect unobservable input assumptions.

Mortgage Servicing Rights

Residential MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available. Accordingly, Truist estimates the fair value of residential MSRs using a valuation model to project residential MSR cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service, and other economic factors. Truist periodically reassesses and adjusts the underlying inputs and assumptions in the model to reflect market conditions and assumptions that a market participant would consider in valuing the residential MSR asset.

Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, observable market data. Due to the nature of the valuation inputs, residential MSRs are classified within Level 3 of the valuation hierarchy. The value of residential MSRs is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining interest rates, the value of MSRs declines due to increasing prepayments attributable to increased mortgage-refinance activity. Conversely, during periods of rising interest rates, the value of residential MSRs generally increases due to reduced refinance activity. Truist typically hedges against market value changes in the residential MSRs. Refer to “Note 8. Loan Servicing” for quantitative disclosures reflecting the effect that changes in management’s assumptions would have on the fair value of residential MSRs.

Trading Assets and Liabilities

Fair value measurements for trading securities and securities sold short are derived from observable market-based information, including overall market conditions, recent trades, comparable securities, broker quotes, and FINRA’s Trade Reporting and Compliance Engine data. Security prices are also validated through actual cash settlement upon the sale of a security. When observable market prices are not available, the Company uses judgment and estimates fair value using internal models that reflect assumptions consistent with those that would be used by a market participant in estimating fair value. Refer to “Note 18. Fair Value Disclosures” for further information about the Company’s trading securities and securities sold short.

Truist elects to measure certain loans at fair value when such reporting aligns with the underlying business purpose. Trading loans include loans held in connection with the Company’s trading business primarily consisting of commercial and corporate leveraged loans and loans made or acquired in connection with the Company’s TRS business. Trading loans are valued by a third-party pricing service primarily using quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active. Refer to “Note 18. Fair Value Disclosures” for further information on the Company’s trading loans and other trading liabilities. Refer to “Note 16. Commitments and Contingencies,” and “Note 19. Derivative Financial Instruments,” for further discussion of the Company’s TRS business.

Derivative Assets and Liabilities

Truist uses derivatives to manage various financial risks and in a dealer capacity to facilitate client transactions. The fair values of derivative financial instruments are determined based on quoted market prices and internal pricing models that use market observable data for interest rates, foreign exchange, equity, and credit. The fair value of interest rate lock commitments, which are related to mortgage loan commitments, is based on quoted market prices adjusted for commitments that Truist does not expect to fund and includes the value attributable to the net servicing fee. Refer to “Note 18. Fair Value Disclosures” for information on the significant inputs used to value derivatives, as well as how such values are impacted by changes in those inputs.

Truist Financial Corporation 89

Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets acquired and liabilities assumed in business combinations are recorded at their fair values. This often involves estimates based on third-party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of definite-lived intangible assets is based upon the estimated economic benefits to be received, which is also subjective. Business combinations also typically result in goodwill, which is subject to ongoing periodic impairment testing based on the fair values of the reporting units to which the acquired goodwill relates. Refer to “Note 1. Basis of Presentation” for a description of the impairment testing process.

The Company’s three reporting units with goodwill balances are CSBB, WB excluding Wealth, and Wealth. Management performs a goodwill impairment analysis on an annual basis as of October 1st, 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. For its annual impairment review, Truist performed a quantitative test of each of its reporting units. The quantitative impairment test estimates the fair value of the reporting units using the income approach and a market-based approach, weighted 50% and 50%, respectively. 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 transactions, when applicable. The income approach utilizes a discounted cash flow analysis of multi-year financial forecasts developed for each reporting unit by considering several inputs and assumptions such as net interest income, expected credit losses, noninterest income, noninterest expense, and required capital. The market-based 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.

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.

The projection of net interest income is the most significant input to the financial projections of the CSBB and WB reporting units, while noninterest income is the most significant input to the financial projections of the Wealth reporting unit. The long-term growth rate used in determining the terminal value of each reporting unit was 3% as of October 1, 2025, 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 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 valuation of the WB reporting unit as of October 1, 2025 indicated that if the discount rate increased 100 basis points, with other cash flow assumptions unchanged, the reporting unit’s fair value would be less than its carrying value, indicating a goodwill impairment under the income approach. Ultimately, adverse performance in relation to management’s projections or potential future changes in management’s 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, changes in the underlying makeup of the reporting unit, or changes in the risk profile of the reporting unit, which could impact whether the fair value of a reporting unit is less than its carrying value.

Refer to “Note 1. Basis of Presentation” and “Note 7. Goodwill and Other Intangible Assets” for additional goodwill information.

Income Taxes

Truist is subject to income tax laws of the U.S., its states, and the municipalities in which the Company conducts business. In estimating the net amount due to or to be received from tax jurisdictions either currently or in the future, the Company assesses the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent, and other pertinent information. The income tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. Significant judgment is required in determining the tax accruals and in evaluating the Company’s tax positions, including evaluating uncertain tax positions. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws and new judicial guidance, the status of examinations by the tax authorities, and newly enacted statutory and regulatory guidance that could impact the relative merits and risks of tax positions. These changes, when they occur, impact tax expense and can materially affect operating results. Truist reviews tax positions quarterly and adjusts accrued taxes as new information becomes available.

90 Truist Financial Corporation

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. The Company regularly evaluates the ability to realize DTAs, recognizing a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. Truist currently maintains a valuation allowance for certain state carryforwards. Refer to “Note 1. Basis of Presentation” and “Note 14. Income Taxes” for additional income tax information.

Pension and Postretirement Benefit Obligations

Truist offers various pension plans and postretirement benefit plans to teammates. Calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions, which are subject to management judgment and may differ significantly if different assumptions are used. The discount rate assumption used to measure the postretirement benefit obligations is set by reference to a high-quality corporate bond yield curve and the individual characteristics of the plans such as projected cash flow patterns and payment durations.

Management also considered the sensitivity that changes in the expected return on plan assets and the discount rate would have on pension expense. For the Company’s qualified plans, a decrease of 50 basis points in the discount rate would result in additional pension expense of approximately $20 million for 2026, while a decrease of 50 basis points in the expected return on plan assets would result in an increase of approximately $79 million in pension expense for 2026. These estimates reflect the sensitivity of certain factors considered in calculation of pension expense but does not consider all factors that could increase or decrease estimates calculated.

Refer to “Note 15. Benefit Plans” for disclosures related to the benefit plans.

MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. The latest 10-K appears above; prior years are below.

FY 2024 filed 2025-02-25
FY 2023 filed 2024-02-27
FY 2022 filed 2023-02-28
FY 2021 filed 2022-02-23

FY 2024 10-K MD&A

SEC filing source: 0000092230-25-000020.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2025-02-25. Report date: 2024-12-31.

ITEM 7. 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-K, and other information contained in this document. For discussion of 2023 results as compared to 2022 results, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the year ended December 31, 2023, which was updated by Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on May 10, 2024, to reflect the discontinued operations of TIH and the segment realignment. Refer to “Note 21. Operating Segments” for additional disclosures related to Truist’s operating segments and “Note 2. Discontinued Operations” for additional information related to discontinued operations.

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors of this report.

Executive Overview

2024 was an important year for Truist. We added new clients and deepened existing relationships, invested in our core banking business, made enhancements to our technology and risk infrastructure, and maintained our credit and expense discipline.

We executed on several important strategic initiatives, including the sale of TIH and the repositioning of our balance sheet. On May 6, 2024, we completed the divestiture of TIH. Refer to “Note 2. Discontinued Operations” for additional information. Following the sale of TIH, Truist executed a strategic balance sheet repositioning of a portion of its AFS investment securities portfolio by selling lower-yielding investment securities, resulting in an after-tax loss of $5.1 billion in 2024, allowing Truist to reinvest a portion of the proceeds in higher yielding securities.

These actions increased our capital and further enhanced our ability to support the growth needs of clients, while also returning capital to shareholders. We returned $3.8 billion of capital to our common shareholders through $2.8 billion of common stock dividends and $1.0 billion of common share repurchases during 2024. As of December 31, 2024, we have $4.0 billion remaining under our $5.0 billion common share repurchase authorization through the end of 2026.

In addition, Truist redeemed all outstanding shares of its perpetual preferred stock series L and the corresponding depositary shares representing fractional interests in such series for $750 million.

In July 2024, we successfully completed the sale of Sterling Capital Management LLC, an asset management business. Cash proceeds and the gain recognized on the sale were not material.

Clarke R. Starnes III retired from his position as CRO and Vice Chair. Brad Bender, a 20-year Truist veteran who previously served as Truist’s Head of Enterprise Operational Services and interim Chief Information Officer, succeeded Starnes as CRO.

Hugh S. “Beau” Cummins III, Vice Chair and Chief Operating Officer of Truist, resigned from his position, effective January 13, 2025. Following Mr. Cummins’ departure, management of the enterprise payments business transitioned to Kristin Lesher, Senior Executive Vice President and Chief Wholesale Banking Officer. Mr. Cummins’ remaining responsibilities, including leading teams responsible for enterprise operational services, enterprise corporate services, the strategy, transformation, and performance office, and the governance and controls organization, transitioned to Michael B. Maguire, Senior Executive Vice President and CFO.

We launched Truist Cares for Western North Carolina, a three-year, $725 million commitment to support and sustain hurricane recovery and resiliency through dedicated capital to support rebuilding and resiliency, loans or investments in Community Development Financial Institutions, philanthropic grants to local and national nonprofit organizations, and community service hours.

Truist Financial Corporation 47

Key Areas of Focus

Our strategic direction is to build the top super regional bank that grows with our clients with care. Our 2025 strategic objectives are to:

•Leverage our capital position by growing and capturing additional share within our high growth markets and existing client base in key focus areas in WB and CSBB and in areas, markets, and client solutions where we have invested significantly and have momentum.

•In WB, deepen and grow existing client relationships in areas like Payments and Wealth, enhance the client digital experience, continue our momentum in Investment Banking and Trading, and capture more share of the commercial middle market.

•In CSBB, grow core deposits, deepen existing relationships with Premier clients, enhance the client digital experience, and drive additional fee and loan growth through our differentiated consumer lending solutions.

•Continue to invest in important areas like new and existing talent, technology, risk, and cybersecurity, while maintaining our expense discipline with a goal of driving positive operating leverage.

•Maintain our credit and risk discipline.

•Return capital to shareholders through our common stock dividend and share repurchase authorization.

Financial Results

Net income to common shareholders totaled $4.5 billion, or $3.36 per share, for 2024, compared to a net loss available to common shareholders of $1.5 billion, or $1.09 per share, from the prior year.

•Results from continuing operations for 2024 included securities losses of $6.7 billion ($5.1 billion after-tax or $3.82 per share) from the balance sheet repositioning, a charitable contribution to the Truist Foundation of $150 million ($115 million after-tax, or $0.09 per share), restructuring charges of $120 million ($92 million after-tax, or $0.07 per share), and the FDIC special assessment adjustment of $64 million ($49 million after-tax, or $0.04 per share).

•Results from continuing operations for 2023 included a non-cash goodwill impairment charge of $6.1 billion ($4.56 per share), the FDIC special assessment of $507 million ($387 million after-tax, or $0.29 per share), restructuring charges of $320 million ($244 million after-tax, or $0.18 per share), and a discrete tax benefit of $204 million ($0.15 per share).

Net income from discontinued operations was $4.9 billion for 2024, compared to $456 million for 2023.

•Results from discontinued operations for 2024 included a gain on the sale of TIH of $6.9 billion ($4.8 billion after-tax, or $3.64 per share), the accelerated recognition of TIH equity compensation expense for certain event-driven awards of $99 million ($76 million after tax, or $0.06 per share), and restructuring charges of $82 million ($62 million after-tax, or $0.05 per share).

•Results from discontinued operations for 2023 included restructuring charges of $55 million ($42 million after-tax, or $0.03 per share).

Table 8: Earnings Highlights
Year Ended December 31, (Dollars in millions)							Change
	2024		2023	2022		2024 vs. 2023		2023 vs. 2022
Net income (loss) available to common shareholders		$	4,469		$	(1,452)			$	5,927		$	5,921	$	(7,379)
Diluted earnings per common share		3.36		(1.09)			4.43			4.45		(5.52)
Net interest income - TE		$	14,303		$	14,744			$	14,455		$	(441)	$	289
Noninterest income		(813)		5,498			5,660			(6,311)		(162)
Total taxable-equivalent revenue		$	13,490		$	20,242			$	20,115		$	(6,752)	$	127
Less taxable-equivalent adjustment		212		220			142
Total revenue		$	13,278		$	20,022			$	19,973
Return on average assets		0.92	%	(0.19)	%		1.15	%		1.11	%	(1.34)	%
Return on average common shareholders’ equity		8.0		(2.6)			10.4			10.6		(13.0)
Net interest margin - TE		3.03		2.98			3.01			0.05		(0.03)

48 Truist Financial Corporation

Truist’s TE revenue for 2024 was $13.5 billion. Excluding securities losses, TE revenue was $20.1 billion, representing a decrease of $101 million compared to 2023. Net interest income on a TE basis was $14.3 billion, down $441 million, or 3.0%, from the prior year primarily as a result of having a smaller more efficient balance sheet after the repositioning improving NIM by five basis points.

•Average earning assets decreased $21.6 billion, or 4.4%, compared to the prior year primarily due to declines in average total loans of $15.8 billion, or 4.9%, and average securities of $13.7 billion, or 10.0%, partially offset by an increase in other earning assets of $7.3 billion, or 25%. The change in average securities was driven by maturities and the balance sheet repositioning. The change in other earning assets (increase in balances held at the Federal Reserve) was driven by the balance sheet repositioning.

•Average deposits decreased $13.3 billion, or 3.3%, average short-term borrowings were flat, and average long-term debt decreased $13.0 billion, or 26% as a result of the smaller more efficient balance sheet.

NIM was 3.03% for 2024, up five basis points compared to the prior year.

•The yield on the average total loan portfolio was 6.34% for 2024, up 22 basis points, compared to the prior year primarily reflecting higher market interest rates. The yield on the average securities portfolio was 2.83% for 2024, up 60 basis points compared to the prior year, reflecting the balance sheet repositioning and reinvesting cash flows into higher yielding securities.

•The average cost of total deposits was 2.02% for 2024, up 42 basis points compared to the prior year. The average cost of short-term borrowings was 5.36% for 2024, up 11 basis points compared to the prior year. The average cost of long-term debt was 4.94% for 2024, up 48 basis points compared to the prior year. The increases in rates on deposits and other funding sources was largely attributable to the repricing of lower cost funding sources.

The provision for credit losses was $1.9 billion for the year ended December 31, 2024 compared to $2.1 billion for the year ended December 31, 2023. The net charge-off ratio for the current year of 0.59% was up 9 basis points compared to the prior year.

•The decrease in the current year provision expense primarily reflects a lower allowance build.

•The net charge-off ratio was up compared to the prior year driven by higher net charge-offs in the CRE, other consumer, credit card, and indirect auto portfolios, partially offset by higher recoveries in the commercial and industrial portfolio. Additionally, the prior year included $98 million of charge-offs related to the sale of the student loan portfolio.

Noninterest income was down $6.3 billion for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to $6.7 billion of securities losses resulting from the balance sheet repositioning, lower lending related fees, operating lease income, and card and payment related fees, partially offset by higher investment banking and trading income, wealth management income, service charges on deposits, and other income. Excluding securities losses, noninterest income was up $340 million, or 6.2%, compared to the prior year.

Noninterest expense was down $6.7 billion, or 36%, for the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to the 2023 goodwill impairment of $6.1 billion, lower regulatory charges due to the FDIC special assessment and related adjustments ($64 million in 2024 compared to $507 million in 2023), lower other expense, excluding the charitable contribution to the Truist Foundation, lower amortization of intangibles, and operating lease depreciation, partially offset by a $150 million charitable contribution to the Truist Foundation (other expense) and higher professional fees and outside processing expense. Restructuring charges decreased $200 million; both periods included restructuring charges for severance charges as well as facilities optimization costs. Noninterest expenses excluding the charitable contribution, the amortization of intangibles, the FDIC special assessment adjustment, restructuring charges, and a small loss on the early extinguishment of debt, decreased $44 million, or 0.4%.

Truist had a benefit from income taxes of $556 million for 2024, compared to a provision for income taxes of $738 million in 2023. The provision for income taxes for 2023 reflects a pre-tax loss, which includes a non-deductible goodwill impairment charge, partially offset by a discrete tax benefit in the fourth quarter of 2023.

Truist’s total assets at December 31, 2024 were $531.2 billion, a decrease of $4.2 billion, or 0.8%, compared to December 31, 2023 as loans and leases, net of ALLL, decreased $5.7 billion, or 1.9%, total securities decreased $3.4 billion, or 2.8%, partially offset by an increase of $8.7 billion, or 35%, in interest-bearing deposits with banks.

Total liabilities at December 31, 2024 were $467.5 billion, a decrease of $8.6 billion, or 1.8%, from the prior year, reflecting a decrease of $5.3 billion, or 1.3%, in deposits and a decrease of $4.0 billion, or 10.2%, in long-term debt, partially offset by an increase of $4.4 billion, or 17.6%, in short-term borrowings.

Truist Financial Corporation 49

Total shareholders’ equity was $63.7 billion at December 31, 2024, an increase of $4.4 billion from December 31, 2023. This increase includes $4.8 billion in net income and $4.3 billion in OCI, partially offset by $3.1 billion in common and preferred dividends, $1.0 billion in common share repurchases, and $750 million for the redemption of series L preferred stock. Truist’s book value per common share at December 31, 2024 was $43.90, compared to $39.31 at December 31, 2023. Truist’s TBVPS of $30.01 at December 31, 2024 increased 37% compared to December 31, 2023.

Asset quality remained stable.

•Nonperforming loans and leases held for investment totaled $1.4 billion or 0.47% of loans and leases held for investment at December 31, 2024, up three basis points compared to December 31, 2023.

•Loans 90 days or more past due and still accruing totaled $587 million or 0.19% of loans and leases held for investment at December 31, 2024, up two basis point as a percentage of loans and leases compared with December 31, 2023. 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 0.05% at December 31, 2024, up one basis point from December 31, 2023.

•The allowance for credit losses was $5.2 billion and includes $4.9 billion for the allowance for loan and lease losses and $304 million for the reserve for unfunded commitments. The ALLL ratio was 1.59%, up five basis points compared with December 31, 2023.

Capital strengthened during 2024.

•Truist’s CET1 ratio was 11.5% as of December 31, 2024, up 140 basis points since December 31, 2023 from the sale of TIH and organic capital generation, partially offset by the balance sheet repositioning, common dividends, and share repurchases.

•Truist returned $3.8 billion to common shareholders through declared common dividends of $2.8 billion or $2.08 per share during 2024 and repurchases of $1.0 billion of common stock, resulting in a dividend payout ratio of 62% and total payout ratio of 85%.

•Truist redeemed all outstanding shares of its perpetual preferred stock series L and the corresponding depositary shares representing fractional interests in such series for $750 million.

•Truist’s average consolidated LCR was 109% for the three months ended December 31, 2024, compared to the regulatory minimum of 100%.

Analysis of Results of Operations

Net Interest Income and NIM

Taxable-equivalent net interest income for the year ended December 31, 2024 was down $441 million, or 3.0%, compared to the year ended December 31, 2023 primarily as a result of having a smaller more efficient balance sheet after the repositioning. Net interest margin was 3.03%, up five basis points compared to the prior year.

•Average deposits decreased $13.3 billion, or 3.3%, average short-term borrowings were flat, and average long-term debt decreased $13.0 billion, or 26% due to decreased funding needs.

50 Truist Financial Corporation

Table 9: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
																		2024 vs. 2023		2023 vs. 2022
Year Ended December 31, (Dollars in millions)	Average Balances(1)		Annualized Yield/Rate(2)		Income/Expense(2)		Incr. (Decr.)		Change due to		Incr. (Decr.)		Change due to
2024		2023		2022		2024		2023		2022		2024		2023	2022			Rate		Volume			Rate		Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury	$	12,100			$	11,021			$	10,591			4.01	%	1.20	%		0.88	%		$	485			$	132			$	93			$	353			$	339			$	14			$	39			$	35	$	4
GSE	390			348			498			3.38			2.94		2.24			13			10			11			3			2			1			(1)			3			(4)
Agency MBS	109,652			121,923			132,222			2.70			2.31		1.93			2,958			2,821			2,552			137			441			(304)			269			477			(208)
States and political subdivisions	417			424			392			4.14			4.13		3.88			17			18			15			(1)			—			(1)			3			1			2
Non-agency MBS	1,282			3,816			4,072			2.85			2.34		2.30			37			89			94			(52)			16			(68)			(5)			2			(7)
Other	17			20			44			5.25			5.37		3.60			1			1			2			—			—			—			(1)			1			(2)
Total securities	123,858			137,552			147,819			2.83			2.23		1.87			3,511			3,071			2,767			440			798			(358)			304			519			(215)
Interest earning trading assets	5,320			4,739			5,767			6.12			6.64		4.15			326			314			239			12			(26)			38			75			124			(49)
Other earning assets(3)	36,622			29,335			19,886			5.48			5.31		1.92			2,008			1,557			381			451			51			400			1,176			927			249
Loans and leases, net of unearned income:
Commercial and industrial	155,674			163,983			149,030			6.36			6.34		3.91			9,897			10,389			5,823			(492)			33			(525)			4,566			3,931			635
CRE	21,585			22,741			22,697			6.81			6.71		4.01			1,480			1,535			920			(55)			22			(77)			615			613			2
Commercial Construction	7,729			6,125			5,326			7.67			7.62		4.46			583			459			228			124			3			121			231			191			40
Residential mortgage	54,486			56,131			51,721			3.88			3.78		3.60			2,114			2,121			1,860			(7)			55			(62)			261			96			165
Home equity	9,778			10,388			10,788			7.94			7.36		5.01			776			765			540			11			57			(46)			225			246			(21)
Indirect auto	22,326			25,621			27,197			7.00			6.10		5.50			1,563			1,563			1,497			—			215			(215)			66			156			(90)
Other consumer	28,748			28,412			26,320			8.18			7.25		6.23			2,351			2,061			1,640			290			265			25			421			284			137
Student	—			2,453			6,114			—			6.91		4.97			—			170			304			(170)			(85)			(85)			(134)			91			(225)
Credit card	4,907			4,876			4,753			11.96			11.59		9.57			587			565			455			22			18			4			110			98			12
Total loans and leases HFI	305,233			320,730			303,946			6.34			6.12		4.36			19,351			19,628			13,267			(277)			583			(860)			6,361			5,706			655
LHFS	1,305			1,605			2,889			6.31			6.37		4.23			82			102			122			(20)			(1)			(19)			(20)			47			(67)
Total loans and leases	306,538			322,335			306,835			6.34			6.12		4.36			19,433			19,730			13,389			(297)			582			(879)			6,341			5,753			588
Total earning assets	472,338			493,961			480,307			5.35			4.99		3.49			25,278			24,672			16,776			606			1,405			(799)			7,896			7,323			573
Nonearning assets	51,185			51,554			56,666
Assets of discontinued operations	2,542			7,617			6,857
Total assets	$	526,065			$	553,132			$	543,830
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	104,606			$	103,465			$	111,539			2.68		2.11			0.47			2,802			2,184			519			618			594			24			1,665			1,706			(41)
Money market and savings	136,217			138,841			145,645			2.54			2.04		0.37			3,457			2,834			536			623			677			(54)			2,298			2,324			(26)
Time deposits	39,406			36,803			15,514			4.04			3.83		0.58			1,590			1,409			90			181			79			102			1,319			1,059			260
Total interest-bearing deposits	280,229			279,109			272,698			2.80			2.30		0.42			7,849			6,427			1,145			1,422			1,350			72			5,282			5,089			193
Short-term borrowings	24,499			24,478			14,957			5.36			5.25		2.58			1,313			1,286			385			27			26			1			901			558			343
Long-term debt	36,713			49,678			34,172			4.94			4.46		2.31			1,813			2,215			791			(402)			220			(622)			1,424			958			466
Total interest-bearing liabilities	341,441			353,265			321,827			3.21			2.81		0.72			10,975			9,928			2,321			1,047			1,596			(549)			7,607			6,605			1,002
Noninterest-bearing deposits	107,639			122,018			145,392
Other liabilities	13,343			11,560			9,994
Liabilities of discontinued operations	1,049			3,190			2,800
Shareholders’ equity	62,593			63,099			63,817
Total liabilities and shareholders’ equity	$	526,065			$	553,132			$	543,830
Average interest-rate spread							2.14	%		2.18	%		2.77	%
NIM/net interest income - TE							3.03	%		2.98	%		3.01	%	$	14,303			$	14,744			$	14,455			$	(441)			$	(191)			$	(250)			$	289			$	718			$	(429)
Taxable-equivalent adjustment													$	212		$	220			$	142
Memo: Total deposits	$	387,868			$	401,127			$	418,090			2.02	%	1.60	%		0.27	%		$	7,849			$	6,427			$	1,145			$	1,422							$	5,282

(1)Represents daily average balances. Unrealized gains and losses on available-for-sale securities are included in nonearning assets. Active hedge basis adjustments for fair value hedges are included in nonearning assets and other liabilities. In 2024, Truist revised its presentation of active hedge basis adjustments for fair value hedges on securities to be included in nonearning assets for all periods presented.

(2)Yields are stated on a TE basis utilizing a federal tax rate of 21%. Interest income includes certain fees, deferred costs, and dividends. 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.

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

Truist Financial Corporation 51

Provision for Credit Losses

•The decrease in the current year provision expense primarily reflects a lower allowance build.

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

Noninterest Income

Table 10: Noninterest Income
	Year Ended December 31,	% Change
(Dollars in millions)		2024		2023		2022		2024 vs. 2023	2023 vs. 2022
Wealth management income		$	1,412			$	1,358		$	1,338		4.0	%		1.5	%
Investment banking and trading income		1,203			822			995		46.4		(17.4)
Card and payment related fees		907			936			944		(3.1)		(0.8)
Service charges on deposits		915			873			1,028		4.8		(15.1)
Mortgage banking income		432			437			460		(1.1)		(5.0)
Lending related fees		366			447			375		(18.1)		19.2
Operating lease income		205			254			258		(19.3)		(1.6)
Securities gains (losses)		(6,651)			—			(71)		NM	NM
Other income		398			371			333		7.3		11.4
Total noninterest income		$	(813)			$	5,498		$	5,660		(114.8)		(2.9)

•Investment banking and trading income increased due to higher bond and equity originations, structured real estate income, loan syndication fees, and merger and acquisition fees, partially offset by lower trading income.

•Wealth management income increased due to higher assets under management, partially offset by the impact of the sale of Sterling Capital Management LLC in 2024.

•Service charges on deposits increased due to a prior period reduction in deposit service charge fees for client refund accruals resulting from a revision in deposit service fee protocols, partially offset by a decline as a result of continued growth of Truist One checking.

•Other income increased due to higher derivative income and the gain on the sale of Sterling Capital Management LLC, partially offset by lower equity investment income due to gains in 2023 and a valuation decrease for derivatives related to Visa shares.

•Lending related fees decreased due to lower leasing-related gains.

•Operating lease income decreased due to the runoff of operating lease balances.

•Card and payment related fees decreased due to lower interchange rates, higher rebates, and lower volumes.

52 Truist Financial Corporation

Noninterest Expense

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

Table 11: Noninterest Expense
	Year Ended December 31,	% Change
(Dollars in millions)		2024		2023		2022		2024 vs. 2023	2023 vs. 2022
Personnel expense		$	6,506			$	6,516		$	6,558		(0.2)	%	(0.6)	%
Professional fees and outside processing		1,337			1,192			1,322		12.2		(9.8)
Software expense		896			868			887		3.2		(2.1)
Net occupancy expense		656			658			690		(0.3)		(4.6)
Equipment expense		373			381			449		(2.1)		(15.1)
Amortization of intangibles		345			395			455		(12.7)		(13.2)
Marketing and customer development		268			260			321		3.1		(19.0)
Operating lease depreciation		144			175			184		(17.7)		(4.9)
Regulatory costs		344			824			183		(58.3)	NM
Restructuring charges		120			320			466		(62.5)		(31.3)
Goodwill impairment		—			6,078			—		(100.0)	NM
Other expense		1,020			1,011			652		0.9		55.1
Total noninterest expense		$	12,009			$	18,678		$	12,167		(35.7)		53.5

Restructuring Charges

•Other expense, excluding the aforementioned charitable contribution to the Truist Foundation, decreased primarily due to lower pension expense, the prior period costs associated with a revision in deposit service fee protocols, and the prior period resolution of the USAA remote deposit capture patent infringement lawsuit.

•Operating lease depreciation decreased due to the runoff of operating lease balances.

•Professional fees and outside processing expense increased due to higher investments in technology and risk infrastructure.

Truist has incurred certain restructuring charges, which include:

•severance and personnel-related costs or credits;

•occupancy and equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete equipment write-offs, and the sale of duplicate facilities and equipment;

•professional services, which relate to legal and investment banking advisory fees and other consulting services pertaining to restructuring initiatives or transactions; and

•write-offs related to exiting certain businesses.

Restructuring accruals are established when the costs are incurred or once all requirements for a plan to dispose of or outsource certain business functions have been approved by management. Restructuring accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2024 are generally expected to be utilized within one year, unless they relate to specific contracts that expire later.

Truist Financial Corporation 53

The following table presents a summary of restructuring charges and the related accruals. The 2024 and 2023 restructuring charges predominantly include costs for severance and other benefits and costs related to exiting facilities.

Table 12: Restructuring Accrual Activity
(Dollars in millions)	Accrual at Jan 1, 2023		Expense		Utilized		Accrual at Dec 31, 2023			Expense	Utilized		Accrual at Dec 31, 2024
Severance and personnel-related	$	6			$	249		$	(247)		$	8			$	80		$	(88)	$	—
Occupancy and equipment	—			52			(52)		—				31	(31)			—
Professional services	11			2			(13)		—				6	(5)			1
Other	2			17			(19)		—				3	(3)			—
Total	$	19			$	320		$	(331)		$	8			$	120		$	(127)	$	1

Segment Results

Truist operates and measures business activity across two segments: CSBB and WB, 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.

On February 20, 2024, the Company entered into an agreement to sell the remaining stake of the common equity in TIH to an investor group, representing substantially all of the Company’s IH segment, which represented a material strategic shift for the Company, and as a result, the Company recast results for all periods presented under the discontinued operations basis of presentation. On May 6, 2024, the Company completed the sale of its remaining equity interests in TIH. TIH was the principal legal entity of the IH segment. As the operations of TIH were included in discontinued operations prior to the sale of TIH, the Company no longer presents the IH segment as one of its reportable segments. Refer to “Note 2. Discontinued Operations” for additional information related to discontinued operations.

Effective October 1, 2024, the Company’s corporate expense allocation methodology was enhanced to allocate certain overhead or functional expenses based on actual OT&C noninterest expense performance. Prior period results have been revised for the CSBB, WB, and OT&C segments to conform to the current allocation methodology.

As a result of the methodology change, CSBB noninterest expense increased $267 million and $639 million for the years ended December 31, 2023 and 2022, respectively, with an off-setting decrease in OT&C noninterest expense. For the same reason, WB noninterest expense increased $325 million and $101 million for the years ended December 31, 2023 and 2022, respectively, with an off-setting decrease in OT&C noninterest expense.

Table 13: Net Income from Continuing Operations by Reportable Segment
	Year Ended December 31,			% Change
(Dollars in millions)		2024		2023		2022					2024 vs. 2023	2023 vs. 2022
Consumer and Small Business Banking		$	3,490			$	126		$	3,228					NM	(96.1)	%
Wholesale Banking		3,984			346			4,446					NM	(92.2)
Other, Treasury & Corporate		(7,519)			(1,975)			(1,895)					NM	4.2
Truist Financial Corporation		$	(45)			$	(1,503)		$	5,779					(97.0)		(126.0)

54 Truist Financial Corporation

2024 compared to 2023

Consumer and Small Business Banking

CSBB net income was $3.5 billion for the year ended December 31, 2024, an increase of $3.4 billion compared to the prior year.

•Segment net interest income decreased $106 million primarily driven by lower loan and deposit balances, partially offset by higher funding credit on deposits.

•The allocated provision for credit losses increased $192 million primarily reflecting higher charge-offs in the other consumer, credit card, and indirect auto portfolios and an allowance build in the current period compared to same period last year.

•Noninterest income increased $30 million primarily due to increased service charges on deposits, partially offset by lower card and payment related fees in the current period.

•Noninterest expense decreased $3.6 billion including the goodwill impairment in the prior year. Excluding the goodwill impairment, noninterest expense decreased $271 million due to lower personnel expenses, FDIC assessment cost, restructuring charges, pension costs, and technology project costs, as well as lower foreclosed property expense, partially offset by higher enterprise operations, marketing, and finance support expenses.

CSBB average loans and leases held for investment decreased $8.0 billion, or 6.0%, for the year ended December 31, 2024 compared to the prior year driven primarily by a decrease in indirect auto loans, the sale of the student loan portfolio in the second quarter of 2023, and lower mortgage loan balances as well as a decrease in LightStream loans and home equity lending, partially offset by increases in Service Finance and Sheffield loans.

CSBB average total deposits decreased $7.3 billion, or 3.3%, for the year ended December 31, 2024 compared to the prior year primarily due to decreases in average interest-bearing checking, noninterest-bearing deposits, and money market and savings, partially offset by an increase in time deposits.

Wholesale Banking

WB net income was $4.0 billion for the year ended December 31, 2024, an increase of $3.6 billion compared to the prior year.

•Segment net interest income decreased $354 million primarily due to lower deposit and loan balances combined with higher cost of deposits and lower loan yields, partially offset by higher funding credit on deposits.

•The allocated provision for credit losses decreased $437 million, which primarily reflects a decrease in the allowance build compared to the earlier period, partially offset by an increase in net charge-offs.

•Noninterest income increased $451 million primarily due to increases in investment banking income across all products, income from tax credit activity, and wealth management related income, partially offset by lower lending related fees, operating lease income, and income from strategic investments.

•Noninterest expense decreased $3.4 billion including the goodwill impairment in the prior year. Excluding the goodwill impairment, noninterest expense decreased $654 million primarily due to lower FDIC assessment cost, restructuring expense, pension costs, and personnel expenses as well as lower marketing and finance support expenses.

WB average loans and leases held for investment decreased $7.5 billion, or 4.0%, for the year ended December 31, 2024 compared to the prior year driven by decreases in the commercial and industrial portfolio.

WB average total deposits decreased $6.4 billion, or 4.3%, for the year ended December 31, 2024 compared to the prior year primarily due to decreases in average noninterest-bearing deposits and money market and savings, partially offset by an increase in interest-bearing checking balances.

Other, Treasury, and Corporate

OT&C generated a net loss of $7.5 billion for the year ended December 31, 2024, compared to a net loss of $2.0 billion in the prior year.

•Segment net interest income increased $27 million due to funding charges primarily on loans to other segments, the balance sheet repositioning, and lower average long-term debt, partially offset by the funding credit on deposits to other segments.

•Noninterest income decreased $6.8 billion primarily due to securities losses resulting from the balance sheet repositioning.

•Noninterest expense increased $334 million primarily driven by higher incentive expense, higher donations and contributions expense due to a charitable contribution to the Truist Foundation, and increased professional fees and outside processing expense, partially offset by lower pension costs and increased credit from other segments for enterprise operations.

Truist Financial Corporation 55

Analysis of Financial Condition

Investment Activities

Truist’s investment policy is approved and carried out by ALCO, which meets regularly to review the economic environment and establish investment strategies. The ALCO also has much broader responsibilities, which are discussed in the “Market Risk” section in MD&A.

Truist Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies, GSEs (including MBS), bank eligible obligations of any state or political subdivision, non-agency MBS, structured notes, bank eligible corporate obligations (including corporate debentures), commercial paper, negotiable CDs, bankers’ acceptances, mutual funds, and limited types of equity securities.

Table 14: Composition of Securities Portfolio
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
AFS securities (at fair value):
U.S. Treasury	$	14,411			$	10,041
GSE	403			362
Agency MBS – residential	49,959			51,289
Agency MBS – commercial	2,293			2,248
States and political subdivisions	382			425
Non-agency MBS	—			2,981
Other	16			20
Total AFS securities	67,464			67,366
HTM securities (at amortized cost):
Agency MBS – residential	50,640			54,107
Total securities	$	118,104			$	121,473

The securities portfolio totaled $118.1 billion at December 31, 2024, compared to $121.5 billion at December 31, 2023. U.S. Treasury, GSE, and Agency MBS represented 99.7% and 97.2% of the total securities portfolio as of December 31, 2024 and December 31, 2023, respectively. The overwhelming majority of the portfolio is in agency MBS securities.

•The decrease in 2024 includes sales of $28.1 billion and maturities and paydowns of $18.7 billion, partially offset by $44.7 billion in purchases. The purchases and sales were primarily related to the balance sheet repositioning.

◦Following the sale of TIH, which resulted in after-tax cash proceeds to Truist of approximately $10.1 billion, Truist executed a strategic balance sheet repositioning of a portion of its AFS investment securities portfolio by selling $27.7 billion of lower-yielding investment securities, resulting in an after-tax loss of $5.1 billion in the second quarter of 2024. The investment securities that were sold had a book value of $34.4 billion and a weighted average book yield of 2.80% for the remainder of 2024 including the impact of hedges and based on the Federal Funds futures curve at the time. Including the tax benefit, the repositioning generated $29.3 billion available for reinvestment.

◦Truist invested approximately $18.7 billion of the $39.4 billion available, including the $10.1 billion after-tax proceeds from the sale of TIH, in shorter duration investment securities yielding 5.27%. The remaining $20.7 billion was invested in cash. The blended reinvestment rate on the new investment securities purchased and cash was 5.22% for the remainder of 2024 including the impact of hedges and based on the Federal Funds futures curve at the time.

•As of December 31, 2024 and December 31, 2023, 41% of the investment securities portfolio was classified as held-to-maturity based on amortized cost, excluding portfolio level basis adjustments.

•As of December 31, 2024, approximately 3.0% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 5.7% as of December 31, 2023.

•The effective duration of the AFS securities portfolio was 5.0 years at December 31, 2024 and 6.1 years at December 31, 2023, excluding the impact of swaps, or 3.3 years at December 31, 2024 and 4.0 years at December 31, 2023, including the impact of swaps. The effective duration of the HTM securities portfolio was 7.0 years at December 31, 2024 and 7.3 years at December 31, 2023.

56 Truist Financial Corporation

The following table presents the securities portfolio by major category of security holdings with ranges of maturities and average yields:

Table 15: Securities Yields by Major Category and Maturity
December 31, 2024 (Dollars in millions)	AFS		HTM
Fair Value		Effective Yield(1)		Amortized Cost		Effective Yield(1)
U.S. Treasury:
Within one year	$	4,512			4.84	%		$	—		—	%
One to five years	9,480			4.45			—			—
Five to ten years	397			3.60			—			—
After ten years	22			3.02			—			—
Total	14,411			4.55			—			—
GSE:
Within one year	2			3.00			—			—
One to five years	5			2.88			—			—
Five to ten years	11			3.05			—			—
After ten years	385			3.78			—			—
Total	403			3.74			—			—
Agency MBS – residential:(2)
One to five years	88			2.44			—			—
Five to ten years	365			2.88			—			—
After ten years	49,506			3.90			50,640			1.79
Total	49,959			3.89			50,640			1.79
Agency MBS – commercial:(2)
Within one year	—			—			—			—
One to five years	9			4.40			—			—
Five to ten years	78			3.69			—			—
After ten years	2,206			1.99			—			—
Total	2,293			2.05			—			—
States and political subdivisions:
Within one year	41			6.80			—			—
One to five years	68			6.84			—			—
Five to ten years	146			6.60			—			—
After ten years	127			5.45			—			—
Total	382			6.28			—			—
Other:
One to five years	7			2.87			—			—
Five to ten years	9			6.51			—			—
Total	16			4.88			—			—
Total securities	$	67,464			3.98			$	50,640		1.79

(1)Yields represent interest computed using the effective interest method on the amortized cost of securities inclusive of amortization of premiums or accretion of discounts, excluding the impact of hedging. Weighted yield is represented on a TE basis with the exception of obligations of state and political subdivisions which are presented on a tax-effected basis.

(2)For purposes of the maturity, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties.

Lending Activities

Truist lends to a diverse client base that is managed to be geographically dispersed to mitigate concentration risk arising from local and regional economic downturns. The following discussion provides additional information on the Company’s loan and lease portfolios. Refer to the “Risk Management” section for a discussion of the credit risk management policies used to manage the portfolios.

Truist Financial Corporation 57

Commercial Loan and Lease Portfolio

Commercial loans and leases represent the largest category of the Company’s loan and lease portfolio. Commercial Community Banking and small business banking generally target small-to-middle market businesses with annual sales between $2 million and $500 million, while Investment Banking and Capital Markets (formerly Corporate and Investment Banking) provides lending solutions to large corporate clients. The commercial loan and lease portfolio consists of lending to public and private business clients and includes commercial and industrial, owner occupied, equipment leasing and financing, CRE, government and institutional financing, premium financing, and dealer floor plan financing.

Residential Mortgage Loan Portfolio

Truist primarily originates conforming mortgage loans, loans under FHA, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture programs, and higher quality jumbo and construction-to-permanent loans for 1-4 family residential properties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA and FHLMC. They are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, or have mortgage insurance as required by investors and are made to borrowers that meet Truist’s credit standards.

Risks associated with mortgage lending include interest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary mortgage market and an effective MSR hedging process. Credit risk is managed through underwriting procedures and mortgage insurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management believes that the retention of mortgage servicing diversifies income while enabling Truist to build long-term client relationships and offer high quality client service. Truist also purchases residential mortgage loans from correspondent originators. The loans purchased from third-party originators are subject to substantially the same underwriting and risk-management criteria as loans originated internally.

Home Equity Loan Portfolio

Indirect Auto Loan Portfolio

The indirect auto portfolio primarily includes secured indirect installment loans to consumers for the purchase of new and used automobiles. The indirect auto portfolio also includes nonprime and near prime automobile finance. Such loans are originated through approved franchised and independent dealers throughout the Truist market area and nationally through Regional Acceptance Corporation. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. Indirect auto loans are subject to lending policies and procedures and are underwritten with note amounts and credit limits that are consistent with the Company’s risk philosophy. In addition to its normal underwriting due diligence, Truist uses application systems and scoring systems to help underwrite and manage the credit risk in its indirect auto portfolio.

Other Consumer Loan Portfolio

The other consumer portfolio includes loans originated through the Truist branch network, as well as loans originated by Truist’s national online consumer lending platforms. The other consumer loan portfolio includes: secured and unsecured loans originated through the Truist branch network marketed to qualifying clients and other creditworthy candidates in Truist’s market areas; LightStream, an online platform which originates fixed-rate, unsecured lending to consumers with strong credit; secured indirect installment loans to consumers for the purchase of new and used boats and recreational vehicles; Sheffield, a small ticket consumer lending division related to the purchase of power sports and outdoor power equipment; other indirect and point-of-sale lending to consumers, including through Service Finance, to finance home improvements, furniture purchases, certain elective health-care services; and unsecured loans originated via third-party partnerships, which are in run-off. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. These loans are originated in accordance with underwriting criteria as determined by Truist.

58 Truist Financial Corporation

Credit Card Loan Portfolio

Refer to “Note 5. Loans and ACL” for additional information.

The following table summarizes the loan portfolio:

Table 16: Loans and Leases as of Period End
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
Commercial:
Commercial and industrial	$	154,848			$	160,788
CRE	20,363			22,570
Commercial construction	8,520			6,683
Consumer:
Residential mortgage	55,599			55,492
Home equity	9,642			10,053
Indirect auto	23,089			22,727
Other consumer	29,395			28,647
Credit card	4,927			5,101
Total loans and leases HFI	306,383			312,061
LHFS	1,388			1,280
Total loans and leases	$	307,771			$	313,341

Loans and leases HFI were $306.4 billion at December 31, 2024, down $5.7 billion compared to 2023.

Commercial loans decreased $6.3 billion during 2024 primarily due to declines of $5.9 billion in the commercial and industrial portfolio and $2.2 billion in the CRE portfolio due to lower production, partially offset by an increase in the commercial construction portfolio of $1.8 billion.

Consumer loans and credit cards increased $632 million during 2024 primarily due to a $748 million increase in other consumer primarily due to growth of higher-return point-of-sale lending portfolios (Service Finance and Sheffield), and a $362 million increase in indirect auto primarily due to higher production, partially offset by a $411 million decrease in home equity.

Truist Financial Corporation 59

Table 17: Loan Maturities
December 31, 2024 (Dollars in millions)	1 Year or Less		1 to 5 Years		5 to 15 Years		After 15 Years	Total
Fixed rate:
Commercial:
Commercial and industrial	$	11,084			$	14,377		$	10,589	$	2,111	$	38,161
CRE	858			2,161			401		3	3,423
Commercial construction	19			42			22		38	121
Total commercial	11,961			16,580			11,012		2,152	41,705
Consumer:
Residential mortgage	1,560			6,276			17,113		23,743	48,692
Home equity	313			956			1,604		409	3,282
Indirect auto	5,514			15,958			1,617		—	23,089
Other consumer	5,580			13,784			6,611		857	26,832
Total consumer	12,967			36,974			26,945		25,009	101,895
Credit card	266			—			—		—	266
Total fixed rate	25,194			53,554			37,957		27,161	143,866
Variable rate:
Commercial:
Commercial and industrial	32,888			73,617			8,234		1,948	116,687
CRE	5,139			10,982			813		6	16,940
Commercial construction	3,321			4,956			121		1	8,399
Total commercial	41,348			89,555			9,168		1,955	142,026
Consumer:
Residential mortgage	175			776			2,348		3,608	6,907
Home equity	623			2,261			3,459		17	6,360
Indirect auto	—			—			—		—	—
Other consumer	396			1,813			351		3	2,563
Total consumer	1,194			4,850			6,158		3,628	15,830
Credit card	4,661			—			—		—	4,661
Total variable rate	47,203			94,405			15,326		5,583	162,517
Total loans and leases HFI	$	72,397			$	147,959		$	53,283	$	32,744	$	306,383

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $647 million and $317 million at December 31, 2024 and December 31, 2023, respectively.

60 Truist Financial Corporation

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

Table 18: Average Loans and Leases
	Three Months Ended
(Dollars in millions)	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024	Dec 31, 2023
Commercial:
Commercial and industrial	$	153,209			$	154,102		$	157,043	$	158,385	$	160,278
CRE	20,504			21,481			21,969		22,400	22,755
Commercial construction	8,261			7,870			7,645		7,134	6,515
Consumer:
Residential mortgage	54,390			53,999			54,490		55,070	55,658
Home equity	9,675			9,703			9,805		9,930	10,104
Indirect auto	22,790			22,121			22,016		22,374	23,368
Other consumer	29,355			29,015			28,326		28,285	28,913
Credit card	4,926			4,874			4,905		4,923	4,996
Total average loans and leases HFI	$	303,110			$	303,165		$	306,199	$	308,501	$	312,587

Average loans and leases HFI were flat compared to the prior quarter.

•Average commercial loans decreased 0.8% due to declines in the commercial and industrial and CRE portfolios.

•Average consumer loans and credit cards increased 1.2% due to growth in the indirect auto, residential mortgage, and other consumer portfolios.

