Companies: 10,652     total market cap: $140.507 T
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Truist Financial Corporation
TFC
#361
Rank
$66.39 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$51.90
Share price
0.68%
Change (1 day)
11.83%
Change (1 year)
๐Ÿฆ Banks๐Ÿ’ณ Financial services
Categories
  1. Truist Financial Corporation
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2023 Q3

Truist Financial Corporation - 10-Q quarterly report FY2023 Q3


Text size:
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________________________________
FORM 10-Q
_________________________________________________________________

☒ Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: September 30, 2023
Commission File Number: 1-10853

TRUIST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________________________
North Carolina56-0939887
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
214 North Tryon Street
Charlotte,North Carolina28202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(336)733-2000
_________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $5 par valueTFCNew York Stock Exchange
Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred StockTFC.PINew York Stock Exchange
5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred StockTFC.PJNew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred StockTFC.PONew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred StockTFC.PRNew York Stock Exchange

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

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

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

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

At September 30, 2023, 1,333,668,077 shares of the registrant’s common stock, $5 par value, were outstanding.

TABLE OF CONTENTS
TRUIST FINANCIAL CORPORATION
FORM 10-Q
September 30, 2023
Page No.
PART I - Financial Information
Glossary of Defined Terms
1
Forward-Looking Statements
3
Item 1.Financial Statements
Consolidated Balance Sheets (Unaudited)
4
Consolidated Statements of Income (Unaudited)
5
Consolidated Statements of Comprehensive Income (Unaudited)
6
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
7
Consolidated Statements of Cash Flows (Unaudited)
8
Notes to Consolidated Financial Statements (Unaudited)
Note 1. Basis of Presentation
9
Note 2. Business Combinations, Divestitures, and Noncontrolling Interests
11
Note 3. Securities Financing Activities
11
Note 4. Investment Securities
12
Note 5. Loans and ACL
14
Note 6. Goodwill and Other Intangible Assets
23
Note 7. Loan Servicing
24
Note 8. Other Assets and Liabilities
25
Note 9. Borrowings
26
Note 10. Shareholders’ Equity
27
Note 11. AOCI
27
Note 12. Income Taxes
28
Note 13. Benefit Plans
28
Note 14. Commitments and Contingencies
29
Note 15. Fair Value Disclosures
33
Note 16. Derivative Financial Instruments
38
Note 17. Computation of EPS
43
Note 18. Operating Segments
43
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Regulatory Considerations
45
Executive Overview
46
Analysis of Results of Operations
48
Analysis of Financial Condition
57
Risk Management
64
Liquidity
69
Capital
72
Share Repurchase activity
73
Critical Accounting Policies
73
Item 3.Quantitative and Qualitative Disclosures About Market Risk (see Market Risk in MD&A)
64
Item 4.Controls and Procedures
74
PART II - Other Information
Item 1.Legal Proceedings
75
Item 1A.Risk Factors
75
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
75
Item 3.Defaults Upon Senior Securities - (none)
Item 4.Mine Safety Disclosures - (not applicable)
Item 5.Other Information
75
Item 6.Exhibits
76