Truist Financial Corporation 61

Asset Quality

The following tables summarize asset quality information:

Table 19: Asset Quality
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
NPAs:
NPLs:
Commercial and industrial	$	521			$	470
CRE	298			284
Commercial construction	3			24
Residential mortgage	166			153
Home equity	116			122
Indirect auto	259			268
Other consumer	66			59
Total NPLs HFI	1,429			1,380
Loans held for sale	—			51
Total nonperforming loans and leases	1,429			1,431
Foreclosed real estate	3			3
Other foreclosed property	45			54
Total nonperforming assets	$	1,477			$	1,488
Loans 90 days or more past due and still accruing:
Commercial and industrial	$	19			$	7
CRE	1			—
Commercial construction	—			1
Residential mortgage – government guaranteed	430			418
Residential mortgage – nonguaranteed	51			21
Home equity	9			11
Indirect auto	—			2
Other consumer	23			21
Credit card	54			53
Total loans 90 days or more past due and still accruing	$	587			$	534
Loans 30-89 days past due and still accruing:
Commercial and industrial	$	168			$	230
CRE	60			5
Commercial construction	3			—
Residential mortgage – government guaranteed	318			326
Residential mortgage – nonguaranteed	401			313
Home equity	60			70
Indirect auto	622			669
Other consumer	236			271
Credit card	81			87
Total loans 30-89 days past due and still accruing	$	1,949			$	1,971

Nonperforming assets totaled $1.5 billion at December 31, 2024, down $11 million compared to December 31, 2023 due to a decline in the LHFS portfolio, partially offset by an increase in the commercial and industrial portfolio. Nonperforming loans and leases represented 0.47% of total loans and leases HFI, up three basis points compared to December 31, 2023.

Loans 90 days or more past due and still accruing totaled $587 million at December 31, 2024, up $53 million compared to the prior year primarily due to an increase in the residential mortgage portfolio. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases HFI was 0.05% at December 31, 2024, up one basis point compared to December 31, 2023.

Loans 30-89 days past due and still accruing totaled $1.9 billion at December 31, 2024, down $22 million compared to the prior year due to declines in the commercial and industrial, indirect auto, and other consumer portfolios, partially offset by increases in the residential mortgage and CRE portfolios. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases HFI was 0.64% at December 31, 2024, up one basis point compared to the prior year.

62 Truist Financial Corporation

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 19. 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 20: Asset Quality Ratios
	Dec 31, 2024		Dec 31, 2023
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.64	%		0.63	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.19			0.17
NPLs as a percentage of loans and leases HFI	0.47			0.44
NPLs as a percentage of total loans and leases(1)	0.46			0.46
NPAs as a percentage of:
Total assets(1)	0.28			0.28
Loans and leases HFI plus foreclosed property	0.48			0.46
ALLL as a percentage of loans and leases HFI	1.59			1.54
Ratio of ALLL to NPLs	3.4x		3.5x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)	0.05	%		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 21: Asset Quality Ratios (Continued)
	Year Ended December 31,
		2024		2023		2022
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial		0.20	%		0.20	%	0.04	%
CRE		1.31			0.71		0.02
Commercial construction		(0.03)			0.04		(0.07)
Consumer:
Residential mortgage		(0.01)			0.01		(0.01)
Home equity		(0.07)			(0.12)		(0.11)
Indirect auto		2.11			1.66		1.17
Other consumer		1.73			1.40		1.14
Student		—			4.39		0.34
Credit card		5.26			3.85		2.98
Total		0.59			0.50		0.27
Ratio of ALLL to net charge-offs		2.7x		3.0x		5.3x

The following table presents activity related to NPAs:

Table 22: Rollforward of NPAs
(Dollars in millions)	2024		2023
Balance, January 1	$	1,488			$	1,250
New NPAs	3,331			3,055
Advances and principal increases	454			842
Disposals of foreclosed assets(1)	(616)			(603)
Disposals of NPLs(2)	(223)			(237)
Charge-offs and losses	(1,313)			(1,013)
Payments	(1,308)			(1,357)
Transfers to performing status	(309)			(440)
Other, net	(27)			(9)
Ending balance, December 31	$	1,477			$	1,488

(1)Includes charge-offs and losses recorded upon sale of $260 million and $196 million for the years ended December 31, 2024 and 2023, respectively.

(2)Includes gains, net of charge-offs and losses recorded upon sale of $14 million for the year ended December 31, 2024, and charge-offs and losses recorded upon sale of $30 million for the year ended December 31, 2023.

Truist Financial Corporation 63

Commercial Credit Concentrations

Truist has established the following general practices to manage commercial credit risk:

•limiting the amount of credit that Truist may extend to a borrower;

•establishing a process for credit approval accountability;

•initial underwriting and analysis of borrower, transaction, market, and collateral risks;

•evaluating the diversity of the loan portfolio in terms of type, industry, and geographical concentration;

•ongoing servicing and monitoring of individual loans and lending relationships;

•continuous monitoring of the portfolio, market dynamics, and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market, and other relevant conditions change.

64 Truist Financial Corporation

Table 23: Commercial and Industrial Portfolio Industry and Geography
	December 31, 2024				December 31, 2023
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:(1)
Finance and insurance	$	24,271			15.7	%			$	28			$	21,929	13.6	%		$	40
Retail trade	12,488			8.1				66				12,368		7.7			89
Manufacturing	12,298			7.9				62				14,090		8.8			65
Health care and social assistance	12,154			7.8				129				13,078		8.1			46
Real estate and rental and leasing	11,354			7.3				3				11,001		6.8			16
Public administration	8,860			5.7				—				9,280		5.8			—
Wholesale trade	7,428			4.8				45				7,471		4.6			3
Information	5,235			3.4				66				5,727		3.6			—
Transportation and warehousing	4,634			3.0				34				5,707		3.5			8
Educational services	4,478			2.9				—				5,362		3.3			31
Professional, scientific, and technical services	4,125			2.7				8				4,445		2.8			26
Utilities	4,096			2.6				—				4,577		2.8			—
Arts, entertainment, and recreation	3,599			2.3				6				3,250		2.0			—
Other services (except public administration)	3,072			2.0				2				3,308		2.1			1
Administrative and support and waste management and remediation services	3,022			2.0				—				3,652		2.3			49
Accommodation and food services	2,935			1.9				9				2,925		1.8			13
Other(2)	11,746			7.6				31				11,913		7.5			41
Subtotal	135,795			87.7				489				140,083		87.1			428
Business owner occupied	19,053			12.3				32				20,705		12.9			42
Total commercial and industrial	$	154,848			100.0	%			$	521			$	160,788	100.0	%		$	470
Geography:
Florida	$	18,258			11.8	%			$	172			$	18,947	11.8	%		$	228
Texas	14,728			9.5				47				15,374		9.6			24
North Carolina	12,167			7.9				16				12,959		8.1			11
New York	11,379			7.3				50				10,336		6.4			3
Georgia	11,240			7.3				10				12,167		7.6			32
Virginia	9,343			6.0				7				9,724		6.0			35
California	8,115			5.2				8				9,115		5.7			1
Maryland	6,781			4.4				3				6,668		4.1			6
Pennsylvania	6,466			4.2				9				7,423		4.6			4
Tennessee	5,729			3.7				51				5,852		3.6			43
South Carolina	4,151			2.7				23				4,134		2.6			1
New Jersey	3,947			2.5				5				3,754		2.3			36
Illinois	3,639			2.4				20				3,892		2.4			10
Ohio	3,482			2.2				1				3,220		2.0			6
Other(3)	35,423			22.9				99				37,223		23.2			30
Total commercial and industrial	$	154,848			100.0	%			$	521			$	160,788	100.0	%		$	470

(1)The Company adjusted certain NAICS code assignments in connection with the implementation of new guidance related to non-depository financial institutions. This change primarily impacted the industry assignment related to asset securitization facilities and family office obligations. Prior periods were reclassified to conform to the current presentation.

(2)Represents other remaining industries that are deemed to be individually insignificant.

(3)Includes non-U.S. loans of $4.1 billion and $5.1 billion at December 31, 2024 and December 31, 2023, respectively. The remainder represents other remaining states that are deemed to be individually insignificant.

Truist has noted that the CRE and commercial construction portfolios have the potential for heightened risk in the current environment. Truist seeks to maintain a high-quality portfolio through disciplined risk management and prudent client selection.

Truist’s CRE and commercial construction portfolios totaled $28.9 billion as of December 31, 2024, which includes 36% related to multifamily residential, 21% related to industrial, 14% related to office, 13% related to retail, and the remainder composed of hotel and other commercial real estate.

Truist Financial Corporation 65

Our combined CRE and commercial construction office portfolio is primarily composed of multi-tenant, non-gateway properties located within Truist Bank’s footprint. As of December 31, 2024, approximately 97% of these properties are multi-tenant or medical. Additionally, as of December 31, 2024, 34% and 19% of these exposures are scheduled to mature in 2025 and 2026, respectively, with the remainder scheduled to mature in 2027 and beyond.

Table 24: CRE Portfolio Property Type and Geography
	December 31, 2024		December 31, 2023
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:
Multifamily	$	5,508			27.0	%			$	27			$	5,731	25.4	%		$	3
Industrial	4,303			21.1				3				4,054		18.0			3
Retail	3,530			17.3				33				4,172		18.5			9
Office	3,459			17.0				228				4,286		19.0			264
Hotel	1,891			9.3				—				2,445		10.8			—
Other(1)	1,672			8.3				7				1,882		8.3			5
Total CRE	$	20,363			100.0	%			$	298			$	22,570	100.0	%		$	284
Geography:
Florida	$	2,594			12.7	%			$	26			$	2,481	11.0	%		$	5
North Carolina	2,212			10.9				10				2,726		12.1			1
Georgia	2,010			9.9				80				2,532		11.2			120
California	1,683			8.3				—				1,709		7.6			81
Texas	1,599			7.9				6				1,611		7.1			—
New York	1,491			7.3				2				1,574		7.0			3
Pennsylvania	1,218			6.0				1				1,403		6.2			—
Virginia	1,108			5.4				3				1,276		5.7			—
Massachusetts	860			4.2				27				698		3.1			—
District of Columbia	827			4.1				45				1,043		4.6			—
Tennessee	715			3.5				1				810		3.6			1
Other(2)	4,046			19.8				97				4,707		20.8			73
Total CRE	$	20,363			100.0	%			$	298			$	22,570	100.0	%		$	284

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Includes non-U.S. loans of $54 million and $73 million at December 31, 2024 and December 31, 2023, respectively. The remainder represents other remaining states that are deemed to be individually insignificant.

Table 25: Commercial Construction Portfolio Property Type and Geography
	December 31, 2024		December 31, 2023
(Dollars in millions)	LHFI		% of Total				NPL			LHFI	% of Total					NPL
Industry:
Multifamily	$	4,918			57.7	%			$	—			$	3,868	57.9	%		$	23
Industrial	1,680			19.7				—				877		13.1			—
Single Family - CP	664			7.8				2				819		12.3			—
Office	627			7.4				—				634		9.5			1
Single Family - AD and CL	187			2.2				1				196		2.9			—
Other(1)	444			5.2				—				289		4.3			—
Total commercial construction	$	8,520			100.0	%			$	3			$	6,683	100.0	%		$	24
Geography:
Texas	$	1,345			15.8				$	—			$	956	14.3			$	23
Georgia	1,294			15.2				—				1,059		15.8			—
Florida	1,138			13.4				—				741		11.1			—
North Carolina	992			11.6				1				777		11.6			—
California	492			5.8				—				512		7.7			—
Other(2)	3,259			38.2				2				2,638		39.5			1
Total commercial construction	$	8,520			100.0	%			$	3			$	6,683	100.0	%		$	24

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Includes an immaterial amount of non-U.S. loans at December 31, 2024 and $16 million at December 31, 2023. The remainder represents other remaining states that are deemed to be individually insignificant.

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

66 Truist Financial Corporation

ACL

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

Table 26: Activity in ACL
	Year Ended December 31,
(Dollars in millions)		2024		2023		2022
Balance, beginning of period(1)		$	5,093			$	4,649		$	4,695
Provision for credit losses		1,870			2,109			777
Charge-offs:
Commercial and industrial		(395)			(390)			(143)
CRE		(316)			(166)			(13)
Commercial construction		—			(5)			(1)
Residential mortgage		(3)			(10)			(9)
Home equity		(9)			(10)			(13)
Indirect auto		(591)			(531)			(411)
Other consumer		(606)			(477)			(381)
Student		—			(108)			(22)
Credit card		(296)			(223)			(176)
Total charge-offs		(2,216)			(1,920)			(1,169)
Recoveries:
Commercial and industrial		87			70			87
CRE		34			3			8
Commercial construction		2			3			5
Residential mortgage		6			6			16
Home equity		16			23			25
Indirect auto		120			107			91
Other consumer		110			78			79
Student		—			—			1
Credit card		38			35			34
Total recoveries		413			325			346
Net charge-offs		(1,803)			(1,595)			(823)
Other(2)		1			(70)			—
Balance, end of period		$	5,161			$	5,093		$	4,649
ACL:(1)
ALLL		4,857			4,798			4,377
RUFC		304			295			272
Total ACL		$	5,161			$	5,093		$	4,649

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

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

Net charge-offs during 2024 totaled $1.8 billion, or 0.59% as a percentage of average loans, and were up nine basis points compared to the prior year, primarily driven by higher charge-offs in the CRE, other consumer, credit card, and indirect auto portfolios, partially offset by the sale of the student loan portfolio in the prior year.

The allowance for credit losses was $5.2 billion and includes $4.9 billion for the allowance for loan and lease losses and $304 million for the reserve for unfunded commitments. The ALLL ratio was 1.59%, compared to 1.54% at December 31, 2023. The increase in the ALLL ratio primarily reflects increases in reserves related to the CRE, commercial construction, and certain consumer non-real estate portfolios, as well as declines in commercial and industrial balances. The ALLL covered nonperforming loans and leases held for investment 3.4x compared to 3.5x at December 31, 2023. At December 31, 2024, the ALLL was 2.7x annualized net charge-offs, compared to 3.0x at December 31, 2023.

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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 27: Allocation of ALLL by Category
	December 31, 2024		December 31, 2023
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,284			26.4	%		50.7	%		$	1,404			29.4	%		51.6	%
CRE	643			13.2			6.6			616			12.8			7.2
Commercial construction	257			5.3			2.8			174			3.6			2.1
Residential mortgage	204			4.2			18.1			298			6.2			17.8
Home equity	89			1.8			3.1			89			1.9			3.2
Indirect auto	955			19.7			7.5			942			19.6			7.3
Other consumer	994			20.5			9.6			890			18.5			9.2
Credit card	431			8.9			1.6			385			8.0			1.6
Total ALLL	4,857			100.0	%		100.0	%		4,798			100.0	%		100.0	%
RUFC	304							295
Total ACL	$	5,161							$	5,093

Other Assets

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

Table 28: Other Assets as of Period End
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
Tax credit and other private equity investments	$	9,303			$	7,898
Bank-owned life insurance	7,801			7,716
Prepaid pension assets	7,238			6,563
Accrued income	2,069			2,085
DTAs, net	1,945			3,037
Accounts receivable	1,904			997
Leased assets and related assets	1,352			1,647
Prepaid expenses	1,061			1,083
ROU assets	1,015			1,057
Derivative assets	966			951
FHLB stock	965			1,198
Other	1,513			765
Total other assets	$	37,132			$	34,997

68 Truist Financial Corporation

Funding Activities

Deposits are the primary source of funds for the Company’s lending and investing activities. Scheduled payments and maturities from portfolios of loans and investment securities also provide a stable source of liquidity. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed funds, as well as long-term debt issued through the capital markets, all provide supplemental liquidity sources. Funding activities are monitored and governed through Truist’s overall ALM process under the governance and oversight of the ALCO, which is further discussed in the “Market Risk” section in MD&A. The following section provides a brief description of the various sources of funds.

Deposits

The following table presents a summary of deposits:

Table 29: Deposits as of Period End
(Dollars in millions)	Dec 31, 2024			Dec 31, 2023
Noninterest-bearing deposits		$	107,451			$	111,624
Interest checking		109,042			104,757
Money market and savings		137,307			135,923
Time deposits		36,724			43,561
Total deposits		$	390,524			$	395,865

Deposits totaled $390.5 billion at December 31, 2024, a decrease of $5.3 billion from December 31, 2023. Brokered deposits were $28.1 billion at December 31, 2024 compared to $31.3 billion at December 31, 2023.

Approximately 60% of deposits are insured or collateralized at December 31, 2024, compared to 62% at December 31, 2023. Truist deposit accounts are typically based on long-term relationships that include multiple products and services. The amount of deposits above the FDIC’s limit of $250,000 was $179.1 billion and $175.1 billion as of December 31, 2024 and 2023, respectively, calculated using the same methodology as the Call Report for Truist Bank.

The following table summarizes the maturities of time deposit accounts above $250,000:

Table 30: Scheduled Maturities of Time Deposits $250,000 and Greater
December 31, 2024 (Dollars in millions)
Three months or less	$	4,621
Over three through six months	3,122
Over six through twelve months	2,182
Over twelve months	116
Total	$	10,041

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The following table presents average deposits:

Table 31: Average Deposits
	Three Months Ended
(Dollars in millions)	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024	Dec 31, 2023
Noninterest-bearing deposits	$	107,968			$	106,080		$	107,634	$	108,888	$	114,555
Interest checking	107,075			103,899			103,894		103,537	101,722
Money market and savings	138,242			136,639			135,264		134,696	137,464
Time deposits	36,757			37,726			41,250		41,937	41,592
Total average deposits	$	390,042			$	384,344		$	388,042	$	389,058	$	395,333

Average deposits for the fourth quarter of 2024 were $390.0 billion, an increase of $5.7 billion, or 1.5%, compared to the prior quarter.

Average noninterest-bearing deposits increased 1.8% compared to the prior quarter and represented 27.7% of total deposits for the fourth quarter of 2024 compared to 27.6% for the third quarter of 2024. Average interest checking increased 3.1%. Average money market and savings accounts increased 1.2%. Average time deposits decreased 2.6%.

Borrowings

The types of short-term borrowings that have been, or may be, used by the Company include Federal funds purchased, securities sold under repurchase agreements, master notes, commercial paper, short-term bank notes, and short-term FHLB advances. Short-term borrowings fluctuate based on the Company’s funding needs. While deposits remain the primary source for funding loan originations, management uses short-term borrowings as a supplementary funding source for loan growth and other balance sheet management purposes. The following table summarizes certain information for the past three years with respect to short-term borrowings excluding trading liabilities, hedges, and collateral in excess of derivative exposure:

Table 32: Short-Term Borrowings
	As Of / For The Year Ended December 31,
(Dollars in millions)	2024		2023		2022
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end during the year	$	9,675			$	4,120			$	6,033
Balance outstanding at end of year	9,675			2,427			2,128
Average outstanding during the year	2,947			2,472			2,670
Average interest rate during the year	5.13	%		5.18	%		1.33	%
Average interest rate at end of year	4.42			5.39			4.36
Federal funds purchased and short-term borrowed funds:
Maximum outstanding at any month-end during the year	$	28,218			$	26,453			$	22,324
Balance outstanding at end of year	19,530			22,401			19,340
Average outstanding during the year	21,552			22,007			10,135
Average interest rate during the year	5.39	%		5.26	%		2.79	%
Average interest rate at end of year	4.04			5.15			4.38

At December 31, 2024, short-term borrowings totaled $29.2 billion, an increase of $4.4 billion compared to December 31, 2023. Average short-term borrowings were $24.5 billion for the years ended December 31, 2024 and 2023, representing 5.5% and 5.2% of total funding, respectively.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by the Parent Company and Truist Bank. Long-term debt totaled $35.0 billion at December 31, 2024, a decrease of $4.0 billion compared to December 31, 2023. During the year ended December 31, 2024, the Company had:

•Net redemptions of $1.8 billion of floating rate FHLB advances.

•Maturities and redemptions of $6.9 billion of senior notes.

•Issuances of $4.5 billion of fixed-to-floating rate senior notes with interest rates between 5.15% and 5.71% due from January 24, 2030 to January 24, 2035.

70 Truist Financial Corporation

Shareholders’ Equity

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

Table 33: Book Value per Common Share
(Dollars in millions, except per share data, shares in thousands)	Dec 31, 2024		Dec 31, 2023
Common equity per common share	$	43.90			$	39.31
Non-GAAP capital measure:(1)
Tangible common equity per common share	$	30.01			$	21.83
Calculation of tangible common equity:(1)
Total shareholders’ equity	$	63,679			$	59,253
Less:
Preferred stock	5,907			6,673
Noncontrolling interests	—			152
Goodwill and intangible assets, net of deferred taxes	18,274			23,306
Tangible common equity	$	39,498			$	29,122
Common shares outstanding at end of period	1,315,936			1,333,743

(1)Tangible common equity is a non-GAAP measure that excludes the impact of intangible assets, net of deferred taxes. This measure is useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses this measure to assess balance sheet risk and shareholder value.

Total shareholders’ equity was $63.7 billion at December 31, 2024, an increase of $4.4 billion from December 31, 2023. This increase includes $4.8 billion in net income and $4.3 billion in OCI, partially offset by $3.1 billion in common and preferred dividends,$1.0 billion in common share repurchases, and $750 million for the redemption of series L preferred stock. For 2024, the dividend payout ratio was 62% and the total payout ratio was 85%.Truist’s book value per common share at December 31, 2024 was $43.90, compared to $39.31 at December 31, 2023. Truist’s TBVPS of $30.01 at December 31, 2024, increased 37% compared to December 31, 2023.

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Risk Management

Truist seeks to maintain 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. A key objective of the Company’s risk management framework is to promote the execution of strategic goals and objectives in alignment with its risk appetite.

Truist has developed a risk management taxonomy to provide for the identification and classification of risk elements at Truist. The objective of the risk management taxonomy is to define enterprise-wide categorization for elements used in risk management activities, establish consistently applied language, and enable data analysis, aggregation, and reporting.

Truist is committed to fostering a culture that supports the 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 must be evaluated and prioritized to identify those that present attractive risk-adjusted returns, while preserving asset value and capital.

Truist’s risk appetite is defined as the level of risk exposure Truist is willing to assume to realize its purpose, mission, and values, as well as achieve its strategic objectives, deliver shareholder returns, and maintain the safety and soundness of Truist. Truist’s RMO provides independent oversight and guidance for risk-taking across the enterprise. In keeping with the belief that consistent values drive long-term behaviors, Truist’s RMO has established four key behaviors all teammates are expected to practice daily – regardless of role:

•Awareness: demonstrate an appropriate understanding of enterprise and business unit risks and the controls required to mitigate them. Complete required risk and compliance training within deadlines. Comply with risk related applicable Truist policies.

•Identification: proactively recognize business concerns, issues, risks, or emerging risks as they arise in day-to-day activities.

•Escalation: speak up, report, and elevate concerns, issues, and risks as soon as possible to appropriate parties.

•Mitigation: consistently execute risk related applicable procedures and processes as designed for day-to-day activities. Maintain and execute effective controls to manage risk within risk appetite. As applicable, complete successful and timely remediation of assigned issues.

The BRC assists the Board in its oversight of the Company’s risk management function. The BRC is responsible for approving and periodically reviewing the Company’s risk management framework and risk management policies as well as monitoring the Company’s risk profile, approving risk appetite statements, and providing input to management regarding Truist’s risk appetite and risk profile.

The RMO is led by the CRO and is responsible for overseeing the identification, measurement, monitoring, management, and reporting of risk. The CRO has direct access to the Board to communicate any risk issues (current or emerging) as well as the performance of the risk management activities throughout the enterprise.

The risk management framework is supported by a three-lines-of-defense structure with unique roles and responsibilities for executing risk management activities, maintaining independent oversight, and providing independent assurance. The 1st line of defense (1LOD) includes the business units which originate and own the risk and GCO, which is described below. The 2nd line of defense (2LOD) is the independent risk management function provided by the RMO. The 3rd line of defense (3LOD) is the independent assurance function provided by Truist Audit Services.

The GCO standardizes first-line risk execution and ownership across the Company in partnership with the business units and enterprise functions. As part of the first-line of defense, the GCO provides risk advice and oversight, issues management, testing, reporting, and business continuity expertise to first-line execution efforts. The GCO coordinates closely with the RMO in executing these responsibilities.

72 Truist Financial Corporation

•Level I committees: Board committees established by the Board to assist in its oversight of the Company. Level I committees are subject to governance directly by the Board, the respective Board committee charters, the bylaws of Truist, and the Truist corporate governance guidelines.

•Level II committees: appointed by a Level I committee with a direct reporting relationship and with the annual review and approval of its charter by the appointing Level I committee.

•Level III committees: appointed by a Level I, II, or III committee with a direct reporting relationship with, and the annual review and approval of its charter by, the appointing “parent” Level I, II, or III committee.

The ERC serves as the enterprise-wide risk governance body authorized by the BRC with responsibility for broad strategic oversight of all risk types and establishing an integrated view of risks across Truist at the enterprise level. The ERC is responsible for maintaining a risk management framework and monitoring its adoption and execution across the enterprise. The ERC is chaired by the CRO and its membership includes the CEO, CFO, Chief Audit Officer, and other designated members of Truist management.

Principal types of inherent risk include market, credit, liquidity, technology, compliance, strategic, reputational, and operational risks. The following is a discussion of these risks.

Market Risk

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 of instruments held 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); changing rate relationships among different yield curves affecting bank activities (basis risk); changing rate relationships across the spectrum of maturities (yield curve risk); and interest-related options inherently embedded in bank products (options risk).

Interest Rate Market Risk

As a financial institution, Truist is exposed to interest rate risk from assets, liabilities, and off-balance sheet positions. Truist primarily monitors this risk through two measurement types, (i) NII at risk and (ii) economic value of equity. Truist manages this risk with securities, derivatives, and broader asset liability management activities. Truist uses derivatives to hedge interest income variability of floating rate loans and to hedge valuation changes of long-term debt and investment securities.

IRR measurement is reported monthly through the ALCO. Monthly IRR reporting includes exposure and historical trends relative to risk limit scenarios, impacts to a wide range of rate scenarios, and sensitivity tests of key assumptions. IRR reporting is provided to the BRC quarterly.

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IRR measurement is influenced by data, assumptions, and models. Due to their high sensitivity to market rates, mortgage (loan and security) prepayments leverage an industry model that results in varying prepayment speeds across rate scenarios. Prepayments for non-mortgage loans leverage a mix of dynamic models (varying results based on market rates) and static prepayment assumptions based on historical experience. Prior to December 2024, interest-bearing-deposit rate paid was projected to move at a constant ratio (deposit beta) of market rates, primarily the Federal Funds Rate, aligned to historical through the cycle experience, and deposit balances in alternate scenarios were aligned to the Truist baseline scenario. In December 2024, we enhanced our deposit methodology to more dynamically incorporate client deposit balance levels, the mix across product types, and deposit rate paid across alternate rate scenarios based on modeled changes in customer and bank behavior.

NII at risk measures the change in NII under alternate interest rate scenarios relative to Truist’s baseline scenario, which incorporates Truist’s current balance sheet and off-balance sheet hedges as well as expectations for new business over the forecast horizon. Truist’s baseline scenario relies on assumptions including expectations of the economy and interest rates – which are influenced by market conditions, new business volume, pricing, and customer behavior. In measuring NII at risk, Truist assumes that changes in key factors, such as prepayments and deposit pricing (betas), largely move in line with those it has experienced in prior rate cycles. However, future behavior of key factors may vary from Truist’s assumptions. NII at risk measurement assumes, when applicable, that U.S. interest rates floor at zero and Truist does not take any balance sheet or hedging actions in response to the rate scenarios.

The change in simulation analysis results from December 31, 2023 to December 31, 2024 in the table below was primarily due to the aforementioned enhanced deposit methodology. The use of dynamic deposit balance models results in rotation to higher cost funding products (e.g., CDs) when market rates increase and to lower cost funding products (e.g., non-maturity deposits) when market rates decrease. The use of dynamic rate paid models results in varying deposit betas based on the timing and conditions within market rate cycles but generally result in lower betas in the simulation analysis results than the prior methodology due to beta lag effects relative to changes in market rates. These updates were made to better reflect expected deposit behavior and Truist’s NII rate sensitivity to changes in market rates. Together, the incorporation of dynamic deposit balances and dynamic rate paid resulted in adding NII in up rate scenarios and reducing NII in down rate scenarios.

Table 34: Interest Sensitivity Simulation Analysis
	Dec 31, 2024		Dec 31, 2023
Up 200bps gradual change in interest rates	1.1	%		(1.5)	%
Up 50bps instantaneous change in interest rates	0.6			(0.4)
Down 50bps instantaneous change in interest rates	(0.8)			(0.1)
Down 200bps gradual change in interest rates	(2.1)			(0.3)

Truist performs and monitors sensitivity tests of key assumptions used in NII risk including:

•Asset prepayment speeds

•New loan volume pricing spreads

•Interest-bearing deposit betas

•Non-interest-bearing demand deposit balance runoff, replaced by market funding

•Asset prepayment speeds

•Mortgage spreads (mortgage loan and security valuations)

•Interest-bearing deposit beta

•Deposit runoff / decay

The identification and testing of key assumptions are influenced by market conditions and management views of key risks. The results of key assumption sensitivity tests are reported to ALCO and BRC at least quarterly. Key assumptions and their associated sensitivity tests are reviewed with ALCO and BRC at least annually.

74 Truist Financial Corporation

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 multi-faceted 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.

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

Covered Trading Positions

Valuation policies and methodologies exist for all trading positions. Additionally, these positions are subject to independent price verification. See “Note 19. Derivative Financial Instruments,” “Note 18. Fair Value Disclosures,” and “Critical Accounting Policies” herein for discussion of valuation policies and methodologies.

Securitizations

As of December 31, 2024, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule, which were non-agency asset backed securities positions, was $100 million. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics including deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s 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 December 31, 2024.

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 manage market risk include stress testing, scenario analysis, and stop loss limits.

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Table 35: VaR-based Measures
	Year Ended December 31,
		2024	2023
(Dollars in millions)				10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum				$	28			$	12			$	30	$	14
Average				21			7			17			7
Minimum				12			4			10			4
Period-end				16			6			23			11
VaR by Risk Class:
Interest Rate Risk						6					5
Credit Spread Risk						6					2
Equity Price Risk						6					5
Foreign Exchange Risk						1					1
Portfolio Diversification						(12)					(2)
Period-end						6					11

Stressed VaR-based measures

Table 36: Stressed VaR-based Measures - 10 Day Holding Period
	Year Ended December 31,
(Dollars in millions)		2024		2023
Maximum		$	234			$	164
Average		145			76
Minimum		69			25
Period-end		105			79

Compared to the same period of the prior year, Stressed VaR measures were higher, primarily due to higher market making inventory.

Specific Risk Measures

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 December 31, 2024. 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.

76 Truist Financial Corporation

Model Risk Oversight

MRO is responsible for the independent model validation of all decision models, including trading market risk models. As part of ongoing monitoring efforts, the performance of all trading risk models is reviewed regularly to evaluate model performance with emerging developments in financial markets, assess evolving modeling approaches, and identify potential model enhancement.

Stress Testing

The Company uses a 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 risk factor sensitivities, historical repeats, and hypothetical scenarios with varying liquidity horizons of key risk factors. All trading positions within each applicable market risk category (i.e., interest rate risk, equity risk, foreign exchange rate risk, credit spread risk, and commodity price risk) are included in the Company’s stress testing framework. Management reviews stress testing scenarios and makes updates on an ongoing basis. 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.

Credit Risk

Credit risk is the risk to current or anticipated earnings or capital arising when a borrower, obligor, issuer, or counterparty does not meet its financial obligations to us. Credit risk is primarily incurred through lending activities in the Company’s WB and CSBB operating segments. A number of products expose the Company to credit risk, including loans and leases, lending commitments, derivatives, trading assets, and investment securities. Changes in credit quality can have a significant impact on the Company’s earnings and capital position.

Truist has established the following general practices to manage credit risk:

•limiting the amount of credit that individual lenders may extend to a borrower;

•establishing a process for credit approval accountability;

•careful initial underwriting and analysis of borrower, transaction, market, and collateral risks;

•ongoing servicing and monitoring of individual loans and lending relationships;

•maintaining collections and asset resolution teams;

•continuous monitoring of the portfolio, concentration and transactional limits, emerging risks, market dynamics and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market and other relevant conditions change.

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The following discussion describes the underwriting procedures and overall risk management of Truist’s lending function.

Underwriting Approach

The loan portfolio is a primary source of profitability and risk; therefore, proper loan underwriting is critical to Truist’s long-term financial success. Truist’s underwriting approach is designed to define acceptable combinations of specific risk-mitigating features that promote credit relationships that conform to Truist’s risk philosophy. Provided below is a summary of the most significant underwriting criteria used to evaluate new loans and loan renewals:

•Level of equity invested in the transaction - in general, borrowers are required to contribute or invest a portion of their own funds prior to any loan advances.

Refer to the “Lending Activities” section in MD&A for a discussion of each loan and lease portfolio.

Liquidity Risk

Technology Risk

Refer to Item 1C, “Cybersecurity” for a discussion regarding Truist’s cybersecurity risk management, strategy, and governance.

Data Analytics, AI, and Generative AI Risks

Truist recognizes the importance of maintaining accurate and reliable data and maintains a formal data risk management program that is designed to mitigate risks related to data fidelity. Through active data risk monitoring and accuracy testing, Truist seeks to provide reasonable assurance over data-related processes, risks, and controls, as well as the quality and retention of key data used for operational, strategic, regulatory, and compliance purposes. Management and the Board provide oversight of the data risk management program and receive regular updates from the RMO.

78 Truist Financial Corporation

Compliance Risk

Strategic Risk

Reputational Risk

Reputational risk is the risk to current or future earnings, capital and resilience arising from negative publicity or stakeholder opinion, whether real or perceived, regarding Truist’s business practices, products, services, transactions, or other activities undertaken by Truist, its representatives, or its partners that may adversely impair Truist’s brand and public confidence, relationship with clients, teammates, stakeholders, or communities. The Company monitors, identifies, and internally escalates potential reputational risk events and endeavors to mitigate such reputational risks in a timely manner. Truist seeks to provide transparent and accurate communication, both internally and externally, to respond to key stakeholders on issues or events that could give rise to potential reputational risk. Truist utilizes an established risk taxonomy that is used to help identify, measure, and monitor reputational risk that enables clear transparently communication to stakeholders on the level of potential risk faced by the Company which in turn allows for effective management of risk to acceptable levels.

Truist is committed to operating in a manner that reflects the Company’s stated purpose, mission, and values and seeks to protect its reputation, public confidence, and resilience by identifying and evaluating associated risks that conflict with the expectations of the Company’s internal and external stakeholders, including clients, teammates, investors, regulators, and communities.

Operational Risk

Operational risk is the risk of loss associated with inadequate or failed internal processes, people, systems, or from external events. It includes legal risk, which is the risk of loss arising from defective transactions, litigation or claims made, or the failure to adequately protect company-owned assets. An operational loss occurs when an event results in a loss or reserve originating from operational risk.

Model Risk

Model risk is the risk to current or anticipated earnings or capital from decisions based on incorrect or misused model outputs. Truist uses models for many purposes, including the valuation of financial positions, estimation of credit losses, and the measurement of risk. Valuation models are used to value certain financial instruments for which quoted prices may not be readily available. Valuation models are also used as inputs for VaR, the estimation of VaR itself, regulatory capital, stress testing, and the ACL. Models are owned by the applicable business units, which are responsible for the development, implementation, and use of their models. Oversight of these functions is performed by the MRO, which is a component of the RMO. Once models have been approved by MRO, model owners are responsible for the maintenance of an appropriate operating environment and must monitor and evaluate the performance of the models on a recurring basis. Models are updated in response to changes in portfolio composition, industry and economic conditions, technological capabilities, and other developments.

MRO seeks to manage model risk through a suite of model governance and model validation activities. The risk of each model is assessed and classified into various risk tiers. Additionally, MRO maintains an enterprise-wide model inventory containing relevant model information. Regarding model validation, MRO utilizes internal validation analysts and managers with skill sets in predictive modeling to perform detailed reviews of model development, implementation, and conceptual soundness. On certain occasions, the MRO will also engage external parties to assist with validation efforts. Once in a production environment, MRO assesses a model’s performance on a periodic basis through ongoing monitoring reviews. MRO tracks issues that have been identified during model validation or through ongoing monitoring and engages with model owners to drive timely remediation. MRO gauges model risk utilizing a collection of key risk indicators, which are periodically reported to relevant committees, including the Model Risk Management Committee and the ERC. MRO will also present model risk topics to the BRC as necessary.

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Liquidity

Truist has a liquidity risk management process designed to identify, measure, and monitor key liquidity risks to assess whether Truist is operating within its liquidity risk appetite. The liquidity risk appetite is outlined using a qualitative statement and more granular detailed risk appetite statements aligned to Truist’s risk taxonomy; risk statements form the basis for aligning risk appetite with risk management goals and strategy. Using the risk appetite statements, key risk indicators are developed that represent quantitative metrics which measure current risk exposure relative to Truist’s risk appetite, which help the Board and management monitor liquidity risk taking activity. Truist’s key risk indicators are designed to support the following objectives:

•maintain (i) a diversified, but customer deposit centric, funding base, (ii) a level of liquid, readily monetized assets sufficient to satisfy business as usual and stressed cash flow needs across multiple liquidity horizons, and (iii) an appropriate level of contingent funding to meet any unexpected needs;

•limit concentration risk from individual, correlated counterparties, and funding concentrations in tenors that may negatively impact Truist from an unforeseen idiosyncratic or market event; and

•maintain sufficient liquidity in the holding company to serve as a source of strength to its subsidiaries.

Internal Liquidity Stress Testing

Truist maintains a liquidity buffer of cash on hand and highly liquid unencumbered securities that is designed to meet the projected 30-day net stressed cash-flow needs. Truist’s liquidity buffer is substantially the same in composition to what qualifies as HQLA under the LCR Rule. Truist periodically monetizes a representative sample of the liquidity buffer to assess operational readiness through available monetization channels.

Contingency Funding Plan

Truist has a contingency funding plan designed to address 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. On a quarterly basis, Truist conducts testing of market access for alternative sources of funds (e.g. discount window, standing repo facility, etc.) to test operational readiness. On an periodic basis, Truist conducts a table-top test of the Contingency Funding Plan to assess reliability of the plan during liquidity stress events and to simulate the operational elements of the plan such as communications, coordination, and decision-making.

LCR, NSFR, and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient within the parameters of the rule to meet their 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 $89.6 billion and Truist’s average LCR was 109% for the three months ended December 31, 2024.

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Sources of Funds

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 37: Selected Liquidity Sources
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
Unused borrowing capacity:
FRB	$	72,040			$	55,252
FHLB	31,411			24,712
Available investment securities (at fair value)	68,212			77,029
Available secured borrowing capacity	171,663			156,993
Eligible cash at the FRB	33,717			25,085
Total	$	205,380			$	182,078

At December 31, 2024, Truist Bank’s available secured borrowing capacity represented approximately 4.4 times the amount of wholesale funding maturities in one-year or less.

As of December 31, 2024, the Company had $1.7 billion in obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the total amount of obligations based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in determining the total amount of obligations. See “Note 9. Other Assets and Liabilities,” “Note 11. Borrowings,” and “Note 16. Commitments and Contingencies” for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

Parent Company

The Parent Company serves as the primary source of capital for its 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, payments on and, from time-to-time, potential repurchases or redemptions of a portion of an outstanding tranche of the long-term debt of the Parent Company (as may be permitted by the terms of each respective series), and the redemption of preferred stock. See “Note 22. Parent Company Financial Information” 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 manages cash levels at the Parent Company to exceed a minimum of 12 months of projected 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 December 31, 2024, the Parent Company held cash on hand to meet these requirements.

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” 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.

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The following table presents the credit ratings and outlooks of the Parent Company and Truist Bank as of December 31, 2024:

Table 38: Credit Ratings of Truist Financial Corporation and Truist Bank
	Moody’s	S&P	Fitch	DBRS Morningstar
Truist Financial Corporation:
Issuer	Baa1	A- / A-2	A / F1	AAL / R-1M
Senior unsecured	Baa1	A-	A-	AAL
Subordinated	Baa1	BBB+	BBB+	AH
Preferred stock	Baa3(hyb)	BBB-	BBB-	AL
Truist Bank:
Issuer	A3	A / A-1	A / F1	AA / R-1H
Senior unsecured	A3	A	A	AA
Deposits	A1/P-1	NA	A+ / F1	AA
Subordinated	(P) A3	A-	A-	AAL
Ratings outlook:
Credit trend	Stable	Stable	Stable	Stable

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, for the Parent Company to remain a source of strength for the Parent Company’s 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.

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. Truist also 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 has implemented internal stress capital ratio minimums that serve as limits which are measured under internally-developed stress testing scenarios to evaluate whether capital ratios calculated under hypothetical stress, and after the effect of alternative capital actions, are likely to remain above internal stressed minimums. Breaches of internal capital limits or projected breaches of internal stress capital ratio minimums under hypothetical stress result in the activation of Truist’s capital contingency plan.

Table 39: Capital Requirements
	Minimum Capital		Well-Capitalized		Minimum Capital Plus Stress Capital Buffer(1)
		Truist		Truist Bank
CET1	4.5	%		NA		6.5	%		7.3	%
Tier 1 capital	6.0			6.0	%		8.0			8.8
Total capital	8.0			10.0			10.0			10.8
Leverage ratio	4.0			NA		5.0			NA
Supplementary leverage ratio	3.0			NA		NA		NA

(1)Reflects a SCB requirement of 2.8% applicable to Truist as of December 31, 2024. Truist’s SCB requirement, received in the 2024 CCAR process, is effective from October 1, 2024 to September 30, 2025.

Truist completed the 2024 CCAR process and received a SCB requirement of 2.8% for the period October 1, 2024 to September 30, 2025, down 10 basis points from the SCB requirement for the period October 1, 2023 to September 30, 2024.

Management intends to maintain capital at Truist Bank at levels that exceed the minimum capital plus CCB. This will also result in Truist Bank being “well-capitalized” for regulatory purposes.

Management’s capital deployment plan in order of preference is to focus on (i) organic growth, (ii) dividends, (iii) strategic opportunities and acquisitions, and (iv) share repurchases if excess capital is available.

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

Table 40: Capital Ratios - Truist Bank
	Dec 31, 2024		Dec 31, 2023
CET1	12.6	%		11.7	%
Tier 1 capital	12.6			11.7
Total capital	14.3			13.3
Leverage ratio	10.1			9.2
Supplementary leverage ratio	8.5			7.9

The Parent Company’s capital ratios are presented in the following table:

Table 41: Capital Ratios - Truist Financial Corporation
(Dollars in millions)	Dec 31, 2024		Dec 31, 2023
Risk-based:
CET1	11.5	%		10.1	%
Tier 1 capital	12.9			11.6
Total capital	15.0			13.7
Leverage ratio	10.5			9.3
Supplementary leverage ratio	8.8			7.9
Risk-weighted assets	$	418,337			$	423,705

Truist’s capital level at December 31, 2024 remains strong compared to the regulatory levels for well-capitalized banks. Truist’s CET1 ratio was 11.5% as of December 31, 2024, up 140 basis points since December 31, 2023 from the sale of TIH and organic capital generation, partially offset by common dividends, share repurchases, and the impact of the CECL phase-in under U.S. banking agencies rules. The remaining CECL phase-in will be amortized in the first quarter of 2025.

Truist paid $2.8 billion in common stock dividends, or $2.08 per share, during 2024 and for 2023. Truist repurchased $1.0 billion in common stock for 2024 and had no share repurchases for 2023. In early 2025, Truist declared common dividends of $0.52 per share for the first quarter of 2025.

Capital Contingency Plan

In the event of a realized or potential capital shortfall, Truist has a capital contingency plan that is designed to facilitate improvement of the Company’s capital position through the execution of specific contingency actions which either increase capital, decrease risk-weighted assets, or both. The plan provides a framework designed to monitor for the occurrence of these events by establishing mechanisms to detect capital contraction, including market and economic stress that could adversely impact the Company’s capital position. The plan also establishes governance protocols for activation or deactivation and decision making, list capital contingency options and associated key information, and addresses the responsibilities of key departments.

Reclassifications

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. The 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. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, Truist’s significant accounting policies and effects of new accounting pronouncements are discussed in detail in “Note 1. Basis of Presentation.”

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ACL

Truist’s ACL represents management’s best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgement. The ACL estimation process includes both quantitatively calculated components as well as qualitative components. Quantitative models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. Certain loans or leases that do not have similar risk characteristics are individually evaluated when establishing an allowance for expected credit losses. The macroeconomic forecast data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period the models gradually revert to long-term historical loss conditions over a one-year period. As a means of addressing uncertainty related to future economic conditions, the quantitative allowance components include an adjustment that reflects model outputs calculated using a range of potential future economic conditions. Expected losses are estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or to capture the losses expected at the balance sheet date or prior to January 1, 2023 it was reasonably expected that the loan will be modified as a TDR.

The qualitative components of the ACL incorporate management’s judgment in determining qualitative adjustments where model outputs are inconsistent with management’s expectations with respect to expected credit losses. The qualitative components are used to adjust for limitations in modeled results related to current economic conditions, and considerations with respect to the impact of current and expected events or risks, the outcomes of which are uncertain and may not be completely considered by quantitative models.

Management considers a range of macroeconomic forecast data in connection with the allowance estimation process. Under the range of scenarios considered as of December 31, 2024, use of the Company’s pessimistic scenario would have resulted in an increase to the modeled allowance results of approximately $2.2 billion. This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

The methodology used to determine an estimate for the RUFC is similar to that used to determine the funded component of the ALLL and is measured over the period there is a contractual obligation to extend credit that is not unconditionally cancellable. The RUFC is adjusted for factors specific to binding commitments, including the probability of funding and exposure at default. A detailed discussion of the methodology used in determining the ACL is included in “Note 1. Basis of Presentation.”

Fair Value of Financial Instruments

Securities

Truist generally utilizes a third-party pricing service in determining the fair value of its AFS investment securities, whereas trading securities are priced internally. Fair value measurements for investment securities are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Management performs procedures to evaluate the fair values provided by the third-party service provider. These procedures, which are performed independent of the responsible business unit, include comparison of pricing information received from the third-party pricing service to other third-party pricing sources, review of additional information provided by the third-party pricing service and other third-party sources for selected securities and back-testing to compare the price realized on security sales to the daily pricing information received from the third-party pricing service. The Enterprise Valuation Committee provides oversight to Truist’s enterprise-wide IPV function, which is responsible for the comparison of pricing information received from the third-party pricing service or internally to other third-party pricing sources, approving tolerance limits determined by IPV for price comparison exceptions, reviewing significant changes to pricing and valuation policies and reviewing and approving the pricing decisions made on any illiquid and hard-to-price securities. When market observable data is not available, which generally occurs due to the lack of liquidity or inactive markets for certain securities, the valuation of the security is subjective and may involve substantial judgment by management to reflect unobservable input assumptions.

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MSRs

Truist’s primary class of MSRs for which it separately manages the economic risks relates to residential mortgages. Residential MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available. Accordingly, Truist estimates the fair value of residential MSRs using a stochastic OAS valuation model to project residential MSR cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The OAS model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Truist reassesses and periodically adjusts the underlying inputs and assumptions in the OAS model to reflect market conditions and assumptions that a market participant would consider in valuing the residential MSR asset.

Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, observable market data. Truist’s enterprise-wide IPV function also compares market data, when available, and information received from certain third-party pricing sources, to MSR fair value estimates, approving tolerance limits determined by IPV for price comparison exceptions, and reviewing significant changes to pricing and valuation policies. Due to the nature of the valuation inputs, residential MSRs are classified within Level 3 of the valuation hierarchy. The value of residential MSRs is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining interest rates, the value of MSRs declines due to increasing prepayments attributable to increased mortgage-refinance activity. Conversely, during periods of rising interest rates, the value of residential MSRs generally increases due to reduced refinance activity. Truist typically hedges against market value changes in the residential MSRs. Refer to “Note 8. Loan Servicing” for quantitative disclosures reflecting the effect that changes in management’s assumptions would have on the fair value of residential MSRs.

Trading Assets and Liabilities

Fair value measurements for trading securities and securities sold short are derived from observable market-based information including overall market conditions, recent trades, comparable securities, broker quotes and FINRA’s Trade Reporting and Compliance Engine data when determining the value of a position. Security prices are also validated through actual cash settlement upon the sale of a security. When observable market prices are not available, the Company uses judgment and estimates fair value using internal models that reflect assumptions consistent with those that would be used by a market participant in estimating fair value. Refer to “Note 18. Fair Value Disclosures” for further information on the Company’s trading securities and securities sold short.

Truist elects to measure certain loans at fair value for financial reporting where fair value aligns with the underlying business purpose. Trading loans include loans held in connection with the Company’s trading business primarily consisting of commercial and corporate leveraged loans and loans made or acquired in connection with the Company’s TRS business. Other trading liabilities include loans sold, but not yet purchased primarily consisting of commercial and corporate leveraged loans. Trading loans and loans sold, but not yet purchased are valued primarily using quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active by a third-party pricing service. Refer to “Note 18. Fair Value Disclosures” for further information on the Company’s trading loans and other trading liabilities. Refer to “Note 16. Commitments and Contingencies,” and “Note 19. Derivative Financial Instruments,” for further discussion of the Company’s TRS business.

Derivative Assets and Liabilities

Truist uses derivatives to manage various financial risks and in a dealer capacity to facilitate client transactions. Truist mitigates credit risk by subjecting counterparties to credit reviews and approvals similar to those used in making loans and other extensions of credit. In addition, certain counterparties are required to provide collateral to Truist when their unsecured loss positions exceed certain negotiated limits. The fair values of derivative financial instruments are determined based on quoted market prices and internal pricing models that use market observable data for interest rates, foreign exchange, equity, and credit. The fair value of interest rate lock commitments, which are related to mortgage loan commitments, is based on quoted market prices adjusted for commitments that Truist does not expect to fund and includes the value attributable to the net servicing fee. Refer to “Note 19. Derivative Financial Instruments” for further information on the Company’s derivatives.

Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets acquired and liabilities assumed in business combinations are recorded at their fair values. This often involves estimates based on third-party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of definite-lived intangible assets is based upon the estimated economic benefits to be received, which is also subjective. Business combinations also typically result in goodwill, which is subject to ongoing periodic impairment tests based on the fair values of the reporting units to which the acquired goodwill relates. Refer to “Note 1. Basis of Presentation” for a description of the impairment testing process.

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Effective January 1, 2024, several business activities were realigned reflecting updates to the Company’s operating structure. First, the CB&W segment was renamed CSBB and the C&CB segment was renamed WB. Second, the Wealth business was realigned into the WB segment from the CSBB segment, representing a separate reporting unit in that segment. Third, the small business banking client segmentation was realigned into the CSBB segment from the WB segment. Further, TIH was the principal legal entity of the IH segment. As the operations of TIH were included in discontinued operations prior to the sale of TIH, the Company no longer presents the IH segment as one of its reportable segments.

Following the realignment of these business activities, the Company’s three reporting units with goodwill balances are CSBB, WB excluding Wealth, and Wealth. In conjunction with these realignments, goodwill of $1.7 billion was realigned to Wealth, residing within the WB segment, from CSBB based on the relative fair value of CSBB and Wealth, and goodwill of $220 million was realigned to CSBB from the WB reporting unit based on the relative fair value of the WB reporting unit and the realigned small business banking client segmentation. In addition, the Company completed an assessment of any potential goodwill impairment for all impacted reporting units immediately prior and subsequent to the realignments and determined that no impairment existed. The quantitative valuation of the WB reporting unit performed in conjunction with these goodwill realignments indicated that as of January 1, 2024, the fair value of the WB reporting unit exceeded its carrying value by less than 10%, indicating at the time of the realignments that the goodwill of the WB reporting unit may be at risk of impairment.

Management performs a goodwill impairment analysis on an annual basis 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. For its annual impairment review, Truist performed a quantitative test of each of its reporting units. The quantitative impairment test estimates the fair value of the reporting units using the income approach and a market-based approach, weighted 50% and 50%, respectively. The inputs and assumptions specific to each reporting unit are incorporated in the valuations, including projections of future cash flows, discount rates, and applicable valuation multiples based on the comparable public company information. The income approach utilizes a discounted cash flow analysis of multi-year financial forecasts 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 market-based 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 projection of net interest margin is the most significant input to the financial projections of the CSBB and WB reporting units, while noninterest income is the most significant input to the financial projections of the Wealth reporting unit. The long-term growth rate used in determining the terminal value of each reporting unit was 3% as of October 1, 2024, 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 CSBB, Wealth, and WB reporting units as of October 1, 2024 were 12.5%, 12.0%, and 10.5%, respectively.

Based on the results of the Company’s annual impairment analyses, the Company concluded that the fair values of the CSBB, WB and Wealth reporting units exceeded their respective carrying values; therefore, there was no goodwill impairment. However, for the WB reporting unit, the fair value of the reporting unit exceeded its carrying value by approximately 10%, indicating that the goodwill of the WB reporting unit may remain at risk of impairment. Circumstances that could negatively impact the fair value for the WB reporting unit in the future include a sustained decrease in Truist’s stock price, a decline in industry peer multiples, an increase in the applicable discount rate, and deterioration in the reporting unit’s forecast.

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 valuation of the WB reporting unit as of October 1, 2024 indicated that if the discount rate were increased more than 100 basis points, with other cash flow assumptions unchanged, the reporting unit’s fair value would be less than its carrying value, indicating a goodwill impairment under the income approach. Ultimately, future potential changes in management’s 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.

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The Company monitored events and circumstances during the period from October 1, 2024 to December 31, 2024, 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 October 1, 2024 quantitative valuations, and the sensitivity of the October 1, 2024 quantitative results to changes in assumptions as of December 31, 2024. Based on these considerations, Truist 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 December 31, 2024.

Prior to the January 1, 2024 realignment of certain business activities described above, the Company also performed quantitative goodwill impairment analyses for its former CB&W and C&CB reporting units as of October 1, 2023. Based on the results of the prior year impairment analyses, the Company concluded as of October 1, 2023 that the carrying values of the former CB&W and C&CB reporting units exceeded their respective fair values, which resulted in a non-cash, non-tax-deductible goodwill impairment charge of $6.1 billion for the year ended December 31, 2023. This prior year goodwill impairment charge was primarily due to the continued impact of higher interest rates and discount rates on the former CB&W and C&CB reporting units, and a sustained decline in the banking industry share prices, including Truist’s through the October 1, 2023 date of the prior year quantitative analyses.

For additional goodwill information, refer to “Note 1. Basis of Presentation” and “Note 7. Goodwill and Other Intangible Assets.”

Income Taxes

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. The Company regularly evaluates the ability to realize DTAs, recognizing a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. Truist currently maintains a valuation allowance for certain state carryforwards. For additional income tax information, refer to “Note 1. Basis of Presentation” and “Note 14. Income Taxes.”

Pension and Postretirement Benefit Obligations

Truist offers various pension plans and postretirement benefit plans to teammates. Calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions, which are subject to management judgment and may differ significantly if different assumptions are used. The discount rate assumption used to measure the postretirement benefit obligations is set by reference to an AA Above Median corporate bond yield curve and the individual characteristics of the plans such as projected cash flow patterns and payment durations.

Management also considered the sensitivity that changes in the expected return on plan assets and the discount rate would have on pension expense. For the Company’s qualified plans, a decrease of 50 basis points in the discount rate would result in additional pension expense of approximately $20 million for 2025, while a decrease of 50 basis points in the expected return on plan assets would result in an increase of approximately $73 million in pension expense for 2025. This estimate reflects the sensitivity of certain factors considered in calculation of pension expense but does not consider all factors that could increase or decrease estimates calculated.

Refer to “Note 15. Benefit Plans” for disclosures related to the benefit plans.

Truist Financial Corporation 87

FY 2023 10-K MD&A

SEC filing source: 0000092230-24-000010.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2024-02-27. Report date: 2023-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors of this report.

Executive Overview

Underlying results were positive for 2023 despite economic uncertainty stemming from bank failures in the first half of 2023. Truist withstood the market stress by leaning on its strong core deposit base, ample liquidity, and diverse revenue streams across multiple businesses. Results for 2023 included several discrete items, including a non-cash goodwill impairment charge that has no impact on our regulatory capital ratios, liquidity, ability to pay the common dividend, or service our clients.

We grew the number of new consumer and business checking accounts, experienced another strong year of growth in our insurance business, gained share in capital markets, and deepened our relationships with clients through Integrated Relationship Management, Business Lifecycle Advisory, and digital channels.

We also committed nearly $2.1 billion to support more than 15,000 units of affordable housing through Truist Community Capital, which helped create more than 15,000 jobs, and serve more than 130,000 people in low- and moderate-income communities in 2023. Teammates impacted 5,300 organizations and causes through their charitable giving and more than 62,000 hours of volunteer service. In addition, we started a Small Business Community Heroes initiative which empowers our branch teammates to proactively connect via caring conversations with small business owners who work tirelessly to serve our neighbors, create jobs, build our communities, and help drive our economy.

In addition, we unveiled an organizational simplification and cost savings plan in September 2023 aimed at limiting expenses in 2024 and beyond and simplifying our organization to gain efficiencies that will improve the client experience. Our transformation is centered on improving efficiency as an organization and realigning certain aspects of our leadership and operating model within our operating segments to increase efficiency and drive revenue opportunities. We made strong progress on our plan in the second half of 2023 as evidenced by a reduction in our headcount and the consolidation of several key business lines.

We accomplished all of this in 2023, while also strengthening our balance sheet. We added 110 basis points of CET1 to finish the year with a CET1 ratio of 10.1% through a combination of organic capital generation and the minority stake sale in our insurance business, partially offset by the CECL phase in. Although we are committed to building capital, our balance sheet remains open to core clients as our primary capital priorities are supporting the financial needs of new and existing clients and the payment of our common dividend. Asset quality continues to normalize, but remains in-line relative to our expectations and allowance coverage ratios.

On October 2, 2023, Truist announced changes to its Board of Directors. On December 31, 2023, directors Kelly S. King, Nido R. Qubein, David M. Ratcliffe and Thomas N. Thompson retired 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. decided to conclude their service as directors effective as of December 31, 2023. The Board and Truist’s management express their deep appreciation to these directors for their dedicated service and many significant contributions to Truist.

Effective January 2024, several business activities were realigned within the segments. First, the CB&W segment was renamed Consumer and Small Business Banking and the C&CB segment was renamed Wholesale Banking. Second, the Wealth business was repositioned into a component of the Wholesale Banking segment from the CB&W segment. Third, certain small business banking functions were repositioned into a component of the Consumer and Small Business Banking segment from the C&CB segment.

Truist Financial Corporation 45

On February 20, 2024, the Company entered into an agreement to sell the remaining 80% stake of the common equity in TIH to an investor group led by Stone Point Capital LLC for a purchase price that implies an enterprise value for TIH of $15.5 billion, and is expected to result in cash proceeds to Truist of approximately $10.1 billion after-tax, reflecting certain closing adjustments for cash, debt and debt-like items, including the settlement of certain previously granted TIH awards, working capital, transaction expenses and an investor return amount associated with the originally sold 20% stake. The transaction improves Truist’s relative capital position and allows Truist to maintain strategic flexibility. The transaction is expected to close in the second quarter of 2024, subject to customary closing conditions and regulatory approvals. Upon closing, the transaction will result in a full deconsolidation of the TIH subsidiary from Truist, and an expected gain equal to the excess of after-tax cash proceeds over Truist’s approximate $5.4 billion investment in its TIH subsidiary.

Key Areas of Focus

Truist’s business is dynamic and complex. Consequently, management annually evaluates and, as necessary, adjusts the Company’s business strategy in the context of the current operating environment. During this process, management considers the current financial condition and performance of the Company and its expectations for future economic activity from both a national and local market perspective. Achieving key strategic objectives and long-term financial goals is subject to many uncertainties and challenges. In the opinion of management, the following are the key areas of focus most likely to impact Truist’s near to medium term performance:

•Completing our transformation into a simpler, more efficient, and client-centric organization with leading financial results;

•Leveraging our existing platforms and increasing our efficiencies to gain market share;

•Focusing on integrated relationship management to deepen relationships with core clients, improve client experiences, and deliver the bank as One Team;

•Digitizing the enterprise through our “T3 strategy” to create a world-class client experience and streamline, simplify, and automate processes and operations; and

•Building capital and maintaining strong risk controls and asset quality metrics.

In addition, certain challenges and unforeseen events could have a near term impact on Truist’s financial condition and results of operations. See the sections titled “Forward-Looking Statements” and “Risk Factors” for additional examples of such challenges.

Financial Results

Net loss to common shareholders totaled $1.5 billion, or $1.09 per share, for 2023, compared to net income available to common shareholders of $5.9 billion, or $4.43 per share, from the prior year.

•Results for 2023 included a non-cash goodwill impairment charge of $6.1 billion ($4.56 per share) which has no impact on our liquidity, regulatory capital ratios, or our ability to pay our common dividend and service our clients’ financial needs; the FDIC special assessment of $507 million ($387 million after-tax, or $0.29 per share); merger-related and restructuring charges of $375 million ($286 million after-tax, or $0.21 per share); and a discrete tax benefit of $204 million ($0.15 per share).

•Results for 2022 included merger-related and restructuring charges of $513 million ($393 million after-tax, or $0.29 per share); incremental operating expenses related to the Merger of $465 million ($356 million after-tax, or $0.27 per share); a gain on the redemption of noncontrolling equity interest of $74 million ($57 million after-tax, or $0.04 per share) related to the acquisition of certain merchant services relationships; net losses on the sales of securities of $71 million ($54 million after-tax, or $0.04 per share); and a gain on the early extinguishment of long-term debt of $39 million ($30 million after-tax, or $0.02 per share).

Table 8: Earnings Highlights
Year Ended December 31, (Dollars in millions)							Change
	2023		2022	2021		2023 vs. 2022		2022 vs. 2021
Net income (loss) available to common shareholders		$	(1,452)		$	5,927			$	6,033		$	(7,379)	$	(106)
Diluted earnings per common share		(1.09)		4.43			4.47			(5.52)		(0.04)
Net interest income - taxable equivalent		$	14,820		$	14,458			$	13,114		$	362	$	1,344
Noninterest income		8,790		8,719			9,290			71		(571)
Total taxable-equivalent revenue		$	23,610		$	23,177			$	22,404		$	433	$	773
Less taxable-equivalent adjustment		220		142			108
Total revenue		$	23,390		$	23,035			$	22,296
Return on average assets		(0.19)	%	1.15	%		1.23	%		(1.34)	%	(0.08)	%
Return on average common shareholders’ equity		(2.6)		10.4			9.7			(13.0)		0.7
Net interest margin - taxable equivalent		3.00		3.01			2.86			(0.01)		0.15

46 Truist Financial Corporation

Truist’s revenue for 2023 was $23.4 billion. On a TE basis, revenue was $23.6 billion, which represents an increase of $433 million compared to 2022. Net interest income on a TE basis was $14.8 billion, up $362 million, or 2.5%, primarily due to higher market interest rates and higher average loans. These increases were partially offset by higher funding costs and lower purchase accounting accretion.

•Average earning assets increased $13.5 billion, or 2.8%, compared to the prior year primarily due to growth in average total loans of $15.5 billion, or 5.1%, and growth in other earning assets of $9.3 billion, or 46%, primarily due to an increase in balances held at the Federal Reserve to support liquidity build, partially offset by a $10.3 billion, or 7.0%, decrease in average securities.

•Average deposits decreased $17.0 billion, or 4.1%, compared to the prior year while average short-term borrowings increased $9.5 billion, or 64%, and average long-term debt increased $15.5 billion, or 45%.

Noninterest income was up $71 million, or 0.8%, for the year ended December 31, 2023 compared to 2022 due to higher insurance income and lending related fees, partially offset by lower investment banking and trading income, service charges on deposits and other income. The prior year included $71 million of securities losses and a $74 million gain on the redemption of noncontrolling equity interest (other income).

NIM was 3.00% for 2023, down one basis point compared to the prior year. NIM was negatively impacted by lower purchase accounting accretion, which benefited NIM by 5 basis points in 2023 compared to 13 basis points in 2022, partially offset by higher rates.

•The yield on the average total loan portfolio was 6.12% for 2023, up 176 basis points, compared to the prior year primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was 2.24% for 2023, up 36 basis points compared to the prior year.

•The average cost of total deposits was 1.58% for 2023, up 131 basis points compared to the prior year. The average cost of short-term borrowings was 5.25% for 2023, up 267 basis points compared to the prior year. The average cost on long-term debt was 4.46% for 2023, up 215 basis points compared to the prior year. The increases in rates on deposits and other funding sources was largely attributable to the higher rate environment.

The provision for credit losses was $2.1 billion for the year ended December 31, 2023 compared to $777 million in 2022. The net charge-off ratio for the current year of 0.50% was up 23 basis points compared to the prior year.

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

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

Noninterest expense was up $6.9 billion for the year ended December 31, 2023 compared to 2022 due to goodwill impairment of $6.1 billion, higher regulatory costs primarily due to the FDIC special assessment of $507 million, higher other expense, and higher personnel expense, partially offset by lower merger-related and restructuring charges, professional fees and outside processing expenses, equipment expense, marketing and customer development expense, and amortization of intangibles. Merger-related and restructuring charges and incremental operating expenses related to the merger decreased $138 million and $465 million, respectively, due to the completion of integration-related activities. Merger-related and restructuring charges for the current year include increased severance charges due to the ongoing transformation efforts as well as the continuation of specific facilities optimization costs. The prior period also included a gain on the redemption of FHLB advances of $39 million (other expense). Adjusted noninterest expenses, which exclude goodwill impairment, the FDIC special assessment, merger-related costs, the amortization of intangibles, and gains and losses on the early extinguishment of debt, increased $908 million, or 6.9%.

The provision for income taxes was $862 million for 2023, compared to $1.4 billion to 2022. The decrease in the provision for income taxes was primarily driven by lower pre-tax earnings, which includes a non-deductible goodwill impairment, and a discrete tax benefit of $204 million.

Truist’s total assets at December 31, 2023 were $535.3 billion, a decrease of $19.9 billion, or 3.6%, compared to December 31, 2022 as loans and leases, net of ALLL, decreased $14.4 billion, or 4.5%, total securities decreased $8.0 billion, or 6.2%, reflecting our ongoing balance sheet optimization efforts, as well as the aforementioned goodwill impairment, partially offset by an increase of $9.5 billion, or 59.4%, in interest-bearing deposits with banks.

Total liabilities at December 31, 2023 were $476.1 billion, a decrease of $18.6 billion, or 3.8%, from the prior year, reflecting a decrease of $17.6 billion, or 4.3%, in deposits and a decrease of $4.3 billion, or 9.9%, in long-term debt, partially offset by an increase of $1.4 billion, or 6.0%, in short-term borrowings.

Truist Financial Corporation 47

Total shareholders’ equity was $59.3 billion at December 31, 2023, a decrease of $1.3 billion from December 31, 2022. This decrease includes $3.1 billion in common and preferred dividends and a $1.0 billion net loss, partially offset by $1.4 billion received in connection with the TIH minority stake sale, net of tax, and $1.1 billion in OCI. Truist’s book value per common share at December 31, 2023 was $39.31, compared to $40.58 at December 31, 2022. Truist’s TBVPS of $21.83 at December 31, 2023, increased 21% compared to December 31, 2022.

Asset quality reflects normalization and modest deterioration in commercial portfolios.

•Nonperforming loans and leases held for investment were 0.44% of loans and leases held for investment at December 31, 2023, up eight basis points compared to December 31, 2022.

•The allowance for credit losses was $5.1 billion and includes $4.8 billion for the allowance for loan and lease losses and $295 million for the reserve for unfunded commitments. The ALLL ratio was 1.54%, up 20 basis points compared with December 31, 2022.

Capital strengthened during 2023.

•Truist’s CET1 ratio was 10.1% as of December 31, 2023. The 110 basis point increase since December 31, 2022 resulted from organic capital generation and the minority stake sale in TIH, partially offset by the CECL phase in.

•Truist declared common dividends of $2.08 per share during 2023. Truist did not repurchase any shares in 2023.

•Truist’s average consolidated LCR was 112% for the three months ended December 31, 2023, compared to the regulatory minimum of 100%.

Analysis of Results of Operations

Net Interest Income and NIM

Taxable-equivalent net interest income for the year ended December 31, 2023 was up $362 million, or 2.5%, compared to 2022 primarily due to higher market interest rates and higher average loans. These increases were partially offset by higher funding costs and lower purchase accounting accretion. Net interest margin was 3.00% for 2023, down one basis point compared to the prior year. NIM was negatively impacted by lower purchase accounting accretion, which benefited NIM by 5 basis points in 2023 compared to 13 basis points in 2022, partially offset by higher rates.

As of December 31, 2023, the remaining unamortized fair value marks on the loan and lease portfolio and long-term debt were $477 million and $39 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 $349 million for consumer loans and leases, and $128 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as paydowns occur.

48 Truist Financial Corporation

Table 9: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
																		2023 vs. 2022		2022 vs. 2021
Year Ended December 31, (Dollars in millions)	Average Balances(1)		Annualized Yield/Rate(2)		Income/Expense		Incr. (Decr.)		Change due to		Incr. (Decr.)		Change due to
2023		2022		2021		2023		2022		2021		2023		2022	2021			Rate		Volume			Rate		Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury	$	11,021			$	10,591			$	7,633			1.20	%	0.88	%		0.73	%		$	132			$	93			$	56			$	39			$	35			$	4			$	37			$	13	$	24
GSE	348			498			1,799			2.94			2.24		2.29			10			11			41			(1)			3			(4)			(30)			(1)			(29)
Agency MBS	121,313			131,669			128,306			2.32			1.94		1.52			2,821			2,552			1,953			269			478			(209)			599			547			52
States and political subdivisions	424			392			429			4.13			3.88		3.55			18			15			15			3			1			2			—			1			(1)
Non-agency MBS	3,816			4,072			1,299			2.34			2.30		2.20			89			94			28			(5)			2			(7)			66			1			65
Other	20			44			31			5.37			3.60		1.90			1			2			1			(1)			1			(2)			1			1			—
Total securities	136,942			147,266			139,497			2.24			1.88		1.50			3,071			2,767			2,094			304			520			(216)			673			562			111
Interest earning trading assets	4,739			5,767			5,602			6.64			4.15		2.78			314			239			156			75			124			(49)			83			78			5
Other earning assets(3)	29,765			20,429			19,498			5.24			1.88		0.24			1,561			384			48			1,177			938			239			336			334			2
Loans and leases, net of unearned income:
Commercial and industrial	163,983			149,030			137,304			6.34			3.91		3.04			10,389			5,823			4,174			4,566			3,931			635			1,649			1,270			379
CRE	22,741			22,697			25,269			6.71			4.01		2.85			1,535			920			728			615			613			2			192			271			(79)
Commercial Construction	6,125			5,326			6,053			7.62			4.46		2.98			459			228			173			231			191			40			55			79			(24)
Residential mortgage	56,131			51,721			45,500			3.78			3.60		4.14			2,121			1,860			1,884			261			96			165			(24)			(263)			239
Home equity	10,388			10,788			11,136			7.36			5.01		5.69			765			540			506			225			246			(21)			34			27			7
Indirect auto	25,621			27,197			26,621			6.10			5.50		6.12			1,563			1,497			1,629			66			156			(90)			(132)			(167)			35
Other consumer	28,412			26,320			25,118			7.25			6.23		6.70			2,061			1,640			1,666			421			284			137			(26)			(111)			85
Student	2,453			6,114			7,251			6.91			4.97		3.99			170			304			289			(134)			91			(225)			15			65			(50)
Credit card	4,876			4,753			4,650			11.59			9.57		8.92			565			455			415			110			98			12			40			31			9
Total loans and leases HFI	320,730			303,946			288,902			6.12			4.36		3.97			19,628			13,267			11,464			6,361			5,706			655			1,803			1,202			601
LHFS	1,605			2,889			4,546			6.37			4.23		2.63			102			122			120			(20)			47			(67)			2			56			(54)
Total loans and leases	322,335			306,835			293,448			6.12			4.36		3.95			19,730			13,389			11,584			6,341			5,753			588			1,805			1,258			547
Total earning assets	493,781			480,297			458,045			5.00			3.49		3.03			24,676			16,779			13,882			7,897			7,335			562			2,897			2,232			665
Nonearning assets	59,351			63,533			64,340
Total assets	$	553,132			$	543,830			$	522,385
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	103,465			$	111,539			$	107,311			2.04		0.47			0.05			2,112			519			59			1,593			1,634			(41)			460			458			2
Money market and savings	138,841			145,645			134,303			2.04			0.37		0.03			2,834			536			35			2,298			2,324			(26)			501			497			4
Time deposits	36,803			15,514			18,025			3.83			0.58		0.30			1,409			90			54			1,319			1,059			260			36			44			(8)
Total interest-bearing deposits	279,109			272,698			259,639			2.28			0.42		0.06			6,355			1,145			148			5,210			5,017			193			997			999			(2)
Short-term borrowings	24,478			14,957			6,170			5.25			2.58		0.76			1,286			385			47			901			558			343			338			212			126
Long-term debt	49,678			34,172			37,410			4.46			2.31		1.53			2,215			791			573			1,424			958			466			218			271			(53)
Total interest-bearing liabilities	353,265			321,827			303,219			2.79			0.72		0.25			9,856			2,321			768			7,535			6,533			1,002			1,553			1,482			71
Noninterest-bearing deposits	122,018			145,392			138,733
Other liabilities	14,750			12,794			11,300
Shareholders’ equity	63,099			63,817			69,133
Total liabilities and shareholders’ equity	$	553,132			$	543,830			$	522,385
Average interest-rate spread							2.21	%		2.77	%		2.78	%
NIM/net interest income - taxable equivalent							3.00	%		3.01	%		2.86	%	$	14,820			$	14,458			$	13,114			$	362			$	802			$	(440)			$	1,344			$	750			$	594
Taxable-equivalent adjustment													$	220		$	142			$	108
Memo: Total deposits	$	401,127			$	418,090			$	398,372			1.58	%	0.27	%		0.04	%		$	6,355			$	1,145			$	148			$	5,210							$	997

(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

Provision for Credit Losses

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

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

Noninterest Income

Table 10: Noninterest Income
	Year Ended December 31,	% Change
(Dollars in millions)		2023		2022		2021		2023 vs. 2022	2022 vs. 2021
Insurance income		$	3,354			$	3,043		$	2,627		10.2	%	15.8	%
Wealth management income		1,358			1,338			1,392		1.5		(3.9)
Investment banking and trading income		822			995			1,441		(17.4)		(31.0)
Card and payment related fees		936			944			874		(0.8)		8.0
Service charges on deposits		869			1,026			1,060		(15.3)		(3.2)
Mortgage banking income		437			460			734		(5.0)		(37.3)
Lending related fees		447			375			349		19.2		7.4
Operating lease income		254			258			262		(1.6)		(1.5)
Securities gains (losses)		—			(71)			—		NM	NM
Other income		313			351			551		(10.8)		(36.3)
Total noninterest income		$	8,790			$	8,719		$	9,290		0.8		(6.1)

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

•Lending related fees increased due to higher leasing-related gains.

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

•Service charges on deposits decreased primarily due to changes in service fee protocols, as well as reduced overdraft fees as a result of continued growth of Truist One Banking.

•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, 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 11: Noninterest Expense
	Year Ended December 31,	% Change
(Dollars in millions)		2023		2022		2021		2023 vs. 2022	2022 vs. 2021
Personnel expense		$	8,654			$	8,467		$	8,632		2.2	%	(1.9)	%
Professional fees and outside processing		1,341			1,411			1,442		(5.0)		(2.1)
Software expense		929			932			945		(0.3)		(1.4)
Net occupancy expense		715			744			764		(3.9)		(2.6)
Amortization of intangibles		527			583			574		(9.6)		1.6
Equipment expense		409			478			513		(14.4)		(6.8)
Marketing and customer development		297			352			294		(15.6)		19.7
Operating lease depreciation		175			184			190		(4.9)		(3.2)
Regulatory costs		824			183			137		NM	33.6
Merger-related and restructuring charges		375			513			822		(26.9)		(37.6)
Goodwill impairment		6,078			—			—		NM	NM
Other expense		1,142			742			803		53.9		(7.6)
Total noninterest expense		$	21,466			$	14,589		$	15,116		47.1		(3.5)

Noninterest expense was up $6.9 billion, or 47.1%, for the year ended December 31, 2023 compared to 2022 due to goodwill impairment of $6.1 billion, higher regulatory costs primarily due to the FDIC special assessment of $507 million, higher other expense, and higher personnel expense, partially offset by lower merger-related and restructuring charges, professional fees and outside processing expenses, equipment expense, marketing and customer development expense, and amortization of intangibles. Merger-related and restructuring charges and incremental operating expenses related to the Merger decreased $138 million and $465 million, respectively, due to the completion of integration-related activities in 2022. Merger-related and restructuring charges for the current year include increased severance charges due to the ongoing transformation efforts as well as the continuation of specific facilities optimization costs. The prior period also included a gain on the redemption of FHLB advances of $39 million (other expense).

Adjusted noninterest expenses, which exclude goodwill impairment, the FDIC special assessment, merger-related costs, the amortization of intangibles, and gains and losses on the early extinguishment of debt, increased $908 million, or 6.9%.

•Other expense, excluding the aforementioned gain on FHLB advances, increased primarily due to higher pension expense (driven primarily by lower plan assets) and higher operating losses, including $70 million of costs associated with changes in 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.

•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, and higher other post-retirement benefit expense (which is almost entirely offset by higher other income), partially offset by lower pension expenses and lower incentives as well as reduced headcount in the second half of 2023, in part due to our ongoing transformation into a more efficient organization.

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

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

•Equipment expense decreased due to retirement of certain technology related equipment and higher laptop purchases in 2022.

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

Merger-Related and Restructuring Charges

Truist has incurred certain merger-related and restructuring charges, which include:

•severance and personnel-related costs or credits;

•occupancy and equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete equipment write-offs and the sale of duplicate facilities and equipment;

•professional services, which relate to legal and investment banking advisory fees and other consulting services pertaining to restructuring initiatives or transactions;

•systems conversion and related charges, which represent costs to integrate the entity’s information technology systems;

Truist Financial Corporation 51

•costs for integration of mergers and acquisitions and other restructuring charges or credits, which include expenses necessary to convert and combine the acquired branches and operations of merged companies, direct media advertising related to the mergers and acquisitions, asset and supply inventory write-offs, and other similar charges; and

•write-offs related to exiting certain businesses.

Merger-related and restructuring accruals are established when the costs are incurred or once all requirements for a plan to dispose of or outsource certain business functions have been approved by management. Merger and restructuring accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2023 are generally expected to be utilized within one year, unless they relate to specific contracts that expire later.

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 12: Merger-Related and Restructuring Accrual Activity
(Dollars in millions)	Accrual at Jan 1, 2022		Expense		Utilized		Accrual at Dec 31, 2022			Expense	Utilized		Accrual at Dec 31, 2023
Severance and personnel-related	$	77			$	92		$	(160)		$	9			$	276		$	(265)	$	20
Occupancy and equipment	—			175			(175)		—				67	(67)			—
Professional services	37			142			(167)		12				10	(20)			2
Systems conversion and related costs	—			60			(60)		—				—	—			—
Other	12			44			(51)		5				22	(25)			2
Total(1)	$	126			$	513		$	(613)		$	26			$	375		$	(377)	$	24

(1)The Company recognized $368 million of expense related to the Merger for the year ended December 31, 2022. Merger integration activities were completed in 2022.

Segment Results

Through December 31, 2023, Truist operated and measured business activities across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury, and Corporate.

In 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. Additionally, Truist updated its segment cost allocation methodology. Results for 2023 have been revised to conform to the current presentation. Management concluded the impact to 2022 was not material.

The segment results are presented based on internal management methodologies that were designed to support these strategic objectives. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to GAAP. The application and development of management reporting methodologies is an active process and undergoes periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment, with no impact on consolidated results. When significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is revised.

In conjunction with the Company’s April 3, 2023 sale of a 20% stake of the common equity in TIH, TIH 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). TIH is the principal legal entity of the IH segment.

Also related to the same transaction, TIH was recapitalized from a corporate entity to an LLC, such that each member is allocated its share of TIH’s income before taxes, and beginning in the second quarter of 2023 the Company recognizes its associated income tax provision through OT&C. The Company elected not to restate prior periods for this change based on TIH’s previous status as a corporate entity. The Company recognized $110 million for the twelve months ended December 31, 2023 of tax provision related to IH in OT&C. IH continues to recognize certain state jurisdictions that impose income taxes on partnerships and LLCs.

52 Truist Financial Corporation

See “Note 21. Operating Segments” for additional disclosures related to Truist’s operating segments, including the internal accounting and reporting practices used to manage these segments.

Table 13: Net Income by Reportable Segment
	Year Ended December 31,			% Change
(Dollars in millions)		2023		2022		2021					2023 vs. 2022	2022 vs. 2021
Consumer Banking and Wealth		$	178			$	3,866		$	3,827				(95.4)	%	1.0	%
Corporate and Commercial Banking		755			4,421			4,818					(82.9)	(8.2)
Insurance Holdings		282			506			488					(44.3)	3.7
Other, Treasury & Corporate		(2,262)			(2,526)			(2,696)					(10.5)	(6.3)
Truist Financial Corporation		$	(1,047)			$	6,267		$	6,437				(116.7)		(2.6)

2023 compared to 2022

Consumer Banking and Wealth

CB&W net income was $178 million for the year ended December 31, 2023, a decrease of $3.7 billion compared to the prior year.

•Segment net interest income increased $614 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 million reflecting higher charge offs primarily in the indirect auto and other consumer portfolios, partially offset by a reserve release in the current period.

•Noninterest income decreased $108 million primarily due to decreased service charge fees on deposits driven by changes in service fee protocols in the current period and a gain on the redemption of noncontrolling equity interest in the earlier period, partially offset by higher residential mortgage banking income in the current period.

•Noninterest expense increased $4.1 billion primarily driven by a goodwill impairment charge. Excluding goodwill impairment, noninterest expense increased $692 million due to higher corporate technology costs, the FDIC special assessment, and corporate operating and risk support expenses, partially offset by lower marketing and customer development, professional fees and outside processing, and amortization of intangibles.

CB&W average loans and leases held for investment increased $1.6 billion, or 1.2%, for the year ended December 31, 2023 compared to the prior year driven primarily by an increase in residential mortgage and Service Finance loans, partially offset by the sale of the student loan portfolio in second quarter 2023 and a decrease in indirect auto loans.

CB&W average total deposits decreased $15.7 billion, or 6.2%, for the year ended December 31, 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.

CB&W had 2,001 banking offices at December 31, 2023, a decrease of 122 offices, or 5.7%, compared to December 31, 2022 due to continued branch network optimization.

Truist Wealth had assets under management of $199 billion as of December 31, 2023, an increase of $19 billion, or 10%, compared to the prior year primarily due to higher markets and positive net asset flows.

Corporate and Commercial Banking

C&CB net income was $755 million for the year ended December 31, 2023, a decrease of $3.7 billion compared to the prior year.

•Segment net interest income increased $617 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 $1.1 billion which reflects an 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 $324 million primarily due to lower structured real estate fee income, higher derivative collateral related costs, lower commercial mortgage income, and lower trading income, partially offset by increases in lending related fees, merger and acquisition fees, and bond originations.

•Noninterest expense increased $3.2 billion primarily due to a goodwill impairment charge. Excluding goodwill impairment, noninterest expense increased $483 million driven by the FDIC special assessment, higher corporate technology expenses, and merger-related and restructuring charges, partially offset by lower corporate marketing expense and lower incentive expense.

Truist Financial Corporation 53

C&CB average loans and leases held for investment increased $15.1 billion, or 9.1%, for the year ended December 31, 2023 compared to the prior year driven by an increase in the commercial and industrial portfolio.

C&CB average total deposits decreased $14.7 billion, or 10%, for the year ended December 31, 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 $282 million for the year ended December 31, 2023, a decrease of $224 million, or 44%, compared to the prior year.

•Segment net interest income decreased $267 million driven primarily by interest expense accruals on new intercompany mandatorily redeemable preferred units resulting from the recapitalization of IH.

•Noninterest income increased $306 million primarily due to continued organic growth and acquisitions.

•Noninterest expense increased $389 million primarily due to the impact of acquisitions, investments in new hires and teammates, independence readiness expenses, performance-driven incentive expense, and higher operational loss reserves.

Other, Treasury, and Corporate

OT&C generated a net loss of $2.3 billion for the year ended December 31, 2023, compared to a net loss of $2.5 billion in the prior year.

•Segment net interest income decreased $680 million due to higher funding credit on deposits to other segments and higher rates, partially offset by higher funds transfer charges to other segments for loans and higher earnings on cash balances and in the securities portfolio driven by the higher rate environment.

•Noninterest income increased $197 million primarily due to valuation changes from assets held for certain post-retirement benefits in the current period, which is primarily offset by higher personnel expense, and losses on the sale of securities in the earlier period.

•Noninterest expense decreased $765 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 operating charge-offs due to costs associated with changes 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.

54 Truist Financial Corporation

Analysis of Financial Condition

Investment Activities

Truist’s Board-approved investment policy is carried out by the MRLCC, which meets regularly to review the economic environment and establish investment strategies. The MRLCC also has much broader responsibilities, which are discussed in the “Market Risk” section in MD&A.

Investment strategies are reviewed by the MRLCC based on the interest rate environment, balance sheet mix, actual and anticipated loan demand, funding opportunities and the overall interest rate sensitivity of the Company. In general, the goals of the investment portfolio are: (i) to provide sufficient liquid assets to meet unanticipated deposit and loan fluctuations and overall funds management objectives; (ii) to provide eligible securities to secure public funds, trust deposits and other borrowings; and (iii) to earn an optimal return on funds invested commensurate with meeting the requirements of (i) and (ii) and consistent with the Company’s risk appetite.

Truist Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies, GSEs (including MBS), bank eligible obligations of any state or political subdivision, non-agency MBS, structured notes, bank eligible corporate obligations (including corporate debentures), commercial paper, negotiable CDs, bankers’ acceptances, mutual funds, and limited types of equity securities.

Table 14: Composition of Securities Portfolio
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
AFS securities (at fair value):
U.S. Treasury	$	10,041			$	10,295
GSE	362			303
Agency MBS - residential	51,289			55,225
Agency MBS - commercial	2,248			2,424
States and political subdivisions	425			416
Non-agency MBS	2,981			3,117
Other	20			21
Total AFS securities	67,366			71,801
HTM securities (at amortized cost):
Agency MBS - residential	54,107			57,713
Total securities	$	121,473			$	129,514

The securities portfolio totaled $121.5 billion at December 31, 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 December 31, 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 in 2023 includes paydowns and maturities of $13.9 billion, partially offset by $4.2 billion in purchases as well as an increase in the fair value of AFS securities.

•As of December 31, 2023, 41% of the investment securities portfolio was classified as held-to-maturity based on amortized cost.

•As of December 31, 2023, approximately 5.7% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 5.6% as of December 31, 2022.

•The effective duration of the AFS securities portfolio was 6.1 years at December 31, 2023 and 6.2 years at December 31, 2022, excluding the impact of swaps, or 4.0 years at December 31, 2023 and 6.0 years at December 31, 2022, including the impact of swaps. The effective duration of the HTM securities portfolio was 7.3 years at December 31, 2023 and 2022.

Truist Financial Corporation 55

The following table presents the securities portfolio by major category of security holdings with ranges of maturities and average yields:

Table 15: Securities Yields by Major Category and Maturity
December 31, 2023 (Dollars in millions)	AFS		HTM
Fair Value		Effective Yield(1)		Amortized Cost		Effective Yield(1)
U.S. Treasury:
Within one year	$	3,567			1.67	%		$	—		—	%
One to five years	6,436			1.27			—			—
Five to ten years	13			2.76			—			—
After ten years	25			3.02			—			—
Total	10,041			1.42			—			—
GSE:
One to five years	7			2.91			—			—
Five to ten years	10			3.06			—			—
After ten years	345			3.54			—			—
Total	362			3.52			—			—
Agency MBS - residential:(2)
One to five years	123			2.43			—			—
Five to ten years	427			2.79			—			—
After ten years	50,739			2.58			54,107			1.79
Total	51,289			2.59			54,107			1.79
Agency MBS - commercial:(2)
Within one year	—			—			—			—
One to five years	—			—			—			—
Five to ten years	67			3.50			—			—
After ten years	2,181			1.78			—			—
Total	2,248			1.83			—			—
States and political subdivisions:
Within one year	28			5.18			—			—
One to five years	68			2.51			—			—
Five to ten years	177			4.63			—			—
After ten years	152			4.30			—			—
Total	425			4.21			—			—
Non-agency MBS:(2)
Five to ten years	169		2.03			—			—
After ten years	2,812			2.36			—			—
Total	2,981			2.34			—			—
Other:
Within one year	—			—			—			—
One to five years	8			2.88			—			—
Five to ten years	12			7.04			—			—
Total	20			5.46			—			—
Total securities	$	67,366			2.39			$	54,107		1.79

(1)Yields represent interest computed under the effective interest method on a TE basis using the federal income tax rate and the amortized cost of the securities.

(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans.

56 Truist Financial Corporation

Lending Activities

Truist strives to meet the credit needs of its clients while pursuing a balanced strategy of loan profitability, loan growth, and loan quality. Management believes that this purpose can best be accomplished by building strong client relationships over time and developing in-depth local market knowledge. The Company employs strict underwriting criteria governing the degree of risk assumed and the diversity of the loan portfolio in terms of type, industry, and geographical concentration.

Truist lends to a diverse client base that is geographically dispersed to mitigate concentration risk arising from local and regional economic downturns. The following discussion provides additional information on the Company’s loan and lease portfolios. Refer to the “Risk Management” section for a discussion of the credit risk management policies used to manage the portfolios.

Commercial Loan and Lease Portfolio

Commercial loans and leases represent the largest category of the Company’s loan and lease portfolio. Commercial Community Banking and small business banking generally target small-to-middle market businesses with annual sales between $2 million and $500 million, while CIB provides lending solutions to large corporate clients. The commercial loan and lease portfolio consists of lending to public and private business clients and is composed of commercial and industrial, owner occupied, equipment leasing and financing, commercial real estate, government and institutional financing, premium financing, and dealer floor plan financing.

Residential Mortgage Loan Portfolio

Truist primarily originates conforming mortgage loans, loans under FHA, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture programs, and higher quality jumbo and construction-to-permanent loans for 1-4 family residential properties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA and FHLMC. They are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, or have mortgage insurance as required by investors and are made to borrowers in good credit standing.

Risks associated with mortgage lending include interest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary mortgage market and an effective MSR hedging process. Credit risk is managed through rigorous underwriting procedures and mortgage insurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management believes that the retention of mortgage servicing diversifies income while enabling Truist to build long-term client relationships and offer high quality client service. Truist also purchases residential mortgage loans from correspondent originators. The loans purchased from third-party originators are subject to substantially the same underwriting and risk-management criteria as loans originated internally.

Home Equity Loan Portfolio

Indirect Auto Loan Portfolio

The indirect auto portfolio primarily includes secured indirect installment loans to consumers for the purchase of new and used automobiles. The indirect auto portfolio also includes nonprime and near prime automobile finance. Such loans are originated through approved franchised and independent dealers throughout the Truist market area and nationally through Regional Acceptance Corporation. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. Indirect auto loans are subject to rigorous lending policies and procedures and are underwritten with note amounts and credit limits that are consistent with the Company’s risk philosophy. In addition to its normal underwriting due diligence, Truist uses application systems and scoring systems to help underwrite and manage the credit risk in its indirect auto portfolio.

Truist Financial Corporation 57

Other Consumer Loan Portfolio

The other consumer portfolio includes loans originated through the Truist branch network, as well as loans originated by Truist’s national online consumer lending division. Loans originated through the Truist branch network include secured and unsecured lending marketed to qualifying clients and other creditworthy candidates in Truist’s market areas. Truist provides fixed-rate, unsecured lending to consumers with strong credit through its proprietary online loan origination system. The other consumer portfolio includes secured indirect installment loans to consumers for the purchase of new and used boats and recreational vehicles. The other consumer portfolio includes Sheffield, a small ticket consumer lending division related to the purchase of power sports and outdoor power equipment, and trailers. These loans are homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. These loans are subject to similar rigorous lending policies and procedures as the indirect auto loan portfolio. The other consumer loan portfolio also includes other indirect and point-of-sale lending to consumers, including through Service Finance, to finance home improvements, furniture purchases, certain elective health-care services, and other consumer products segments. These loans are originated in accordance with strict underwriting criteria as determined by Truist.

Student Loan Portfolio

The student loan portfolio, which was sold in 2023, was primarily composed of government guaranteed student loans and additionally included certain private student loans originated by third parties. The government guarantee mitigated substantially all of the risk related to principal and interest repayment for this component of the portfolio.

Credit Card Loan Portfolio

The credit card portfolio consists of the outstanding balances on credit cards. Truist markets credit cards to its existing client base and does not solicit cardholders through nationwide programs or other forms of mass marketing. Such balances are generally unsecured and actively managed.

Refer to “Note 5. Loans and ACL” for additional information.

The following table summarizes the loan portfolio:

Table 16: Loans and Leases as of Period End
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
Commercial:
Commercial and industrial	$	160,788			$	164,307
CRE	22,570			22,676
Commercial construction	6,683			5,849
Consumer:
Residential mortgage	55,492			56,645
Home equity	10,053			10,876
Indirect auto	22,727			27,951
Other consumer	28,647			27,533
Student	—			5,287
Credit card	5,101			4,867
Total loans and leases HFI	312,061			325,991
LHFS	1,280			1,444
Total loans and leases	$	313,341			$	327,435

Loans and leases HFI were $312.1 billion at December 31, 2023, down $13.9 billion compared to 2022 primarily due to the sale of the student loan portfolio at the end of the second quarter of 2023 and balance sheet optimization. Excluding the student loan sale, loans HFI declined 2.7% compared to the prior year.

Commercial loans decreased $2.8 billion during 2023 primarily due to a $3.5 billion decline in the commercial and industrial portfolio, partially offset by an $834 million increase in the commercial construction portfolio.

Consumer loans and credit cards, excluding the student loan portfolio, decreased $5.9 billion during 2023 primarily due to a $5.2 billion decrease in indirect auto primarily due to lower production, a $1.2 billion decrease in residential mortgages due to lower correspondent channel production, and an $823 million decrease in home equity, partially offset by a $1.1 billion increase in other consumer primarily due to growth of higher-return point-of-sale lending portfolios (Service Finance and Sheffield).

58 Truist Financial Corporation

Table 17: Loan Maturities
December 31, 2023 (Dollars in millions)	1 Year or Less		1 to 5 Years		5 to 15 Years		After 15 Years	Total
Fixed rate:
Commercial:
Commercial and industrial	$	10,759			$	15,635		$	11,656	$	2,395	$	40,445
CRE	669			2,493			823		3	3,988
Commercial construction	38			58			27		16	139
Total commercial	11,466			18,186			12,506		2,414	44,572
Consumer:
Residential mortgage	1,579			6,394			16,886		24,463	49,322
Home equity	339			1,033			1,756		469	3,597
Indirect auto	5,474			16,192			1,061		—	22,727
Other consumer	5,459			13,429			6,219		857	25,964
Total consumer	12,851			37,048			25,922		25,789	101,610
Credit card	282			—			—		—	282
Total fixed rate	24,599			55,234			38,428		28,203	146,464
Variable rate:
Commercial:
Commercial and industrial	30,579			77,740			9,855		2,169	120,343
CRE	4,216			12,479			1,877		10	18,582
Commercial construction	1,632			4,742			117		53	6,544
Total commercial	36,427			94,961			11,849		2,232	145,469
Consumer:
Residential mortgage	173			754			2,206		3,037	6,170
Home equity	585			2,355			3,503		13	6,456
Other consumer	282			1,930			462		9	2,683
Total consumer	1,040			5,039			6,171		3,059	15,309
Credit card	4,819			—			—		—	4,819
Total variable rate	42,286			100,000			18,020		5,291	165,597
Total loans and leases HFI	$	66,885			$	155,234		$	56,448	$	33,494	$	312,061

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $317 million and $342 million at December 31, 2023 and December 31, 2022, respectively.