Glossary of Defined Terms
The following terms may be used throughout this report, including the consolidated financial statements and related notes.
TermDefinition
ACL
Allowance for credit losses
AFS
Available-for-sale
Agency MBS
Mortgage-backed securities issued by a U.S. government agency or GSE
ALLL
Allowance for loan and lease losses
AOCI
Accumulated other comprehensive income (loss)
BoardTruist’s Board of Directors
C&CB
Corporate and Commercial Banking, an operating segment
CB&W
Consumer Banking and Wealth, an operating segment
CCAR
Comprehensive Capital Analysis and Review
CDI
Core deposit intangible
CECLCurrent expected credit loss model
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CFTCCommodity Futures Trading Commission
CET1
Common equity tier 1
Company
Truist Financial Corporation and its subsidiaries (interchangeable with “Truist” below)
COVID-19Coronavirus disease 2019
CRE
Commercial real estate
DEI
Diversity, Equity & Inclusion
DTADeferred tax asset
EPS
Earnings per common share
Exchange Act
Securities Exchange Act of 1934, as amended
FDIC
Federal Deposit Insurance Corporation
FHLB
Federal Home Loan Bank
FHLMC
Federal Home Loan Mortgage Corporation
FNMA
Federal National Mortgage Association
FRB
Board of Governors of the Federal Reserve System
GAAP
Accounting principles generally accepted in the United States of America
GDPGross Domestic Product
Grandbridge
Grandbridge Real Estate Capital, LLC
GSE
U.S. government-sponsored enterprise
HFI
Held for investment
HQLA
High-quality liquid assets
HTM
Held-to-maturity
IH
Truist Insurance Holdings, LLC, an operating segment
IPV
Independent price verification
ISDA
International Swaps and Derivatives Association, Inc.
LCR
Liquidity Coverage Ratio
LHFS
Loans held for sale
LIBOR
London Interbank Offered Rate
LIBOR ActAdjustable Interest Rate (LIBOR) Act
LOCOMLower of cost or market
Market Risk RuleMarket risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBS
Mortgage-backed securities
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MergerMerger of BB&T Corporation and SunTrust Banks, Inc effective December 6, 2019
MRO
Model Risk Oversight
MSR
Mortgage servicing right
NA
Not applicable
NIM
Net interest margin, computed on a TE basis
NPA
Nonperforming asset
NPL
Nonperforming loan
NSFR
Net stable funding ratio
NYSE
New York Stock Exchange
OAS
Option adjusted spread
OCCOffice of the Comptroller of the Currency
OCI
Other comprehensive income (loss)
OPEB
Other post-employment benefit
OREO
Other real estate owned
OT&C
Other, Treasury and Corporate
Parent Company
Truist Financial Corporation, the parent company of Truist Bank and other subsidiaries
PCD
Purchased credit deteriorated loans
ROU assets
Right-of-use assets
RUFC
Reserve for unfunded lending commitments
S&P
Standard & Poor’s
SBIC
Small Business Investment Company
SCBStress Capital Buffer
Truist Financial Corporation 1

TermDefinition
SEC
Securities and Exchange Commission
SOFR
Secured Overnight Financing Rate
TBATo-be-announced
TBVPS
Tangible book value per common share
TDR
Troubled debt restructuring
TE
Taxable-equivalent
TRSTotal Return Swap
Truist
Truist Financial Corporation and its subsidiaries (interchangeable with the “Company” above)
Truist BankTruist Bank, formerly Branch Banking and Trust Company
U.S.
United States of America
U.S. Treasury
United States Department of the Treasury
UPB
Unpaid principal balance
USAAUnited Services Automobile Association
VaR
Value-at-risk
VIE
Variable interest entity
2 Truist Financial Corporation

Forward-Looking Statements

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

Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding Truist’s business, the economy, and other future conditions. Such statements involve inherent uncertainties, risks, and changes in circumstances that are difficult to predict. As such, Truist’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed in Part I, Item 1A-Risk Factors in Truist’s Form 10-K for the year ended December 31, 2022:

•current and future economic and market conditions, such as the interest rate environment, including the replacement of LIBOR as an interest rate benchmark; U.S. fiscal debt, budget and tax matters; geopolitical matters (including conflicts in the Ukraine, Israel, and the Gaza Strip); and any slow down in global economic growth could result in, among other things, slower deposit or asset growth, a deterioration in credit quality, or a reduced demand for credit, insurance, or other services;
•the monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, could have a material adverse effect on the economy and Truist’s profitability;
•regulatory and supervisory matters, litigation, or other legal actions may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences;
•evolving legislative, accounting standards, regulatory and supervisory standards, including with respect to climate, deposit, capital, liquidity, and long-term debt requirements, which may become more stringent in light of recent turmoil in the banking industry and results of regulatory examinations, which may adversely affect Truist’s financial condition and results of operations;
•increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance could damage its reputation and adversely impact business and revenues;
•Truist may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect our ability to attract and retain depositors and to borrow or raise capital;
•Truist is subject to credit risk by lending or committing to lend money, may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral, and may suffer losses if the value of collateral declines in stressed market conditions;
•inability to access short-term funding or liquidity, loss of client deposits, or changes in Truist’s credit ratings could increase the cost of funding, limit access to capital markets, or negatively affect Truist’s overall liquidity or capitalization;
•unexpected outflows of uninsured deposits may require Truist to sell investment securities at a loss;
•a loss of value of Truist’s investment portfolio could negatively impact market perceptions of Truist and could lead to deposit withdrawals;
•risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk;
•there are risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators;
•deposit attrition, client loss, or revenue loss following completed mergers or acquisitions may be greater than anticipated;
•Truist could fail to execute on strategic or operational plans, including the ability to achieve its cost saves targets;
•increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards or compliance costs, and (ii) products and services offered by non-bank financial technology companies, which may reduce Truist’s client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact Truist’s businesses or results of operations;
•failure to maintain or enhance Truist’s competitive position with respect to new products, services, and technology, whether we fail to anticipate client expectations or because our technological developments fail to perform as desired or do not achieve market acceptance or regulatory approval or for other reasons, may cause Truist to lose market share or incur additional expense;
•negative public opinion could damage Truist’s reputation and adversely impact business and revenues, including the effects of social media on market perceptions of Truist and banks generally;
•Truist faces substantial legal and operational risks in safeguarding personal information;
•accounting policies and processes require management to make estimates about matters that are uncertain, including the potential write down to goodwill if there is an elongated period of decline in market value for Truist’s stock and adverse economic conditions are sustained over a period of time or if there is a decline in a reporting unit’s forecasted net income;
•Truist faces risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases;
•there are risks relating to Truist’s role as a loan servicer, including an increase in the scope or costs of the services Truist is required to perform without any corresponding increase in servicing fees or a breach of Truist’s obligations as servicer;
•Truist’s success depends on hiring and retaining key teammates, and if these individuals leave or change roles without effective replacements, Truist’s operations could be adversely impacted, which could be exacerbated in the increased work-from-home environment as job markets may be less constrained by physical geography;
•Truist’s operations rely on its ability, and the ability of key external parties, to maintain appropriate-staffed workforces, and on the competence, trustworthiness, health and safety of teammates;
•Truist faces the risk of fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect, or mitigate;
•security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s teammates and clients, malware intrusion, data corruption attempts, system breaches, cyberattacks, which have increased in frequency with geopolitical tensions, identity theft, ransomware attacks, and physical security risks, such as natural disasters, environmental conditions, and intentional acts of destruction, could result in the disclosure of confidential information, adversely affect Truist’s business or reputation or create significant legal or financial exposure;
•widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism and pandemics), and the effects of climate change, including physical risks, such as more frequent and intense weather events, and risks related to the transition to a lower carbon economy, such as regulatory or technological changes or shifts in market dynamics or consumer preferences, could have an adverse effect on Truist’s financial condition and results of operations, lead to material disruption of Truist’s operations or the ability or willingness of clients to access Truist’s products and services; and
•the effects of COVID-19 adversely impacted the Company’s operations and financial performance and similar adverse impacts resulting from pandemics could occur in future periods.

Readers are cautioned not to place undue reliance on these forward-looking statements, which represented management’s views on the date they were made. Except to the extent required by applicable law or regulation, Truist undertakes no obligation to revise or update any forward-looking statements.
Truist Financial Corporation 3

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)		Sep 30, 2023Dec 31, 2022
Assets
Cash and due from banks$5,156 $5,379 
Interest-bearing deposits with banks24,676 16,042 
Securities borrowed or purchased under agreements to resell2,018 3,181 
Trading assets at fair value4,384 4,905 
AFS securities at fair value65,117 71,801 
HTM securities (fair value of $42,501 and $47,791, respectively)54,942 57,713 
LHFS (including $1,269 and $1,065 at fair value, respectively)1,413 1,444 
Loans and leases (including $16 and $18 at fair value, respectively)315,699 325,991 
ALLL(4,693)(4,377)
Loans and leases, net of ALLL311,006 321,614 
Premises and equipment3,394 3,605 
Goodwill26,979 27,013 
CDI and other intangible assets3,292 3,672 
Loan servicing rights at fair value3,537 3,758 
Other assets (including $1,079 and $1,582 at fair value, respectively)36,793 35,128 
Total assets$542,707 $555,255 
Liabilities
Noninterest-bearing deposits$116,674 $135,742 
Interest-bearing deposits283,350 277,753 
Short-term borrowings (including $1,718 and $1,551 at fair value, respectively)23,485 23,422 
Long-term debt41,232 43,203 
Other liabilities (including $3,474 and $2,971 at fair value, respectively)15,959 14,598 
Total liabilities480,700 494,718 
Shareholders’ Equity
Preferred stock6,673 6,673 
Common stock, $5 par value6,668 6,634 
Additional paid-in capital36,114 34,544 
Retained earnings27,944 26,264 
AOCI, net of deferred income taxes(15,559)(13,601)
Noncontrolling interests167 23 
Total shareholders’ equity62,007 60,537 
Total liabilities and shareholders’ equity$542,707 $555,255 
Common shares outstanding1,333,668 1,326,829 
Common shares authorized2,000,000 2,000,000 
Preferred shares outstanding223 223 
Preferred shares authorized5,000 5,000 