Truist Financial Corporation 59

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

Table 18: Average Loans and Leases
	Three Months Ended
(Dollars in millions)	Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023	Dec 31, 2022
Commercial:
Commercial and industrial	$	160,278			$	164,022		$	166,588	$	165,095	$	159,308
CRE	22,755			22,812			22,706		22,689	22,497
Commercial construction	6,515			6,194			5,921		5,863	5,711
Consumer:
Residential mortgage	55,658			56,135			56,320		56,422	56,292
Home equity	10,104			10,243			10,478		10,735	10,887
Indirect auto	23,368			24,872			26,558		27,743	28,117
Other consumer	28,913			28,963			28,189		27,559	27,479
Student	—			—			4,766		5,129	5,533
Credit card	4,996			4,875			4,846		4,785	4,842
Total average loans and leases HFI	$	312,587			$	318,116		$	326,372	$	326,020	$	320,666

Average loans held for investment decreased $5.5 billion, or 1.7%, compared to the prior quarter.

•Average commercial loans decreased 1.8% due to a decline in the commercial and industrial portfolio, partially offset by an increase in commercial construction loans.

•Average consumer loans decreased 1.8% primarily due to declines in the indirect auto and mortgage portfolios.

60 Truist Financial Corporation

Asset Quality

The following tables summarize asset quality information:

Table 19: Asset Quality
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
NPAs:
NPLs:
Commercial and industrial	$	470			$	398
CRE	284			82
Commercial construction	24			—
Residential mortgage	153			240
Home equity	122			135
Indirect auto	268			289
Other consumer	59			44
Total NPLs HFI	1,380			1,188
Loans held for sale	51			—
Total nonaccrual loans and leases	1,431			1,188
Foreclosed real estate	3			4
Other foreclosed property	54			58
Total nonperforming assets	$	1,488			$	1,250
Loans 90 days or more past due and still accruing:
Commercial and industrial	$	7			$	49
CRE	—			1
Commercial construction	1			—
Residential mortgage - government guaranteed	418			759
Residential mortgage - nonguaranteed	21			27
Home equity	11			12
Indirect auto	2			1
Other consumer	21			13
Student - government guaranteed	—			702
Student - nonguaranteed	—			4
Credit card	53			37
Total loans 90 days or more past due and still accruing	$	534			$	1,605
Loans 30-89 days past due and still accruing:
Commercial and industrial	$	230			$	256
CRE	5			25
Commercial construction	—			5
Residential mortgage - government guaranteed	326			268
Residential mortgage - nonguaranteed	313			346
Home equity	70			68
Indirect auto	669			646
Other consumer	271			187
Student - government guaranteed	—			396
Student - nonguaranteed	—			6
Credit card	87			64
Total loans 30-89 days past due and still accruing	$	1,971			$	2,267

Nonperforming assets totaled $1.5 billion at December 31, 2023, up $238 million compared to December 31, 2022 due to increases in the CRE and commercial and industrial portfolios, partially offset by a decrease in the residential mortgage portfolio. Nonperforming loans and leases represented 0.44% of total loans and leases HFI, up 8 basis points compared to December 31, 2022.

Loans 90 days or more past due and still accruing totaled $534 million at December 31, 2023, down $1.1 billion compared to the prior year primarily due to the sale of the student loan portfolio 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 HFI was 0.04% at December 31, 2023 and 2022.

Loans 30-89 days past due and still accruing totaled $2.0 billion at December 31, 2023, down $296 million compared to the prior year due to the sale of the student portfolio and a decrease in nonguaranteed residential mortgages, partially offset by increases in the other consumer portfolio and guaranteed residential mortgages. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases HFI was 0.63% at December 31, 2023, down seven basis points compared to the prior year.

Truist Financial Corporation 61

Table 20: Asset Quality Ratios
	Dec 31, 2023		Dec 31, 2022
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.63	%		0.70	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.17			0.49
NPLs as a percentage of loans and leases HFI	0.44			0.36
NPLs as a percentage of total loans and leases(1)	0.46			0.36
NPAs as a percentage of:
Total assets(1)	0.28			0.23
Loans and leases HFI plus foreclosed property	0.46			0.38
ALLL as a percentage of loans and leases HFI	1.54			1.34
Ratio of ALLL to NPLs	3.5x		3.7x
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	%

(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 21: Asset Quality Ratios (Continued)
	Year Ended December 31,
		2023		2022		2021
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial		0.20	%		0.04	%	0.10	%
CRE		0.71			0.02		0.01
Commercial construction		0.04			(0.07)		(0.03)
Consumer:
Residential mortgage		0.01			(0.01)		0.02
Home equity		(0.12)			(0.11)		(0.11)
Indirect auto		1.66			1.17		0.92
Other consumer		1.40			1.14		0.72
Student		4.39			0.34		0.31
Credit card		3.85			2.98		2.42
Total		0.50			0.27		0.24
Ratio of ALLL to net charge-offs		3.0x		5.3x		6.4x

The following table presents activity related to NPAs:

Table 22: Rollforward of NPAs
(Dollars in millions)	2023		2022
Balance, January 1	$	1,250			$	1,163
New NPAs	3,055			1,983
Advances and principal increases	842			662
Disposals of foreclosed assets(1)	(603)			(471)
Disposals of NPLs(2)	(237)			(129)
Charge-offs and losses	(1,013)			(494)
Payments	(1,357)			(917)
Transfers to performing status	(440)			(560)
Other, net	(9)			13
Ending balance, December 31	$	1,488			$	1,250

(1)Includes charge-offs and losses recorded upon sale of $196 million and $130 million for the year ended December 31, 2023 and 2022, respectively.

(2)Includes charge-offs and losses recorded upon sale of $30 million and gains, net of charge-offs recorded upon sale of $2 million for the year ended December 31, 2023 and 2022, respectively.

62 Truist Financial Corporation

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 totaled $29.3 billion as of December 31, 2023, which includes 33% related to multifamily residential, 17% related to office, 17% related to industrial, 14% related to retail, and the remainder composed of hotel and other commercial real estate.

Our office and medical portfolios are primarily composed of Class A, multi-tenant properties located within Truist bank’s footprint. As of December 31, 2023, approximately 97% of these properties are multi-tenant or medical, and within our top 10 markets 64% and 25% of these exposures represent Class A and Class B properties, respectively. Approximately 26% and 25% of these exposures are scheduled to mature in 2024 and 2025, respectively, with the remainder scheduled to mature in 2026 and beyond. Truist maintains rigorous credit risk management surveillance routines across all loan portfolios. During 2023, Truist performed multiple reviews of the CRE office portfolio, which resulted in an increase in the ALLL for this portfolio.

Table 23: CRE and Commercial Construction by Type
	December 31, 2023		December 31, 2022
(Dollars in millions)	LHFI		NPL		LHFI		NPL
CRE and commercial construction:
Multifamily	$	9,599			$	27		$	7,762	$	—
Industrial	4,931			3		4,329			—
Office	4,920			265		5,258			75
Retail	4,290			9		4,668			2
Hotel	2,480			—		2,965			—
Other(1)	3,033			4		3,543			5
Total	$	29,253			$	308		$	28,525	$	82
(1)Includes $554 million and $590 million medical portfolio balances at December 31, 2023 and 2022, respectively. There were no NPLs at either period-end.

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.

Truist Financial Corporation 63

ACL

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

Table 24: Activity in ACL
	Year Ended December 31,
(Dollars in millions)		2023		2022		2021
Balance, beginning of period(1)		$	4,649			$	4,695		$	6,199
Provision for credit losses		2,109			777			(813)
Charge-offs:
Commercial and industrial		(390)			(143)			(243)
CRE		(166)			(13)			(10)
Commercial construction		(5)			(1)			(2)
Residential mortgage		(10)			(9)			(23)
Home equity		(10)			(13)			(16)
Indirect auto		(531)			(411)			(336)
Other consumer		(477)			(381)			(255)
Student		(108)			(22)			(24)
Credit card		(223)			(176)			(150)
Total charge-offs		(1,920)			(1,169)			(1,059)
Recoveries:
Commercial and industrial		70			87			107
CRE		3			8			6
Commercial construction		3			5			4
Residential mortgage		6			16			12
Home equity		23			25			29
Indirect auto		107			91			92
Other consumer		78			79			74
Student		—			1			1
Credit card		35			34			37
Total recoveries		325			346			362
Net charge-offs		(1,595)			(823)			(697)
Other(2)		(70)			—			6
Balance, end of period		$	5,093			$	4,649		$	4,695
ACL:(1)
ALLL		4,798			4,377			4,435
RUFC		295			272			260
Total ACL		$	5,093			$	4,649		$	4,695

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

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

Net charge-offs during 2023 totaled $1.6 billion, or 0.50% as a percentage of average loans, and were up twenty-three basis points compared to the prior year, primarily driven by higher charge-offs in the commercial and industrial, CRE, indirect auto, other consumer, and credit card portfolios as well as the sale of the student loan portfolio.

The allowance for credit losses was $5.1 billion and includes $4.8 billion for the allowance for loan and lease losses and $295 million for the reserve for unfunded commitments. The ALLL ratio was 1.54%, compared to 1.34% at December 31, 2022. The increase in the ALLL ratio primarily reflects an increase in reserves related to the CRE and commercial construction portfolios, loan growth in the other consumer portfolio, partially offset by the sale of the student portfolio. The ALLL covered nonperforming loans and leases held for investment 3.5x compared to 3.7x at December 31, 2022. At December 31, 2023, the ALLL was 3.0x annualized net charge-offs, compared to 5.3x at December 31, 2022.

64 Truist Financial Corporation

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 25: Allocation of ALLL by Category
	December 31, 2023		December 31, 2022
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,404			29.4	%		51.6	%		$	1,409			32.3	%		50.3	%
CRE	616			12.8			7.2			224			5.1			7.0
Commercial construction	174			3.6			2.1			46			1.1			1.8
Residential mortgage	298			6.2			17.8			399			9.1			17.4
Home equity	89			1.9			3.2			90			2.0			3.3
Indirect auto	942			19.6			7.3			981			22.4			8.6
Other consumer	890			18.5			9.2			770			17.6			8.5
Student	—			—			—			98			2.2			1.6
Credit card	385			8.0			1.6			360			8.2			1.5
Total ALLL	4,798			100.0	%		100.0	%		4,377			100.0	%		100.0	%
RUFC	295							272
Total ACL	$	5,093							$	4,649

Other Assets

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

Table 26: Other Assets as of Period End
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
Tax credit and other private equity investments	$	7,898			$	6,825
Bank-owned life insurance	7,716			7,618
Prepaid pension assets	6,563			4,539
DTAs, net	3,037			3,027
Accounts receivable	2,723			2,682
Accrued income	2,345			2,265
Leased assets and related assets	1,647			2,082
FHLB stock	1,198			1,279
Prepaid expenses	1,130			1,162
ROU assets	1,069			1,193
Derivative assets	951			684
Equity securities at fair value	360			898
Other	533			874
Total other assets	$	37,170			$	35,128

Truist Financial Corporation 65

Funding Activities

Deposits are the primary source of funds for the Company’s lending and investing activities. Scheduled payments and maturities from portfolios of loans and investment securities also provide a stable source of funds. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed funds, as well as long-term debt issued through the capital markets, all provide supplemental liquidity sources. Funding activities are monitored and governed through Truist’s overall ALM process under the governance and oversight of the MRLCC, which is further discussed in the “Market Risk” section in MD&A. The following section provides a brief description of the various sources of funds.

Deposits

Deposits are obtained principally from individuals and businesses within Truist’s geographic area and include noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market deposit accounts, CDs, and IRAs. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit and service charge schedules. Interest rates paid on specific deposit types are determined based on (i) competitor deposit rates, (ii) the anticipated amount and timing of funding needs, (iii) the availability and cost of alternative sources of funding, and (iv) anticipated future economic conditions and interest rates. Deposits are attractive sources of funding because of their stability and relative cost.

The following table presents a summary of deposits:

Table 27: Deposits as of Period End
(Dollars in millions)	Dec 31, 2023			Dec 31, 2022
Noninterest-bearing deposits		$	111,624			$	135,742
Interest checking		104,757			110,464
Money market and savings		135,923			143,815
Time deposits		43,561			23,474
Total deposits		$	395,865			$	413,495

Deposits totaled $395.9 billion at December 31, 2023, a decrease of $17.6 billion from December 31, 2022. The decline in deposits reflects the impacts of monetary tightening, inflation, and higher interest rate alternatives, partially offset by growth in time deposits, which reflects increases in various wholesale deposit products to support funding. Brokered deposits were $31.3 billion at December 31, 2023 compared to $22.4 billion at December 31, 2022.

Truist has a very granular and relationship-based deposit franchise. Approximately 62% of deposits are insured or collateralized at December 31, 2023, compared to 61% at December 31, 2022. Truist deposit accounts are typically based on long-term relationships and include multiple products and services. The amount of deposits above the FDIC’s limit of $250,000 was $175.1 billion and $189.6 billion as of December 31, 2023 and 2022, respectively, calculated using the same methodology as the Call Report for Truist Bank. The decrease in uninsured deposits from December 31, 2022 to December 31, 2023 was largely due to commercial clients that chose to diversify into money market mutual funds or across multiple banks (primarily higher-cost, non-operational deposits) and the maturity of large denominated negotiable certificates of deposit.

The following table summarizes the maturities of time deposit accounts above $250,000:

Table 28: Scheduled Maturities of Time Deposits $250,000 and Greater
December 31, 2023 (Dollars in millions)
Three months or less	$	7,531
Over three through six months	1,225
Over six through twelve months	1,592
Over twelve months	74
Total	$	10,422

The following table presents average deposits:

Table 29: Average Deposits
	Three Months Ended
(Dollars in millions)	Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023	Dec 31, 2022
Noninterest-bearing deposits	$	114,555			$	118,905		$	123,728	$	131,099	$	141,032
Interest checking	101,722			101,252			102,105		108,886	110,001
Money market and savings	137,464			139,961			138,149		139,802	144,730
Time deposits	41,592			40,920			35,844		28,671	17,513
Total average deposits	$	395,333			$	401,038		$	399,826	$	408,458	$	413,276

66 Truist Financial Corporation

Average deposits for the fourth quarter of 2023 were $395.3 billion, a decrease of $5.7 billion, or 1.4%, compared to the prior quarter.

Average noninterest-bearing deposits decreased 3.7% compared to the prior quarter and represented 29.0% of total deposits for the fourth quarter of 2023 compared to 29.6% for the third quarter of 2023 and 34.1% compared to the year ago quarter. Average money market and savings accounts decreased 1.8%. Average time deposits increased 1.6% due to increases in retail client time deposits, primarily due to migration from other deposit products, partially offset by a $2.1 billion decline in brokered time deposits.

Borrowings

Table 30: Short-Term Borrowings
	As Of / For The Year Ended December 31,
(Dollars in millions)	2023		2022		2021
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end during the year	$	4,120			$	6,033			$	3,279
Balance outstanding at end of year	2,427			2,128			2,435
Average outstanding during the year	2,472			2,670			2,382
Average interest rate during the year	5.18	%		1.33	%		0.07	%
Average interest rate at end of year	5.39			4.36			0.01
Federal funds purchased and short-term borrowed funds:
Maximum outstanding at any month-end during the year	$	26,453			$	22,324			$	6,244
Balance outstanding at end of year	22,401			19,340			808
Average outstanding during the year	22,007			10,135			1,936
Average interest rate during the year	5.26	%		2.79	%		0.12	%
Average interest rate at end of year	5.15			4.38			0.08

At December 31, 2023, short-term borrowings totaled $24.8 billion, an increase of $1.4 billion compared to December 31, 2022. Average short-term borrowings were $24.5 billion, or 5.2% of total funding, for the year ended December 31, 2023, as compared to $15.0 billion, or 3.2%, for the prior year.

•Maturities and redemptions of $5.5 billion of senior notes.

•Issued $8.0 billion fixed-to-floating rate senior notes with interest rates between 4.87% and 7.161% due from June 8, 2027 to June 8, 2034.

•Net redemptions of $6.6 billion of FHLB floating rate advances as issuances in the first quarter of 2023 were more than offset by redemptions throughout the rest of 2023.

Truist Financial Corporation 67

Shareholders’ Equity

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

Table 31: Book Value per Common Share
(Dollars in millions, except per share data, shares in thousands)	Dec 31, 2023		Dec 31, 2022
Common equity per common share	$	39.31			$	40.58
Non-GAAP capital measure:(1)
Tangible common equity per common share	$	21.83			$	18.04
Calculation of tangible common equity:(1)
Total shareholders’ equity	$	59,253			$	60,537
Less:
Preferred stock	6,673			6,673
Noncontrolling interests	152			23
Goodwill and intangible assets, net of deferred taxes	23,306			29,908
Tangible common equity	$	29,122			$	23,933
Common shares outstanding at end of period	1,333,743			1,326,829

Risk Management

Truist seeks to maintain 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 is designed to promote 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. Truist has developed a risk taxonomy designed to drive internal risk measurement and monitoring and enable 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’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 is designed to support its core values and sound risk management practices in an effort to promote judicious risk-taking behavior.

Truist’s purpose, mission, and values are the foundation for the risk management framework utilized at Truist and therefore serve as the basis on which the risk appetite and risk strategy are built. Truist’s RMO provides independent oversight and guidance for risk-taking across the enterprise. In keeping with the belief that consistent values drive long-term behaviors, Truist’s RMO has established the following risk values which are intended to guide teammates’ day-to-day activities:

•Managing risk is the responsibility of every teammate.

•Proactively identifying risk and managing the inherent risks of their businesses is the responsibility of the business units.

•Managing risk with a balanced approach which includes quality, profitability, and growth.

•Utilizing sound and consistent risk management practices.

68 Truist Financial Corporation

•Thoroughly analyzing risk quantitatively and qualitatively.

•Realizing lower cost of capital from high quality risk management.

Truist places significant emphasis on risk management oversight and maintains a separate Board-level Risk Committee, which assists the Board in its oversight of the Company’s risk management function. The Committee is responsible for approving and periodically reviewing the Company’s risk management framework and risk management policies as well as monitoring the Company’s risk profile, approving risk appetite statements, and providing input to management regarding Truist’s risk appetite and risk profile.

As illustrated below, the risk management framework is supported by three lines of defense. The following figure describes the roles of the three lines of defense:

Truist’s Risk Governance framework is designed to provide comprehensive Board and management risk oversight, maintaining a committee governance structure that is designed to ensure alignment and execution of the risk management framework. The committee structure provides a mechanism to allow for efficient aggregation and escalation of risk information from the business units up to the risk programs, management and ultimately the Board. The GCO standardizes first-line risk execution and ownership across the company in partnership with the business units and enterprise functions. As part of the first-line of defense, the GCO provides risk advice and effective challenge, issues management, testing, reporting, and business continuity expertise to first-line execution efforts. The GCO coordinates closely with the RMO to ensure proper program execution and regulatory compliance.

Truist Financial Corporation 69

Truist maintains a robust and comprehensive management committee structure reporting to the Truist Board of Directors, or Board committees thereof, that are responsible for providing independent risk oversight of each of Truist’s primary risk types and comprehensive coverage of Truist’s strategy, risk-taking and execution activities. Examples of such committees include the ERC and Management Compensation Oversight Committee.

The ERC serves as the enterprise-wide risk governance body authorized by the Risk Committee of the Board of Directors with responsibility for broad strategic oversight of all risk types and establishing a fully integrated view of risks across Truist at the enterprise level. The ERC is responsible for maintaining an effective risk management framework and monitoring its adoption and execution across the enterprise. The ERC is chaired by the Vice Chair and Chief Risk Officer and its membership includes the Chief Executive Officer, Vice Chair and Chief Operating Officer, Chief Audit Officer, and other designated members of Truist management.

Principal types of inherent risk include market, credit, liquidity, technology, compliance, strategic, reputational, and operational risks. The following is a discussion of these risks.

Market Risk

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

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

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

Interest Rate Market Risk

70 Truist Financial Corporation

Net interest income at risk measures changes in net interest income in alternate interest rate scenarios relative to Truist’s baseline scenario, which relies on assumptions including expectations of the economy and interest rates – which are influenced by market conditions, new business volume, pricing, and client behavior. In measuring net interest income at risk, Truist assumes that changes in key factors, such as prepayments and deposit pricing (betas), largely move in line with those it has experienced in prior rate cycles. However, future behavior of key factors used in this measurement may vary. Net interest income at risk measurement assumes, when applicable, that U.S. interest rates will not fall below zero.

Truist evaluates a wide range of alternate scenarios including instantaneous and gradual as well as parallel and non-parallel changes in interest rates. The following table provides additional information on the estimated change to net interest income over the following 12 months for select parallel alternate scenarios, expressed as a percentage change relative to baseline net interest income.

Table 32: Interest Sensitivity Simulation Analysis
	Dec 31, 2023
Up 200bps gradual change in interest rates	(1.46)	%
Up 50bps instantaneous change in interest rates	(0.36)
Down 50bps instantaneous change in interest rates	(0.10)
Down 200bps gradual change in interest rates	(0.30)

Estimated changes to net interest income in the previous table assume no change in deposit balances or mix relative to the baseline scenario. In an increasing rate scenario, rotation from non-interest-bearing into interest bearing deposits would reduce net interest income. Conversely, in a down rate scenario, rotation from higher yielding to lower yielding deposits would benefit net interest income. Truist performs and monitors sensitivity tests of deposit and other key assumptions used in interest rate risk.

Economic value of equity measures changes in economic value of Truist’s current balance sheet and off-balance sheet hedges under alternate rate scenarios relative to starting economic value. Truist uses economic value of equity as a longer-term measure of interest rate risk.

LIBOR Transition

The remaining tenors of U.S. dollar LIBOR ceased publication of representative rates on June 30, 2023, with only select tenors receiving a synthetic publication through September 30, 2024. Truist provided timely notices and information to impacted clients about the transition to new interest rates post cessation and had minimal use of synthetic LIBOR to support the transition. Most contracts were transitioned to new rates in July and August 2023, in accordance with fallback language. A small number of contracts utilize longer tenor LIBOR rates and will transition by early 2024 (6-month and 12-month LIBOR) based on contractual agreements. Truist has materially completed LIBOR transition efforts, primarily utilizing SOFR replacement rates, and closed formal project efforts as of September 2023.

Fallback language used to remediate loan agreements was generally consistent with ARRC recommendations and included use of “hardwired fallback” language, which transitioned loans to a SOFR based rate after June 30, 2023. For a small number of wholesale contracts remaining without fallback language, Truist leveraged the LIBOR Act and corresponding safe harbor provision to transition these loans to SOFR. Truist’s consumer lending portfolios included fallback language to transition to SOFR, based on lender discretion and as supported by the LIBOR Act; therefore, these contracts did not require remediation and also benefit from the safe harbor provisions of the LIBOR Act.

Derivatives that reference LIBOR 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 transitioned to a SOFR based rate utilizing application of the LIBOR Act and the rules promulgated thereunder by the FRB. Truist announced that these securities would move to a 3-month adjusted Term SOFR in accordance with the LIBOR Act. See “Note 12. Shareholders’ Equity” for information about preferred stock using LIBOR.

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 Financial Corporation 71

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

Covered Trading Positions

Securitizations

As of December 31, 2023, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule, which were non-agency asset backed securities positions, was $49 million. 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 December 31, 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.

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Table 33: VaR-based Measures
	Year Ended December 31,
		2023	2022
(Dollars in millions)				10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum				$	30			$	14			$	38	$	14
Average				17			7			17			5
Minimum				10			4			6			3
Period-end				23			11			20			6
VaR by Risk Class:
Interest Rate Risk						5					6
Credit Spread Risk						2					8
Equity Price Risk						5					1
Foreign Exchange Risk						1					—
Portfolio Diversification						(2)					(9)
Period-end						11					6

Stressed VaR-based measures

Table 34: Stressed VaR-based Measures - 10 Day Holding Period
	Year Ended December 31,
(Dollars in millions)		2023		2022
Maximum		$	164			$	109
Average		76			70
Minimum		25			40
Period-end		79			77

Compared to the prior year, Stressed VaR measures were generally higher, primarily due to higher market making inventory and lower diversification benefits in 2023.

Specific Risk Measures

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 December 31, 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.

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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 risk factor sensitivities, historical repeats and hypothetical scenarios with varying liquidity horizons of key risk factors. 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.

Credit Risk

Credit risk is the risk to current or anticipated earnings or capital arising from the default, unwillingness or inability of a borrower, obligor, or counterparty such that an obligation will not be repaid on time and/or in full or the client and/or counterparty will fail to perform on an obligation to the Company or its affiliates. Credit risk exists in all activities where success depends on the performance of a borrower, obligor, or counterparty. Credit risk arises when Truist funds are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether on or off-balance sheet. Credit risk increases when the credit quality of an issuer whose securities or other instruments the Company or its affiliates holds has deteriorated.

Truist has established the following general practices to manage credit risk:

•limiting the amount of credit that individual lenders may extend to a borrower;

•establishing a process for credit approval accountability;

•careful initial underwriting and analysis of borrower, transaction, market, and collateral risks;

•ongoing servicing and monitoring of individual loans and lending relationships;

•maintaining collections and asset resolution teams;

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•continuous monitoring of the portfolio, concentration and transactional limits, emerging risks, market dynamics and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market and other relevant conditions change.

The following discussion describes the underwriting procedures and overall risk management of Truist’s lending function.

Underwriting Approach

•Level of equity invested in the transaction - in general, borrowers are required to contribute or invest a portion of their own funds prior to any loan advances.

Refer to the “Lending Activities” section in MD&A for a discussion of each loan and lease portfolio.

Liquidity Risk

Liquidity risk is the risk that (i) Truist will be unable to meet its obligations as they come due because of an inability to obtain adequate funding (funding liquidity risk), or (ii) Truist cannot easily monetize assets without significantly lowering market prices because of inadequate market depth or market disruptions (market liquidity risk). Refer to the “Liquidity” section in MD&A for additional discussion.

Technology Risk

Technology risk is the business risk associated with the use, ownership, operation, involvement, influence, and adoption of information technology across the Company. Truist has defined and adopted a technology risk framework that provides the foundation for technology risk strategy, program, and oversight and defines key objectives, operating model components, risk domains, and capabilities to manage this risk.

Cybersecurity risk management and strategy

Like other financial services firms, Truist faces an increasingly complex and evolving cybersecurity threat environment. See Item 1A, “Risk Factors” for information on risks from cybersecurity threats. We maintain a risk-based cybersecurity framework that is part of our enterprise-wide risk management framework. It is implemented through people, processes, and technology, whereby we assess, identify, and manage material risks from cybersecurity threats, and seek to continually adapt our risk mitigation activities accordingly.

Our cybersecurity framework is aligned with industry standards such as those of the National Institute of Standards and Technology and the Federal Financial Institutions Examination Council, and is designed to conform to the requirements and guidance from applicable regulatory authorities. In addition, our cybersecurity framework includes internally and third-party focused capabilities that drive the development and implementation of our data security strategy, which is designed to reduce cybersecurity risk while enabling Truist’s corporate business objectives. Truist’s cybersecurity strategy is enabled by Truist’s multilayered defenses, including capabilities that are designed for early and rapid cyber threat identification, detection, protection, response, and recovery.

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Processes for assessing, identifying, and managing material risks from cybersecurity threats

As part of our enterprise risk management framework, we have implemented and maintain a program to assess, identify, and manage risks arising from the cybersecurity threats facing Truist. Truist maintains cybersecurity and information security policies, procedures, and technologies that are designed to address regulatory requirements and protect our clients’, teammates’ and our own data against unauthorized disclosure, modification, and misuse. These policies, procedures, and technologies cover a broad range of areas, including: identification of internal and external threats, access control, data security, protective controls, detection of malicious or unauthorized activity, incident response, and recovery planning.

Truist participates in the federally recognized Financial Services Information Sharing and Analysis Center as a key part of the Company’s cyber threat intelligence and response programs, as well as other industry organizations and initiatives that promote industry best practices such as harmonized cybersecurity standards, cyber readiness, and secure consumer financial data sharing. To further mitigate the risks presented by an evolving cyber threat landscape, Truist provides data protection guidance to clients and promotes data protection awareness and accountability through mandatory teammate training. Truist conducts scenario-driven test exercises simulating impacts and consequences developed through analysis of real-world technology incidents as well as known and anticipated cyber threats. These exercises are designed to assess the viability of Truist’s crisis response and management programs and provide the basis for continuous improvement. Where a potential cybersecurity threat is identified in our environment, our Cyber Incident Response Team evaluates the potential impact to Truist and coordinates remediation where required. Our Cyber Incident Response Team also manages significant cyber-specific events, with escalation to executive management and the Board, as appropriate.

Our cybersecurity framework is also designed to help oversee, identify, and mitigate cybersecurity risks associated with our use of third-party service providers. Following an initial assessment of the level of enterprise risk potentially posed by use of the third-party, the service provider is then subject to further risk-based assessments on its operational resilience and cybersecurity practices, including disaster recovery and business continuity plans that specify the time frame to resume activities and recover data. In its agreements with third-party service providers, Truist then requires service providers to adhere to Truist’s relevant cybersecurity and operational resilience standards, subject to certain exceptions that are managed on a case-by-case basis.

Our cybersecurity framework is routinely assessed to ensure the effectiveness of key controls through third-party cybersecurity maturity measurements, technology risk oversight, compliance risk management testing and monitoring, internal audit review, and regulatory oversight.

In addition, Truist continues to strengthen its cross-functional, holistic approach to enterprise resilience by addressing potential amplification of risks from significant technology, cybersecurity and data incidents. As part of these efforts, Truist is deepening capabilities for both disaster recovery and restoration, along with the implementation of other resilience measures.

Management’s role in assessing and managing material risks from cybersecurity threats

Truist’s cybersecurity framework is operated and maintained by management, including the CIO, CISO, CRO and CTRO. These senior officers are responsible for assessing and managing Truist’s cybersecurity risks. Our cybersecurity framework strategy, which is overseen by CISO, is informed by various risk and control assessments, control testing, external assessments, threat intelligence, and public and private information sharing. Our cybersecurity framework also includes processes for escalating and considering the materiality of incidents that impact Truist, including escalation to executive management and the Board, which are periodically tested through tabletop exercises to test Truist’s preparedness.

In addition, our Technology Management Committee is an internal committee created to ensure that members of executive management overseeing multiple business units understand pertinent technology-related topics, including cybersecurity and information security, and associated risks. The Technology Management Committee provides additional oversight of cybersecurity and information security strategy, including understanding and prioritizing cybersecurity and information security capabilities and associated risks.

The members of management that lead our Cybersecurity Program and strategy have extensive experience in technology, cybersecurity, and information security. Our CIO of has over 25 years of experience leading cybersecurity teams at financial institutions, including in the areas of information technology strategy, risk management, and information security. Following the departure of our CISO in January 2024, we have appointed an interim CISO while our search for a permanent CISO continues. Our interim CISO has over 20 years of experience as a technology and information security executive in the financial services industry, including serving as CISO at two different financial institutions and as a supervising examiner for the Federal Reserve Bank of New York.

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Board of Directors’ oversight of risks from cybersecurity threats

Our Board has primary responsibility for the oversight of our enterprise risk management, and exercises its oversight function in respect of cybersecurity risk through two of its committees. The Risk Committee of the Board is responsible for oversight of Truist’s risk management function, involving approving and reviewing Truist’s risk management framework and policies as well as overseeing management’s implementation of Truist’s risk management framework and significant risk policies. In addition, the Technology Committee of the Board assists the Board and the Risk Committee in oversight of Truist’s technology risks.

The oversight responsibility of our Board and its committees is facilitated through management-reporting processes designed to provide visibility to the Board and its committees on the processes for the identification, assessment, prioritization and management of critical risks and management’s risk mitigation strategies. For example, members of the Risk Committee receive regular reports from our CRO and CTRO related to information technology and cybersecurity risks to Truist. The Risk Committee may also meet throughout the year with risk management advisors and discuss with executive management any recommendations received. In addition, the Technology Committee receives reports from management regarding Truist’s practices, management, and functioning of technology operations and cybersecurity and information security risks, and reviews and discusses Truist’s technology policies, standards and controls. On at least a semi-annual basis, the Technology Committee reports to the Risk Committee the significant activities undertaken by the Technology Committee involving oversight of technology risks in support of the Risk Committee’s overall responsibility and oversight of Truist’s risk management framework. The CISO provides updates at every Technology Committee meeting on cybersecurity and information security risk, and the Board annually reviews and approves our Information Security Program and Information Security Policy.

Truist provides ongoing development and education to its directors with respect to cybersecurity, including presentations at Board meetings on special topics, such as updates on cybersecurity legislation and regulation, as well as making available written materials and video presentations to directors for review at their own pace. The Board also conducts a cybersecurity tabletop exercise at least every other year to simulate Truist’s analysis and response to hypothetical cybersecurity incidents. In addition, Truist provides directors with a Board Cybersecurity Handbook that provides details on key Truist practices, resources and protocols relating to cybersecurity protection, response and preparedness. Finally, as required by the Gramm-Leach-Bliley Act, the Board receives an update at least annually on Truist’s information security program.

Data Risk

Truist is subject to risk that data may be negatively impacted by integrity, quality, availability, and privacy, which could potentially impact regulatory and management reporting, public disclosures, and business decisions. Truist recognizes the importance of maintaining accurate and reliable data and maintains a formal data risk management program to mitigate risks related to data fidelity. Through active data risk monitoring and accuracy testing, Truist provides reasonable assurance over the quality and retention of key data used for operational, strategic, regulatory, and compliance purposes. Management and the Board provide oversight of the data risk management program and receive regular updates from the Chief Data Risk Officer. While the current data risk management program identifies and mitigates data risk, the data risk program must be dynamic and is actively expanding oversight to enhance data risk management capabilities to achieve the data risk management objectives defined in the strategic plan.

Compliance Risk

Compliance risk is the risk to current or anticipated earnings or capital arising from violations of laws, rules, or regulations, or from non-conformance with prescribed practices, internal policies, and procedures or ethical standards. This risk exposes Truist to fines, civil monetary penalties, payment of damages, and the voiding of contracts. Compliance risk can result in diminished reputation, reduced franchise or enterprise value, limited business opportunities, increased costs and expenses, and lessened expansion potential.

Strategic Risk

Strategic risk is the risk to earnings, capital, stock price, diminished stakeholder confidence, or negative impact to human capital resulting from ineffective strategy and execution, adverse business decisions, or lack of responsiveness to changes in the banking industry and operating environment. Truist is committed to fulfilling its overall strategic objectives by setting and successfully executing established business strategies to deliver on earnings growth and maintaining strong confidence and trust with key stakeholder constituencies.

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Reputational Risk

Truist manages reputational risk under an established risk management framework that includes established policies and procedures embedded within its existing business and risk management processes. The Company proactively monitors, identifies, and internally escalates potential reputational risk events and endeavors to mitigate such reputational risks in a timely manner. Truist takes pride with ensuring transparent and accurate communication, both internally and externally, to respond to key stakeholders on issues or events that give rise to potential reputational risk. Truist utilizes an established risk taxonomy that is used to help identify, measure, and monitor reputational risk that enables clear transparently communication to stakeholders on the level of potential risk faced by the Company which in turn allows for effective management of risk to acceptable levels.

Truist is committed to operating in a manner that reflects the Company’s stated Purpose, Mission, and Values and seeks to protect its reputation, public confidence, and resilience by identifying and evaluating associated risks that conflict with the expectations of the Company’s internal and external stakeholders, including clients, teammates, investors, regulators, and communities.

Operational Risk

Operational risk is the risk to current or anticipated earnings or capital arising from inadequate or failed internal processes, people, and systems or from external events. It includes legal risk, which is the risk of loss arising from defective transactions, litigation or claims made, or the failure to adequately protect company-owned assets. An operational loss occurs when an event results in a loss or reserve originating from operational risk.

Model Risk

Model risk is the risk to current or anticipated earnings or capital from decisions based on incorrect or misused model outputs. Truist uses models for many purposes, including the valuation of financial positions, estimation of credit losses, and the measurement of risk. Valuation models are used to value certain financial instruments for which quoted prices may not be readily available. Valuation models are also used as inputs for VaR, the estimation of VaR itself, regulatory capital, stress testing, and the ACL. Models are owned by the applicable BUs, who are responsible for the development, implementation, and use of their models. Oversight of these functions is performed by the MRO, which is a component of the RMO. Once models have been approved, model owners are responsible for the maintenance of an appropriate operating environment and must monitor and evaluate the performance of the models on a recurring basis. Models are updated in response to changes in portfolio composition, industry and economic conditions, technological capabilities, and other developments.

MRO manages model risk in a holistic manner through a suite of model governance and model validation activities. The risk of each model is assessed and classified into various risk tiers. Additionally, MRO maintains an enterprise-wide model inventory containing relevant model information. Regarding model validation, MRO utilizes internal validation analysts and managers with skill sets in predictive modeling to perform detailed reviews of model development, implementation, and conceptual soundness. On certain occasions, the MRO will also engage external parties to assist with validation efforts. Once in a production environment, MRO assesses a model’s performance on a periodic basis through ongoing monitoring reviews. MRO tracks issues that have been identified during model validation or through ongoing monitoring and engages with model owners to ensure their timely remediation. MRO gauges model risk utilizing a collection of key risk indicators, which are periodically reported to relevant committees, including but not limited to, the Model Risk Management Committee and the ERC. MRO will also present model risk topics to the Board Risk Committee as necessary.

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.

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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 $84.9 billion and Truist’s average LCR was 112% for the three months ended December 31, 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 December 31, 2023, Truist was 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 35: Selected Liquidity Sources
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
Unused borrowing capacity:
FRB	$	55,252			$	49,250
FHLB	24,712			20,770
Available investment securities (after haircuts)	74,717			85,401
Available secured borrowing capacity	154,681			155,421
Eligible cash at the FRB	25,085			15,556
Total	$	179,766			$	170,977

At December 31, 2023, Truist Bank’s available secured borrowing capacity represented approximately 3.4 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.

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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 of the Parent Company (as may be permitted by the terms of each respective series). See “Note 22. Parent Company Financial Information” 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 December 31, 2023 and December 31, 2022, the Parent Company had 48 months and 37 months, respectively, of cash on hand to satisfy projected cash outflows, and 30 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” 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:

The following table presents the credit ratings and outlooks of Truist and Truist Bank as of December 31, 2023:

Table 36: Credit Ratings of Truist Financial Corporation and Truist Bank
	Moody’s	S&P	Fitch	DBRS Morningstar
Truist Financial Corporation:
Issuer	A3	A- / A-2	A+ / F1	AAL / R-1M
Senior unsecured	A3	A-	A	AAL
Subordinated	A3	BBB+	A-	AH
Preferred stock	Baa2(hyb)	BBB-	BBB	AL
Truist Bank:
Issuer	A2	A / A-1	A+ / F1	AA / R-1H
Senior unsecured	A2	A	A+	AA
Deposits	Aa3 / P-1	NA	AA- / F1+	AA
Subordinated	(P) A2	A-	A	AAL
Ratings outlook:
Credit trend	Negative	Stable	Negative	Stable

Changes in the Company’s credit ratings and outlooks during 2023 include:

•On March 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 bank failures in the first half of 2023 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 the view of Moody’s Investor Service 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.

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•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.

•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, the “negative” ratings outlook reflects the view of Fitch Ratings that Truist currently has less “headroom” to face increasing earnings pressures than similarly-rated peers.

•On November 1, 2023, Moody’s Investors Service affirmed the ratings of Truist and Truist Bank and revised the outlook on those ratings to “negative” from “rating under review for downgrade.” The confirmation of Truist’s ratings reflects Moody’s Investor Service’s view that Truist should be able to continue to grow its capital ratios through earnings retention and balance sheet optimization activities, and also maintain adequate control of its asset liability management risks, including rising funding costs and its sizeable holdings of low-yielding, fixed-rate assets.

•On February 20, 2024, Moody’s Investors Service placed the long-term ratings and certain short-term ratings of Truist and Truist Bank “under review for downgrade,” citing that even though its capitalization will improve materially, Truist will be less diversified and will have greater reliance on net interest income, and as a consequence of these factors, it will likely have greater earnings volatility following the sale of TIH.

•On February 20, 2024, Fitch Ratings downgraded the ratings of Truist and Truist Bank to ‘A’ from ‘A+’ following the announced sale of TIH. Fitch has also downgraded TFC and Truist Bank’s viability rating to ‘a’ from ‘a+.’ The rating outlook is “stable.” Fitch Ratings cited: (i) TIH as largest source of fee income; (ii) the segment has grown faster than rest of the bank and benefited from higher inflation in recent years; and (iii) the sale will result in a less diverse business mix than similarly-rated peers.

•On February 20, 2024, DBRS, Inc. affirmed the ratings of Truist and Truist Bank and maintained a “stable” ratings outlook, citing the sale of the remaining stake in TIH has no impact on the Company’s credit ratings.

•On February 22, 2024, S&P Global Ratings affirmed its ‘A-/A-2’ issuer credit ratings on Truist and its ‘A/A-1’ ratings on Truist Bank, citing that the TIH sale will significantly boost Truist’s regulatory capital ratios, enhance Truist’s liquidity, and help fund continued organic growth in its core banking businesses. The outlook on the long-term ratings is stable.

Management believes current sources of liquidity are adequate to meet Truist’s current requirements and plans for continued growth. As of December 31, 2023, the Company had $2.3 billion in obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the total amount of obligations based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in determining the total amount of obligations. See “Note 9. Other Assets and Liabilities,” “Note 11. Borrowings,” and “Note 16. Commitments and Contingencies” for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

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.

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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 37: Capital Requirements
	Minimum Capital		Well-Capitalized		Minimum Capital Plus Stress Capital Buffer(1)
		Truist		Truist Bank
CET1	4.5	%		NA		6.5	%		7.4	%
Tier 1 capital	6.0			6.0	%		8.0			8.9
Total capital	8.0			10.0			10.0			10.9
Leverage ratio	4.0			NA		5.0			NA
Supplementary leverage ratio	3.0			NA		NA		NA

(1)Reflects a SCB requirement of 2.9% applicable to Truist as of December 31, 2023. Truist’s SCB requirement, received in the 2023 CCAR process, is effective from October 1, 2023 to September 30, 2024.

Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company’s double leverage ratio (investments in subsidiaries as a percentage of shareholders’ equity). The active management of the subsidiaries’ equity capital is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of Truist’s capital position.

Management intends to maintain capital at Truist Bank at levels that exceed the minimum capital plus CCB. This will also result in Truist Bank being “well-capitalized” for regulatory purposes. Secondarily, it is management’s intent to maintain Truist Bank’s capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity, and risk profile. If the capital levels of Truist Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.

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

Table 38: Capital Ratios - Truist Bank
	Dec 31, 2023		Dec 31, 2022
CET1	11.7	%		10.6	%
Tier 1 capital	11.7			10.6
Total capital	13.3			12.1
Leverage ratio	9.2			8.5
Supplementary leverage ratio	7.9			7.3

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

Table 39: Capital Ratios - Truist Financial Corporation
(Dollars in millions)	Dec 31, 2023		Dec 31, 2022
Risk-based:
CET1	10.1	%		9.0	%
Tier 1 capital	11.6			10.5
Total capital	13.7			12.4
Leverage ratio	9.3			8.5
Supplementary leverage ratio	7.9			7.3
Risk-weighted assets	$	423,705			$	434,413

Truist’s capital level at December 31, 2023 remains strong compared to the regulatory levels for well-capitalized banks. Truist’s CET1 ratio was 10.1% as of December 31, 2023. The 110 basis point increase since December 31, 2022 resulted from organic capital generation and the minority stake sale in TIH, partially offset by the CECL phase in. The remaining CECL phase in will be amortized ratably in the first quarters of 2024 and 2025.

Truist paid $2.8 billion in common stock dividends, or $2.08 per share, during 2023, compared to $2.7 billion, or $2.00 per share, for 2022. Truist did not have any share repurchases for 2023 and repurchased $250 million in common stock in 2022. In early 2024, Truist declared common dividends of $0.52 per share for the first quarter of 2024.

82 Truist Financial Corporation

Reclassifications

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. The 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. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, Truist’s significant accounting policies and effects of new accounting pronouncements are discussed in detail in “Note 1. Basis of Presentation.”

ACL

Truist’s ACL represents management’s best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgement. The ACL estimation process includes both quantitatively calculated components as well as qualitative components. Quantitative models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. Certain loans or leases that do not have similar risk characteristics are individually evaluated when establishing an allowance for expected credit losses. The macroeconomic forecast data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period the models gradually revert to long-term historical loss conditions over a one-year period. As a means of addressing uncertainty related to future economic conditions, the quantitative allowance components include an adjustment that reflects model outputs calculated using a range of potential future economic conditions. Expected losses are estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or to capture the losses expected at the balance sheet date or prior to January 1, 2023 it is reasonably expected that the loan will be modified as a TDR.

Management considers a range of macroeconomic forecast data in connection with the allowance estimation process. Under the range of scenarios considered as of December 31, 2023, use of the Company’s pessimistic scenario would have resulted in an increase to the modeled allowance results of approximately $2.2 billion. This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

The Company individually evaluates expected credits losses related to loans and leases that do not share similar risk characteristics and prior to January 1, 2023 loans that have been classified as a TDR. For individually evaluated loans, the ALLL is determined through review of data specific to the borrower and related collateral, if any, while prior to January 1, 2023 for TDRs, default expectations and estimated prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL.

Truist Financial Corporation 83

Fair Value of Financial Instruments

The vast majority of assets and liabilities measured at fair value on a recurring basis are based on either quoted market prices or market prices for similar instruments. Refer to “Note 18. Fair Value Disclosures” for additional disclosures regarding the fair value of financial instruments and “Note 2. Business Combinations, Divestitures, and Noncontrolling Interests” for additional disclosures regarding business combinations.

Securities

Truist generally utilizes a third-party pricing service in determining the fair value of its AFS investment securities, whereas trading securities are priced internally. Fair value measurements for investment securities are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Management performs procedures to evaluate the fair values provided by the third-party service provider. These procedures, which are performed independent of the responsible business unit, include comparison of pricing information received from the third-party pricing service to other third-party pricing sources, review of additional information provided by the third-party pricing service and other third-party sources for selected securities and back-testing to compare the price realized on security sales to the daily pricing information received from the third-party pricing service. The Enterprise Valuation Committee, which provides oversight to Truist’s enterprise-wide IPV function, is responsible for the comparison of pricing information received from the third-party pricing service or internally to other third-party pricing sources, approving tolerance limits determined by IPV for price comparison exceptions, reviewing significant changes to pricing and valuation policies and reviewing and approving the pricing decisions made on any illiquid and hard-to-price securities. When market observable data is not available, which generally occurs due to the lack of liquidity or inactive markets for certain securities, the valuation of the security is subjective and may involve substantial judgment by management to reflect unobservable input assumptions.

MSRs

LHFS

Truist originates certain residential and commercial mortgage loans for sale to investors that are measured at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. Changes in the fair value are recorded as components of Mortgage banking income, while the related origination costs are generally recognized in Personnel expense when incurred. The changes in fair value are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the LHFS. Truist uses various derivative instruments to mitigate the economic effect of changes in fair value of the underlying loans. LHFS also includes certain loans, generally carried at LOCOM, where management has committed to a formal plan of sale and the loans are available for immediate sale. Adjustments to reflect unrealized gains and losses resulting from changes in fair value, up to the original carrying amount, and realized gains and losses upon ultimate sale are classified as noninterest income. The fair value of these loans is estimated using observable market prices when available. When observable market prices are not available, the Company uses judgment and estimates fair value using internal models that reflect assumptions consistent with those that would be used by a market participant in estimating fair value. Refer to “Note 1. Basis of Presentation” for further description of the Company’s accounting for LHFS.

84 Truist Financial Corporation

Trading Loans

Truist elects to measure certain loans at fair value for financial reporting where fair value aligns with the underlying business purpose. Specifically, loans included within this classification include trading loans that are (i) purchased in connection with the Company’s TRS business, (ii) part of the loan sales and trading business within the C&CB segment, or (iii) backed by the SBA. Refer to “Note 16. Commitments and Contingencies,” and “Note 19. Derivative Financial Instruments,” for further discussion of the Company’s TRS business. The loans purchased in connection with the Company’s TRS and sales and trading businesses are primarily commercial and corporate leveraged loans valued based on quoted prices for identical or similar instruments in markets that are not active by a third-party pricing service. SBA loans are fully guaranteed by the U.S. government as to contractual principal and interest and there is sufficient observable trading activity upon which to base the estimate of fair value.

Derivative Assets and Liabilities

Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets acquired and liabilities assumed in business combinations are recorded at their fair values. This often involves estimates based on third-party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of definite-lived intangible assets is based upon the estimated economic benefits to be received, which is also subjective. Business combinations also typically result in goodwill, which is subject to ongoing periodic impairment tests based on the fair values of the reporting units to which the acquired goodwill relates. Refer to “Note 1. Basis of Presentation” for a description of the impairment testing process.

At December 31, 2023, Truist’s reporting units with goodwill balances were CB&W, C&CB, and IH. Management performs a goodwill impairment analysis on an annual basis 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. For its annual impairment review, Truist performed a quantitative test of each of its reporting units. The quantitative impairment test estimates the fair value of the reporting units using the income approach and a market-based approach, weighted 50% and 50%, respectively. The inputs and assumptions specific to each reporting unit are incorporated in the valuations, including projections of future cash flows, discount rates, and applicable valuation multiples based on the comparable public company information. The income approach utilizes a discounted cash flow analysis of multi-year financial forecasts 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 market based 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 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 October 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 October 1, 2023 were 13.5%, 12.5%, and 11.0%, respectively.

Truist Financial Corporation 85

Based on the Company’s annual impairment test of goodwill, it was determined for the CB&W and C&CB reporting units that the respective reporting units’ carrying value was in excess of its respective fair value as of October 1, 2023, resulting in a non-cash, non-tax-deductible goodwill impairment charge of $6.1 billion for the year ended December 31, 2023. The goodwill impairment was primarily due to the continued impact of higher interest rates and discount rates on the CB&W and C&CB reporting units, and a sustained decline in banking industry share prices, including Truist’s. For the IH reporting unit, it was determined that the reporting unit’s fair value was in excess of its respective carrying value as of October 1, 2023.

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. Circumstances that could negatively impact the fair value of Truist’s reporting units in the future include a sustained decrease in Truist’s stock price, continued decline in industry peer multiples, an increase in the applicable discount rate and further deterioration in the reporting units’ forecasts. 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 October 1, 2023 through December 31, 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 October 1, 2023 quantitative impairment test, and the sensitivity of the October 1, 2023 quantitative test results to changes in assumptions through December 31, 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 December 31, 2023.

Income Taxes

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. The Company regularly evaluates the ability to realize DTAs, recognizing a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. Truist currently maintains a valuation allowance for certain state carryforwards. For additional income tax information, refer to “Note 1. Basis of Presentation” and “Note 14. Income Taxes.”

Pension and Postretirement Benefit Obligations

Truist offers various pension plans and postretirement benefit plans to teammates. Calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions, which are subject to management judgment and may differ significantly if different assumptions are used. The discount rate assumption used to measure the postretirement benefit obligations is set by reference to an AA Above Median corporate bond yield curve and the individual characteristics of the plans such as projected cash flow patterns and payment durations.

Management also considered the sensitivity that changes in the expected return on plan assets and the discount rate would have on pension expense. For the Company’s qualified plans, a decrease of 25 basis points in the discount rate would result in additional pension expense of approximately $29 million for 2024, while a decrease of 100 basis points in the expected return on plan assets would result in an increase of approximately $145 million in pension expense for 2024. This estimate reflects the sensitivity of certain factors considered in calculation of pension expense but does not consider all factors that could increase or decrease estimates calculated.

Refer to “Note 15. Benefit Plans” for disclosures related to the benefit plans.

86 Truist Financial Corporation

FY 2022 10-K MD&A

SEC filing source: 0000092230-23-000034.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2023-02-28. Report date: 2022-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors of this report.

Executive Overview

This year was a strategic turning point for Truist as we began to shift our focus to executional excellence and purposeful growth. Results for 2022 were solid, reflecting post-integration momentum and progress in many areas. Robust loan growth, significant margin expansion, and good cost discipline contributed to our strong performance. Credit quality remains strong reflecting our conservative credit culture and diverse business mix. We also delivered on our commitment to achieve positive operating leverage for the full-year 2022.

We fulfilled our purpose to inspire and build better lives and communities in many ways throughout the year. We showed care for our teammates with a bold increase in our minimum wage; created new ways to meet clients’ needs through initiatives like Truist One Banking and enhanced digital offerings like Truist Assist, Truist Invest Pro, and Truist Trade; and supported our communities, including introducing a $120 million commitment to small businesses. In addition, we exceeded our $60 billion Community Benefits Plan commitment that we established at the time of the Merger.

We continued to have strong momentum during the year with regards to other environmental, social and governance initiatives that we have undertaken. We announced our goal to achieve net zero greenhouse gas emissions by 2050, which will help support our clients’ transition to a low-carbon economy. In support of this goal, we joined the Partnership for Carbon Accounting Financials, and set 2030 goals to reduce Scope 1 and Scope 2 emissions by 35% each, and to reduce water consumption by 25%, relative to 2019. With 17.2% of senior leadership roles being held by ethnically diverse teammates, we have exceeded our original goal and we aspire for continued growth in this area, and surpassed our goal of 10% spend with diverse suppliers in 2022. Truist was ranked 5th overall within the JUST 100 list and recognized as one of Fortune Magazine’s Most Admired Companies.

Truist maintained strong capital and liquidity in 2022 and made a number of strategic investments to deploy capital and expand on its businesses. During 2022, Truist made the following acquisitions:

•BankDirect Capital Finance, the insurance premium finance unit of Texas Capital Bancshares, which resulted in the addition of approximately $3.1 billion of loans;

•BenefitMall, one of the nation’s leading benefit wholesale general insurance agencies, to broaden the selection of products and services offered by IH’s wholesale insurance broker;

•Kensington Vanguard National Land Services, one of the largest independent full-service national title insurance agencies, to expand IH’s presence in the title insurance market; and

•A noncontrolling equity interest in SunTrust Merchant Services, LLC, in exchange for the rights to certain merchant banking relationships, including relationships previously referred by Truist to SunTrust Merchant Services, LLC.

Truist increased the quarterly common dividend 8% during the year and declared total common dividends of $2.00 per share during 2022. The dividend payout ratio for 2022 was 45% compared to 41% for the prior year. The total payout ratio for 2022 was 49% compared to 68% for the prior year.

40 Truist Financial Corporation

Financial Results

Net income available to common shareholders totaled $5.9 billion for 2022, a 1.8% decrease from the prior year. On a diluted per common share basis, earnings for 2022 were $4.43, compared to $4.47 for 2021. Truist’s results of operations for 2022 produced a return on average assets of 1.15% and a return on average common shareholders’ equity of 10.4% compared to prior year ratios of 1.23% and 9.7%, respectively. Results include merger-related and restructuring charges of $513 million ($393 million after-tax) for 2022 compared to $822 million ($631 million after-tax) for 2021, and incremental operating expenses related to the Merger of $465 million ($356 million after-tax) for 2022 compared to $771 million ($592 million after-tax) for 2021. Additionally, the 2022 results include a gain on the redemption of noncontrolling equity interest of $74 million ($57 million after-tax) related to the acquisition of certain merchant services relationships, a gain on the early extinguishment of long-term debt of $39 million ($30 million after-tax), partially offset by net losses on the sales of securities of $71 million ($54 million after-tax). The 2021 results include charitable contributions of $200 million ($153 million after-tax), an acceleration of loss recognition related to certain terminated cash flow hedges of $36 million ($28 million after tax), and a one-time professional fee expense of $30 million ($23 million after tax), partially offset by a small gain on extinguishment of debt.

Table 8: Earnings Highlights
Year Ended December 31, (Dollars in millions)							Change
	2022		2021	2020		2022 vs. 2021		2021 vs. 2020
Net income available to common shareholders		$	5,927		$	6,033			$	4,184		$	(106)	$	1,849
Diluted earnings per common share		4.43		4.47			3.08			(0.04)		1.39
Net interest income - taxable equivalent		$	14,458		$	13,114			$	13,951		$	1,344	$	(837)
Noninterest income		8,719		9,290			8,879			(571)		411
Total taxable-equivalent revenue		$	23,177		$	22,404			$	22,830		$	773	$	(426)
Less taxable-equivalent adjustment		142		108			125
Total revenue		$	23,035		$	22,296			$	22,705
Return on average assets		1.15	%	1.23	%		0.90	%		(0.08)	%	0.33	%
Return on average common shareholders’ equity		10.4		9.7			6.8			0.7		2.9
Net interest margin - taxable equivalent		3.01		2.86			3.22			0.15		(0.36)

Truist’s revenue for 2022 was $23.0 billion. On a TE basis, revenue was $23.2 billion, which represents an increase of $773 million compared to 2021. Net interest income on a TE basis was $14.5 billion, an increase of $1.3 billion primarily due to higher market interest rates coupled with strong loan growth and well controlled deposit costs. These increases were partially offset by lower purchase accounting accretion and lower PPP revenue. Average earning assets increased $22.3 billion, or 4.9%, compared to the earlier year. The increase in average earning assets reflects a $13.4 billion, or 4.6%, increase in average outstanding loans and a $7.8 billion, or 5.6%, increase in average securities. Average deposits increased $19.7 billion, or 4.9%, and average short-term borrowings increased $8.8 billion, or 142%, partially offset by a decrease in average long-term debt of $3.2 billion, or 8.7%, compared to the earlier year. Noninterest income for 2022 decreased $571 million compared to 2021 primarily due to lower investment banking and mortgage banking income, partially offset by growth in insurance revenues.

NIM was 3.01% for 2022, up 15 basis points compared to the prior year primarily due to higher market interest rates and well controlled deposit costs. The growth in NIM was negatively impacted by lower purchase accounting accretion, which benefited NIM by 13 basis points in 2022 compared to 26 basis points in 2021. The TE yield on the total loan portfolio for 2022 was 4.36%, up 41 basis points. The TE yield on the average securities portfolio was 1.88%, up 38 basis points. The average cost of interest-bearing deposits was 0.42%, up 36 basis points. The average cost of total deposits was 0.27%, up 23 basis points. The average cost of long-term debt was 2.31%, up 78 basis points. The increases in rates on assets and liabilities reflects the rising rate environment during 2022.

The provision for credit losses was $777 million, compared to a benefit of $813 million for the prior year. The current year reflects strong loan growth and a moderate decline in the ALLL ratio, whereas the prior year included reserve releases due to the improving economic environment during that period. Net charge-offs were $823 million, compared to $697 million for the prior year. The net charge-off ratio for the current year of 0.27% was up three basis points compared to the earlier year primarily driven by normalizing trends across certain consumer portfolios, partially offset by lower charge offs in the commercial and industrial portfolio.

Noninterest expense decreased $527 million, or 3.5%, compared to the prior year. Excluding the aforementioned items and the impact of amortization expense for intangibles, noninterest expense increased $380 million, or 3.0%, driven by higher professional fees, operational losses, expenses related to acquired companies and marketing expenses, partially offset by lower occupancy and equipment expenses.

The provision for income taxes was $1.4 billion for 2022, compared to $1.6 billion to 2021. The effective tax rate for 2022 was 18.3%, compared to 19.5% for the prior year. The decrease in the effective tax rate was primarily driven by higher favorable permanent tax items and an increase in discrete tax benefits.

Truist Financial Corporation 41

Truist’s total assets at December 31, 2022 were $555.3 billion, an increase of $14.0 billion, or 2.6%, compared to December 31, 2021. Total loans and leases at December 31, 2022, were $327.4 billion, an increase of $33.1 billion, or 11% compared with December 31, 2021. The increase in loans reflects strong production during the year across most industry verticals and product groups in the commercial and industrial portfolio, as well as growth in the majority of the consumer portfolios. Truist’s total investment securities portfolio declined $25.1 billion, or 16%, as paydowns and maturities were reinvested in the loan portfolio and the fair value of the AFS portfolio declined due to the rising rate environment. In the first quarter of 2022, Truist transferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies.

Total liabilities at December 31, 2022 were $494.7 billion, an increase of $22.7 billion, or 4.8%, from the prior year, reflecting an increase of $18.1 billion in short-term borrowings and an increase of $7.3 billion, or 20%, in long-term debt, partially offset by a decrease of $3.0 billion, or 0.7%, in deposits.

Total shareholders’ equity was $60.5 billion at December 31, 2022, a decrease of $8.7 billion from December 31, 2021. This decline includes a decrease of $12.0 billion in AOCI and $3.0 billion in dividends, partially offset by $6.3 billion in net income. Truist’s book value per common share at December 31, 2022 was $40.58, compared to $47.14 at December 31, 2021.

Asset quality ratios were relatively stable at December 31, 2022 compared to the prior year, reflecting Truist’s prudent risk culture and portfolio diversification. Nonperforming loans and leases held for investment were 0.36% of loans and leases held for investment at December 31, 2022, down two basis points compared to December 31, 2021. The ALLL ratio was 1.34% compared to 1.53% for prior year. The ratio of the ALLL to net charge-offs was 5.32X for 2022, compared to 6.36X in 2021.

As of December 31, 2022, the CET1 ratio was 9.0% and the average LCR was 112%. The 60 basis point decline in the CET1 ratio compared to December 31, 2021 primarily reflects strong loan growth, acquisitions, and the impact from the phase-in of the CECL transition relief.

On February 16, 2023, the Company entered into an agreement to sell a 20% stake of the common equity in Truist Insurance Holdings, a subsidiary of Truist and the sixth-largest insurance brokerage in the U.S., for $1.95 billion to an investor group led by Stone Point Capital, LLC. The closing of the investment is expected to occur in the second quarter of 2023, subject to customary closing conditions and regulatory approvals. The transaction allows Truist to maintain strategic flexibility and future upside in Truist Insurance Holdings, which will continue to benefit from Truist’s operations, access to capital, and client relationships. Truist will also preserve and enhance its client service approach to offering leading insurance products to its banking clients. Moreover, Truist Insurance Holdings gains an experienced partner in Stone Point, which brings deep industry expertise and access to capital to help accelerate Truist Insurance Holdings’ growth. Upon closing of the transaction, a five-person Board will be formed to oversee Truist Insurance Holdings, comprising four members appointed by Truist and one member appointed by Stone Point.

Key Areas of Focus

•Actualizing our purpose to inspire and build better lives and communities and driving executional excellence to realize our potential;

•More focus on integrated relationship management to deepen relationships, improve client experiences, and/or deliver the bank as One Team;

•Digitizing the enterprise through our “T3 strategy” to create a world-class client experience and streamline, simplify, and automate processes and operations; and

•Making Truist a great place to work through our purpose-driven and inclusive culture, competitive compensation and benefits, and compelling career development and growth opportunities.

In addition, certain other challenges and unforeseen events could have a near term impact on Truist’s financial condition and results of operations. See the sections titled “Forward-Looking Statements” and “Risk Factors” for additional examples of such challenges.

42 Truist Financial Corporation

Analysis of Results of Operations

Net Interest Income and NIM

2022 compared to 2021

TE net interest income for the year ended December 31, 2022 was up $1.3 billion, or 10%, compared to the prior year primarily due to higher market interest rates coupled with strong loan growth and well controlled deposit costs, partially offset by lower purchase accounting accretion and lower PPP revenue. Average earning assets increased $22.3 billion, or 4.9%, compared to the prior period. The increase in average earning assets reflects a $13.4 billion, or 4.6%, increase in average total loans and leases and a $7.8 billion, or 5.6%, increase in average securities. Average deposits increased $19.7 billion, or 4.9%, and average short-term borrowings increased $8.8 billion, or 142%, compared to the prior year, while average long-term debt decreased $3.2 billion, or 8.7%.

Net interest margin was 3.01% for the year ended December 31, 2022, up 15 basis points compared to the prior year. The growth in NIM was negatively impacted by lower purchase accounting accretion, which benefited NIM by 13 basis points in 2022 compared to 26 basis points in 2021. The yield on the total loan portfolio for the year ended December 31, 2022 was 4.36%, up 41 basis points compared to the prior year, reflecting higher market interest rates, partially offset by lower purchase accounting accretion and lower PPP revenue. The yield on the average securities portfolio was 1.88% for the year ended December 31, 2022, up 38 basis points compared to the prior year primarily due to the higher rate environment.

The average cost of total deposits was 0.27% for the year ended December 31, 2022, up 23 basis points compared to the prior year. The average cost on short-term borrowings was 2.58% for the year ended December 31, 2022, up 182 basis points compared to the prior year. The average cost on long-term debt was 2.31% for the year ended December 31, 2022, up 78 basis points compared to the prior year. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

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, with no remaining mark for deposits. As of December 31, 2021, the remaining unamortized fair value marks on the loan and lease portfolio, deposits and long-term debt were $1.3 billion, $7 million, and $139 million, respectively.

The remaining unamortized purchase accounting fair value mark on loans and leases consists of $474 million for consumer loans and leases, and $267 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as paydowns occur.

Truist Financial Corporation 43

Table 9: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)
																		2022 vs. 2021		2021 vs. 2020
Year Ended December 31, (Dollars in millions)	Average Balances (5)		Yield/Rate		Income/Expense		Incr. (Decr.)		Change due to		Incr. (Decr.)		Change due to
2022		2021		2020		2022		2021		2020		2022		2021	2020			Rate		Volume			Rate		Volume
Assets
Total securities, at amortized cost: (2)
U.S. Treasury	$	10,591			$	7,633			$	2,194			0.88	%	0.73	%		1.81	%		$	93			$	56			$	40			$	37			$	13			$	24			$	16			$	(35)	$	51
GSE	498			1,799			1,846			2.24			2.29		2.33			11			41			43			(30)			(1)			(29)			(2)			(1)			(1)
Agency MBS	131,669			128,306			78,564			1.94			1.52		2.07			2,552			1,953			1,625			599			547			52			328			(511)			839
States and political subdivisions	392			429			501			3.88			3.55		3.92			15			15			19			—			1			(1)			(4)			(2)			(2)
Non-agency MBS	4,072			1,299			86			2.30			2.20		16.81			94			28			15			66			1			65			13			(23)			36
Other	44			31			36			3.60			1.90		2.33			2			1			1			1			1			—			—			—			—
Total securities	147,266			139,497			83,227			1.88			1.50		2.09			2,767			2,094			1,743			673			562			111			351			(572)			923
Interest earning trading assets	5,767			5,602			4,655			4.15			2.78		3.62			239			156			168			83			78			5			(12)			(43)			31
Other earning assets (3)	20,429			19,498			31,240			1.88			0.24		0.50			384			48			156			336			334			2			(108)			(63)			(45)
Loans and leases, net of unearned income: (4)
Commercial and industrial	149,030			137,304			147,603			3.91			3.04		3.42			5,823			4,174			5,053			1,649			1,270			379			(879)			(540)			(339)
CRE	22,697			25,269			27,410			4.01			2.85		3.32			920			728			914			192			271			(79)			(186)			(119)			(67)
Commercial Construction	5,326			6,053			6,659			4.46			2.98		3.72			228			173			243			55			79			(24)			(70)			(48)			(22)
Residential mortgage	51,721			45,500			51,423			3.60			4.14		4.51			1,860			1,884			2,320			(24)			(263)			239			(436)			(181)			(255)
Residential home equity and direct	25,232			25,319			26,951			5.64			5.69		6.03			1,422			1,441			1,625			(19)			(14)			(5)			(184)			(89)			(95)
Indirect auto	27,197			26,621			25,055			5.50			6.12		6.61			1,497			1,629			1,656			(132)			(167)			35			(27)			(127)			100
Indirect other	11,876			10,935			11,264			6.39			6.70		7.11			758			731			801			27			(35)			62			(70)			(46)			(24)
Student	6,114			7,251			7,596			4.97			3.99		4.62			304			289			351			15			65			(50)			(62)			(47)			(15)
Credit card	4,753			4,650			5,027			9.57			8.92		9.34			455			415			470			40			31			9			(55)			(21)			(34)
Total loans and leases HFI	303,946			288,902			308,988			4.36			3.97		4.35			13,267			11,464			13,433			1,803			1,237			566			(1,969)			(1,218)			(751)
LHFS	2,889			4,546			5,513			4.23			2.63		3.13			122			120			173			2			56			(54)			(53)			(25)			(28)
Total loans and leases	306,835			293,448			314,501			4.36			3.95		4.33			13,389			11,584			13,606			1,805			1,293			512			(2,022)			(1,243)			(779)
Total earning assets	480,297			458,045			433,623			3.49			3.03		3.61			16,779			13,882			15,673			2,897			2,267			630			(1,791)			(1,921)			130
Nonearning assets	63,533			64,340			65,462
Total assets	$	543,830			$	522,385			$	499,085
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	111,539			$	107,311			$	94,879			0.47		0.05			0.23			519			59			216			460			458			2			(157)			(183)			26
Money market and savings	145,645			134,303			123,826			0.37			0.03		0.21			536			35			264			501			497			4			(229)			(248)			19
Time deposits	15,514			18,025			30,008			0.58			0.30		1.02			90			54			305			36			44			(8)			(251)			(160)			(91)
Total interest-bearing deposits (6)	272,698			259,639			248,713			0.42			0.06		0.32			1,145			148			785			997			999			(2)			(637)			(591)			(46)
Short-term borrowings	14,957			6,170			10,129			2.58			0.76		1.35			385			47			137			338			212			126			(90)			(48)			(42)
Long-term debt	34,172			37,410			45,793			2.31			1.53		1.75			791			573			800			218			271			(53)			(227)			(92)			(135)
Total interest-bearing liabilities	321,827			303,219			304,635			0.72			0.25		0.57			2,321			768			1,722			1,553			1,482			71			(954)			(731)			(223)
Noninterest-bearing deposits (6)	145,392			138,733			114,580
Other liabilities	12,794			11,300			11,846
Shareholders’ equity	63,817			69,133			68,024
Total liabilities and shareholders’ equity	$	543,830			$	522,385			$	499,085
Average interest-rate spread							2.77	%		2.78	%		3.04	%
NIM/net interest income - taxable equivalent							3.01	%		2.86	%		3.22	%	$	14,458			$	13,114			$	13,951			$	1,344			$	785			$	559			$	(837)			$	(1,190)			$	353
Taxable-equivalent adjustment													$	142		$	108			$	125

(1)Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs, and dividends.

(2)Total securities include AFS and HTM securities.

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

(4)Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances.

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

(6)Total deposit costs were 0.27%, 0.04%, and 0.22% for the years ended December 31, 2022, 2021, and 2020, respectively.

44 Truist Financial Corporation

Provision for Credit Losses

2022 compared to 2021

The provision for credit losses was $777 million for the year ended December 31, 2022, compared to a benefit of $813 million for the prior year. The current year reflects strong loan growth and a moderate decline in the ALLL ratio, whereas the prior year included reserve releases due to the improving economic environment during that period. Net charge-offs for the year ended December 31, 2022 totaled $823 million compared to $697 million in the prior year. The net charge-off ratio for the current year of 0.27% was up three basis points compared to the prior year.

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. During 2022, the Company reclassified certain line items within noninterest income. See “Note 1. Basis of Presentation” for additional details. The following table provides a breakdown of Truist’s noninterest income:

Table 10: Noninterest Income
	Year Ended December 31,	% Change
(Dollars in millions)			2022		2021		2020		2022 vs. 2021	2021 vs. 2020
Insurance income			$	3,043			$	2,627		$	2,193		15.8	%	19.8	%
Wealth management income			1,338			1,392			1,277		(3.9)		9.0
Investment banking and trading income			995			1,441			1,010		(31.0)		42.7
Service charges on deposits			1,026			1,060			1,020		(3.2)		3.9
Card and payment related fees			944			874			761		8.0		14.8
Mortgage banking income			460			734			1,185		(37.3)		(38.1)
Lending related fees			375			349			315		7.4		10.8
Operating lease income			258			262			309		(1.5)		(15.2)
Securities gains (losses)			(71)			—			402		NM	(100.0)
Other income			351			551			407		(36.3)		35.4
Total noninterest income			$	8,719			$	9,290		$	8,879		(6.1)		4.6

2022 compared to 2021

Noninterest income for the year ended December 31, 2022 decreased $571 million, or 6.1%, compared to the prior year. The current year includes net securities losses of $71 million and the gain on the redemption of noncontrolling equity interest (other income) of $74 million. The earlier year included a gain of $37 million from the divestiture of certain businesses (other income). Excluding the aforementioned items, noninterest income was down $537 million, or 5.8%, compared to the prior year. Investment banking and trading income decreased $446 million, or 31%, due to lower capital markets activity and lower merger and acquisition fees. Mortgage banking income decreased $274 million, or 37%, as lower production income (due to lower margins and refinance volumes resulting from the higher rate environment) was partially offset by higher residential servicing income (due to lower prepayments and servicing portfolio purchases). Excluding the aforementioned gains, other income decreased $237 million, or 46%, primarily due to valuation changes from assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense, lower investment income and valuation marks from the Company’s SBIC and other strategic investments and lower derivative trading income. Wealth management income decreased $54 million, or 3.9%, primarily due to lower market valuations. Insurance income increased $416 million, or 16%, due to acquisitions and continued organic growth. Card and payment related fees increased $70 million, or 8.0%, due to the first quarter 2022 acquisition of certain merchant services relationships and increased activity.

Truist Financial Corporation 45

Noninterest Expense

During 2022, the Company reclassified certain line items within noninterest expense. See “Note 1. Basis of Presentation” for additional details. The following table provides a breakdown of Truist’s noninterest expense:

Table 11: Noninterest Expense
	Year Ended December 31,	% Change
(Dollars in millions)			2022		2021		2020		2022 vs. 2021	2021 vs. 2020
Personnel expense			$	8,467			$	8,632		$	8,146	(1.9)	%	6.0	%
Professional fees and outside processing			1,411			1,442			1,252		(2.1)	15.2
Software expense			932			945			862		(1.4)	9.6
Net occupancy expense			744			764			904		(2.6)	(15.5)
Amortization of intangibles			583			574			685		1.6	(16.2)
Equipment expense			478			513			484		(6.8)	6.0
Marketing and customer development			352			294			273		19.7	7.7
Operating lease depreciation			184			190			258		(3.2)	(26.4)
Regulatory costs			183			137			125		33.6	9.6
Merger-related and restructuring charges			513			822			860		(37.6)	(4.4)
Other expense			742			803			1,048		(7.6)	(23.4)
Total noninterest expense			$	14,589			$	15,116		$	14,897	(3.5)		1.5

2022 compared to 2021

Noninterest expense for the year ended December 31, 2022 was down $527 million, or 3.5%, compared to the earlier year. Merger-related and restructuring charges decreased $309 million due to diminishing integration-related activities and lower costs in connection with the voluntary separation and retirement program, partially offset by higher costs for client day one conversions. Incremental operating expenses related to the Merger decreased $306 million, primarily reflecting lower personnel and professional fees and outside processing expenses. The current year includes a $39 million gain on the redemption of FHLB advances (other expense). The prior year includes $200 million for charitable contributions to the Truist Foundation and the Truist Charitable Fund (other expense), $36 million of expense associated with an acceleration of loss recognition related to certain terminated cash flow hedges (other expense), a $30 million professional fee to develop an ongoing program to identify, prioritize, and roadmap teammate generated revenue growth and expense savings opportunities beyond the Merger, and a small gain on the extinguishment of debt (other expense).

Excluding the aforementioned items and the amortization of intangibles, adjusted noninterest expense increased $380 million, or 3.0%, compared to the earlier year. Other expense was down $61 million, but was up $217 million, or 39%, on an adjusted basis primarily due to increased operational losses and teammate travel expenses. Professional fees and outside processing expenses were down $31 million, but up $173 million, or 20%, on an adjusted basis due to increased project spend for enterprise technology investments and increased call center staffing. Marketing and customer development expense increased $58 million ($66 million, or 23% on an adjusted basis) due to increased spend to continue to build and strengthen Truist’s brand. Net occupancy expense decreased $20 million ($47 million, or 6.2% on an adjusted basis) primarily due to consolidations of branches and other facilities. Equipment expense decreased $35 million ($41 million, or 8.2% on an adjusted basis) primarily due to laptop purchases in the prior year. Personnel expense decreased $165 million, or 1.9% ($18 million, or 0.2% on an adjusted basis) due to lower other post-retirement benefit expense, which is almost entirely offset by lower other income, lower incentives expenses, and lower defined benefit costs, partially offset by higher salaries due to additional personnel costs for acquisitions, annual merit increases, and investments in revenue producing businesses and enterprise technology, and higher medical claims.

Merger-Related and Restructuring Charges

Truist has incurred certain merger-related and restructuring charges, which include:

•severance and personnel-related costs or credits;

•occupancy and equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete equipment write-offs and the sale of duplicate facilities and equipment;

•professional services, which relate to legal and investment banking advisory fees and other consulting services pertaining to restructuring initiatives or transactions;

•systems conversion and related charges, which represent costs to integrate the entity’s information technology systems;

•other merger-related and restructuring charges or credits, which include expenses necessary to convert and combine the acquired branches and operations of merged companies, direct media advertising related to the mergers and acquisitions, asset and supply inventory write-offs, and other similar charges; and

•write-offs related to exiting certain businesses.

46 Truist Financial Corporation

Merger-related and restructuring accruals are established when the costs are incurred or once all requirements for a plan to dispose of or outsource certain business functions have been approved by management. Merger and restructuring accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2022 are generally expected to be utilized within one year, unless they relate to specific contracts that expire later.

The following table presents a summary of merger-related and restructuring charges and the related accruals. The 2022 and 2021 merger-related and restructuring costs primarily reflect charges as a result of the Merger, including costs for severance and other benefits, costs related to exiting facilities, and other restructuring initiatives.

Table 12: Merger-Related and Restructuring Accrual Activity
(Dollars in millions)	Accrual at Jan 1, 2021		Expense		Utilized		Accrual at Dec 31, 2021			Expense	Utilized		Accrual at Dec 31, 2022
Severance and personnel-related	$	36			$	336		$	(295)		$	77			$	92		$	(160)	$	9
Occupancy and equipment	—			139			(139)		—				175	(175)			—
Professional services	16			256			(235)		37				142	(167)			12
Systems conversion and related costs	—			59			(59)		—				60	(60)			—
Other	11			32			(31)		12				44	(51)			5
Total (1)	$	63			$	822		$	(759)		$	126			$	513		$	(613)	$	26

(1)Related to the Merger, the Company recognized $368 million of expense for the year ended December 31, 2022. At December 31, 2022, the Company had an accrual of $19 million related to the Merger. The remaining expense and accrual relate to other restructuring activities.

Segment Results

Prior period results have been revised to reflect management reporting methodology changes resulting from the integration of heritage BB&T and heritage SunTrust measurement processes and systems. Changes primarily relate to funds transfer pricing and internal equity allocations. The changes impacted 2021 and 2020 segment net interest income reported in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report on Form 10-K for the year ended December 31, 2021. CB&W, C&CB, and IH increased $868 million, $566 million, and $15 million, respectively, for 2021 and increased $117 million, $375 million, and $15 million, respectively, for 2020. These increases were offset with decreases in OT&C of $1.4 billion for 2021 and $507 million for 2020.

See “Note 21. Operating Segments” for additional disclosures related to Truist’s operating segments, including the internal accounting and reporting practices used to manage these segments.

Table 13: Net Income by Reportable Segment
	Year Ended December 31,	% Change
(Dollars in millions)			2022		2021		2020					2022 vs. 2021	2021 vs. 2020
Consumer Banking and Wealth			$	3,785			$	3,770		$	3,019				0.4	%	24.9	%
Corporate and Commercial Banking			4,395			4,830			2,690					(9.0)	79.6
Insurance Holdings			546			530			418					3.0	26.8
Other, Treasury & Corporate			(2,459)			(2,693)			(1,635)					(8.7)	64.7
Truist Financial Corporation			$	6,267			$	6,437		$	4,492				(2.6)		43.3

Truist Financial Corporation 47

2022 compared to 2021

Consumer Banking and Wealth

CB&W net income was $3.8 billion for the year ended December 31, 2022, an increase of $15 million, or 0.4%, compared to the prior year. Segment net interest income increased $975 million primarily due to favorable funding credit on deposits attributable to the higher rate environment and higher average loan and deposit balances, partially offset by decreased loan spreads and lower purchase accounting accretion. The allocated provision for credit losses increased $717 million primarily due to a reserve release in the prior year as well as loan growth and a moderately slower economic outlook in the current year. Noninterest income decreased $274 million primarily due to a decrease in residential mortgage income. Noninterest expense decreased $94 million primarily due to lower net occupancy and incentive expenses as well as lower merger-related and restructuring charges, partially offset by increased operational losses.

CB&W average loans and leases held for investment increased $4.9 billion, or 3.7%, for the year ended December 31, 2022 compared to the prior year driven primarily by an increase in residential mortgage loans as well as increases in the Service Finance, prime auto, and recreational lending portfolios. These increases were partially offset by lower mortgage warehouse lending as well as runoff in other partnership lending programs and student loans.

CB&W average total deposits increased $8.9 billion, or 3.7%, for the year ended December 31, 2022 compared to the prior year primarily due to increases in average noninterest bearing deposits, money market and savings, and interest bearing checking, partially offset by a decline in time deposits.

CB&W had 2,123 banking offices at December 31, 2022, a decrease of 394 offices compared to December 31, 2021. The decrease in offices was driven primarily by the consolidation of branches as a result of the Merger.

Truist Wealth had assets under management of $180.4 billion as of December 31, 2022, a decrease of $29.2 billion, or 14%, compared to the prior year primarily due to market declines, partially offset by positive organic growth in assets under management.

Corporate and Commercial Banking

C&CB net income was $4.4 billion for the year ended December 31, 2022, a decrease of $435 million, or 9.0%, compared to the prior year. Segment net interest income increased $740 million primarily due to higher funding credit on deposits and increases to noninterest bearing deposit balances, partially offset by lower purchase accounting accretion and lower fee income associated with PPP loan forgiveness. The allocated provision for credit losses increased $786 million which reflects lower allowance releases in the current year compared to the prior year, partially offset by lower net charge-offs in the current year. Noninterest income decreased $513 million primarily due lower investment banking revenue. Noninterest expense decreased $31 million primarily due to lower incentive expense tied to lower revenues and lower professional fees as well as lower merger-related and restructuring charges, partially offset by investments in revenue producers.

C&CB average loans and leases held for investment increased $11.0 billion, or 7.2%, for the year ended December 31, 2022 compared to the prior year. Excluding a $5.7 billion decrease in average PPP loans, average loans held for investment were up $16.6 billion, or 11%, primarily driven by an increase in the commercial and industrial portfolio loans, partially offset by a decrease in average commercial real estate and commercial construction loans.

C&CB average total deposits decreased $1.9 billion, or 1.3%, for the year ended December 31, 2022 compared to the prior year primarily due to a decrease in average interest bearing deposits, partially offset by an increase in noninterest bearing deposits.

Insurance Holdings

IH net income was $546 million for the year ended December 31, 2022, an increase of $16 million, or 3.0%, compared to the prior year. Noninterest income increased $441 million, or 17%, primarily due to acquisitions and organic growth. Noninterest expense increased $425 million, or 20%, primarily due to investments in new hires and teammates, performance-driven incentive expense, higher merger-related charges related to acquisitions, and an increase in travel and entertainment expense.

48 Truist Financial Corporation

Other, Treasury, and Corporate

OT&C generated a net loss of $2.5 billion for the year ended December 31, 2022, compared to a net loss of $2.7 billion in the prior year. Segment net interest income decreased $435 million due to higher funding credit on deposits to other segments, partially offset by higher funds transfer charges to other segments for loans and higher earnings in the securities portfolio from the higher rate environment. The allocated provision for credit losses increased $80 million, which reflects a build in the reserve for unfunded commitments in the current year compared to a release in the prior year. Noninterest income decreased $225 million primarily due to valuation changes from assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense, and losses on the sale of securities in the current year. Noninterest expense decreased $827 million primarily due to lower personnel expense, charitable contributions to the Truist Foundation and the Truist Charitable Fund in the prior year, and lower merger-related and restructuring charges and incremental operating expenses related to the Merger.

Analysis of Financial Condition

Investment Activities

Truist Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies, GSEs (including MBS), bank eligible obligations of any state or political subdivision, non-agency MBS, structured notes, bank eligible corporate obligations (including corporate debentures), commercial paper, negotiable CDs, bankers’ acceptances, mutual funds, and limited types of equity securities.

Table 14: Composition of Securities Portfolio
(Dollars in millions)	Dec 31, 2022		Dec 31, 2021
AFS securities (at fair value):
U.S. Treasury	$	10,295			$	9,795
GSE	303			1,698
Agency MBS - residential	55,225			134,042
Agency MBS - commercial	2,424			2,882
States and political subdivisions	416			420
Non-agency MBS	3,117			4,258
Other	21			28
Total AFS securities	71,801			153,123
HTM securities (at amortized cost):
Agency MBS - residential	57,713			1,494
Total securities	$	129,514			$	154,617

The securities portfolio totaled $129.5 billion at December 31, 2022, compared to $154.6 billion at December 31, 2021. The decrease includes paydowns and maturities of $20.8 billion, as well as market declines of $14.0 billion, partially offset by purchases of $10.1 billion. In the first quarter of 2022, Truist transferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies. As of December 31, 2022, 41% of the investment securities portfolio was classified as held-to-maturity based on amortized cost.

As of December 31, 2022, approximately 5.6% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 4.6% as of December 31, 2021. The effective duration of the securities portfolio was 6.7 years at December 31, 2022, compared to 5.8 years at December 31, 2021, excluding the impact of unsettled security purchases at period end. The increase in duration was driven by higher rates, resulting in slower prepayments and longer average lives for the MBS portfolio.

U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of December 31, 2022 and December 31, 2021. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company also holds AAA rated non-agency MBS as the risk adjusted returns for these securities are more attractive than agency MBS.

Truist Financial Corporation 49

The following table presents the securities portfolio by major category of security holdings with ranges of maturities and average yields:

Table 15: Securities Yields by Major Category and Maturity
December 31, 2022 (Dollars in millions)	AFS		HTM
Fair Value		Effective Yield (1)		Amortized Cost		Effective Yield (1)
U.S. Treasury:
Within one year	$	1,619			1.30	%		$	—		—	%
One to five years	8,196			0.98			—			—
Five to ten years	455			1.35			—			—
After ten years	25			3.02			—			—
Total	10,295			1.05			—			—
GSE:
One to five years	7			2.91			—			—
Five to ten years	10			3.06			—			—
After ten years	286			2.93			—			—
Total	303			2.94			—			—
Agency MBS - residential: (2)
One to five years	15			2.49			—			—
Five to ten years	534			2.49			—			—
After ten years	54,676			2.54			57,713			1.79
Total	55,225			2.54			57,713			1.79
Agency MBS - commercial: (2)
Within one year	1			2.80			—			—
One to five years	7			2.87			—			—
Five to ten years	66			3.51			—			—
After ten years	2,350			1.78			—			—
Total	2,424			1.83			—			—
States and political subdivisions:
Within one year	3			6.37			—			—
One to five years	72			3.44			—			—
Five to ten years	165			4.75			—			—
After ten years	176			3.78			—			—
Total	416			4.12			—			—
Non-agency MBS: (2)
After ten years	3,117			2.38			—			—
Total	3,117			2.38			—			—
Other:
Within one year	6			3.79			—			—
Five to ten years	15			6.21			—			—
Total	21			5.50			—			—
Total securities	$	71,801			2.31			$	57,713		1.79

(1)Yields represent interest computed under the effective interest method on a TE basis using the federal income tax rate and the amortized cost of the securities.

50 Truist Financial Corporation

Lending Activities

Truist strives to meet the credit needs of its clients while pursuing a balanced strategy of loan profitability, loan growth, and loan quality. Management believes that this purpose can best be accomplished by building strong client relationships over time and developing in-depth local market knowledge. The Company employs strict underwriting criteria governing the degree of risk assumed and the diversity of the loan portfolio in terms of type, industry, and geographical concentration.

Commercial Loan and Lease Portfolio

Commercial loans and leases represent the largest category of the Company’s loan and lease portfolio. Commercial Community Banking generally targets small-to-middle market businesses with annual sales between $2 million and $500 million, while CIB provides lending solutions to large corporate clients. The commercial loan and lease portfolio consists of lending to public and private business clients and is composed of commercial and industrial, owner occupied, equipment leasing and financing, commercial real estate, government and institutional financing, and premium financing

Residential Mortgage Loan Portfolio

Truist primarily originates conforming mortgage loans, loans under FHA, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture programs, and higher quality jumbo and construction-to-permanent loans for 1-4 family residential properties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA and FHLMC. They are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, or have mortgage insurance as required by investors and are made to borrowers in good credit standing.

Risks associated with mortgage lending include interest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary mortgage market and an effective MSR hedging process. Credit risk is managed through rigorous underwriting procedures and mortgage insurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management believes that the retention of mortgage servicing diversifies income while enabling Truist to build long-term client relationships and offer high quality client service. Truist also purchases residential mortgage loans from correspondent originators. The loans purchased from third-party originators are subject to substantially the same underwriting and risk-management criteria as loans originated internally.

Residential Home Equity and Direct Loan Portfolio

The residential home equity and direct loan portfolio is composed of a wide variety of secured and unsecured loans offered through Truist’s branch network, as well as loans originated by LightStream, Truist’s national online consumer lending division. Loans originated through the Truist branch network include revolving home equity lines of credit secured by first or second liens on residential real estate and certain other secured and unsecured lending marketed to qualifying clients and other creditworthy candidates in Truist’s market areas. LightStream provides fixed-rate, unsecured lending to consumers with strong credit through its proprietary online loan origination system.

Indirect Auto Loan Portfolio

The indirect auto portfolio primarily includes secured indirect installment loans to consumers for the purchase of new and used automobiles. The indirect auto portfolio also includes nonprime and near prime automobile finance. Such loans are originated through approved franchised and independent dealers throughout the Truist market area and nationally through Regional Acceptance Corporation. These loans are relatively homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. Indirect auto loans are subject to rigorous lending policies and procedures and are underwritten with note amounts and credit limits that are consistent with the Company’s risk philosophy. In addition to its normal underwriting due diligence, Truist uses application systems and scoring systems to help underwrite and manage the credit risk in its indirect auto portfolio.

Truist Financial Corporation 51

Indirect Other Loan Portfolio

The indirect other portfolio includes secured indirect installment loans to consumers for the purchase of new and used boats and recreational vehicles. The indirect other portfolio also includes small ticket consumer lending related to the purchase of power sports and outdoor power equipment, and trailers. These loans are relatively homogeneous, and no single loan is individually significant in terms of its size and potential risk of loss. These loans are subject to similar rigorous lending policies and procedures as the indirect auto loan portfolio. The indirect other loan portfolio also includes other indirect and point-of-sale lending to consumers to finance home improvements, furniture purchases, certain elective health-care services, and other consumer products segments. These loans are originated in accordance with strict underwriting criteria as determined by Truist.

Student Loan Portfolio

The student loan portfolio is primarily composed of government guaranteed student loans and additionally includes certain private student loans originated by third parties. The government guarantee mitigates substantially all of the risk related to principal and interest repayment for this component of the portfolio. Private student loans were purchased from third-party originators with credit enhancements that partially mitigate the Company’s credit exposure.

Credit Card Loan Portfolio

Refer to “Note 5. Loans and ACL” for additional information.

The following table summarizes the loan portfolio:

Table 16: Loans and Leases as of Period End
(Dollars in millions)	Dec 31, 2022		Dec 31, 2021
Commercial:
Commercial and industrial	$	164,307			$	138,762
CRE	22,676			23,951
Commercial construction	5,849			4,971
Consumer:
Residential mortgage	56,645			47,852
Residential home equity and direct	25,432			25,066
Indirect auto	27,951			26,441
Indirect other	12,977			10,883
Student	5,287			6,780
Credit card	4,867			4,807
Total loans and leases HFI	325,991			289,513
LHFS	1,444			4,812
Total loans and leases	$	327,435			$	294,325

Loans and leases HFI were $326.0 billion at December 31, 2022, up $36.5 billion compared to 2021.

Commercial loans increased $25.1 billion during 2022 primarily due to broad-based growth within the commercial and industrial portfolio and the BankDirect acquisition, which added $3.1 billion of loans on November 1, 2022. These increases were partially offset by a $1.9 billion decline in PPP loans.

Consumer loans, including credit cards, increased $11.3 billion during 2022 primarily due to an $8.8 billion increase in residential mortgages due to correspondent channel production and lower prepayments, a $2.1 billion increase in indirect other primarily due to growth from Service Finance, recreational lending, and Sheffield portfolios, partially offset by runoff in other partnership lending programs, and a $1.5 billion increase in indirect auto primarily in the prime auto segment. These increases were partially offset by $1.5 billion runoff in student loans.

LHFS decreased $3.4 billion during 2022 primarily due to certain residential mortgage correspondent channel production being retained and lower overall mortgage volumes due to rising rate environment, as well as a decline in commercial loans.

52 Truist Financial Corporation

Table 17: Loan Maturities
December 31, 2022 (Dollars in millions)	1 Year or Less		1 to 5 Years		5 to 15 Years		After 15 Years	Total
Fixed rate:
Commercial:
Commercial and industrial	$	11,761			$	15,801		$	12,459	$	2,278	$	42,299
CRE	556			2,185			1,209		3	3,953
Commercial construction	16			91			45		2	154
Total commercial	12,333			18,077			13,713		2,283	46,406
Consumer:
Residential mortgage	1,627			6,616			17,051		25,692	50,986
Residential home equity and direct	3,238			7,767			3,585		495	15,085
Indirect auto	6,136			19,748			2,067		—	27,951
Indirect other	2,423			6,034			3,774		717	12,948
Student	23			99			76		1	199
Total consumer	13,447			40,264			26,553		26,905	107,169
Credit card	79			—			—		—	79
Total fixed rate	25,859			58,341			40,266		29,188	153,654
Variable rate:
Commercial:
Commercial and industrial	24,184			84,302			12,098		1,424	122,008
CRE	3,419			12,765			2,535		4	18,723
Commercial construction	1,340			4,161			175		19	5,695
Total commercial	28,943			101,228			14,808		1,447	146,426
Consumer:
Residential mortgage	177			750			2,087		2,645	5,659
Residential home equity and direct	814			4,924			4,578		31	10,347
Indirect other	1			5			22		1	29
Student	318			1,539			2,555		676	5,088
Total consumer	1,310			7,218			9,242		3,353	21,123
Credit card	4,788			—			—		—	4,788
Total variable rate	35,041			108,446			24,050		4,800	172,337
Total loans and leases HFI	$	60,900			$	166,787		$	64,316	$	33,988	$	325,991

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $342 million and $288 million at December 31, 2022 and December 31, 2021, respectively.