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

CONSOLIDATED STATEMENTS OF INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)		Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Interest Income    
Interest and fees on loans and leases$4,976 $3,490 $14,547 $9,032 
Interest on securities763 709 2,264 2,024 
Interest on other earning assets490 170 1,379 343 
Total interest income6,229 4,369 18,190 11,399 
Interest Expense    
Interest on deposits1,831 331 4,462 462 
Interest on long-term debt491 190 1,739 459 
Interest on other borrowings343 103 932 143 
Total interest expense2,665 624 7,133 1,064 
Net Interest Income3,564 3,745 11,057 10,335 
Provision for credit losses497 234 1,537 310 
Net Interest Income After Provision for Credit Losses3,067 3,511 9,520 10,025 
Noninterest Income    
Insurance income793 725 2,541 2,277 
Wealth management income343 334 1,012 1,014 
Investment banking and trading income185 222 657 738 
Service charges on deposits152 263 641 769 
Card and payment related fees238 241 704 699 
Mortgage banking income102 122 343 343 
Lending related fees102 80 294 265 
Operating lease income63 66 194 190 
Securities gains (losses)— (1)— (71)
Other income130 50 249 268 
Total noninterest income2,108 2,102 6,635 6,492 
Noninterest Expense    
Personnel expense2,200 2,116 6,637 6,269 
Professional fees and outside processing317 352 983 1,064 
Software expense238 225 689 691 
Net occupancy expense180 176 543 565 
Amortization of intangibles130 140 397 420 
Equipment expense97 122 299 354 
Marketing and customer development78 105 235 282 
Operating lease depreciation43 45 133 140 
Regulatory costs77 52 225 131 
Merger-related and restructuring charges75 62 192 399 
Other expense312 218 853 552 
Total noninterest expense3,747 3,613 11,186 10,867 
Earnings    
Income before income taxes1,428 2,000 4,969 5,650 
Provision for income taxes245 363 926 1,065 
Net income1,183 1,637 4,043 4,585 
Noncontrolling interests6 4 44 6 
Preferred stock dividends and other106 97 284 262 
Net income available to common shareholders$1,071 $1,536 $3,715 $4,317 
Basic EPS$0.80 $1.16 $2.79 $3.25 
Diluted EPS0.80 1.15 2.77 3.22 
Basic weighted average shares outstanding1,333,522 1,326,539 1,331,377 1,328,569 
Diluted weighted average shares outstanding1,340,574 1,336,659 1,339,041 1,339,071 

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)		Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Net income$1,183 $1,637 $4,043 $4,585 
OCI, net of tax:    
Net change in net pension and postretirement costs23 6 17 19 
Net change in cash flow hedges(255)(139)(447)(85)
Net change in AFS securities(2,015)(3,051)(1,712)(10,889)
Net change in HTM securities63 80 183 216 
Other, net(1)(6)1 (7)
Total OCI, net of tax(2,185)(3,110)(1,958)(10,746)
Total OCI$(1,002)$(1,473)$2,085 $(6,161)
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs$— $1 $— $6 
Net change in cash flow hedges(79)(42)(138)(26)
Net change in AFS securities(618)(927)(543)(3,307)
Net change in HTM securities19 25 51 65 
Total income taxes related to OCI$(678)$(943)$(630)$(3,262)