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

Table 18: Average Loans and Leases
For the Three Months Ended(Dollars in millions)	Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022	Dec 31, 2021
Commercial:
Commercial and industrial	$	159,308			$	152,123		$	145,558	$	138,872	$	134,804
CRE	22,497			22,245			22,508		23,555	24,396
Commercial construction	5,711			5,284			5,256		5,046	5,341
Consumer:
Residential mortgage	56,292			53,271			49,237		47,976	47,185
Residential home equity and direct	25,518			25,394			25,124		24,883	25,146
Indirect auto	28,117			28,057			26,496		26,088	26,841
Indirect other	12,848			12,300			11,471		10,860	10,978
Student	5,533			5,958			6,331		6,648	6,884
Credit card	4,842			4,755			4,728		4,682	4,769
Total average loans and leases HFI	$	320,666			$	309,387		$	296,709	$	288,610	$	286,344

Truist Financial Corporation 53

Average loans and leases held for investment for the fourth quarter of 2022 were $320.7 billion, up $11.3 billion, or 3.6%, compared to the third quarter of 2022. The company added $3.1 billion of loans in conjunction with the acquisition of BankDirect on November 1, 2022, which contributed $2.1 billion of average loan growth for the fourth quarter of 2022. Excluding the acquisition, average loans and leases held for investment increased $9.2 billion, or 3.0% compared to the third quarter of 2022.

Average commercial loans increased $7.9 billion, or 4.4%, due to broad-based growth within the commercial and industrial portfolio and the BankDirect acquisition.

Average consumer loans increased $3.3 billion, or 2.7%, due to a $3.0 billion increase in residential mortgages due to correspondent channel production and lower prepayments. In addition, indirect other increased $548 million primarily due to growth from the Service Finance, recreational lending, and Sheffield portfolios, partially offset by runoff in other partnership lending programs. These increases were partially offset by $425 million runoff in student loans.

54 Truist Financial Corporation

Asset Quality

The following tables summarize asset quality information:

Table 19: Asset Quality
(Dollars in millions)	Dec 31, 2022		Dec 31, 2021
NPAs:
NPLs:
Commercial and industrial	$	398			$	394
CRE	82			29
Commercial construction	—			7
Residential mortgage	240			296
Residential home equity and direct	173			141
Indirect auto	289			218
Indirect other	6			5
Total NPLs HFI	1,188			1,090
Loans held for sale	—			22
Total nonaccrual loans and leases	1,188			1,112
Foreclosed real estate	4			8
Other foreclosed property	58			43
Total nonperforming assets	$	1,250			$	1,163
TDRs:
Performing TDRs:
Commercial and industrial	$	136			$	147
CRE	5			5
Commercial construction	1			—
Residential mortgage - government guaranteed	917			480
Residential mortgage - nonguaranteed	335			212
Residential home equity and direct	76			98
Indirect auto	462			389
Indirect other	6			7
Student - nonguaranteed	30			25
Credit card	18			27
Total performing TDRs	1,986			1,390
Nonperforming TDRs	214			152
Total TDRs	$	2,200			$	1,542
Loans 90 days or more past due and still accruing:
Commercial and industrial	$	49			$	13
CRE	1			—
Commercial construction	—			—
Residential mortgage - government guaranteed	759			978
Residential mortgage - nonguaranteed	27			31
Residential home equity and direct	15			9
Indirect auto	1			1
Indirect other	10			3
Student - government guaranteed	702			864
Student - nonguaranteed	4			4
Credit card	37			27
Total loans 90 days or more past due and still accruing	$	1,605			$	1,930
Loans 30-89 days past due and still accruing:
Commercial and industrial	$	256			$	130
CRE	25			20
Commercial construction	5			2
Residential mortgage - government guaranteed	268			256
Residential mortgage - nonguaranteed	346			258
Residential home equity and direct	127			107
Indirect auto	646			607
Indirect other	128			64
Student - government guaranteed	396			549
Student - nonguaranteed	6			6
Credit card	64			45
Total loans 30-89 days past due and still accruing	$	2,267			$	2,044

Truist Financial Corporation 55

Nonperforming assets totaled $1.3 billion at December 31, 2022, up $87 million compared to December 31, 2021 due to increases in the indirect auto and CRE portfolios, partially offset by a decrease in the residential mortgage portfolio. Nonperforming loans and leases represented 0.36% of total loans and leases, down two basis points compared to December 31, 2021.

Performing TDRs were up $596 million compared to the prior year primarily due to increases in residential mortgages and indirect auto.

Loans 90 days or more past due and still accruing totaled $1.6 billion at December 31, 2022, down $325 million compared to the prior year

primarily due to a decline in government guaranteed residential mortgages and government guaranteed student loans. 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 December 31, 2022, up one basis point from December 31, 2021.

Loans 30-89 days past due and still accruing totaled $2.3 billion at December 31, 2022, up $223 million compared to the prior year due to increases in the commercial and industrial, nonguaranteed residential mortgage, and indirect other portfolios, partially offset by a decline in the student portfolio. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases was 0.70% at December 31, 2022, down one basis point compared to the prior year.

Table 20: Asset Quality Ratios
	Dec 31, 2022		Dec 31, 2021
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.70	%		0.71	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.49			0.67
NPLs as a percentage of loans and leases HFI	0.36			0.38
NPLs as a percentage of total loans and leases (1)	0.36			0.38
NPAs as a percentage of:
Total assets (1)	0.23			0.21
Loans and leases HFI plus foreclosed property	0.38			0.39
ALLL as a percentage of loans and leases HFI	1.34			1.53
Ratio of ALLL to NPLs	3.68x		4.07x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)	0.04	%		0.03	%

(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 21: Asset Quality Ratios (Continued)
	Year Ended December 31,
	2022		2021		2020
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial	0.04	%		0.10	%	0.21	%
CRE	0.02			0.01		0.27
Commercial construction	(0.07)			(0.03)		0.28
Consumer:
Residential mortgage	(0.01)			0.02		0.09
Residential home equity and direct	0.84			0.54		0.61
Indirect auto	1.17			0.92		1.16
Indirect other	0.64			0.30		0.32
Student	0.34			0.31		0.29
Credit card	2.98			2.42		2.99
Total	0.27			0.24		0.36
Ratio of ALLL to net charge-offs	5.32x		6.36x		5.21x

56 Truist Financial Corporation

The following table presents activity related to NPAs:

Table 22: Rollforward of NPAs
(Dollars in millions)	2022		2021
Balance, January 1	$	1,163			$	1,387
New NPAs	1,983			2,008
Advances and principal increases	662			364
Disposals of foreclosed assets (1)	(471)			(356)
Disposals of NPLs (2)	(129)			(274)
Charge-offs and losses	(494)			(401)
Payments	(917)			(970)
Transfers to performing status	(560)			(546)
Other, net	13			(49)
Ending balance, December 31	$	1,250			$	1,163

(1)Includes charge-offs and losses recorded upon sale of $130 million and $115 million for the year ended December 31, 2022 and 2021, respectively.

(2)Includes gains, net of charge-offs recorded upon sale of $2 million and $3 million for the year ended December 31, 2022 and 2021, respectively.

The following table provides a summary of performing TDR activity:

Table 23: Rollforward of Performing TDRs
(Dollars in millions)	2022		2021
Balance, January 1	$	1,390			$	1,361
Inflows	1,055			651
Payments and payoffs (1)	(283)			(407)
Charge-offs	(36)			(44)
Transfers to nonperforming TDRs (2)	(48)			(46)
Removal due to the passage of time	(72)			(12)
Non-concessionary re-modifications	(1)			(15)
Transferred to LHFS, sold and other	(19)			(98)
Balance, December 31	$	1,986			$	1,390

(1)Includes scheduled principal payments, prepayments, and payoffs of amounts outstanding.

(2)Represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.

The following table provides further details regarding the payment status of TDRs outstanding:

Table 24: Payment Status of TDRs (1)
December 31, 2022 (Dollars in millions)	Current		Past Due 30-89 Days		Past Due 90 Days Or More		Total
Performing TDRs:
Commercial:
Commercial and industrial	$	135			99.3	%		$	1		0.7	%	$	—	—	%	$	136
CRE	5			100.0			—			—		—		—	5
Commercial construction	1			100.0			—			—		—		—	1
Consumer:
Residential mortgage - government guaranteed	496			54.1			111			12.1		310		33.8	917
Residential mortgage - nonguaranteed	294			87.7			31			9.3		10		3.0	335
Residential home equity and direct	71			93.4			5			6.6		—		—	76
Indirect auto	389			84.2			73			15.8		—		—	462
Indirect other	5			83.3			1			16.7		—		—	6
Student - nonguaranteed	27			90.0			2			6.7		1		3.3	30
Credit card	15			83.3			2			11.1		1		5.6	18
Total performing TDRs	1,438			72.4			226			11.4		322		16.2	1,986
Nonperforming TDRs	90			42.0			32			15.0		92		43.0	214
Total TDRs	$	1,528			69.5			$	258		11.7		$	414	18.8		$	2,200

(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.

Truist Financial Corporation 57

ACL

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

Table 25: Activity in ACL
	Year Ended December 31,
(Dollars in millions)		2022		2021		2020
Balance, beginning of period		$	4,695			$	6,199		$	1,889
CECL adoption - impact to retained earnings before tax		—			—			2,762
CECL adoption - reserves on PCD assets		—			—			378
Provision for credit losses		777			(813)			2,335
Charge-offs:
Commercial and industrial		(143)			(243)			(412)
CRE		(13)			(10)			(78)
Commercial construction		(1)			(2)			(30)
Residential mortgage		(9)			(23)			(56)
Residential home equity and direct		(294)			(214)			(231)
Indirect auto		(411)			(336)			(378)
Indirect other		(100)			(57)			(60)
Student		(22)			(24)			(23)
Credit card		(176)			(150)			(182)
Total charge-offs		(1,169)			(1,059)			(1,450)
Recoveries:
Commercial and industrial		87			107			96
CRE		8			6			5
Commercial construction		5			4			11
Residential mortgage		16			12			10
Residential home equity and direct		81			79			66
Indirect auto		91			92			87
Indirect other		23			24			23
Student		1			1			1
Credit card		34			37			32
Total recoveries		346			362			331
Net charge-offs		(823)			(697)			(1,119)
Other		—			6			(46)
Balance, end of period		$	4,649			$	4,695		$	6,199
ACL:
ALLL		$	4,377			$	4,435		5,835
RUFC		272			260			364
Total ACL		$	4,649			$	4,695		$	6,199

Net charge-offs during 2022 totaled $823 million, or 0.27% as a percentage of average loans, and were up three basis points compared to the prior year, primarily driven by normalizing trends across certain consumer loan portfolios, partially offset by lower charge offs in the commercial and industrial portfolio.

The allowance for credit losses was $4.6 billion and includes $4.4 billion for the allowance for loan and lease losses and $272 million for the reserve for unfunded commitments. The ALLL ratio was 1.34%, compared to 1.53% at December 31, 2021. The decline in the ALLL ratio was due to strong portfolio performance and growth in higher quality loans, partially offset by a moderately slower economic outlook. The ALLL covered nonperforming loans and leases held for investment 3.68 times compared to 4.07 times at December 31, 2021. At December 31, 2022, the ALLL was 5.32 times annualized net charge-offs, compared to 6.36x times at December 31, 2021.

58 Truist Financial Corporation

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 26: Allocation of ALLL by Category
	December 31, 2022		December 31, 2021
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,409			32.3	%		50.3	%		$	1,426			32.2	%		47.9	%
CRE	224			5.1			7.0			350			7.9			8.3
Commercial construction	46			1.1			1.8			52			1.2			1.7
Residential mortgage	399			9.1			17.4			308			6.9			16.5
Residential home equity and direct	549			12.5			7.8			615			13.9			8.7
Indirect auto	981			22.4			8.6			1,022			23.0			9.1
Indirect other	311			7.1			4.0			195			4.4			3.8
Student	98			2.2			1.6			117			2.6			2.3
Credit card	360			8.2			1.5			350			7.9			1.7
Total ALLL	4,377			100.0	%		100.0	%		4,435			100.0	%		100.0	%
RUFC	272							260
Total ACL	$	4,649							$	4,695

Other Assets

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

Table 27: Other Assets as of Period End
(Dollars in millions)	Dec 31, 2022		Dec 31, 2021
Bank-owned life insurance	$	7,618			$	7,281
Tax credit and other private equity investments	6,825			6,309
Prepaid pension assets	4,539			5,938
DTAs	3,027			—
Accounts receivable	2,682			2,244
Accrued income	2,265			1,791
Leased assets and related assets	2,082			2,092
FHLB stock	1,279			48
ROU assets	1,193			1,168
Prepaid expenses	1,162			1,152
Equity securities at fair value	898			1,066
Derivative assets	684			2,370
Other	874			690
Total other assets	$	35,128			$	32,149

Funding Activities

Deposits are the primary source of funds for the Company’s lending and investing activities. Scheduled payments and maturities from portfolios of loans and investment securities also provide a stable source of funds. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed funds, as well as long-term debt issued through the capital markets, all provide supplemental liquidity sources. Funding activities are monitored and governed through Truist’s overall ALM process under the governance and oversight of the MRLCC, which is further discussed in the “Market Risk” section in MD&A. The following section provides a brief description of the various sources of funds.

Truist Financial Corporation 59

Deposits

Deposits are obtained principally from individuals and businesses within Truist’s geographic area and include noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market deposit accounts, CDs, and IRAs. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit and service charge schedules. Interest rates paid on specific deposit types are determined based on (i) competitor deposit rates, (ii) the anticipated amount and timing of funding needs, (iii) the availability and cost of alternative sources of funding, and (iv) anticipated future economic conditions and interest rates. Deposits are attractive sources of funding because of their stability and relative cost.

The following table presents a summary of deposits:

Table 28: Deposits as of Period End
(Dollars in millions)	Dec 31, 2022			Dec 31, 2021
Noninterest-bearing deposits		$	135,742			$	145,892
Interest checking		110,464			115,754
Money market and savings		143,815			138,956
Time deposits		23,474			15,886
Total deposits		$	413,495			$	416,488

Deposits totaled $413.5 billion at December 31, 2022, a decrease of $3.0 billion from December 31, 2021. The decline in deposits reflects the impacts of monetary tightening, inflation, and higher interest rate alternatives, partially offset by growth in time deposits, which reflects increases in various wholesale deposit products to support funding.

The amount of deposits above the FDIC’s limit of $250,000 was $189.6 billion and $202.5 billion as of December 31, 2022 and 2021, respectively, calculated using the same methodology as the Call Report for Truist Bank. The following table summarizes the maturities of time deposit accounts above $250,000:

Table 29: Scheduled Maturities of Time Deposits $250,000 and Greater
December 31, 2022 (Dollars in millions)
Three months or less	$	6,995
Over three through six months	285
Over six through twelve months	747
Over twelve months	178
Total	$	8,205

The following table presents average deposits:

Table 30: Average Deposits
Three Months Ended(Dollars in millions)	Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022	Dec 31, 2021
Noninterest-bearing deposits	$	141,032			$	146,041		$	148,610	$	145,933	$	146,492
Interest checking	110,001			111,645			112,375		112,159	110,506
Money market and savings	144,730			147,659			148,632		141,500	137,676
Time deposits	17,513			14,751			14,133		15,646	16,292
Total average deposits	$	413,276			$	420,096		$	423,750	$	415,238	$	410,966

Average deposits for the fourth quarter of 2022 were $413.3 billion, a decrease of $6.8 billion, or 1.6%, compared to the prior quarter. The decrease in deposits was primarily driven by the impacts of monetary tightening, inflation, and higher interest rate alternatives. Average noninterest-bearing deposits decreased 3.4% compared to the prior quarter and represented 34.1% of total deposits for the fourth quarter of 2022. Average money market and savings and interest checking declined 2.0% and 1.5%, respectively, compared to the prior quarter. Average time deposits increased 19% primarily due to an increase in wholesale time deposit products.

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Borrowings

Table 31: Short-Term Borrowings
	As Of / For The Year Ended December 31,
(Dollars in millions)	2022		2021		2020
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end during the year	$	6,033			$	3,279			$	2,348
Balance outstanding at end of year	2,128			2,435			1,221
Average outstanding during the year	2,670			2,382			1,504
Average interest rate during the year	1.33	%		0.07	%		0.64	%
Average interest rate at end of year	4.36			0.01			0.13
Federal funds purchased and short-term borrowed funds:
Maximum outstanding at any month-end during the year	$	22,324			$	6,244			$	19,392
Balance outstanding at end of year	19,340			808			3,372
Average outstanding during the year	10,135			1,936			6,951
Average interest rate during the year	2.79	%		0.12	%		1.17	%
Average interest rate at end of year	4.38			0.08			0.20

At December 31, 2022, short-term borrowings totaled $23.4 billion, an increase of $18.1 billion compared to December 31, 2021. Average short-term borrowings were $15.0 billion, or 3.2% of total funding, for the year ended December 31, 2022, as compared to $6.2 billion, or 1.4%, for 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 $43.2 billion at December 31, 2022, an increase of $7.3 billion compared to December 31, 2021. During the year ended December 31, 2022, the Company had maturities and redemptions of $5.9 billion of senior and $300 million of subordinated long-term debt and redeemed $800 million of FHLB advances, which resulted in a gain on early extinguishment of long-term debt of $39 million. The Company issued $3.9 billion fixed-to-floating rate senior notes with an interest rate between 4.12% and 6.12% due July 28, 2026 to October 28, 2033 and $1.0 billion fixed-to-floating rate subordinated notes with an interest rate of 4.92% due July 28, 2033. Additionally, Truist issued $10.8 billion notional of FHLB floating rate advances. The average cost of long-term debt was 2.31% for the year ended December 31, 2022, up 78 basis points compared to the same period in 2021.

The increases in short-term borrowings and long-term debt were primarily to fund $33.1 billion of strong loan growth during 2022.

In January 2023, Truist issued $1.5 billion fixed-to-floating rate senior notes with an interest rate of 4.87% due January 26, 2029 and $1.5 billion fixed-to-floating rate senior notes with an interest rate of 5.12% due January 26, 2034.

Shareholders’ Equity

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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 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.

•Managing risk is the responsibility of every teammate.

•Proactively identifying risk and managing the inherent risks of their businesses is the responsibility of the business units.

•Managing risk with a balanced approach which includes quality, profitability, and growth.

•Utilizing sound and consistent risk management practices.

•Thoroughly analyzing risk quantitatively and qualitatively.

•Realizing lower cost of capital from high quality risk management.

As illustrated below, the risk management framework is supported by three lines of defense. The following figure describes the roles of the three lines of defense:

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Truist’s Risk Governance framework is designed to provide comprehensive Board and Executive Leadership risk oversight, maintaining a committee governance structure that is designed to ensure alignment and execution of the risk management framework. The committee structure provides a mechanism to allow for efficient aggregation and escalation of risk information from the business units up to the risk programs, Executive Leadership and ultimately the Board.

The executive level committees include the ERC, ECRC, MRLCC, EBPCC, TMC, and DC, each of which is chaired by a member of Executive Leadership. These committees provide oversight of each of the primary risk types.

The ERC establishes a fully integrated view of risks across the company, provides broad strategic oversight of all risk types, and oversees corporate-wide strategies for identifying, assessing, controlling, measuring, monitoring, and reporting risk at the enterprise level. The ERC is responsible for maintaining an effective risk management framework and monitoring its adoption and execution across the enterprise. The ERC is chaired by the CRO, and its membership includes all members of Executive Leadership and the Chief Audit Officer.

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Principal types of inherent risk include market, credit, liquidity, technology, compliance, strategic, reputational, and operational risks. The following is a discussion of these risks.

Market Risk

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 methods to measure and monitor its interest rate risk: (i) simulations of possible changes to net interest income over the next two years based on gradual changes in interest rates; (ii) analysis of interest rate shock scenarios; and (iii) analysis of economic value of equity based on changes in interest rates.

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

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 32: Interest Sensitivity Simulation Analysis
Interest Rate Scenario		Annualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)		Prime Rate
	Dec 31, 2022		Dec 31, 2021	Dec 31, 2022		Dec 31, 2021
Up 100		8.50	%	4.25	%		(0.11)	%	5.18	%
Up 50		8.00		3.75			0.03		3.94
No Change		7.50		3.25			—		—
Down 50 (1)		7.00		2.75			(0.96)		(1.78)
Down 100 (1)		6.50		2.25			(1.29)		(2.06)

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

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Truist has established parameters related to interest rate sensitivity measures that prescribe a maximum negative impact on net interest income under different interest rate scenarios that would result in an escalation to the Board. The following parameters and interest rate scenarios are considered Truist’s primary measures of interest rate risk:

•Maximum decrease in net interest income of 7.5% for the next 12 months assuming a 100 basis point gradual change in interest rates over four quarters; and a

•Maximum decrease in net interest income of 10% for the next 12 months assuming an immediate 100 basis point parallel shock change in interest rates. This interest rate shock analysis is designed to create an outer bound of acceptable interest rate risk.

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, noninterest-bearing deposits have begun to disintermediate to interest-bearing accounts. Additional balance 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 this advantageous funding source. Alternatively, the Company may reduce the size of its investment portfolio to offset the loss of noninterest-bearing demand deposits to limit the impact on the balance sheet’s asset sensitivity. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of Truist. A decrease in the amount of these deposits in the future would reduce the asset sensitivity of Truist’s balance sheet because the Company may increase interest-bearing funds to offset the loss of this advantageous funding source.

The following table shows the results of Truist’s interest-rate sensitivity position assuming the loss of additional demand deposits and an associated increase in managed rate deposits versus current projections under various interest rate scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%.

Table 33: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)	Base Scenario at December 31, 2022 (1)		Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
	$20 Billion		$40 Billion
Up 100	(0.11)	%		(0.77)	%	(1.44)	%
Up 50	0.03			(0.45)		(0.94)

(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at December 31, 2022 as presented in the preceding table.

Truist uses financial instruments including derivatives to manage interest rate risk related to securities, commercial loans, MSRs, and mortgage banking operations, long-term debt, and other funding sources. Truist has utilized derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of December 31, 2022, Truist had derivative financial instruments outstanding with notional amounts totaling $333.0 billion, with an associated net negative fair value of $2.3 billion. See “Note 19. Derivative Financial Instruments” for additional disclosures.

LIBOR Transition

For most tenors of U.S. dollar LIBOR, the administrator of LIBOR extended publication until 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 potential risks related to the transition from LIBOR to a new index or multiple indices and provides updates to Executive Leadership and the Board. As of December 31, 2022, Truist had outstanding LIBOR-based instruments that mature after June 30, 2023, including loan and lease exposures totaling approximately $135 billion, notional derivative exposure totaling approximately $131 billion, long-term debt of $1.1 billion, and preferred stock of $1.5 billion. These amounts are inclusive of remediated contracts, which contain adequate fallback language for the transition.

Contract fallback language for existing loans and leases has largely been reviewed and certain contracts will require amendments to support the transition away from LIBOR. Impacted lines of business have started remediating these contracts to include standardized fallback language or amending contracts to new reference rates at maturities or based on client request. Current fallback language used to remediate contracts that mature after June 30, 2023 is generally consistent with ARRC recommendations and includes use of “hardwired fallback” language, which will transition loans to a SOFR based rate after June 30, 2023.

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The progress and approach to remediation will vary based on the type of contract and existing language used in the agreement. For commercial lending, a significant number of remaining LIBOR contracts will require client outreach and remediation. Through mid-2022, the Company’s primary focus was supporting new loan production using SOFR and other alternative reference rates as well as transitioning any renewing LIBOR based contracts to alternative reference rates. Efforts have shifted to amend and remediate contracts, excluding mortgage and student loans, that mature post June 30, 2023 ($127 billion), which will continue to be the focus during 2023. Of the contracts remaining on LIBOR that have not yet been remediated or modified to a new reference rate, Truist’s intends to add / update fallback language or move these contracts to new references rates prior to cessation. A significant portion of these contracts contain existing fallback language that will transition the contract to a Prime based rate if not remediated, while a smaller population contains no historical fallback language. Should the institution be unable to remediate all contracts, those based on Prime will be prioritized to provide a more consistent client experience with the “hardwired fallback” transition to SOFR. If there are remaining contracts without fallback language, Truist may leverage recent legislation and corresponding safe harbor provision to transition these loans to SOFR.

Truist’s adjustable-rate mortgage products ($3.5 billion) have consistent and adequate fallback language to transition away from LIBOR in line with industry expectations; therefore, these contracts will not require remediation. Remediation of student loans ($4.7 billion) will follow pending guidance from the Department of Education on the replacement rate for payment allowances on certain student loans and recent guidance from the CFPB to allow transition to “comparable rates,” in the private student loan portfolio, where LIBOR is used directly.

Upon the discontinuation of LIBOR, derivatives that reference LIBOR will transition to a SOFR-based replacement rate as set forth in the ISDA protocol addressing LIBOR fallbacks or as established under the recently passed Adjustable Interest Rate (LIBOR) Act and rules promulgated thereunder by the FRB. Certain derivatives without a clearly defined or practicable replacement benchmark rate will use the recent Federal legislation to replace LIBOR with a SOFR-based rate established by FRB rulemaking and follow the ISDA Protocol for transition. This legislation will also provide additional administrative benefit for a small portion of the commercial and consumer lending portfolios where contracts do not contain fallback language and have not yet been remediated, providing a remediation path to a SOFR based rate.

In addition, the transition from LIBOR to an alternative reference rate, such as SOFR, for the Company’s preferred stock and the Company’s and Truist Bank’s floating rate notes is dependent on a number of factors, including the fallback language for the applicable series of preferred stock or notes, the application of the LIBOR Act and the rules promulgated thereunder by the FRB, determinations to be made by third-party calculation or paying agents rather than the Company or Truist Bank as to the replacement rates, and the impact of any publication of a synthetic U.S. dollar LIBOR as currently proposed by the Financial Conduct Authority. See “Note 12. Shareholders’ Equity” for information about preferred stock using LIBOR.

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

As of December 31, 2021, Truist ceased entering into new contracts with a LIBOR reference rate for all product offerings, except on a limited basis, as permissible. The Company is actively using SOFR as a reference rate and has originated approximately $119 billion of loans, issued $9.9 billion of long-term debt, and has $108 billion in notional derivative exposure using this alternative reference rate as of December 31, 2022. 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. Market risks associated with the transition to alternative reference rates are dependent on market conditions as loans are transitioned to alternative reference rates during 2022 and early 2023. Additional alternative reference rates, such as Bloomberg Short Term Bank Yield, will be supported based on market demand. Other emerging credit sensitive rates will be evaluated as additional alternatives for LIBOR based on market developments. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to the section titled “Item1A. Risk Factors.”

Market Risk from Trading Activities

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

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Covered Trading Positions

Securitizations

As of December 31, 2022, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $12 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 December 31, 2022.

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 12 months ended December 31, 2022 and 2021. Average one and ten-day VaR measures for the year ended December 31, 2022 increased from the same period of last year, primarily driven by higher market volatility in 2022. Maximum one and ten-day VaR measures for the year ended December 31, 2022 were lower than 2021 as heightened market volatility experienced during March 2020 was used for measuring VaR until March 2021.

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Table 34: VaR-based Measures
	Year Ended December 31,
		2022	2021
(Dollars in millions)				10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum				$	38			$	14			$	68	$	16
Average				17			5			14			4
Minimum				6			3			3			1
Period-end				20			6			13			5
VaR by Risk Class:
Interest Rate Risk						6					3
Credit Spread Risk						8					5
Equity Price Risk						1					1
Foreign Exchange Risk						—					—
Portfolio Diversification						(9)					(5)
Period-end						6					5

Stressed VaR-based measures

Table 35: Stressed VaR-based Measures - 10 Day Holding Period
	Year Ended December 31,
(Dollars in millions)		2022		2021
Maximum		$	109			$	118
Average		70			59
Minimum		40			26
Period-end		77			65

Compared to the prior year, the average Stressed VaR measures increased primarily due to higher market making inventory levels in 2022.

Specific Risk Measures

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 December 31, 2022. The total number of Company-wide VaR backtesting exceptions over the preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.

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Model Risk Oversight

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.

Credit Risk

Credit risk is the risk to current or anticipated earnings or capital arising from the default, inability or unwillingness of a borrower, obligor, or counterparty to meet the terms of any financial obligation to Truist or otherwise perform as agreed. Credit risk exists in all activities where success depends on the performance of a borrower, obligor, or counterparty. Credit risk arises when Truist funds are extended, committed, invested, or otherwise exposed through actual or implied contractual agreements, whether on or off-balance sheet. Credit risk increases when the credit quality of an issuer whose securities or other instruments the bank holds has deteriorated.

Truist has established the following general practices to manage credit risk:

•limiting the amount of credit that individual lenders may extend to a borrower;

•establishing a process for credit approval accountability;

•careful initial underwriting and analysis of borrower, transaction, market and collateral risks;

•ongoing servicing and monitoring of individual loans and lending relationships;

•continuous monitoring of the portfolio, market dynamics and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market and other relevant conditions change.

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The following discussion describes the underwriting procedures and overall risk management of Truist’s lending function.

Underwriting Approach

•Level of equity invested in the transaction - in general, borrowers are required to contribute or invest a portion of their own funds prior to any loan advances.

Refer to the “Lending Activities” section in MD&A for a discussion of each loan and lease portfolio.

Liquidity Risk

Liquidity risk is the risk that (i) Truist will be unable to meet its obligations as they come due because of an inability to obtain adequate funding (funding liquidity risk), or (ii) Truist cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions (market liquidity risk). Refer to the “Liquidity” section in MD&A for additional discussion.

Technology Risk

Cybersecurity Risk

The technology landscape is constantly evolving, and new and unforeseen threats and actions by others may disrupt operations or result in losses beyond Truist’s risk control thresholds. Truist maintains a comprehensive risk-based information security / cybersecurity framework implemented through people, processes, and technology whereby Truist actively monitors and evaluates threats, events, and the performance of its business operations and continually adapts its risk mitigation activities accordingly.

Truist’s framework aligns with those of the National Institute of Standards and Technology, Cyber Risk Institute, the International Standards Organization 27000 series, the IT Governance Institute, and the Control Objectives for Information and Related Technology, as well as conforms with the requirements and guidance from applicable regulatory authorities, including the Federal Financial Institutions Examination Council. In addition, Truist’s framework, which includes internally and externally focused capabilities, drives the development and implementation of Truist’s data security strategy that is designed to reduce risk while enabling Truist’s corporate business objectives.

Truist has built an organization with dedicated, skilled talent to operationalize Truist’s cybersecurity strategy. The cybersecurity strategy is enabled by continuous enhancement of Truist’s multilayered defenses including advanced capabilities for early and rapid cyber threat identification, detection, protection, response, and recovery. Truist participates in the federally recognized Financial Services Information Sharing and Analysis Center as a key part of the Company’s cyber threat intelligence and response programs, as well as other industry organizations and initiatives that promote industry best practices such as harmonized cybersecurity standards, cyber readiness, and secure consumer financial data sharing.

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To further mitigate the risks presented by an evolving cyber threat landscape, Truist provides data protection guidance to clients and promotes data protection awareness and accountability through mandatory teammate training. Truist conducts scenario-driven test exercises simulating impacts and consequences developed through analysis of real-world technology incidents as well as known and anticipated cyber threats. These exercises are designed to assess the viability of Truist’s crisis response and management programs and provide the basis for continuous improvement.

Truist’s cybersecurity risk program is overseen by Executive Leadership and the Board. Regular updates on the status of the cybersecurity risk program, including information security risks and incidents, emerging threats, and control environment, are aggregated and escalated to Executive Leadership and the Board. Additionally, Truist has a Cyber Incident Response Team that manages significant cyber-specific events with escalation up to Executive Leadership and the Board. Truist’s framework requires annual exercises at a minimum to test Truist’s preparedness. The Board devotes significant time and attention to its oversight of cyber security risk and approves related information security policies. Although Truist has invested substantial resources to manage and reduce cybersecurity risk, it is not possible to completely eliminate this risk. Truist obtains insurance that protects against certain losses, expenses, and damages associated with cybersecurity risk. See Item 1A, “Risk Factors,” for additional information regarding cybersecurity risk.

Compliance Risk

Strategic Risk

Strategic risk is the risk of financial loss, diminished stakeholder confidence, or negative impact to human capital resulting from ineffective strategy setting and execution, adverse business decisions, or lack of responsiveness to changes in the banking industry and operating environment. Truist is committed to fulfilling its overall strategic objectives by selecting business strategies and operating businesses in a manner consistent with its established risk appetite, achieving profitability/earnings growth and maintaining strong confidence and trust with its key stakeholder constituencies.

Reputational Risk

Reputational risk is the risk to current or anticipated earnings, capital, enterprise value, the Truist brand, and public confidence arising from negative publicity or public opinion, whether real or perceived, regarding Truist’s business practices, products, services, transactions, or other activities undertaken by Truist, its representatives, or its partners. A negative reputation may impair Truist’s relationship with clients, teammates, communities, or shareholders, and it is often a residual risk that arises when other risks are not managed properly.

Operational Risk

Model Risk

Model risk is the risk to current or anticipated earnings or capital from decisions based on incorrect or misused model outputs. Truist uses models for many purposes, including the valuation of financial positions, estimation of credit losses, and the measurement of risk. Valuation models are used to value certain financial instruments for which quoted prices may not be readily available. Valuation models are also used as inputs for VaR, the estimation of VaR itself, regulatory capital, stress testing, and the ACL. Models are owned by the applicable BUs, who are responsible for the development, implementation, and use of their models. Oversight of these functions is performed by the MRO, which is a component of the RMO. Once models have been approved, model owners are responsible for the maintenance of an appropriate operating environment and must monitor and evaluate the performance of the models on a recurring basis. Models are updated in response to changes in portfolio composition, industry and economic conditions, technological capabilities, and other developments.

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MRO manages model risk in a holistic manner through a suite of model governance and model validation activities. The risk of each model is assessed and classified into various risk tiers. Additionally, MRO maintains an enterprise-wide model inventory containing relevant model information. Regarding model validation, MRO utilizes internal validation analysts and managers with skill sets in predictive modeling to perform detailed reviews of model development, implementation, and conceptual soundness. On certain occasions, the MRO will also engage external parties to assist with validation efforts. Once in a production environment, MRO assesses a model’s performance on a periodic basis through ongoing monitoring reviews. MRO tracks issues that have been identified during model validation or through ongoing monitoring and engages with model owners to ensure their timely remediation. MRO gauges model risk utilizing a collection of key risk indicators, which are periodically reported to relevant committees, including but not limited to, the Model Risk Oversight Committee as well as the Board Risk Committee. MRO will also present model risk topics to the Board Risk Committee as necessary.

Liquidity

Internal Liquidity Stress Testing

Contingency Funding Plan

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 $89.4 billion and Truist’s average LCR was 112% for the three months ended December 31, 2022.

72 Truist Financial Corporation

Sources of Funds

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 36: Selected Liquidity Sources
(Dollars in millions)	Dec 31, 2022		Dec 31, 2021
Unused borrowing capacity:
FRB	$	49,250			$	52,170
FHLB	20,770			49,244
Available investment securities (after haircuts)	85,401			116,600
Available secured borrowing capacity	155,421			218,014
Eligible cash at the FRB	15,556			14,714
Total	$	170,977			$	232,728

At December 31, 2022, Truist Bank’s available secured borrowing capacity represented approximately 4.7 times the amount of wholesale funding maturities in one-year or less. FHLB unused borrowing capacity was $20.8 billion at December 31, 2022, down from $49.2 billion at December 31, 2021 primarily due to increases in short-term borrowings.

Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, repurchases of common stock, and payments on long-term debt. See “Note 22. Parent Company Financial Information” 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 December 31, 2022 and December 31, 2021, the Parent Company had 37 months and 35 months, respectively, of cash on hand to satisfy projected cash outflows, and 22 months and 19 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” 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.

Truist Financial Corporation 73

The following table presents the credit ratings and outlooks of Truist and Truist Bank as of December 31, 2022:

Table 37: Credit Ratings of Truist Financial Corporation and Truist Bank
	Moody’s	S&P	Fitch	DBRS Morningstar
Truist Financial Corporation:
Issuer	A3	A- / A-2	A+ / F1	AAL / R-1M
Senior unsecured	A3	A-	A	AAL
Subordinated	A3	BBB+	A-	AH
Preferred stock	Baa2(hyb)	BBB-	BBB	AL
Truist Bank:
Issuer	A2	A / A-1	A+ / F1	AA / R-1H
Senior unsecured	A2	A	A+	AA
Deposits	Aa3 / P-1	NA	AA- / F1+	AA
Subordinated	(P) A2	A-	A	AAL
Ratings outlook:
Credit trend	Stable	Positive	Stable	Stable

Recent changes in the Company’s credit ratings and outlooks include:

•On January 19, 2022, S&P Global Ratings published Truist’s assigned ESG Credit Indicators of E-2, S-2, and G-2, which were consistent with the scores assigned to most other banks and which indicated that environmental, social and governance factors have “no material influence” on the rating agency’s analysis of the Company.

•On August 15, 2022, DBRS Morningstar upgraded the ratings of Truist, including the Long-Term Issuer Rating to “AA (low)” from “A (high).” DBRS Morningstar also upgraded the ratings of Truist Bank, including the Long-Term Issuer Rating to “AA” from “AA (low).” The trend for all ratings was revised to “Stable” from “Positive.” The rating actions reflected the scale, quality, and diversity of Truist’s franchise; the completion of the Merger integration; Truist’s diversified products and geography; and the Company’s sound balance sheet fundamentals and conservative risk profile.

•On October 21, 2022, Fitch Ratings affirmed the ratings of Truist and Truist Bank, including the long-term and short-term issuer default ratings at “A+” and “F1,” respectively, for both entities. Fitch Ratings also maintained a “stable” ratings outlook for all ratings. In affirming the ratings, Fitch cited Truist’s diverse business model, conservative credit culture, and the completion of the Merger integration.

•On November 3, 2022, Moody’s Investors Service affirmed all of the ratings of Truist and its subsidiaries, including Truist Bank. Moody’s also maintained a “stable” rating outlook for Truist. Moody’s stated that the affirmation of Truist’s ratings reflects the effective completion of its multi-year integration and Truist’s strong, diverse, and resilient platform for organic growth, among, among other factors.

Management believes current sources of liquidity are adequate to meet Truist’s current requirements and plans for continued growth. As of December 31, 2022, the Company had $2.1 billion in obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the total amount of obligations based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in determining the total amount of obligations. See “Note 9. Other Assets and Liabilities,” “Note 11. Borrowings,” and “Note 16. Commitments and Contingencies” for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

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.

74 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 38: 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 December 31, 2022. Truist’s SCB requirement, received in the 2022 CCAR process, is effective from October 1, 2022 to September 30, 2023.

Management intends to maintain capital at Truist Bank at levels that exceed the minimum capital plus CCB. This will also result in Truist Bank being “well-capitalized” for regulatory purposes. Secondarily, it is management’s intent to maintain Truist Bank’s capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity, and risk profile. If the capital levels of Truist Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.

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

Table 39: Capital Ratios - Truist Bank
	Dec 31, 2022		Dec 31, 2021
CET1	10.6	%		10.5	%
Tier 1 capital	10.6			10.5
Total capital	12.1			12.0
Leverage ratio	8.5			8.0
Supplementary leverage ratio	7.3			6.9

Truist Financial Corporation 75

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

Table 40: Capital Ratios - Truist Financial Corporation
(Dollars in millions, except per share data, shares in thousands)	Dec 31, 2022		Dec 31, 2021
Risk-based:
CET1	9.0	%		9.6	%
Tier 1 capital	10.5			11.3
Total capital	12.4			13.2
Leverage ratio	8.5			8.7
Supplementary leverage ratio	7.3			7.4
Non-GAAP capital measure (1):
Tangible common equity per common share	$	18.04			$	25.47
Calculation of tangible common equity (1):
Total shareholders’ equity	$	60,537			$	69,271
Less:
Preferred stock	6,673			6,673
Noncontrolling interests	23			—
Goodwill and intangible assets, net of deferred taxes	29,908			28,772
Tangible common equity	$	23,933			$	33,826
Risk-weighted assets	$	434,413			$	390,886
Common shares outstanding at end of period	1,326,829			1,327,818

(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess profitability, returns relative to balance sheet risk, and shareholder value. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.

Truist’s capital level at December 31, 2022 remains strong compared to the regulatory levels for well capitalized banks. Truist’s CET1 ratio was 9.0% as of December 31, 2022. The decline compared to the 2021 CET1 ratio primarily reflects strong loan growth, acquisitions, and the impact from the phase-in of the CECL transition relief.

Truist increased the quarterly common dividend 8% during the year, paid $2.7 billion in common stock dividends or $2.00 per share, and repurchased $250 million of common stock. The dividend payout ratio for 2022 was 45% compared to 41% for the prior year. The total payout ratio for 2022 was 49% compared to 68% for the prior year, reflecting a greater focus on deploying capital to fund organic growth and acquisitions in 2022. In early 2023, Truist declared common dividends of $0.52 per share for the first quarter of 2023.

Reclassifications

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. The 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. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, Truist’s significant accounting policies and effects of new accounting pronouncements are discussed in detail in “Note 1. Basis of Presentation.”

76 Truist Financial Corporation

ACL

Truist’s ACL represents management’s best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgement. The models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. The macroeconomic data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period the models gradually revert to long-term historical loss conditions over a one-year period. As a means of addressing uncertainty related to future economic conditions, the quantitative allowance includes an adjustment that reflects model output calculated using a range of potential future economic conditions. Expected losses are estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or it is reasonably expected that the loan will be modified as a TDR.

A qualitative allowance which incorporates management’s judgement is also included in the estimation of expected future loan and lease losses, including qualitative adjustments in circumstances where the model output is inconsistent with management’s expectations with respect to expected credit losses. This allowance is used to adjust for limitations in modeled results related to the current economic conditions, and considerations with respect to the impact of current and expected events or risks, the outcomes of which are uncertain and may not be completely considered by quantitative models.

Management considers a range of macroeconomic forecast data in connection with the allowance estimation process. Under the range of scenarios considered as of December 31, 2022, use of the Company’s pessimistic scenario would have resulted in an increase to the modeled allowance results of approximately $2.2 billion. This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

The Company individually evaluates expected credits losses related to loans and leases that do not share similar risk characteristics and loans that have been classified as a TDR. For individually evaluated loans, the ALLL is determined through review of data specific to the borrower and related collateral, if any, while for TDRs, default expectations and estimated prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL.

Fair Value of Financial Instruments

The vast majority of assets and liabilities measured at fair value on a recurring basis are based on either quoted market prices or market prices for similar instruments. Refer to “Note 18. Fair Value Disclosures” for additional disclosures regarding the fair value of financial instruments and “Note 2. Business Combinations” for additional disclosures regarding business combinations.

Securities

Truist generally utilizes a third-party pricing service in determining the fair value of its AFS investment securities, whereas trading securities are priced internally. Fair value measurements for investment securities are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Management performs procedures to evaluate the fair values provided by the third-party service provider. These procedures, which are performed independent of the responsible business unit, include comparison of pricing information received from the third-party pricing service to other third-party pricing sources, review of additional information provided by the third-party pricing service and other third-party sources for selected securities and back-testing to compare the price realized on security sales to the daily pricing information received from the third-party pricing service. The Enterprise Valuation Committee, which provides oversight to Truist’s enterprise-wide IPV function, is responsible for the comparison of pricing information received from the third-party pricing service or internally to other third-party pricing sources, approving tolerance limits determined by IPV for price comparison exceptions, reviewing significant changes to pricing and valuation policies and reviewing and approving the pricing decisions made on any illiquid and hard-to-price securities. When market observable data is not available, which generally occurs due to the lack of liquidity or inactive markets for certain securities, the valuation of the security is subjective and may involve substantial judgment by management to reflect unobservable input assumptions.

Truist Financial Corporation 77

MSRs

LHFS

Trading Loans

Derivative Assets and Liabilities

78 Truist Financial Corporation

Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets acquired and liabilities assumed in business combinations are recorded at their fair values. This often involves estimates based on third-party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of definite-lived intangible assets is based upon the estimated economic benefits to be received, which is also subjective. Business combinations also typically result in goodwill, which is subject to ongoing periodic impairment tests based on the fair values of the reporting units to which the acquired goodwill relates. Refer to “Note 1. Basis of Presentation” for a description of the impairment testing process.

At December 31, 2022, Truist’s reporting units with goodwill balances were CB&W, C&CB, and IH. Management reviews the goodwill of each reporting unit for impairment on an annual basis 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. For its annual impairment review, Truist elected to perform a qualitative test of each of its reporting units.

In performing the qualitative assessment as of October 1, 2022, the Company evaluated events and circumstances since the last quantitative goodwill assessment, macroeconomic conditions, Truist’s own operations, key financial metrics, as well as reporting unit and Company financial performance, and the industry in which it operates. After assessing all relevant events or circumstances, Truist concluded that it is not more-likely-than-not that the fair value of a reporting unit is below its carrying value.

The Company also performs sensitivity analyses around the assumptions used in the most recent quantitative test as well as relevant events or circumstances in order to assess the reasonableness of the assumptions, and the resulting estimated fair values. While the Company’s sensitivity analyses did not indicate risk of impairment as of October 1, 2022, 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, asset growth, 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 fourth quarter of 2022, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of December 31, 2022.

Income Taxes

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. The Company regularly evaluates the ability to realize DTAs, recognizing a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. Truist currently maintains a valuation allowance for certain state carryforwards. For additional income tax information, refer to “Note 1. Basis of Presentation” and “Note 14. Income Taxes.”

Pension and Postretirement Benefit Obligations

Truist offers various pension plans and postretirement benefit plans to teammates. Calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions, which are subject to management judgment and may differ significantly if different assumptions are used. The discount rate assumption used to measure the postretirement benefit obligations is set by reference to an AA Above Median corporate bond yield curve and the individual characteristics of the plans such as projected cash flow patterns and payment durations.

Truist Financial Corporation 79

Management also considered the sensitivity that changes in the expected return on plan assets and the discount rate would have on pension expense. For the Company’s qualified plans, a decrease of 25 basis points in the discount rate would result in additional pension expense of approximately $46 million for 2023, while a decrease of 100 basis points in the expected return on plan assets would result in an increase of approximately $136 million in pension expense for 2023. This estimate reflects the sensitivity of certain factors considered in calculation of pension expense but does not consider all factors that could increase or decrease estimates calculated.

The calculation of pension assets and liabilities is also impacted by the year-end valuation, which takes into account the difference between the actual return on plan assets and the estimated return on plan assets that was recognized during the year, as well as an updated discount rate based on current market rates. The year-end valuation resulted in a pre-tax loss in other comprehensive income of $1.9 billion for all pension plans. As expected return on plan assets is determined with the prior year-end’s plan asset valuation, the lower year-end plan asset valuation and related amortization of accumulated other comprehensive income will reduce the expected return on plan assets component of net periodic pension cost recognized in other expense in 2023.

Refer to “Note 15. Benefit Plans” for disclosures related to the benefit plans.

80 Truist Financial Corporation

FY 2021 10-K MD&A

SEC filing source: 0000092230-22-000008.

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2022-02-23. Report date: 2021-12-31.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

Truist financial performance in 2021 was solid, highlighted by strong performances from investment banking, insurance, wealth and card and payment related fees, and positive trends in a number of other businesses given improving economic conditions. Improving economic conditions also led to a strong credit performance and a benefit from the provision for credit losses. Truist achieved its fourth quarter 2021 net cost saves target and continues to reaffirm its commitment to achieving $1.6 billion in net cost saves on a run rate basis by the fourth quarter of 2022. Truist also continues to closely monitor the COVID-19 pandemic and its effects on stakeholders and the financial markets, and is actively supporting teammates, clients, and communities. Truist formed a Together Safely Committee focused on developing new working models in a post-pandemic era. Further, Truist continued to activate its Integrated Relationship Management approach, which is designed to deepen client relationships and bring the full breadth and depth of Truist’s products and services to meet clients’ financial needs. As we enter 2022 and shift priorities, aiming past systems integrations and the pandemic, Truist is well positioned for purposeful growth.

Executive Leadership Changes

Truist made several Executive Leadership changes during 2021 as we continued to execute on the strategy first agreed upon in the Merger. In September 2021, Kelly S. King, transitioned to the role of Executive Chairman, and William H. Rogers, Jr. became the CEO of Truist. There were other changes to Truist’s Executive Leadership team that included the addition of John M. Howard, as Chief Insurance Officer, the appointment of Hugh S. Cummins III as Vice Chair, and the retirement of Christopher L. Henson, Head of Banking and Insurance. The members of the Executive Leadership team as of December 31, 2021 are detailed in the Executive Officers table within Item 1 “Business.”

In January 2022, Truist appointed Denise M. DeMaio as Chief Audit Officer, effective February 28, 2022. Denise will join the Executive leadership team and will lead Truist's internal audit function and provide counsel to senior management on emerging risk trends from the vantage points of governance, processes, technologies and reporting.

Integration Efforts

Major milestones during 2021 and early 2022 include:

•Made critical progress on core bank conversions, including migrating heritage BB&T clients to the Truist ecosystem in October. We recently completed the core bank conversion in February 2022 for heritage SunTrust clients.

•Completed the Wealth brokerage and trust transitions and the mortgage systems transition.

•Introduced the new Truist digital app for Truist retail, wealth, and small business commercial clients.

•Launched new Truist.com and Truist Digital Commerce platform offering Truist‑branded products in a goal-based, mobile-optimized experience.

Truist Financial Corporation 39

ESG Efforts

Supporting Clients

Truist is committed to investing in and serving all clients, no matter where they are in their financial journey. Some of the ways we are helping clients include:

•In January 2022, Truist announced a first-of-its-kind approach to the checking account experience, designed to address clients’ direct feedback, which will be available to clients beginning in the summer of 2022. The Truist One checking account features will include: no overdraft fees; a $100 negative balance buffer for qualifying clients; an easily accessible, deposit-based line of credit of up to $750; and premium rewards that instantly recognize relationships and honor loyalty. In addition, Truist will offer an alternative checking account product created for clients who are new to credit and want simplicity and control without overdraft fees. This will help clients avoid high fees from check-cashing and payday lenders, bring many more households into mainstream banking, and create a pathway to upgrade to Truist One.

•Increased access to financial education for Truist’s clients through a partnership with Operation HOPE.

•Partnering with the Bank Policy Institute to publish the Child Tax Credit Toolkit and promoting Child Tax Credit expansion awareness with modules on all digital financial education platforms.

•Truist continues to work closely with clients as they navigate through the continuing challenges from the COVID-19 pandemic. Truist ranked as the fourth largest PPP lender amongst commercial banks overall.

Supporting Teammates

•Truist met its commitment to increase racially and ethnically diverse representation in senior leadership roles to more than 15% one year early with 15.1% as of December 31, 2021.

•Truist offered a voluntary separation and retirement program to eligible teammates in June 2021. While Truist is hiring in some areas and rightsizing in others through natural attrition, planned staffing reductions, and the voluntary separation and retirement program, Truist is actively supporting all teammates affected by reductions with opportunities and tools for internal placement, severance payments, and outplacement assistance and coaching. The Company recognized $231 million of merger-related and restructuring charges in 2021 related to the voluntary separation and retirement program.

•Implemented onsite, remote, and hybrid work styles in order to provide the most flexible work environment.

Supporting Communities

Truist continued to fulfill its purpose in meaningful ways in the community through a number of unique and creative initiatives. Some highlights from these initiatives and recognition of Truist’s efforts include:

•Truist continued to make solid progress towards the Company’s $60 billion Community Benefits Plan, ending November 2021 at 113% of the annual target.

•Recognized in JUST Capital’s ‘JUST 100’ list for ongoing efforts around good corporate citizenship.

•Released inaugural TCFD report, joined the Partnership for Carbon Accounting Financials, issued its first social bond, and set 2030 goals to reduce Scope 1 and Scope 2 emissions by 35% each, and to reduce water consumption by 25%, relative to 2019.

•Announced plans to achieve net zero greenhouse gas emissions by 2050, furthering the Company's aspiration to support the transition to a low-carbon economy.

•Released second annual Corporate Social Responsibility and Environmental, Social, and Governance report to outline its advancements and commitments with regard to diversity, equity, and inclusion; environmental sustainability and climate change; governance; community involvement; and financial inclusion.

•In December 2021, Truist and Sterling Capital Management LLC established the Sterling Capital Diverse Multi-Manager Active Exchange Traded Fund to demonstrate the Company’s support for increasing access for individuals and institutions to invest using strategies from diverse-owned firms.

40 Truist Financial Corporation

Financial Results

Net income available to common shareholders totaled $6.0 billion for 2021, a 44% increase from the prior year. On a diluted per common share basis, earnings for 2021 were $4.47, compared to $3.08 for 2020. Truist's results of operations for 2021 produced a return on average assets of 1.23% and a return on average common shareholders' equity of 9.7% compared to prior year ratios of 0.90% and 6.8%, respectively. Results include merger-related and restructuring charges of $822 million ($631 million after-tax) for 2021 compared to $860 million ($660 million after-tax) for 2020, and incremental operating expenses related to the Merger of $771 million ($592 million after-tax) for 2021 compared to $534 million ($409 million after-tax) for 2020. Additionally, the 2021 results include charitable contributions of $200 million ($153 million after-tax), an acceleration of loss recognition related to certain terminated cash flow hedges of $36 million ($28 million after tax), and a one-time professional fee expense of $30 million ($23 million after tax), partially offset by a small gain on extinguishment of debt. The 2020 results include securities gains of $402 million ($308 million after-tax), a loss on extinguishment of debt of $235 million ($180 million after tax), and charitable contributions of $50 million ($38 million after-tax). The following table provides Truist’s earnings highlights:

Table 8: Earnings Highlights
Year Ended December 31, (Dollars in millions)							Change
	2021		2020	2019		2021 vs. 2020		2020 vs. 2019
Net income available to common shareholders		$	6,033		$	4,184			$	3,028		$	1,849	$	1,156
Diluted earnings per common share		4.47		3.08			3.71			1.39		(0.63)
Net interest income - taxable equivalent		$	13,114		$	13,951			$	7,409		$	(837)	$	6,542
Noninterest income		9,290		8,879			5,255			411		3,624
Total taxable-equivalent revenue		$	22,404		$	22,830			$	12,664		$	(426)	$	10,166
Less taxable-equivalent adjustment		108		125			96
Total revenue		$	22,296		$	22,705			$	12,568
Return on average assets		1.23	%	0.90	%		1.31	%		0.33	%	(0.41)	%
Return on average common shareholders' equity		9.7		6.8			9.9			2.9		(3.1)
Net interest margin - taxable equivalent		2.86		3.22			3.42			(0.36)		(0.20)

Truist's revenue for 2021 was $22.3 billion. On a TE basis, revenue was $22.4 billion, which represents a decrease of $426 million compared to 2020. Net interest income on a TE basis was $13.1 billion, a decrease of $837 million. The decrease in net interest income was due primarily to lower purchase accounting accretion and a $21.1 billion decrease in average outstanding loans, partially offset by a $56.3 billion increase in average securities as a result of strong deposit growth. Noninterest income for 2021 increased $411 million compared to 2020 due to strong performance from investment banking, insurance, wealth, and card and payment related fees. Excluding gains of $37 million from the divestiture of certain businesses in 2021 and securities gains of $402 million from 2020, adjusted taxable equivalent revenues decreased $61 million, or 0.3%, compared to the earlier year.

NIM was 2.86% for 2021, down 36 basis points compared to the prior year. Average earning assets increased $24.4 billion or 5.6%, while average interest-bearing liabilities decreased $1.4 billion or 0.5%, and noninterest-bearing deposits increased $24.2 billion or 21%. The TE yield on the total loan portfolio for 2021 was 3.95%, down 38 basis points. The TE yield on the average securities portfolio was 1.50%, down 59 basis points. The average cost of interest-bearing deposits was 0.06%, down 26 basis points. The average cost of long-term debt was 1.53%, down 22 basis points. The average cost of total deposits was 0.04%, down 18 basis points.

The provision for credit losses was a benefit of $813 million, compared to a cost of $2.3 billion for the prior year. Net charge-offs were $697 million, compared to $1.1 billion for the prior year. Asset quality ratios were relatively stable at December 31, 2021 compared to the prior year, reflecting Truist’s prudent risk culture, portfolio diversification, improving economic conditions, and the ongoing effects of government stimulus. The ratio of the ALLL to net charge-offs was 6.36X for 2021, compared to 5.21X in 2020, reflecting lower net charge-offs. NPAs decreased $224 million year over year due to declines across almost all portfolios, partially offset by an increase in the indirect auto portfolio.

Noninterest income increased $411 million, or 4.6%, compared to the prior year. Excluding securities gains and a gain on the divestiture of certain businesses, noninterest income was up $776 million, or 9.2%, highlighted by strong performance from investment banking, insurance, wealth, and card and payment related fees.

Noninterest expense increased $219 million, or 1.5%, compared to the prior year. Excluding merger-related and restructuring charges, incremental operating expenses related to the Merger, the impact of the extinguishment of debt, charitable contributions, an acceleration of loss recognition related to certain terminated cash flow hedges, a one-time professional fee expense, and the impact of amortization expense for intangibles, noninterest expense increased $154 million, or 1.2%. This increase in noninterest expense was driven by incentives expense due to stronger performance and insurance acquisitions, partially offset by the ongoing impact of cost saving efforts from the Merger.

Truist's total assets at December 31, 2021 were $541.2 billion, an increase of $32.0 billion compared to December 31, 2020, reflecting a $33.8 billion increase in securities, a $2.3 billion increase in securities borrowed or purchased under agreements to resell, a $2.1 billion increase in goodwill and intangible assets, partially offset by a decrease of loans and leases HFI, net of ALLL, of $8.8 billion.

Truist Financial Corporation 41

Total liabilities at December 31, 2021 were $472.0 billion, an increase of $33.7 billion from the prior year, reflecting an increase of $35.4 billion in deposits, partially offset by a decrease of $3.7 billion in long-term debt.

Total shareholders' equity was $69.3 billion at December 31, 2021, down $1.6 billion compared to the prior year, reflecting a decrease in AOCI of $2.3 billion, primarily due to unrealized losses on AFS debt securities, $1.6 billion common share repurchases, and the redemption of $1.4 billion of preferred shares, partially offset by net income in excess of dividends paid of $3.6 billion.

Truist maintained strong capital and liquidity in 2021. As of December 31, 2021, the CET1 ratio was 9.6% and the average LCR was 114%. Truist increased the quarterly common dividend 7% during the year and declared total common dividends of $1.86 per share during 2021. The dividend payout ratio for 2021 was 41% compared to 58% for the prior year. The total payout ratio for 2021 was 68% compared to 58% for the prior year, reflecting the resumption of share repurchases. During 2021, Truist completed the acquisition of Service Finance to expand point-of-sale lending capabilities and Constellation Affiliated Partners to expand IH’s wholesale division. In early 2022, Truist declared common dividends of $0.48 per share for the first quarter of 2022, and announced the acquisition of Kensington Vanguard National Land Services to expand IH’s title insurance operation.

Key Areas of Focus

Truist's business is dynamic and complex. Consequently, management annually evaluates and, as necessary, adjusts the Company’s business strategy in the context of the current operating environment. During this process, management considers the current financial condition and performance of the Company and its expectations for future economic activity from both a national and local market perspective. Achieving key strategic objectives and established long-term financial goals is subject to many uncertainties and challenges. In the opinion of management, the following are the key areas of focus most likely to impact Truist’s near to medium term performance:

•Championing the Company’s purpose to inspire and build better lives and communities;

•Leading with purpose to provide profitable growth and achieve positive operating leverage;

•Shifting from an integration focus to an operating focus, with a particular emphasis on executional excellence and profitable growth,

•Attracting and retaining key teammates and advancing teammate and leadership development;

•Driving innovation and remaining attuned to evolving client preferences to succeed in an intensely competitive environment;

•Executing the Company’s "T3 strategy" by focusing on personal touch and technology to engender trust and provide distinctive, secure and successful client experiences;

•Advancing DEI and ESG initiatives;

•Achieving the benefits from the Merger, including anticipated synergies through cost saving and Truist’s Integrated Relationship Management approach; and

•Managing the integration of systems and operations, while safeguarding the Company against external threats.

In addition, certain other challenges and unforeseen events could have a near term impact on Truist's financial condition and results of operations. See the sections titled "Forward-Looking Statements" and "Risk Factors" for additional examples of such challenges.

42 Truist Financial Corporation

Analysis of Results of Operations

Net Interest Income and NIM

2021 compared to 2020

Net interest income for the year ended December 31, 2021 was down $837 million, or 6.0%, compared to the prior year due to lower purchase accounting accretion, lower rates on earning assets, and a decrease in loan balances. These decreases were partially offset by growth in the securities portfolio, lower funding costs, higher fees on PPP loans, and releases of interest deferrals related to COVID-19 loan accommodations established in 2020. Average earning assets increased $24.4 billion, or 5.6%, compared to the prior period. The increase in average earning assets reflects a $56.3 billion, or 68%, increase in average securities, while average total loans and leases decreased $21.1 billion, or 6.7%, and average other earning assets decreased $11.7 billion, or 38%. The growth in average earning assets is a result of an increase in investment securities driven by strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $35.1 billion, or 9.7%, compared to the prior year, while average long-term debt and short-term borrowings decreased $8.4 billion, or 18%, and $4.0 billion, or 39%, respectively.

Net interest margin was 2.86% for the year ended December 31, 2021, down 36 basis points compared to the prior year. The yield on the total loan portfolio for the year ended December 31, 2021 was 3.95%, down 38 basis points compared to the prior year, reflecting the impact of lower purchase accounting accretion and the ongoing impact of the low rate environment. The yield on the average securities portfolio was 1.50% for the year ended December 31, 2021, down 59 basis points compared to the prior year primarily due to lower yields on new purchases and higher premium amortization.

The average cost of total deposits was 0.04% for the year ended December 31, 2021, down 18 basis points compared to the prior year. The average cost on short-term borrowings was 0.76% for the year ended December 31, 2021, down 59 basis points compared to the prior year. The average cost on long-term debt was 1.53% for the year ended December 31, 2021, down 22 basis points compared to the prior year. The lower rates on interest-bearing liabilities reflect the lower rate environment.

As of December 31, 2021, the remaining unamortized fair value marks on the loan and lease portfolio, deposits, and long-term debt were $1.3 billion, $7 million, and $139 million, respectively. As of December 31, 2020, the remaining unamortized fair value marks on the loan and lease portfolio, deposits and long-term debt were $2.4 billion, $19 million, and $216 million, respectively.

The remaining unamortized fair value mark on loans and leases consist of $700 million for consumer loans and leases, and $623 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as paydowns occur.

Truist Financial Corporation 43

Table 9: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)
																		2021 vs. 2020		2020 vs. 2019
Year Ended December 31, (Dollars in millions)	Average Balances (5)		Yield/Rate		Income/Expense		Incr. (Decr.)		Change due to		Incr. (Decr.)		Change due to
2021		2020		2019		2021		2020		2019		2021		2020	2019			Rate		Volume			Rate		Volume
Assets
Total securities, at amortized cost: (2)
U.S. Treasury	$	7,633			$	2,194			$	2,644			0.73	%	1.81	%		2.01	%		$	56			$	40			$	53			$	16			$	(35)			$	51			$	(13)			$	(5)	$	(8)
GSE	1,799			1,846			2,402			2.29			2.33		2.26			41			43			53			(2)			(1)			(1)			(10)			2			(12)
Agency MBS	128,306			78,564			44,710			1.52			2.07		2.59			1,953			1,625			1,161			328			(511)			839			464			(270)			734
States and political subdivisions	429			501			587			3.55			3.92		3.73			15			19			21			(4)			(2)			(2)			(2)			1			(3)
Non-agency MBS	1,299			86			269			2.20			16.81		14.05			28			15			38			13			(23)			36			(23)			6			(29)
Other	31			36			33			1.90			2.33		3.75			1			1			1			—			—			—			—			—			—
Total securities	139,497			83,227			50,645			1.50			2.09		2.62			2,094			1,743			1,327			351			(572)			923			416			(266)			682
Interest earning trading assets	5,602			4,655			1,277			2.78			3.62		2.02			156			168			26			(12)			(43)			31			142			33			109
Other earning assets (3)	19,498			31,240			2,888			0.24			0.50		2.89			48			156			83			(108)			(63)			(45)			73			(122)			195
Loans and leases, net of unearned income: (4)
Commercial and industrial	137,304			147,603			69,878			3.04			3.42		4.23			4,174			5,053			2,952			(879)			(540)			(339)			2,101			(653)			2,754
CRE	25,269			27,410			17,651			2.85			3.32		4.79			728			914			849			(186)			(119)			(67)			65			(311)			376
Commercial Construction	6,053			6,659			4,061			2.98			3.72		5.23			173			243			208			(70)			(48)			(22)			35			(74)			109
Residential mortgage	45,500			51,423			31,668			4.14			4.51		4.08			1,884			2,320			1,291			(436)			(181)			(255)			1,029			148			881
Residential home equity and direct	25,319			26,951			12,716			5.69			6.03		5.97			1,441			1,625			759			(184)			(89)			(95)			866			8			858
Indirect auto	26,621			25,055			12,545			6.12			6.61		8.51			1,629			1,656			1,068			(27)			(127)			100			588			(282)			870
Indirect other	10,935			11,264			6,654			6.70			7.11		6.65			731			801			443			(70)			(46)			(24)			358			33			325
Student	7,251			7,596			460			3.99			4.62		5.20			289			351			24			(62)			(47)			(15)			327			(3)			330
Credit card	4,650			5,027			3,181			8.92			9.34		9.05			415			470			288			(55)			(21)			(34)			182			10			172
PCI	—			—			631			—			—		16.05			—			—			102			—			—			—			(102)			—			(102)
Total loans and leases HFI	288,902			308,988			159,445			3.97			4.35		5.01			11,464			13,433			7,984			(1,969)			(1,218)			(751)			5,449			(1,124)			6,573
LHFS	4,546			5,513			2,159			2.63			3.13		3.91			120			173			85			(53)			(25)			(28)			88			(20)			108
Total loans and leases	293,448			314,501			161,604			3.95			4.33		4.99			11,584			13,606			8,069			(2,022)			(1,243)			(779)			5,537			(1,144)			6,681
Total earning assets	458,045			433,623			216,414			3.03			3.61		4.39			13,882			15,673			9,505			(1,791)			(1,921)			130			6,168			(1,499)			7,667
Nonearning assets	64,340			65,462			31,080
Total assets	$	522,385			$	499,085			$	247,494
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	107,311			$	94,879			$	31,592			0.05		0.23			0.62			59			216			197			(157)			(183)			26			19			(184)			203
Money market and savings	134,303			123,826			67,922			0.03			0.21		0.91			35			264			621			(229)			(248)			19			(357)			(664)			307
Time deposits	18,025			30,008			17,970			0.30			1.02		1.54			54			305			277			(251)			(160)			(91)			28			(115)			143
Foreign office deposits - interest-bearing	—			—			272			—			—		2.35			—			—			6			—			—			—			(6)			—			(6)
Total interest-bearing deposits (6)	259,639			248,713			117,756			0.06			0.32		0.93			148			785			1,101			(637)			(591)			(46)			(316)			(963)			647
Short-term borrowings	6,170			10,129			8,462			0.76			1.35		2.34			47			137			198			(90)			(48)			(42)			(61)			(95)			34
Long-term debt	37,410			45,793			24,756			1.53			1.75		3.22			573			800			797			(227)			(92)			(135)			3			(472)			475
Total interest-bearing liabilities	303,219			304,635			150,974			0.25			0.57		1.39			768			1,722			2,096			(954)			(731)			(223)			(374)			(1,530)			1,156
Noninterest-bearing deposits (6)	138,733			114,580			55,513
Other liabilities	11,300			11,846			6,899
Shareholders’ equity	69,133			68,024			34,108
Total liabilities and shareholders’ equity	$	522,385			$	499,085			$	247,494
Average interest-rate spread							2.78	%		3.04	%		3.00	%
NIM/net interest income - taxable equivalent							2.86	%		3.22	%		3.42	%	$	13,114			$	13,951			$	7,409			$	(837)			$	(1,190)			$	353			$	6,542			$	31			$	6,511
Taxable-equivalent adjustment													$	108		$	125			$	96

(2)Total securities include AFS and HTM securities.

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

(4)Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances.

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

(6)Total deposit costs were 0.04%, 0.22%, and 0.64% for the years ended December 31, 2021, 2020, and 2019, respectively.

44 Truist Financial Corporation

Provision for Credit Losses

2021 compared to 2020

The provision for credit losses was a benefit of $813 million for the year ended December 31, 2021, compared to a cost of $2.3 billion for the prior year. The prior year included significant uncertainty related to the economic impacts resulting from the pandemic, whereas the current year includes reserve releases due to the improving economic outlook. Net charge-offs for the year ended December 31, 2021 totaled $697 million compared to $1.1 billion in the prior year. Net charge-offs for 2020 included $97 million of charge-offs related to the implementation of CECL as more fully discussed in the “ACL” section of MD&A. The net charge-off ratio for the current year of 0.24% was down 12 basis points compared to the prior year, primarily driven by lower losses across the majority of portfolios, partially driven by additional losses on PCD loans taken in 2020, combined with higher recoveries.

Noninterest Income

Table 10: Noninterest Income
Year Ended December 31, (Dollars in millions)							% Change
	2021		2020	2019		2021 vs. 2020		2020 vs. 2019
Insurance income		$	2,627		$	2,193			$	2,072		19.8	%	5.8	%
Investment banking and trading income		1,441		1,010			249			42.7		NM
Wealth management income		1,392		1,277			715			9.0		78.6
Service charges on deposits		1,060		1,020			762			3.9		33.9
Card and payment related fees		874		761			555			14.8		37.1
Residential mortgage income		555		1,000			285			(44.5)		NM
Lending related fees		349		315			124			10.8		154.0
Operating lease income		262		309			153			(15.2)		102.0
Commercial mortgage income		179		185			102			(3.2)		81.4
Income from bank-owned life insurance		183		179			129			2.2		38.8
Securities gains (losses)		—		402			(116)			NM	NM
Other income		368		228			225			61.4	1.3
Total noninterest income		$	9,290		$	8,879			$	5,255		4.6		69.0

In the fourth quarter of 2021, the Company reclassified certain structured real estate activity from commercial mortgage income to investment banking trading income and certain LIHTC activity from commercial mortgage income to other income. Prior periods were reclassified to conform to the current presentation.

2021 compared to 2020

Noninterest income for the year ended December 31, 2021 increased $411 million, or 4.6%, compared to the prior year. Other income for the year ended December 31, 2021 includes a $37 million gain from the divestiture of certain businesses, whereas noninterest income for the year ended December 31, 2020 included $402 million of securities gains on available-for-sale securities. Excluding securities gains and a gain on the divestiture of certain businesses, noninterest income was up $776 million, or 9.2%, compared to the prior year. Insurance income increased $434 million due to acquisitions, as well as organic growth. Investment banking and trading income increased $431 million due to strong investment banking income from loan syndications and merger and acquisition fees, and structured real estate income, and the impact from CVA recoveries in the current year compared to losses in the earlier year. Other income increased $140 million primarily due to $96 million related to increased investment income (primarily valuations gains) from the Company’s SBIC and Truist Ventures investments and higher valuations of $46 million for assets held for certain post-retirement benefits, which is primarily offset by higher benefits expense included in personnel expense. Wealth management increased $115 million due to higher valuations of assets under management, partially offset by the divestiture of the record keeping business. Card and payment related fees and service charges on deposits increased $113 million and $40 million, respectively, due to increased economic activity. Lending related fees increased $34 million due to higher noninterest loan fees, primarily unused line fees. Residential mortgage banking income decreased $445 million primarily due to lower production related revenues as a result of lower gain on sale margins and volumes, partially offset by higher servicing income due to an increase in the valuation of mortgage servicing rights. Operating lease income decreased $47 million due to declines in the lease portfolio.

Truist Financial Corporation 45

Noninterest Expense

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

Table 11: Noninterest Expense
Year Ended December 31, (Dollars in millions)							% Change
	2021		2020	2019		2021 vs. 2020		2020 vs. 2019
Personnel expense		$	8,632		$	8,146			$	4,833	6.0	%	68.5	%
Professional fees and outside processing		1,442		1,252			433			15.2	189.1
Software expense		945		862			338			9.6	155.0
Net occupancy expense		764		904			507			(15.5)	78.3
Amortization of intangibles		574		685			164			(16.2)	NM
Equipment expense		513		484			280			6.0	72.9
Marketing and customer development		294		273			137			7.7	99.3
Operating lease depreciation		190		258			136			(26.4)	89.7
Loan-related expense		212		242			123			(12.4)	96.7
Regulatory costs		137		125			81			9.6	54.3
Merger-related and restructuring charges		822		860			360			(4.4)	138.9
Loss (gain) on early extinguishment of debt		(4)		235			—			(101.7)	NM
Other expense		595		571			542			4.2	5.4
Total noninterest expense		$	15,116		$	14,897			$	7,934	1.5		87.8

2021 compared to 2020

Noninterest expense for the year ended December 31, 2021 was up $219 million, or 1.5%, compared to the earlier year. Merger-related and restructuring charges decreased $38 million and other incremental operating expenses related to the Merger increased $237 million, primarily reflected in professional fees and outside processing expense. The current year also includes $200 million for charitable contributions to the Truist Foundation and the Truist Charitable Fund (other expense), $36 million of expense associated with an acceleration of loss recognition related to certain terminated cash flow hedges, a $30 million professional fee expense, and a small gain on the early extinguishment of debt, whereas the earlier year included a $235 million loss on the early extinguishment of debt and a $50 million charitable contribution. Excluding the aforementioned items and a decrease of $111 million for amortization of intangibles, noninterest expense increased $154 million, or 1.2%, compared to the earlier year. Personnel expense increased $486 million primarily driven by higher incentive expenses due to variable compensation from higher revenues and improved overall performance relative to targets, higher medical insurance claims, higher other employee benefits due to the previously mentioned increase in noninterest income, and personnel cost related to acquired companies. These increases in personnel expense were partially offset by lower salaries due to fewer FTEs. Software expense increased $83 million due to higher spending on certain projects. Other expense includes a decrease of $167 million for non-service-related pension cost components. There was also a decrease of $140 million from net occupancy expense primarily due to branch and property consolidations and a decrease in operating lease depreciation of $68 million due to valuation adjustments taken in the prior year.

Merger-Related and Restructuring Charges

Truist has incurred certain merger-related and restructuring charges, which include:

•severance and personnel-related costs or credits;

•occupancy and equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete equipment write-offs and the sale of duplicate facilities and equipment;

•professional services, which relate to legal and investment banking advisory fees and other consulting services pertaining to restructuring initiatives or transactions;

•systems conversion and related charges, which represent costs to integrate the entity's information technology systems;

•write-offs related to exiting certain businesses.

Merger-related and restructuring accruals are established when the costs are incurred or once all requirements for a plan to dispose of or outsource certain business functions have been approved by management. Merger and restructuring accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2021 are generally expected to be utilized within one year, unless they relate to specific contracts that expire later.

46 Truist Financial Corporation

The following table presents a summary of merger-related and restructuring charges and the related accruals. The 2021 and 2020 merger-related and restructuring costs primarily reflect charges as a result of the Merger, including costs for severance and other benefits, costs related to exiting facilities, and other restructuring initiatives.

Table 12: Merger-Related and Restructuring Accrual Activity
(Dollars in millions)	Accrual at Jan 1, 2020		Expense		Utilized		Accrual at Dec 31, 2020			Expense	Utilized		Accrual at Dec 31, 2021
Severance and personnel-related (1)	$	46			$	232		$	(242)		$	36			$	336		$	(295)	$	77
Occupancy and equipment	—			294			(294)		—				139	(139)			—
Professional services	42			238			(264)		16				256	(235)			37
Systems conversion and related costs	—			30			(30)		—				59	(59)			—
Other	1			66			(56)		11				32	(31)			12
Total (2)	$	89			$	860		$	(886)		$	63			$	822		$	(759)	$	126

(1)Includes $231 million of restructuring charges for the year ended December 31, 2021 related to the Company’s voluntary separation and retirement program.

(2)Related to the Merger, the Company recognized $790 million and $825 million for the year ended December 31, 2021 and 2020, respectively. At December 31, 2021, the Company had an accrual of $119 million related to the Merger. The remaining expense and accrual relate to other restructuring activities.

Segment Results

Truist operates and measures business activity across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury, and Corporate. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. See “Note 21. Operating Segments” for additional disclosures related to Truist’s operating segments, the internal accounting, and reporting practices used to manage these segments and financial disclosures for these segments, including additional details related to results of operations.

Table 13: Net Income by Reportable Segment
								% Change
Year Ended December 31, (Dollars in millions)	2021	2020		2019					2021 vs. 2020		2020 vs. 2019
Consumer Banking and Wealth		$	3,235			$	3,043		$	1,736			6.3	%	75.3	%
Corporate and Commercial Banking		4,261			2,322			1,824				83.5	27.3
Insurance Holdings		508			407			318				24.8	28.0
Other, Treasury & Corporate		(1,567)			(1,280)			(641)				22.4	99.7
Truist Financial Corporation		$	6,437			$	4,492		$	3,237			43.3		38.8

2021 compared to 2020

Consumer Banking and Wealth

Consumer Banking and Wealth had 2,517 banking offices at December 31, 2021, a decrease of 264 offices compared to December 31, 2020. The decrease in offices was driven primarily by the consolidation of 226 branches in the first quarter leveraging the blended branch program strategy, as well as closure of 39 branches in non-overlapping markets in the third quarter.

Consumer Banking and Wealth net income was $3.2 billion for 2021, an increase of $192 million, or 6.3%, compared to 2020. Segment net interest income decreased $533 million primarily due to reduced funding credit on deposits, lower purchase accounting accretion, and a decline in average loans. The allocated provision for credit losses decreased $853 million primarily due to allowance releases in the current year as the economic outlook improved as well as lower net charge offs in the auto, home equity, card, and mortgage portfolios and lower loan balances compared to reserve builds in 2020 due to uncertainty regarding the pandemic. Noninterest income decreased $206 million, due to lower residential mortgage income driven by lower gain on sale margins and volumes, partially offset by increased revenues in wealth management and card and payment related activities resulting from improving economic conditions as well as gains from the divestiture of certain businesses. Noninterest expense decreased $131 million primarily due to lower salary expense, pension costs, amortization of intangibles, and occupancy expenses, partially offset by increased incentives tied to performance and related benefits expense in the current year.

Truist Financial Corporation 47

Consumer Banking and Wealth average loans and leases HFI decreased $6.8 billion, or 4.9%, compared to 2020 driven primarily by a decline in residential mortgage loans and home equity and direct lending, partially offset by increased indirect auto and mortgage warehouse lending. Average loan and leases HFI for residential mortgage and home equity and direct loans declined $5.9 billion, or 12%, and $1.6 billion, or 6.0%, respectively, while indirect auto and mortgage warehouse loans increased $1.6 billion, or 6.3%, and $649 million, or 16%, respectively.

Consumer Banking and Wealth average total deposits increased $25.2 billion, or 12%, compared to 2020 driven primarily due to ongoing impacts of fiscal and monetary stimulus. Average noninterest-bearing deposits, money market and savings accounts, and interest checking accounts increased $11.7 billion, or 21%, $11.1 billion, or 12%, and $9.8 billion, or 22%, respectively, partially offset by a decline in time deposits of $7.3 billion, or 31%.

Truist Wealth had assets under management of $209.6 billion as of December 31, 2021, up $27.3 billion, or 15%, compared to 2020 driven primarily due to favorable market performance.

Corporate and Commercial Banking

Corporate and Commercial Banking net income was $4.3 billion for 2021, an increase of $1.9 billion, or 84%, compared to 2020. Segment net interest income decreased $421 million primarily due to reduced funding credit on deposits, lower purchase accounting accretion, and a decline in average loans partially offset by higher margin fees tied to PPP loan forgiveness. The allocated provision for credit losses decreased $2.2 billion which reflects allowance releases in the current year driven by an improving economic outlook compared to allowance builds in 2020 due to uncertainty regarding the pandemic as well as lower net charge offs primarily in the commercial and industrial portfolio and lower loan balances. Noninterest income increased $572 million due to strong investment banking and trading income, increased lending related fees, income from SBIC equity investments, and increased service charges on deposits slightly offset by lower operating lease income. Noninterest expense decreased $196 million primarily due to lower operating lease depreciation, lower allocated corporate expenses and reduced salary and equity based compensation expense, partially offset by higher incentives tied to performance.

Corporate and Commercial Banking average loans and leases HFI decreased $13.5 billion, or 8.1%, compared to 2020 driven primarily by lower client revolver utilization, lower dealer floor plan levels, and lower PPP.

Corporate and Commercial Banking average total deposits increased $12.8 billion, or 9.3%, compared to 2020 driven primarily by ongoing impacts of fiscal and monetary stimulus. Average noninterest-bearing deposits increased $12.3 billion, or 21%, while Interest bearing deposits increased $460 million, or 0.6%.

Insurance Holdings

Insurance Holdings net income was $508 million in 2021, an increase of $101 million, or 25%, compared to 2020. Noninterest income increased $423 million primarily due to organic growth as well as acquisitions. Impact from organic growth was $238 million, or 11%, and impact from acquisitions was $185 million, or 8%. Noninterest expense increased $295 million primarily due to commissions on higher production in the current year along with higher amortization of intangibles and operating expenses related to acquisitions.

Other, Treasury, and Corporate

Other, Treasury, and Corporate generated a net loss of $1.6 billion in 2021, compared to a net loss of $1.3 billion in 2020. Segment net interest income increased $142 million due to lower expense on borrowings and growth in the securities portfolio. The allocated provision for credit losses decreased $101 million which primarily reflects changes in the reserve for unfunded commitments as well as an allowance release in the current year resulting from the improving economic outlook. Noninterest income decreased $378 million primarily due to a gain on the sale of non-agency MBS in the same period of the prior year, partially offset by income from assets held for certain post-employment benefits. Noninterest expense increased $251 million primarily due to charitable contributions to the Truist Foundation and the Truist Charitable Fund, as well as higher incremental operating expenses related to the Merger and higher restructuring charges in the current year, partially offset by the loss on early extinguishment of long-term debt in the same period of the prior year.

48 Truist Financial Corporation

Analysis of Financial Condition

Investment Activities

Truist Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies, GSEs (including MBS), bank eligible obligations of any state or political subdivision, non-agency MBS, structured notes, bank eligible corporate obligations (including corporate debentures), commercial paper, negotiable CDs, bankers acceptances, mutual funds and limited types of equity securities.

Table 14: Composition of Securities Portfolio
December 31, (Dollars in millions)	2021		2020
AFS securities (at fair value):
U.S. Treasury	$	9,795			$	1,746
GSE	1,698			1,917
Agency MBS - residential	134,042			113,541
Agency MBS - commercial	2,882			3,057
States and political subdivisions	420			493
Non-agency MBS	4,258			—
Other	28			34
Total AFS securities	153,123			120,788
HTM securities (at amortized cost):
Agency MBS - residential	1,494			—
Total securities	$	154,617			$	120,788

The securities portfolio totaled $154.6 billion at December 31, 2021, compared to $120.8 billion at December 31, 2020. The increase was due primarily to increases in MBS and U.S. Treasury securities resulting from strong deposit growth resulting from fiscal and monetary stimulus.

As of December 31, 2021, approximately 4.6% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 1.9% as of December 31, 2020. The effective duration of the securities portfolio was 5.8 years at December 31, 2021, compared to 4.0 years at December 31, 2020, excluding the impact of unsettled security purchases at period end.

U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of December 31, 2021 and more than 99% at December 31, 2020. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company purchased $4.3 billion of AAA rated non-agency MBS as the risk adjusted returns for these securities was more attractive than agency MBS.

Truist Financial Corporation 49

The following table presents the securities portfolio at December 31, 2021, segregated by major category of security holdings with ranges of maturities and average yields disclosed:

Table 15: Securities Yields by Major Category and Maturity
December 31, 2021 (Dollars in millions)	AFS		HTM
Fair Value		Yield (1)		Amortized Cost		Effective Yield (1)
U.S. Treasury:
Within one year	$	290			0.23	%		$	—		—	%
One to five years	8,532			0.68			—			—
Five to ten years	973			1.26			—			—
Total	9,795			0.72			—			—
GSE:
Within one year	432			2.37			—			—
One to five years	1,086			2.14			—			—
After ten years	180			2.34			—			—
Total	1,698			2.22			—			—
Agency MBS - residential: (2)
Within one year	—		1.92			—			—
One to five years	1			1.97			—			—
Five to ten years	611			2.45			—			—
After ten years	133,430			1.85			1,494			0.45
Total	134,042			1.86			1,494			0.45
Agency MBS - commercial: (2)
One to five years	9			2.87			—			—
Five to ten years	15			1.74			—			—
After ten years	2,858			1.72			—			—
Total	2,882			1.73			—			—
States and political subdivisions:
Within one year	31			1.69			—			—
One to five years	80			3.43			—			—
Five to ten years	135			4.65			—			—
After ten years	174			3.49			—			—
Total	420			3.72			—			—
Non-agency MBS: (2)
After ten years	4,258			2.38			—			—
Total	4,258			2.38			—			—
Other:
Within one year	1			1.1			—			—
One to five years	6			3.71			—			—
After ten years	21			1.68			—			—
Total	28			2.11			—			—
Total securities	$	153,123			1.81			$	1,494		0.45

(1)Yields represent interest computed under the effective interest method on a TE basis using the federal income tax rate and the amortized cost of the securities.

Lending Activities

Truist strives to meet the credit needs of its clients while pursuing a balanced strategy of loan profitability, loan growth, and loan quality. Management believes that this purpose can best be accomplished by building strong client relationships over time and developing in-depth local market knowledge. The Company employs strict underwriting criteria governing the degree of risk assumed and the diversity of the loan portfolio in terms of type, industry, and geographical concentration.

Truist lends to a diverse client base that is geographically dispersed to mitigate concentration risk arising from local and regional economic downturns. International loans were immaterial as of December 31, 2021 and 2020. The following discussion provides additional information on the Company’s loan and lease portfolios. Refer to the "Risk Management" section for a discussion of the credit risk management policies used to manage the portfolios.

50 Truist Financial Corporation

Commercial Loan and Lease Portfolio

In accordance with the Company’s lending policy, each commercial loan undergoes a detailed underwriting process. Commercial loans are typically priced with an interest rate tied to market indices, such as the prime rate, LIBOR, or SOFR and are individually monitored and reviewed for deterioration in the ability of the client to repay the loan. The majority of Truist’s commercial loans are secured by real estate, business equipment, inventories, and other types of collateral.

Residential Mortgage Loan Portfolio

Truist primarily originates conforming mortgage loans, loans under FHA, U.S. Department of Veterans Affairs, or U.S. Department of Agriculture programs, and higher quality jumbo and construction-to-permanent loans for 1-4 family residential properties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA and FHLMC. They are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, or have mortgage insurance as required by investors and are made to borrowers in good credit standing.

Risks associated with mortgage lending include interest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary mortgage market and an effective MSR hedging process. Credit risk is managed through rigorous underwriting procedures and mortgage insurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management believes that the retention of mortgage servicing diversifies income while enabling Truist to build long-term client relationships and offer high quality client service. Truist also purchases residential mortgage loans from correspondent originators. The loans purchased from third party originators are subject to substantially the same underwriting and risk-management criteria as loans originated internally.

Residential Home Equity and Direct Loan Portfolio

Indirect Auto Loan Portfolio

The indirect auto portfolio primarily includes secured indirect installment loans to consumers for the purchase of new and used automobiles. The indirect auto portfolio also includes nonprime and near prime automobile finance. Such loans are originated through approved franchised and independent dealers throughout the Truist market area and nationally through Regional Acceptance Corporation. These loans are relatively homogeneous and no single loan is individually significant in terms of its size and potential risk of loss. Indirect auto loans are subject to rigorous lending policies and procedures and are underwritten with note amounts and credit limits that are consistent with the Company’s risk philosophy. In addition to its normal underwriting due diligence, Truist uses application systems and scoring systems to help underwrite and manage the credit risk in its indirect auto portfolio.

Indirect Other Loan Portfolio

The indirect other portfolio includes secured indirect installment loans to consumers for the purchase of new and used boats and recreational vehicles. The indirect other portfolio also includes small ticket consumer lending related to the purchase of power sports equipment. These loans are relatively homogeneous and no single loan is individually significant in terms of its size and potential risk of loss. These loans are subject to similar rigorous lending policies and procedures as the indirect auto loan portfolio. The indirect other loan portfolio also includes other indirect and point-of-sale lending to consumers to finance home improvements, furniture purchases, certain elective health-care services, power sports, trailer, and other consumer products segments. These loans are originated in accordance with strict underwriting criteria as determined by Truist.

Truist Financial Corporation 51

Student Loan Portfolio

The student loan portfolio is primarily composed of government guaranteed student loans and additionally includes certain private student loans originated by third parties. The government guarantee mitigates substantially all of the risk related to principal and interest repayment for this component of the portfolio. Private student loans were purchased from third party originators with credit enhancements that partially mitigate the Company’s credit exposure.

Credit Card Loan Portfolio

Refer to "Note 5. Loans and ACL" for additional information.

The following table summarizes the loan portfolio:

Table 16: Loans and Leases as of Period End
December 31, (Dollars in millions)	2021		2020
Commercial:
Commercial and industrial	$	138,762			$	143,594
CRE	23,951			26,595
Commercial construction	4,971			6,491
Consumer:
Residential mortgage	47,852			47,272
Residential home equity and direct	25,066			26,064
Indirect auto	26,441			26,150
Indirect other	10,883			11,177
Student	6,780			7,552
Credit card	4,807			4,839
Total loans and leases HFI	289,513			299,734
LHFS	4,812			6,059
Total loans and leases	$	294,325			$	305,793

In the fourth quarter of 2021, the Company reclassified the lease financing portfolio to the commercial and industrial portfolio. Prior periods were reclassified to conform to the current presentation.

Loans and leases HFI were $289.5 billion at December 31, 2021, down $10.2 billion compared to 2020.

Commercial loans decreased $9.0 billion during 2021 primarily due to a decline of $8.7 billion in PPP loans (commercial and industrial). The carrying value of PPP loans was $2.1 billion and $10.8 billion as of December 31, 2021 and 2020, respectively. Excluding PPP loans, commercial and industrial loans were up $3.8 billion, or 2.9%, while CRE and commercial construction declined $2.6 billion, or 10%, and $1.5 billion, or 23%, respectively.

Consumer loans decreased $1.2 billion during 2021 primarily due to refinance activity resulting in a $998 million decline in residential home equity and direct loans and a $772 million decline in student loans due to paydowns on government guaranteed loans. This was partially offset by a $580 million increase in residential mortgages due to the strategy to put certain correspondent channel production onto the balance sheet and lower prepayments.

LHFS decreased $1.2 billion during 2021 primarily due to the sale of $1.0 billion due to the divestiture of certain businesses.

52 Truist Financial Corporation

The following table presents a summary of the loans and leases, segregated by contractual maturity of payments and interest rate terms. Determinations of maturities are based on contractual terms, except when rollovers or extensions are included for purposes of measuring the ACL. Truist’s credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the client generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time.

Table 17: Loan Maturities
December 31, 2021 (Dollars in millions)	1 Year or Less		1 to 5 Years		5 to 15 Years		After 15 Years	Total
Fixed rate:
Commercial:
Commercial and industrial	$	5,062			$	13,743		$	17,226	$	3,726	$	39,757
CRE	357			2,043			1,864		34	4,298
Commercial construction	11			137			75		12	235
Total commercial	5,430			15,923			19,165		3,772	44,290
Consumer:
Residential mortgage	20			539			4,370		37,661	42,590
Residential home equity and direct	708			6,389			4,559		2,305	13,961
Indirect auto	301			14,007			12,133		—	26,441
Indirect other	161			4,461			3,150		3,062	10,834
Student	—			—			—		252	252
Total consumer	1,190			25,396			24,212		43,280	94,078
Credit card	88			—			—		—	88
Total fixed rate	6,708			41,319			43,377		47,052	138,456
Variable rate:
Commercial:
Commercial and industrial	18,187			60,566			16,492		3,760	99,005
CRE	2,689			11,949			4,972		43	19,653
Commercial construction	676			3,535			516		9	4,736
Total commercial	21,552			76,050			21,980		3,812	123,394
Consumer:
Residential mortgage	—			15			821		4,426	5,262
Residential home equity and direct	113			1,798			1,904		7,290	11,105
Indirect other	—			—			25		24	49
Student	—			—			—		6,528	6,528
Total consumer	113			1,813			2,750		18,268	22,944
Credit card	4,719			—			—		—	4,719
Total variable rate	26,384			77,863			24,730		22,080	151,057
Total loans and leases HFI	$	33,092			$	119,182		$	68,107	$	69,132	$	289,513

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $288 million and $358 million at December 31, 2021 and December 31, 2020, respectively.

Truist Financial Corporation 53

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

Table 18: Average Loans and Leases
For the Three Months Ended(Dollars in millions)	Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Mar 31, 2021	Dec 31, 2020
Commercial:
Commercial and industrial	$	134,804			$	134,942		$	138,539	$	141,026	$	144,624
CRE	24,396			24,849			25,645		26,211	27,030
Commercial construction	5,341			5,969			6,359		6,557	6,616
Consumer:
Residential mortgage	47,185			45,369			43,605		45,823	48,847
Residential home equity and direct	25,146			25,242			25,238		25,658	26,327
Indirect auto	26,841			26,830			26,444		26,363	25,788
Indirect other	10,978			11,112			10,797		10,848	11,291
Student	6,884			7,214			7,396		7,519	7,519
Credit card	4,769			4,632			4,552		4,645	4,818
Total average loans and leases HFI	$	286,344			$	286,159		$	288,575	$	294,650	$	302,860

Average loans and leases held for investment for the fourth quarter of 2021 were $286.3 billion, up $185 million, or 0.1%, compared to the third quarter of 2021. Excluding a $2.0 billion decrease in average PPP loans, average loans held for investment were up $2.2 billion, or 0.8%.

Average commercial loans decreased $1.2 billion, or 0.7%, as $1.8 billion, or 1.4%, growth within the commercial and industrial portfolio, excluding PPP, was more than offset by a $2.0 billion decrease in average PPP loans (commercial and industrial), a $628 million decrease in average commercial construction loans, and a $453 million decrease in average CRE loans.

Average consumer loans increased $1.3 billion, or 1.1%, primarily due to a $1.8 billion increase in residential mortgages due to the continued strategy to put certain correspondent channel production onto the balance sheet and lower prepayments. Student loans declined $330 million primarily due to paydowns on government guaranteed loans. Indirect other was down $134 million due to a seasonal decline in Sheffield.

54 Truist Financial Corporation

Asset Quality

The following tables summarize asset quality information:

Table 19: Asset Quality
December 31, (Dollars in millions)	2021		2020
NPAs:
NPLs:
Commercial and industrial	$	394			$	560
CRE	29			75
Commercial construction	7			14
Residential mortgage	296			316
Residential home equity and direct	141			205
Indirect auto	218			155
Indirect other	5			5
Total NPLs HFI	1,090			1,330
Loans held for sale	22			5
Total nonaccrual loans and leases	1,112			1,335
Foreclosed real estate	8			20
Other foreclosed property	43			32
Total nonperforming assets	$	1,163			$	1,387
TDRs:
Performing TDRs:
Commercial and industrial	$	147			$	138
CRE	5			47
Residential mortgage	692			648
Residential home equity and direct	98			88
Indirect auto	389			392
Indirect other	7			6
Student	25			5
Credit card	27			37
Total performing TDRs	1,390			1,361
Nonperforming TDRs	152			164
Total TDRs	$	1,542			$	1,525
Loans 90 days or more past due and still accruing: (1)
Commercial and industrial	$	13			$	13
Residential mortgage (2)	1,009			841
Residential home equity and direct	9			10
Indirect auto	1			2
Indirect other	3			2
Student (3)	868			1,111
Credit card	27			29
Total loans 90 days or more past due and still accruing	$	1,930			$	2,008
Loans 30-89 days past due and still accruing: (1)
Commercial and industrial	$	130			$	89
CRE	20			14
Commercial construction	2			5
Residential mortgage	514			782
Residential home equity and direct	107			98
Indirect auto	607			495
Indirect other	64			68
Student	555			618
Credit card	45			51
Total loans 30-89 days past due and still accruing	$	2,044			$	2,220

(1)The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period.