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

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, shares in thousands)		Shares of Common StockPreferred StockCommon StockAdditional Paid-In CapitalRetained EarningsAOCINoncontrolling InterestsTotal Shareholders’ Equity
Balance, July 1, 20221,326,393 $6,673 $6,632 $34,410 $24,500 $(9,240)$24 $62,999 
Net income— — — — 1,633 — 4 1,637 
OCI— — — — — (3,110)— (3,110)
Issued in connection with equity awards, net373 — 2 (5)(1)— — (4)
Cash dividends declared on common stock— — — — (691)— — (691)
Cash dividends declared on preferred stock— — — — (97)— — (97)
Equity-based compensation expense— — — 82 — — — 82 
Other, net— — — — — — (5)(5)
Balance, September 30, 20221,326,766 $6,673 $6,634 $34,487 $25,344 $(12,350)$23 $60,811 
Balance, July 1, 20231,331,976 $6,673 $6,660 $35,990 $27,577 $(13,374)$155 $63,681 
Net income— — — — 1,177 — 6 1,183 
OCI— — — — — (2,185)— (2,185)
Issued in connection with equity awards, net1,692 — 8 43 (4)— — 47 
Cash dividends declared on common stock— — — — (693)— — (693)
Cash dividends declared on preferred stock— — — — (106)— — (106)
Equity-based compensation expense— — — 78 — — — 78 
Other, net— — — 3 (7)— 6 2 
Balance, September 30, 20231,333,668 $6,673 $6,668 $36,114 $27,944 $(15,559)$167 $62,007 
Balance, January 1, 20221,327,818 $6,673 $6,639 $34,565 $22,998 $(1,604)$— $69,271 
Net income— — — — 4,579 — 6 4,585 
OCI— — — — — (10,746)— (10,746)
Issued in connection with equity awards, net4,056 — 21 (112)(4)— — (95)
Repurchase of common stock(5,108)— (26)(224)— — — (250)
Cash dividends declared on common stock— — — — (1,967)— — (1,967)
Cash dividends declared on preferred stock— — — — (262)— — (262)
Equity-based compensation expense— — — 258 — — — 258 
Other, net— — — — — — 17 17 
Balance, September 30, 20221,326,766 $6,673 $6,634 $34,487 $25,344 $(12,350)$23 $60,811 
Balance, January 1, 20231,326,829 $6,673 $6,634 $34,544 $26,264 $(13,601)$23 $60,537 
Net income— — — — 3,999 — 44 4,043 
OCI— — — — — (1,958)— (1,958)
Received in connection with IH minority stake sale, net— — — 1,317 — — 96 1,413 
Issued in connection with equity awards, net6,839 — 34 (1)(7)— — 26 
Cash dividends declared on common stock— — — — (2,077)— — (2,077)
Cash dividends declared on preferred stock— — — — (284)— — (284)
Equity-based compensation expense— — — 251 — — — 251 
Other, net— — — 3 49 — 4 56 
Balance, September 30, 20231,333,668 $6,673 $6,668 $36,114 $27,944 $(15,559)$167 $62,007 

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

CONSOLIDATED STATEMENTS OF CASH FLOWS
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)		Nine Months Ended September 30,
20232022
Cash Flows From Operating Activities:  
Net income$4,043 $4,585 
Adjustments to reconcile net income to net cash from operating activities:  
Provision for credit losses1,537 310 
Depreciation522 581 
Amortization of intangibles397 420 
Securities (gains) losses— 71 
Net change in operating assets and liabilities:  
LHFS(204)1,676 
Loan servicing rights(187)(850)
Pension asset(1,425)(526)
Derivative assets and liabilities852 3,850 
Trading assets521 (1,441)
Other assets and other liabilities262 (247)
Other, net(63)(882)
Net cash from operating activities6,255 7,547 
Cash Flows From Investing Activities:  
Proceeds from sales of AFS securities15 3,311 
Proceeds from maturities, calls and paydowns of AFS securities6,340 10,619 
Purchases of AFS securities(2,261)(9,025)
Proceeds from maturities, calls and paydowns of HTM securities3,023 4,006 
Purchases of HTM securities— (3,020)
Originations and purchases of loans and leases, net of sales and principal collected9,332 (24,135)
Net cash received (paid) for FHLB stock(5)(609)
Net cash received (paid) for securities borrowed or purchased under agreements to resell1,163 1,460 
Net cash received (paid) for asset acquisitions, business combinations, and divestitures(15)(1,325)
Other, net273 (491)
Net cash from investing activities17,865 (19,209)
Cash Flows From Financing Activities:
Net change in deposits(13,471)(490)
Net change in short-term borrowings47 20,395 
Proceeds from issuance of long-term debt48,172 3,461 
Repayment of long-term debt(49,609)(6,991)
Repurchase of common stock— (250)
Cash dividends paid on common stock(2,077)(1,967)
Cash dividends paid on preferred stock(284)(262)
Net cash received (paid) for hedge unwinds(424)(198)
Net cash from IH minority stake sale1,922 — 
Other, net15 (106)
Net cash from financing activities(15,709)13,592 
Net Change in Cash and Cash Equivalents8,411 1,930 
Cash and Cash Equivalents, January 121,421 20,295 
Cash and Cash Equivalents, September 30$29,832 $22,225 
Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:
Interest expense$6,430 $982 
Income taxes785 422 
Noncash investing activities:
Transfer of AFS securities to HTM— 59,436 

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

NOTE 1. Basis of Presentation

General

See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with GAAP. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. The year-end consolidated balance sheet data was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2022 should be referred to in connection with these unaudited interim consolidated financial statements. The Company updated its accounting policies in connection with recently adopted accounting standards, which are described in this footnote. There were no other significant changes to the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022 that could have a material effect on the Company’s financial statements.

Reclassifications

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

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

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

Use of Estimates in the Preparation of Financial Statements

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

Loan Modifications

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

•Renewals: represent the renewal of a loan where the Company has concluded that the borrower is experiencing financial difficulty. Commercial renewals result in an extension of the maturity date of the loan (or in some cases a contraction of the loan term), and other significant terms of the loan (e.g., interest rate, collateral, guarantor support, etc.) are re-evaluated in connection with the renewal event.
•Term extensions: represent an adjustment to the maturity date of the loan that typically results in a reduction to the borrower’s scheduled payment over the remainder of the loan.
•Capitalizations: represents the capitalization of forborne loan payments and/or other amounts advanced on behalf of the borrower into the principal balance of a residential mortgage loan.
•Payment delays: provide the borrower with a temporary postponement of loan payments that is considered other-than-insignificant, which has been defined as a payment delay that exceeds 90 days, or three payment cycles, over a rolling 12-month period. These postponed loan payments may result in an extension of the ultimate maturity date of the loan or may be capitalized into the principal balance of the loan in certain circumstances.
•Combinations: in certain circumstances more than one type of a modification is provided to a borrower (e.g., interest rate reduction and term extension).
•Other: represents other types of loan modifications that are not considered significant for disclosure purposes.

Truist Financial Corporation 9

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

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

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

ALLL

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

Income Taxes

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

Changes in Accounting Principles and Effects of New Accounting Pronouncements

Standard / Adoption DateDescriptionEffects on the Financial Statements
Standards Adopted During the Current Year
Troubled Debt Restructurings and Vintage Disclosures
January 1, 2023		Eliminates TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Additionally, requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.
Truist adopted this standard on a modified-retrospective basis. Upon adoption, the Company eliminated the separate ACL estimation process for loans classified as TDRs. The adoption of this standard did not have a material impact on the financial statements. The Company’s revised disclosures in accordance with the new standard are included in “Note 5. Loans and ACL.”
Fair Value Hedging – Portfolio Layer Method
January 1, 2023
Introduces the portfolio layer method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio. Additionally, expands the scope of the portfolio layer method to include non-prepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.
The adoption of this standard did not have a material impact on the Company’s active last-of-layer hedges.
Investments in Tax Credit Structures
January 1, 2023		Allows reporting entities to elect to account for qualifying equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. Previously, reporting entities were only permitted to apply the proportional amortization method only to qualifying equity investments in low-income housing tax credit structures.
Truist adopted this standard early on a modified-retrospective basis. The adoption of this standard did not have a material impact on the financial statements. Refer to “Note 14. Commitments and Contingencies” for additional information regarding tax credit investments.

10 Truist Financial Corporation

NOTE 2. Business Combinations, Divestitures, and Noncontrolling Interests

Noncontrolling Interest

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

NOTE 3. Securities Financing Activities

Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently sold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. The following table presents securities borrowed or purchased under agreements to resell:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Securities purchased under agreements to resell$826 $2,415 
Securities borrowed1,192 766 
Total securities borrowed or purchased under agreements to resell$2,018 $3,181 
Fair value of collateral permitted to be resold or repledged$1,789 $3,058 
Fair value of securities resold or repledged— 864 