(2)Includes government guaranteed loans of $978 million and $787 million as of December 31, 2021 and 2020, respectively.

(3)Includes government guaranteed loans of $865 million and $1.1 billion as of December 31, 2021 and 2020, respectively.

Nonperforming assets totaled $1.2 billion at December 31, 2021, down $224 million compared to December 31, 2020 due to declines across almost all portfolios, partially offset by an increase in the indirect auto portfolio. Nonperforming loans and leases represented 0.38% of total loans and leases, down six basis points compared to December 31, 2020.

Truist Financial Corporation 55

Performing TDRs were up $29 million compared to the prior year.

Loans 90 days or more past due and still accruing totaled $1.9 billion at December 31, 2021, down $78 million compared to the prior year due to declines in the student portfolio, partially offset by an increase in the residential mortgage portfolio. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.67% at December 31, 2021, flat compared to the prior year. Excluding government guaranteed and PPP loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.03% at December 31, 2021, down one basis point from December 31, 2020.

Loans 30-89 days past due and still accruing totaled $2.0 billion at December 31, 2021, down $176 million compared to the prior year due to declines in the residential mortgage and student portfolios, partially offset by increases in the indirect auto and commercial and industrial portfolios. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases was 0.71% at December 31, 2021, down three basis points compared to the prior year.

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 19. 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 additional disclosures related to these potential problem loans.

Table 20: Asset Quality Ratios
December 31,	2021		2020
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.71	%		0.74	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.67			0.67
NPLs as a percentage of loans and leases HFI	0.38			0.44
NPLs as a percentage of total loans and leases (1)	0.38			0.44
NPAs as a percentage of:
Total assets (1)	0.21			0.27
Loans and leases HFI plus foreclosed property	0.39			0.46
ALLL as a percentage of loans and leases HFI	1.53			1.95
Ratio of ALLL to NPLs	4.07x		4.39x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)	0.03	%		0.04	%

(1)Includes LHFS.

(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student, and PPP loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio 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 21: Asset Quality Ratios (Continued)
For The Year Ended December 31,	2021		2020		2019
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial	0.10	%		0.21	%	0.11	%
CRE	0.01			0.27		0.16
Commercial construction	(0.03)			0.28		(0.07)
Consumer:
Residential mortgage	0.02			0.09		0.06
Residential home equity and direct	0.54			0.61		0.50
Indirect auto	0.92			1.16		2.53
Indirect other	0.30			0.32		0.68
Student	0.31			0.29		(0.01)
Credit card	2.42			2.99		2.79
Total	0.24			0.36		0.40
Ratio of ALLL to net charge-offs	6.36x		5.21x		2.44x

56 Truist Financial Corporation

The following table presents activity related to NPAs:

Table 22: Rollforward of NPAs
(Dollars in millions)	2021		2020
Balance, January 1	$	1,387			$	684
New NPAs (1)	2,008			3,247
Advances and principal increases	364			299
Disposals of foreclosed assets (2)	(356)			(432)
Disposals of NPLs (3)	(274)			(712)
Charge-offs and losses	(401)			(578)
Payments	(970)			(766)
Transfers to performing status	(546)			(339)
Other, net	(49)			(16)
Ending balance, December 31	$	1,163			$	1,387

(1)For 2020, includes approximately $500 million of loans previously classified as PCI that would have otherwise been nonperforming as of December 31, 2019.

(2)Includes charge-offs and losses recorded upon sale of $115 million and $139 million for the year ended December 31, 2021 and 2020, respectively.

(3)Includes gains, net of charge-offs and losses recorded upon sale of $3 million and charge-offs and losses of $132 million for the year ended December 31, 2021 and 2020, respectively.

TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term and a concession has been granted to the borrower. As a result, Truist works with borrowers to prevent further difficulties and to improve the likelihood of recovery on a loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR. For loan modification programs in response to the COVID-19 pandemic, Truist applied the relief from TDR accounting described in the CARES Act. Payment relief assistance provided by Truist includes forbearance, deferrals, extension, and re-aging programs, along with certain other modification strategies. Refer to “Note 1. Basis of Presentation” for the policies related to TDRs and COVID-19 loan modifications. The following table provides a summary of performing TDR activity:

Table 23: Rollforward of Performing TDRs
(Dollars in millions)	2021		2020
Balance, January 1	$	1,361			$	980
Inflows	651			933
Payments and payoffs (1)	(407)			(194)
Charge-offs	(44)			(44)
Transfers to nonperforming TDRs (2)	(46)			(78)
Removal due to the passage of time	(12)			(8)
Non-concessionary re-modifications	(15)			(3)
Transferred to LHFS, sold and other	(98)			(225)
Balance, December 31	$	1,390			$	1,361

(1)Includes scheduled principal payments, prepayments, and payoffs of amounts outstanding.

(2)Represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.

The following table provides further details regarding the payment status of TDRs outstanding at December 31, 2021:

Table 24: Payment Status of TDRs (1)
December 31, 2021 (Dollars in millions)	Current		Past Due 30-89 Days		Past Due 90 Days Or More		Total
Performing TDRs:
Commercial:
Commercial and industrial	$	147			100.0	%		$	—		—	%	$	—	—	%	$	147
CRE	5			100.0			—			—		—		—	5
Consumer:
Residential mortgage	440			63.6			85			12.3		167		24.1	692
Residential home equity and direct	93			94.9			5			5.1		—		—	98
Indirect auto	320			82.3			69			17.7		—		—	389
Indirect other	6			85.7			1			14.3		—		—	7
Student	23			92.0			1			4.0		1		4.0	25
Credit card	24			88.9			2			7.4		1		3.7	27
Total performing TDRs	1,058			76.1			163			11.7		169		12.2	1,390
Nonperforming TDRs	43			28.3			21			13.8		88		57.9	152
Total TDRs	$	1,101			71.4			$	184		11.9		$	257	16.7		$	1,542

(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.

Truist Financial Corporation 57

ACL

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

Table 25: Activity in ACL
	For the Year Ended
(Dollars in millions)		2021		2020		2019
Balance, beginning of period		$	6,199			$	1,889		$	1,651
CECL adoption - impact to retained earnings before tax		—			2,762			—
CECL adoption - reserves on PCD assets		—			378			—
Provision for credit losses		(813)			2,335			615
Charge-offs:
Commercial and industrial		(243)			(412)			(101)
CRE		(10)			(78)			(33)
Commercial construction		(2)			(30)			—
Residential mortgage		(23)			(56)			(21)
Residential home equity and direct		(214)			(231)			(93)
Indirect auto		(336)			(378)			(370)
Indirect other		(57)			(60)			(62)
Student		(24)			(23)			—
Credit card		(150)			(182)			(109)
Total charge-offs		(1,059)			(1,450)			(789)
Recoveries:
Commercial and industrial		107			96			26
CRE		6			5			5
Commercial construction		4			11			3
Residential mortgage		12			10			2
Residential home equity and direct		79			66			30
Indirect auto		92			87			52
Indirect other		24			23			17
Student		1			1			—
Credit card		37			32			20
Total recoveries		362			331			155
Net charge-offs		(697)			(1,119)			(634)
Other		6			(46)			257
Balance, end of period		$	4,695			$	6,199		$	1,889
ALLL (excluding PCD loans)		$	4,320			$	5,668		$	1,541
ALLL for PCD loans		115			167			8
RUFC		260			364			340
Total ACL		$	4,695			$	6,199		$	1,889

At December 31, 2021, the allowance for loan and lease losses was 4.07 times nonperforming loans and leases held for investment, compared to 4.39 times at December 31, 2020. At December 31, 2021, the allowance for loan and lease losses was 6.36 times annualized net charge-offs, compared to 5.21 times at December 31, 2020.

Net charge-offs during 2021 totaled $697 million, down $422 million compared to the prior year, reflecting Truist’s prudent risk culture, portfolio diversification, improving economic conditions, and the ongoing effects of government stimulus. As a percentage of average loans and leases, annualized net charge-offs were 0.24%, down 12 basis points compared to the prior year. Prior year net charge-offs include $97 million of charge-offs related to the implementation of CECL, which required a gross-up of loan carrying values in connection with the establishment of an allowance on PCD loans. Management performed a comprehensive review of PCD assets during the year and concluded in certain situations that a charge-off was required. Excluding these additional charge-offs, net charge-offs would have been an annualized 0.33% of average loans and leases for 2020.

58 Truist Financial Corporation

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 26: Allocation of ALLL by Category
	December 31, 2021		December 31, 2020
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,426			32.2	%		47.9	%		$	2,204			37.8	%		47.9	%
CRE	350			7.9			8.3			573			9.8			8.9
Commercial construction	52			1.2			1.7			81			1.4			2.2
Residential mortgage	308			6.9			16.5			368			6.3			15.8
Residential home equity and direct	615			13.9			8.7			714			12.2			8.7
Indirect auto	1,022			23.0			9.1			1,198			20.5			8.7
Indirect other	195			4.4			3.8			208			3.6			3.7
Student	117			2.6			2.3			130			2.2			2.5
Credit card	350			7.9			1.7			359			6.2			1.6
Total ALLL	4,435			100.0	%		100.0	%		5,835			100.0	%		100.0	%
RUFC	260							364
Total ACL	$	4,695							$	6,199

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 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 December 31, 2021, Truist held or serviced the first lien on 30% of its second lien positions.

Other Assets

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

Table 27: Other Assets as of Period End
(Dollars in millions)	December 31, 2021		December 31, 2020
Bank-owned life insurance	$	7,281			$	6,479
Tax credit and other private equity investments	6,309			5,685
Prepaid pension assets	5,938			4,358
Derivative assets	2,370			3,837
Accounts receivable	2,244			1,833
Leased assets and related assets	2,092			1,810
Accrued income	1,791			1,934
ROU assets	1,168			1,333
Prepaid expenses	1,152			1,247
Equity securities at fair value	1,066			1,054
Other	738			1,103
Total other assets	$	32,149			$	30,673

Funding Activities

Deposits are the primary source of funds for the Company’s lending and investing activities. Scheduled payments and maturities from portfolios of loans and investment securities also provide a stable source of funds. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed funds, as well as long-term debt issued through the capital markets, all provide supplemental liquidity sources. Funding activities are monitored and governed through Truist’s overall ALM process under the governance and oversight of the MRLCC, which is further discussed in the "Market Risk Management" section in MD&A. The following section provides a brief description of the various sources of funds.

Truist Financial Corporation 59

Deposits

Deposits are obtained principally from individuals and businesses within Truist’s geographic area and include noninterest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money market deposit accounts, CDs and IRAs. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit and service charge schedules. Interest rates paid on specific deposit types are determined based on (i) competitor deposit rates, (ii) the anticipated amount and timing of funding needs, (iii) the availability and cost of alternative sources of funding, and (iv) anticipated future economic conditions and interest rates. Deposits are attractive sources of funding because of their stability and relative cost.

The following table presents a summary of deposits:

Table 28: Deposits as of Period End
December 31, (Dollars in millions)	2021			2020
Noninterest-bearing deposits		$	145,892			$	127,629
Interest checking		115,754			105,269
Money market and savings		138,956			126,238
Time deposits		15,886			21,941
Total deposits		$	416,488			$	381,077

Deposits totaled $416.5 billion at December 31, 2021, an increase of $35.4 billion from December 31, 2020. The growth in deposits reflects ongoing impact of government stimulus programs. Time deposits decreased primarily due to the maturity of higher-cost personal accounts.

The following table presents average deposits:

Table 29: Average Deposits
Three Months Ended(Dollars in millions)	Dec 31, 2021		Sep 30, 2021		Jun 30, 2021		Mar 31, 2021	Dec 31, 2020
Noninterest-bearing deposits	$	146,492			$	141,738		$	137,892	$	128,579	$	127,103
Interest checking	110,506			107,802			106,121		104,744	99,866
Money market and savings	137,676			136,094			134,029		129,303	124,692
Time deposits	16,292			17,094			18,213		20,559	23,605
Total average deposits	$	410,966			$	402,728		$	396,255	$	383,185	$	375,266

Average deposits for the fourth quarter of 2021 were $411.0 billion, an increase of $8.2 billion, or 2.0%, compared to the prior quarter. Average noninterest bearing deposits grew 3.4% compared to the prior quarter and represented 35.6% of total deposits for the fourth quarter of 2021, compared to 35.2% for the prior quarter. Average interest checking and money market and savings grew 2.5% and 1.2%, respectively, compared to the prior quarter.

Average time deposits decreased 4.7% primarily due to the maturity of higher-cost personal accounts.

The amount of deposits above the FDIC’s limit of $250,000 was $202.5 billion and $185.4 billion as of December 31, 2021 and 2020, respectively, calculated using the same methodology as the Call Report. The following table summarizes the maturities of time deposit accounts above $250,000:

Table 30: Scheduled Maturities of Time Deposits $250,000 and Greater
December 31, 2021 (Dollars in millions)
Three months or less	$	974
Over three through six months	555
Over six through twelve months	434
Over twelve months	224
Total	$	2,187

60 Truist Financial Corporation

Borrowings

Table 31: Short-Term Borrowings
As Of / For The Year Ended December 31,(Dollars in millions)	2021		2020		2019
Securities sold under agreements to repurchase:
Maximum outstanding at any month-end during the year	$	3,279			$	2,348			$	1,969
Balance outstanding at end of year	2,435			1,221			1,969
Average outstanding during the year	2,382			1,504			826
Average interest rate during the year	0.07	%		0.64	%		2.01	%
Average interest rate at end of year	0.01			0.13			1.41
Federal funds purchased and short-term borrowed funds:
Maximum outstanding at any month-end during the year	$	6,244			$	19,392			$	14,493
Balance outstanding at end of year	808			3,372			14,493
Average outstanding during the year	1,936			6,951			7,354
Average interest rate during the year	0.12	%		1.17	%		2.28	%
Average interest rate at end of year	0.08			0.20			1.75

At December 31, 2021, short-term borrowings totaled $5.3 billion, a decrease of $800 million compared to December 31, 2020, due primarily to a decrease of $2.6 billion in short-term FHLB advances, partially offset by an increase of $1.2 billion in securities sold under agreements to repurchase and a $616 million increase in trading liabilities. Average short-term borrowings were $6.2 billion or 1.4% of total funding for 2021, as compared to $10.1 billion or 2.4% for the prior year. Average short-term borrowings decreased as a percentage of funding sources due to strong deposit growth.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $35.9 billion at December 31, 2021, a decrease of $3.7 billion compared to December 31, 2020. During 2021, the Company had $7.8 billion of senior long term debt maturities and redemptions, partially offset by $2.3 billion of issuances of fixed rate senior notes with an interest rate of 1.27% to 1.89% maturing between 2027 to 2029 and issuances of $2.3 billion in variable rate senior notes maturing between 2024 and 2025. FHLB advances represented 2.4% of total outstanding long-term debt at December 31, 2021, compared to 2.2% at December 31, 2020. The average cost of long-term debt was 1.53% for the year ended December 31, 2021, down 22 basis points compared to the same period in 2020.

In February 2022, Truist announced it will redeem $300 million of fixed rate subordinated notes in February 2022 that were due in March 2022 and $1.0 billion of fixed rate senior notes and $350 million in floating rate senior notes in March 2022 that were due in April 2022.

Shareholders’ Equity

Total shareholders’ equity was $69.3 billion at December 31, 2021, a decrease of $1.6 billion from December 31, 2020. This decrease includes a decrease of $2.3 billion in AOCI, redemptions of $1.4 billion in preferred stock for Series F, G, and H, $2.9 billion in dividends, and $1.6 billion in repurchases of common stock, partially offset by $6.4 billion in net income. Truist’s book value per common share at December 31, 2021 was $47.14, compared to $46.52 at December 31, 2020.

Refer to “Note 12. Shareholders’ Equity” for additional disclosures related to preferred stock redemptions.

Risk Management

Truist Financial Corporation 61

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

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

Truist employs a comprehensive change management program to manage the risks associated with integrating heritage BB&T and heritage SunTrust. The Board and Executive Leadership oversee the change management program, which is designed to ensure key decisions are reviewed and that there is appropriate oversight of integration activities.

•Managing risk is the responsibility of every teammate.

•Proactively identifying risk and managing the inherent risks of their businesses is the responsibility of the business units.

•Managing risk with a balanced approach which includes quality, profitability, and growth.

•Measuring what is managed and managing what is measured.

•Utilizing sound and consistent risk management practices.

•Thoroughly analyzing risk quantitatively and qualitatively.

•Realizing lower cost of capital from high quality risk management.

As illustrated below, the risk management framework is supported by three lines of defense. The following figure describes the roles of the three lines of defense:

62 Truist Financial Corporation

The ERC establishes a fully integrated view of risks across the company, provides broad strategic oversight of all risk types, and oversees corporate-wide strategies for identifying, assessing, controlling, measuring, monitoring, and reporting risk at the enterprise level. The ERC is responsible for maintaining an effective risk management framework and monitoring its adoption and execution across the enterprise. The ERC is chaired by the CRO and its membership includes all members of Executive Leadership and the General Auditor.

Truist Financial Corporation 63

The principal types of inherent risk include climate, market, credit, liquidity, compliance, strategic, reputational, operational, and technology risks. The following is a discussion of these risks.

Climate Risk

Climate risk includes the risks arising from a changing climate and the economic activities or trends resulting from the mitigation of climate change. These risks are classified into two categories, physical risks, resulting from acute weather events and chronic changes in climate conditions; as well as, transition risks, related to the changing economic conditions resulting from the transition to a low-carbon economy.

During 2021, Truist expanded its risk management teams and created a dedicated climate risk management function that seeks to identify and evaluate climate risks and opportunities, and integrate them into the Company’s risk management framework and strategic plans. Truist has conducted initial assessments of its exposure to various forms of climate risk including flooding, hurricane wind, and wildfire risks facing the real estate secured portfolios. Transition risks facing Truist’s commercial clients have also been evaluated against key risk drivers including, stakeholders, legal, regulatory, and technology. These risk assessments and broader climate scenario analysis will continue to be refined while climate risk related metrics are developed and incorporated into risk monitoring processes across the Company.

Market Risk

Interest Rate Market Risk

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 utilizes a tiered deposit beta assumption framework that accounts for historically observed behaviors of clients and the Company. The deposit beta assumptions are reduced when interest rates are exceptionally low and competition for interest-bearing deposits is commensurately low. As interest rates rise, the deposit beta assumptions also rise to reflect increasing competition among banks as well as increased client demand for interest-bearing deposits. Truist applies an average deposit beta of approximately 25% for the first 100 basis point increase in the Federal funds rate, approximately 35% for the second 100 basis point increase, and approximately 50% for any additional increases. Truist also regularly conducts sensitivity analyses on other key variables, including noninterest-bearing deposits, to determine the impact these variables could have on the Company’s interest rate risk position. The predictive value of the simulation model depends upon the accuracy of the assumptions, but management believes that it provides helpful information for the management of interest rate risk.

64 Truist Financial Corporation

Table 32: Interest Sensitivity Simulation Analysis
Interest Rate Scenario		Annualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)		Prime Rate
	Dec 31, 2021		Dec 31, 2020	Dec 31, 2021		Dec 31, 2020
Up 100		4.25	%	4.25	%		5.18	%	4.18	%
Up 50		3.75		3.75			3.94		3.24
No Change		3.25		3.25			—		—
Down 25 (1)		3.00		3.00			(1.28)		(1.82)
Down 50 (1)		2.75		2.75			(1.78)		(2.09)

(1)The Down 25 and 50 rates are floored at one basis point and may not reflect Down 25 and 50 basis points for all rate indices.

•Maximum decrease in net interest income of 7.5% for the next 12 months assuming a 25 basis point change in interest rates each quarter for four quarters; and a

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

The following table shows the results of Truist’s interest-rate sensitivity position assuming the loss of demand deposits and an associated increase in managed rate deposits under various scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%.

Table 33: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)	Base Scenario at December 31, 2021 (1)		Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
	$20 Billion		$40 Billion
Up 100	5.18	%		4.33	%	3.49	%
Up 50	3.94			3.32		2.70

(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at December 31, 2021 as presented in the preceding table.

Truist uses financial instruments including derivatives to manage interest rate risk related to securities, commercial loans, MSRs, and mortgage banking operations, long-term debt, and other funding sources. Truist hedges a portion of its AFS securities to reduce mark-to-market volatility within AOCI and also to increase its overall asset sensitivity position. Truist also uses derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of December 31, 2021, Truist had derivative financial instruments outstanding with notional amounts totaling $300.6 billion, with an associated net fair value of $1.8 billion. See “Note 19. Derivative Financial Instruments” for additional disclosures.

Truist Financial Corporation 65

LIBOR Transition

LIBOR in its current form will no longer be available after 2021. For most tenors of U.S. dollar LIBOR, the administrator of LIBOR extended publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR and all non-U.S. dollar LIBOR, ceased publication at December 31, 2021, based on the October 20, 2021 interagency Joint Statement on Managing the LIBOR transition. To prepare for the transition to an alternative reference rate, management formed a cross-functional project team to address the LIBOR transition. The project team performed an assessment to identify the potential risks related to the transition from LIBOR to a new index or multiple indices and provides updates to Executive Leadership and the Board. As of December 2021, Truist had outstanding LIBOR-based instruments that mature after June 30, 2023, including: loan and lease exposures totaling approximately $151 billion, notional derivative exposure totaling approximately $131 billion, long-term debt of $1.1 billion, and preferred stock of $1.5 billion. These amounts are inclusive of remediated contracts, which contain adequate fallback language for the transition.

Contract fallback language for existing loans and leases has largely been reviewed and certain contracts will require amendments to support the transition away from LIBOR. For impacted lines of business, the Company has started remediating these contracts to include standardized fallback language. Current fallback language used for new, renewed, and modified contracts is generally consistent with ARRC recommendations and includes use of “hardwired fallback” language, where appropriate.

The progress and approach to remediation will vary based on the type of contract and existing language used in the agreement. For commercial lending and general consumer lending, a significant number of remaining LIBOR contracts will require client outreach and remediation. Efforts to amend and remediate contracts, excluding mortgage and student loans, that mature post June 30, 2023 ($141 billion) will be accelerated in 2022. Truist has determined that adjustable rate mortgage products ($4.3 billion) have consistent and adequate fallback language to transition away from LIBOR in line with industry expectations; therefore, these contracts will not require remediation. Remediation of student loans ($6.1 billion) will depend on guidance from the Department of Education and recent guidance from the CFPB to allow transition to “comparable rates,” including SOFR or Prime. Derivatives will utilize recent New York legislation to support transition of trades to follow the ISDA Protocol (where counterparties have not already adhered to the protocol). Truist will evaluate legislation being considered in 2022 to further support the transition away from LIBOR. This legislation may provide additional administrative benefit for a small portion of the commercial and consumer lending portfolios where contracts do not contain fallback language.

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

As of December 31, 2021, Truist ceased entering into new contracts with a LIBOR reference rate for all product offerings, except on a limited basis, as permissible. Market risks associated with this change are dependent on the alternative reference rates available and market conditions as of the transition. The Company is actively using SOFR as a reference rate and has originated approximately $18.3 billion of loans, issued $5.0 billion of long-term debt, and has $44.9 billion in notional derivative exposure using this alternative reference rate as of December 31, 2021. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry and will continue to offer additional SOFR based products during 2022. Additional alternative reference rates, such as Bloomberg Short Term Bank Yield will be supported based on market demand. Other emerging credit sensitive rates will be evaluated as additional alternatives for LIBOR based on market developments. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to the section titled “Item1A. Risk Factors.”

Market risk from trading activities

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

66 Truist Financial Corporation

Covered Trading Positions

Securitizations

As of December 31, 2021, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $51 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 December 31, 2021.

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 twelve months ended December 31, 2021 and 2020. During 2021, average one and ten day VaR measures declined from last year as heightened market volatility experienced during March 2020 aged out of the 12-month VaR look-back window.

Table 34: VaR-based Measures
	Year Ended December 31,
		2021	2020
(Dollars in millions)				10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum				$	68			$	16			$	65	$	11
Average				14			4			27			6
Minimum				3			1			3			1
Period-end				13			5			28			7
VaR by Risk Class:
Interest Rate Risk						3					2
Credit Spread Risk						5					9
Equity Price Risk						1					2
Foreign Exchange Risk						—					—
Portfolio Diversification						(5)					(5)
Period-end						5					7

Truist Financial Corporation 67

Stressed VaR-based measures

Table 35: Stressed VaR-based Measures - 10 Day Holding Period
	Year Ended December 31,
(Dollars in millions)		2021		2020
Maximum		$	118			$	65
Average		59			33
Minimum		26			13
Period-end		65			28

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

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, 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 December 31, 2021. 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

Model Risk Management

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

Stress Testing

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

Credit Risk

Truist has established the following general practices to manage credit risk:

•limiting the amount of credit that individual lenders may extend to a borrower;

•establishing a process for credit approval accountability;

•careful initial underwriting and analysis of borrower, transaction, market and collateral risks;

•ongoing servicing and monitoring of individual loans and lending relationships;

•continuous monitoring of the portfolio, market dynamics and the economy; and

•periodically reevaluating the Company’s strategy and overall exposure as economic, market and other relevant conditions change.

The following discussion describes the underwriting procedures and overall risk management of Truist’s lending function.

Underwriting Approach

•Cash flow and debt service coverage - cash flow adequacy is a necessary condition of creditworthiness, meaning that loans must either be clearly supported by a borrower's cash flow or, if not, must be justified by secondary repayment sources.

•Overall creditworthiness of the client, taking into account the client's relationships, both past and current, with Truist and other lenders - Truist’s success depends on building lasting and mutually beneficial relationships with clients, which involves assessing their financial position and background.

•Level of equity invested in the transaction - in general, borrowers are required to contribute or invest a portion of their own funds prior to any loan advances.

Refer to the "Lending Activities" section in MD&A for a discussion of each loan and lease portfolio.

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Liquidity Risk

Liquidity risk is the risk that (i) Truist will be unable to meet its obligations as they come due because of an inability to obtain adequate funding (funding liquidity risk), or (ii) Truist cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions (market liquidity risk). Refer to the "Liquidity” section in MD&A for additional discussion.

Compliance Risk

Compliance risk is the risk to current or anticipated earnings or capital arising from violations of laws, rules, or regulations, or from non-conformance with prescribed practices, internal policies and procedures or ethical standards. This risk exposes Truist to fines, civil monetary penalties, payment of damages, and the voiding of contracts. Compliance risk can result in diminished reputation, reduced franchise or enterprise value, limited business opportunities and lessened expansion potential.

Strategic Risk

Strategic risk is the risk of financial loss, diminished stakeholder confidence, or negative impact to human capital resulting from ineffective strategy setting and execution, adverse business decisions, or lack of responsiveness to changes in the banking industry and operating environment. Truist is committed to fulfilling its overall strategic objectives by selecting business strategies and operating businesses in a manner consistent with achieving profitability/earnings growth and maintaining strong confidence and trust with its key stakeholder constituencies.

Reputation Risk

Reputation risk is the risk to current or anticipated earnings, capital, enterprise value, the Truist brand, and public confidence arising from negative publicity or public opinion, whether real or perceived, regarding Truist’s business practices, products, services, transactions, or other activities undertaken by Truist, its representatives, or its partners. A negative reputation may impair Truist’s relationship with clients, teammates, communities, or shareholders, and it is often a residual risk that arises when other risks are not managed properly.

Operational Risk

Model Risk

Model risk is the risk to current or anticipated earnings or capital from decisions based on incorrect or misused model outputs. Truist uses models for many purposes, including the valuation of financial positions, estimation of credit losses, and the measurement of risk. Valuation models are used to value certain financial instruments for which quoted prices may not be readily available. Valuation models are also used as inputs for VaR, the estimation of VaR itself, regulatory capital, stress testing, and the ACL. Models are owned by the applicable BUs, who are responsible for the development, implementation, and use of their models. Oversight of these functions is performed by the MRM, which is a component of the RMO. Once models have been approved, model owners are responsible for the maintenance of an appropriate operating environment and must monitor and evaluate the performance of the models on a recurring basis. Models are updated in response to changes in portfolio composition, industry and economic conditions, technological capabilities and other developments.

MRM manages model risk in a holistic manner through a suite of model governance and model validation activities. The risk of each model is assessed and classified into various risk tiers. Additionally, MRM maintains an enterprise-wide model inventory containing relevant model information. Regarding model validation, MRM utilizes internal validation analysts and managers with skill sets in predictive modeling to perform detailed reviews of model development, implementation, and conceptual soundness. On certain occasions, the MRM will also engage external parties to assist with validation efforts. Once in a production environment, MRM assesses a model’s performance on a periodic basis through ongoing monitoring reviews. MRM tracks issues that have been identified during model validation or through ongoing monitoring, and engages with model owners to ensure their timely remediation. MRM gauges model risk utilizing a collection of key risk indicators, which are periodically reported to relevant committees, including but not limited to, the Model Risk Management Committee as well as the Board Risk Committee. MRM will also present model risk topics to the Board Risk Committee as necessary.

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Technology Risk

Merger Integration Risk

The Truist Merger Program was designed to ensure successful integration following the Merger through strong governance practices and controls, with processes, metrics and reporting exemplifying a strong risk culture. The core Truist Merger Program structure consists of key stakeholders from each line of business. Integration activities and risk mitigation are monitored through established workgroups and Truist Merger Program leadership, with oversight and escalation into the Merger Oversight Committee (as the primary committee), TMC, and Board Technology Committee.

Cybersecurity Risk

Truist’s framework aligns with those of the National Institute of Standards and Technology, the International Standards Organization 27000 series, the IT Governance Institute, and the Control Objectives for Information and Related Technology, as well as conforms with the requirements and guidance from applicable regulatory authorities, including the Federal Financial Institutions Examination Council. In addition, Truist’s framework, which includes internally and externally focused capabilities, drives the development and implementation of Truist’s data security strategy that is designed to reduce risk while enabling Truist’s corporate business objectives.

Truist’s cybersecurity risk program is overseen by Executive Leadership and the Board. Regular updates on the status of the cybersecurity risk program, including information security risks and incidents, emerging threats, and control environment, are aggregated and escalated to Executive Leadership and the Board. Additionally, Truist has a Cyber Incident Response Team that manages significant cyber-specific events with escalation up to Executive Leadership and the Board. Truist’s framework requires annual exercises at a minimum to test Truist’s preparedness. The Board devotes significant time and attention to its oversight of cyber security risk and approves related information security policies. Although Truist has invested substantial resources to manage and reduce cybersecurity risk, it is not possible to completely eliminate this risk. Truist obtains insurance that protects against certain losses, expenses, and damages associated with cybersecurity risk. See Item 1A, "Risk Factors," for additional information regarding cybersecurity risk.

Liquidity

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Internal Liquidity Stress Testing

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 critical teammates to follow in the event of a liquidity contraction or in anticipation of such an event. The plan addresses authority for activation and decision making, liquidity options, and the responsibilities of key departments in the event of a liquidity contraction.

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 $86.7 billion and Truist’s average LCR was 114% for the three months ended December 31, 2021.

Sources of Funds

Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and term Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to secured borrowing sources including FHLB advances, repurchase agreements, and the FRB discount window. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the FRB:

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Table 38: Liquidity Sources
(Dollars in millions)	Dec 31, 2021		Dec 31, 2020
Unused borrowing capacity:
FRB	$	52,170			$	52,831
FHLB	49,244			52,274
Available investment securities (after haircuts)	116,600			93,623
Available secured borrowing capacity	218,014			198,728
Eligible cash at the FRB	14,714			13,437
Total	$	232,728			$	212,165

At December 31, 2021, Truist Bank’s available secured borrowing capacity represented approximately 14.2 times the amount of wholesale funding maturities in one-year or less.

Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, repurchases of common stock, and payments on long-term debt. See “Note 22. Parent Company Financial Information” 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 December 31, 2021 and December 31, 2020, the Parent Company had 35 months and 43 months, respectively, of cash on hand to satisfy projected cash outflows, and 19 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," 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.

The following table presents the credit ratings and outlooks of Truist and Truist Bank as of December 31, 2021:

Table 36: Credit Ratings of Truist Financial Corporation and Truist Bank
	Moody's	S&P	Fitch	DBRS Morningstar
Truist Financial Corporation:
Issuer	A3	A- / A-2	A+ / F1	AH / R-1L
Senior unsecured	A3	A-	A	AH
Subordinated	A3	BBB+	A-	A
Preferred stock	Baa2(hyb)	BBB-	BBB	BBBH
Truist Bank:
Issuer	A2	A / A-1	A+ / F1	AAL / R-1M
Senior unsecured	A2	A	A+	AAL
Deposits	Aa3 / P-1	NA	AA- / F1+	AAL
Subordinated	(P) A2	A-	A	AH
Ratings outlook:
Credit trend	Stable	Positive	Stable	Positive

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Recent changes in the Company’s credit ratings and outlooks include:

•On May 7, 2021, Fitch Ratings affirmed the ratings of Truist and Truist Bank and revised the ratings outlook to “stable” from “negative” based on the view that the Company’s diverse business model and solid strategy execution will drive stable earnings performance, and on increased confidence in a U.S. economic recovery.

•On May 24, 2021, S&P Global Ratings affirmed the ratings of Truist and Truist Bank and revised its ratings outlook to “positive” from “stable,” citing stabilization in U.S. economic trends and the easing of industry risk in the U.S. banking system, and noting that the merger of equals provides better diversity and market position, and could generate higher earnings power, financial flexibility, and technology, providing the Company with a sustainable competitive advantage.

•On June 10, 2021, DBRS Morningstar confirmed the ratings of Truist and Truist Bank and revised the trend for all ratings to “positive” from “stable”, reflecting the Company’s substantial progress with the merger integration and the view that the impact of the economic fallout from the coronavirus pandemic will continue to be manageable.

•On July 12, 2021, Moody’s Investors Service upgraded Truist Bank’s long-term subordinated debt rating to A2 from A3, and downgraded Truist Bank’s long-term bank deposit rating to Aa3 from Aa2, following revisions to Moody’s advanced loss given failure analysis that were published in its updated Banks methodology on July 9, 2021.

•On December 7, 2021, Moody’s Investors Service released ESG Issuer Profile Scores (IPS) and Credit Impact Scores (CIS) to assist in demonstrating the impact of ESG on credit ratings. IPS assess an issuer’s exposure to the risk categories in Moody’s ESG classification system from a credit perspective. CIS indicate the extent to which ESG factors impacted the issuer’s credit ratings. Consistent with most other banks, Truist was assigned an IPS of E-3, S-4, and G-2, and a CIS of CIS-2, the latter indicating that ESG attributes had a neutral-to-low impact on Truist’s current ratings.

Management believes current sources of liquidity are adequate to meet Truist’s current requirements and plans for continued growth. As of December 31, 2021, the Company had $1.9 billion in obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the total amount of obligations based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in determining the total amount of obligations. See "Note 9. Other Assets and Liabilities," "Note 11. Borrowings," and "Note 16. Commitments and Contingencies" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.

Capital

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

Truist regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plans and stress testing results to the banking regulators. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, management’s overriding policy is to maintain capital at levels that are in excess of internal capital targets, which are above the regulatory “well capitalized” minimums. Management evaluates whether capital ratios calculated after the effect of alternative capital actions are likely to remain above minimums specified by the FRB for the annual CCAR process. Breaches of minimum targets prompt a review of the planned capital actions included in Truist’s capital plan.

Table 39: 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 of 2.5% applicable to Truist as of December 31, 2021. Truist’s SCB, received in the 2021 CCAR process, is effective from October 1, 2021 to September 30, 2022.

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Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company’s double leverage ratio (investments in subsidiaries as a percentage of shareholders' equity). The active management of the subsidiaries' equity capital is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of Truist’s capital position.

Management intends to maintain capital at Truist Bank at levels that will result in classification as "well-capitalized" for regulatory purposes. Secondarily, it is management's intent to maintain Truist Bank's capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity, and risk profile. If the capital levels of Truist Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.

Management's capital deployment plan in order of preference is to focus on (i) organic growth, (ii) dividends, and (iii) strategic opportunities and/or share repurchases depending on opportunities in the marketplace and Truist’s interest and ability to proceed with acquisitions.

Truist Bank's capital ratios are presented in the following table:

Table 40: Capital Ratios - Truist Bank
December 31,	2021		2020
CET1 to risk-weighted assets	10.5	%		11.0	%
Tier 1 capital to risk-weighted assets	10.5			11.0
Total capital to risk-weighted assets	12.0			13.0
Leverage ratio	8.0			8.7
Supplementary leverage ratio	6.9			7.5

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

Table 41: Capital Ratios - Truist Financial Corporation
(Dollars in millions, except per share data, shares in thousands)	Dec 31, 2021		Dec 31, 2020
Risk-based:
CET1 capital to risk-weighted assets	9.6	%		10.0	%
Tier 1 capital to risk-weighted assets	11.3			12.1
Total capital to risk-weighted assets	13.2			14.5
Leverage ratio	8.7			9.6
Supplementary leverage ratio	7.4			8.7
Non-GAAP capital measure (1):
Tangible common equity per common share	$	25.47			$	26.78
Calculation of tangible common equity (1):
Total shareholders’ equity	$	69,271			$	70,912
Less:
Preferred stock	6,673			8,048
Noncontrolling interests	—			105
Goodwill and intangible assets, net of deferred taxes	28,772			26,629
Tangible common equity	$	33,826			$	36,130
Risk-weighted assets	$	390,886			$	379,153
Common shares outstanding at end of period	1,327,818			1,348,961

(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.

Truist’s capital level at December 31, 2021 remains strong compared to the regulatory levels for well capitalized banks. Truist’s CET1 ratio was 9.6% as of December 31, 2021. The decline compared to the 2020 CET1 ratio reflects capital deployed through the acquisitions of Service Finance, LLC and Constellation Affiliated Partners, the repurchase of common stock, and loan growth in the fourth quarter of 2021 driving an increase in risk-weighted assets. Truist increased common dividends 7% to $0.48 per share starting in the third quarter of 2021. During 2021, Truist paid $2.5 billion in common stock dividends or $1.86 per share, and repurchased $1.6 billion of common stock. Truist also redeemed $1.4 billion of preferred stock to optimize the Company’s capital position. The dividend payout ratio for 2021 was 41% compared to 58% for the prior year. The total payout ratio for 2021 was 68% compared to 58% for the prior year, reflecting the resumption of share repurchases during the year. In early 2022, Truist declared common dividends of $0.48 per share for the first quarter of 2022, and announced the acquisition of Kensington Vanguard National Land Services to expand IH’s title insurance operation.

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Reclassifications

In certain circumstances, reclassifications have been made to prior period information to conform to the current presentation. Such reclassifications had no effect on previously reported shareholders' equity or net income. Refer to "Note 1. Basis of Presentation" for additional discussion regarding reclassifications.

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. The 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. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, Truist’s significant accounting policies and effects of new accounting pronouncements are discussed in detail in "Note 1. Basis of Presentation."

ACL

Truist’s ACL represents management's best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgement. The models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. The macroeconomic data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period the models gradually revert to long-term historical loss conditions over a one year period. As a means of addressing uncertainty related to future economic conditions, the quantitative allowance includes an adjustment that reflects model output calculated using a range of potential future economic conditions. Expected losses are estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or it is reasonably expected that the loan will be modified as a TDR.

Management considers a range of macroeconomic forecast data in connection with the allowance estimation process. Under the range of scenarios considered as of December 31, 2021, use of the Company’s pessimistic scenario would have resulted in an increase to the modeled allowance results of approximately $2.1 billion. This estimate reflects the sensitivity of the modeled allowance estimate to macroeconomic forecast data but does not consider other qualitative adjustments that could increase or decrease modeled loss estimates calculated using this alternative economic scenario.

Fair Value of Financial Instruments

The vast majority of assets and liabilities measured at fair value on a recurring basis are based on either quoted market prices or market prices for similar instruments. Refer to "Note 18. Fair Value Disclosures" for additional disclosures regarding the fair value of financial instruments and "Note 2. Business Combinations" for additional disclosures regarding business combinations.

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Securities

Truist generally utilizes a third-party pricing service in determining the fair value of its AFS investment securities, whereas trading securities are priced internally. Fair value measurements for investment securities are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads, and broker quotes. Management performs procedures to evaluate the fair values provided by the third-party service provider. These procedures, which are performed independent of the responsible business unit, include comparison of pricing information received from the third party pricing service to other third-party pricing sources, review of additional information provided by the third-party pricing service and other third-party sources for selected securities and back-testing to compare the price realized on security sales to the daily pricing information received from the third-party pricing service. The Enterprise Valuation Committee, which provides oversight to Truist’s enterprise-wide IPV function, is responsible for the comparison of pricing information received from the third-party pricing service or internally to other third-party pricing sources, approving tolerance limits determined by IPV for price comparison exceptions, reviewing significant changes to pricing and valuation policies and reviewing and approving the pricing decisions made on any illiquid and hard-to-price securities. When market observable data is not available, which generally occurs due to the lack of liquidity or inactive markets for certain securities, the valuation of the security is subjective and may involve substantial judgment by management to reflect unobservable input assumptions.

MSRs

Truist’s primary class of MSRs for which it separately manages the economic risks relates to residential mortgages. Residential MSRs do not trade in an active, open market with readily observable prices. While sales of MSRs do occur, the precise terms and conditions typically are not readily available. Accordingly, Truist estimates the fair value of residential MSRs using a stochastic OAS valuation model to project residential MSR cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The OAS model considers portfolio characteristics, contractually-specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Truist reassesses and periodically adjusts the underlying inputs and assumptions in the OAS model to reflect market conditions and assumptions that a market participant would consider in valuing the residential MSR asset.

Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, observable market data. Due to the nature of the valuation inputs, residential MSRs are classified within Level 3 of the valuation hierarchy. The value of residential MSRs is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining interest rates, the value of MSRs declines due to increasing prepayments attributable to increased mortgage-refinance activity. Conversely, during periods of rising interest rates, the value of residential MSRs generally increases due to reduced refinance activity. Truist typically hedges against market value changes in the residential MSRs. Refer to "Note 8. Loan Servicing" for quantitative disclosures reflecting the effect that changes in management's assumptions would have on the fair value of residential MSRs.

LHFS

Truist originates certain residential and commercial mortgage loans for sale to investors that are measured at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. Changes in the fair value are recorded as components of Residential mortgage income and Commercial mortgage income, while the related origination costs are generally recognized in Personnel expense when incurred. The changes in fair value are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the LHFS. Truist uses various derivative instruments to mitigate the economic effect of changes in fair value of the underlying loans. LHFS also includes certain loans, generally carried at LOCOM, where management has committed to a formal plan of sale and the loans are available for immediate sale. Adjustments to reflect unrealized gains and losses resulting from changes in fair value, up to the original carrying amount, and realized gains and losses upon ultimate sale are classified as noninterest income. The fair value of these loans is estimated using observable market prices when available. When observable market prices are not available, the Company uses judgment and estimates fair value using internal models that reflect assumptions consistent with those that would be used by a market participant in estimating fair value. Refer to "Note 1. Basis of Presentation" for further description of the Company’s accounting for LHFS.

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Trading Loans

Truist elects to measure certain loans at fair value for financial reporting where fair value aligns with the underlying business purpose. Specifically, loans included within this classification include trading loans that are (i) purchased in connection with the Company’s TRS business, (ii) part of the loan sales and trading business within the C&CB segment, or (iii) backed by the SBA. Refer to "Note 16. Commitments and Contingencies," and "Note 19. Derivative Financial Instruments," for further discussion of the Company’s TRS business. The loans purchased in connection with the Company’s TRS and sales and trading businesses are primarily commercial and corporate leveraged loans valued based on quoted prices for identical or similar instruments in markets that are not active by a third party pricing service. SBA loans are fully guaranteed by the U.S. government as to contractual principal and interest and there is sufficient observable trading activity upon which to base the estimate of fair value.

Derivative Assets and Liabilities

Truist uses derivatives to manage various financial risks and in a dealer capacity to facilitate client transactions. Truist mitigates credit risk by subjecting counterparties to credit reviews and approvals similar to those used in making loans and other extensions of credit. In addition, certain counterparties are required to provide collateral to Truist when their unsecured loss positions exceed certain negotiated limits. The fair values of derivative financial instruments are determined based on quoted market prices and internal pricing models that use market observable data for interest rates, foreign exchange, equity, and credit. The fair value of interest rate lock commitments, which are related to mortgage loan commitments, is based on quoted market prices adjusted for commitments that Truist does not expect to fund and includes the value attributable to the net servicing fee. Refer to "Note 19. Derivative Financial Instruments" for further information on the Company’s derivatives.

Goodwill and Other Intangible Assets

The acquisition method of accounting requires that assets acquired and liabilities assumed in business combinations are recorded at their fair values. This often involves estimates based on third party valuations or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of definite-lived intangible assets is based upon the estimated economic benefits to be received, which is also subjective. Business combinations also typically result in goodwill, which is subject to ongoing periodic impairment tests based on the fair values of the reporting units to which the acquired goodwill relates. Refer to "Note 1. Basis of Presentation" for a description of the impairment testing process.

At December 31, 2021, Truist’s reporting units with goodwill balances were CB&W, C&CB, and IH. Management reviews the goodwill of each reporting unit for impairment on an annual basis 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. For its annual impairment review, Truist elected to perform a quantitative test of each of its reporting units. The quantitative impairment test estimates the fair value of the reporting units using the income approach and market based approaches, weighted 50% and 50%, respectively. The income approach utilizes a discounted cash flow analysis. The market based approaches utilize 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 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 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. Of these inputs, the projection of net interest margin is the most significant 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 October 1, 2021, 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 October 1, 2021 were 11%, 10%, and 10%, respectively.

Based on the Company’s annual impairment analysis of goodwill as of October 1, it was determined for the CB&W, C&CB, and IH reporting units that the respective reporting unit's fair value was in excess of its respective carrying value as of October 1, 2021, therefore goodwill is considered not impaired for the CB&W, C&CB, and IH reporting units. None of the reporting units of the Company had a fair value that exceeded the respective carrying value by less than 10%.

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The Company also performs sensitivity analyses around these assumptions in order to assess the reasonableness of the assumptions, and the resulting estimated fair values. While the Company’s sensitivity analyses did not indicate risk of impairment as of October 1. 2021, 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, asset growth, 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 fourth quarter of 2021, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of December 31, 2021.

Income Taxes

Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. The Company regularly evaluates the ability to realize DTAs, recognizing a valuation allowance if, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, the Company considers the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. Truist currently maintains a valuation allowance for certain state carryforwards. For additional income tax information, refer to "Note 1. Basis of Presentation" and "Note 14. Income Taxes."

Pension and Postretirement Benefit Obligations

Truist offers various pension plans and postretirement benefit plans to teammates. Calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions, which are subject to management judgment and may differ significantly if different assumptions are used. The discount rate assumption used to measure the postretirement benefit obligations is set by reference to an AA Above Median corporate bond yield curve and the individual characteristics of the plans such as projected cash flow patterns and payment durations.

Management also considered the sensitivity that changes in the expected return on plan assets and the discount rate would have on pension expense. For the Company’s qualified plans, a decrease of 25 basis points in the discount rate would result in additional pension expense of approximately $23 million for 2022, while a decrease of 100 basis points in the expected return on plan assets would result in an increase of approximately $166 million in pension expense for 2022. Refer to "Note 15. Benefit Plans" for disclosures related to the benefit plans.

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