For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to “Note 14. Commitments and Contingencies” for additional information related to pledged securities. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:
September 30, 2023December 31, 2022
(Dollars in millions)Overnight and ContinuousUp to 30 daysTotalOvernight and ContinuousUp to 30 daysTotal
U.S. Treasury$— $— $— $318 $— $318 
State and Municipal
195 — 195 272 — 272 
GSE— — — 74 — 74 
Agency MBS - residential— 1,500 1,500 1,019 26 1,045 
Corporate and other debt securities230 205 435 369 50 419 
Total securities sold under agreements to repurchase$425 $1,705 $2,130 $2,052 $76 $2,128 

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

Truist Financial Corporation 11

NOTE 4. Investment Securities

The following tables summarize the Company’s AFS and HTM securities:
September 30, 2023
(Dollars in millions)		Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:    
U.S. Treasury$11,031 $— $670 $10,361 
GSE372 — 48 324 
Agency MBS - residential61,202 — 12,126 49,076 
Agency MBS - commercial2,827 — 692 2,135 
States and political subdivisions421 7 34 394 
Non-agency MBS3,754 — 946 2,808 
Other20 — 1 19 
Total AFS securities$79,627 $7 $14,517 $65,117 
HTM securities:    
Agency MBS - residential$54,942 $— $12,441 $42,501 
December 31, 2022
(Dollars in millions)		Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:    
U.S. Treasury$11,080 $— $785 $10,295 
GSE339 — 36 303 
Agency MBS - residential65,377 — 10,152 55,225 
Agency MBS - commercial2,887 — 463 2,424 
States and political subdivisions425 15 24 416 
Non-agency MBS3,927 — 810 3,117 
Other21 — — 21 
Total AFS securities$84,056 $15 $12,270 $71,801 
HTM securities:    
Agency MBS - residential$57,713 $— $9,922 $47,791 

The amortized cost and estimated fair value of certain MBS securities issued by FNMA and FHLMC that exceeded 10% of shareholders’ equity are shown in the table below:
September 30, 2023
(Dollars in millions)Amortized CostFair Value
FNMA$40,167 $31,590 
FHLMC40,710 31,724 

The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table. The expected life of MBS may be shorter than the contractual maturities because borrowers have the right to prepay their obligations with or without penalties.
Amortized CostFair Value
September 30, 2023
(Dollars in millions)		Due in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotalDue in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotal
AFS securities:
U.S. Treasury$3,996 $6,989 $17 $29 $11,031 $3,923 $6,401 $15 $22 $10,361 
GSE— 7 11 354 372 — 7 10 307 324 
Agency MBS - residential— 125 453 60,624 61,202 — 118 413 48,545 49,076 
Agency MBS - commercial— — 71 2,756 2,827 — — 63 2,072 2,135 
States and political subdivisions4 94 142 181 421 5 90 140 159 394 
Non-agency MBS— — 222 3,532 3,754 — — 165 2,643 2,808 
Other— 8 12 — 20 — 7 12 — 19 
Total AFS securities$4,000 $7,223 $928 $67,476 $79,627 $3,928 $6,623 $818 $53,748 $65,117 
HTM securities:
Agency MBS - residential$— $— $— $54,942 $54,942 $— $— $— $42,501 $42,501 

12 Truist Financial Corporation

The following tables present the fair values and gross unrealized losses of investments based on the length of time that individual securities have been in a continuous unrealized loss position:
Less than 12 months12 months or moreTotal
September 30, 2023
(Dollars in millions)		Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:      
U.S. Treasury$567 $6 $9,177 $664 $9,744 $670 
GSE75 3 248 45 323 48 
Agency MBS - residential307 7 48,743 12,119 49,050 12,126 
Agency MBS - commercial62 52,073 687 2,135 692 
States and political subdivisions60 1 234 33 294 34 
Non-agency MBS— — 2,808 946 2,808 946 
Other— — 20 1 20 1 
Total$1,071 $22 $63,303 $14,495 $64,374 $14,517 
HTM securities:      
Agency MBS - residential$— $— $42,501 $12,441 $42,501 $12,441 
Less than 12 months12 months or moreTotal
December 31, 2022
(Dollars in millions)		Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:      
U.S. Treasury$2,069 $49 $8,186 $736 $10,255 $785 
GSE180 14 114 22 294 36 
Agency MBS - residential25,041 3,263 30,050 6,889 55,091 10,152 
Agency MBS - commercial790 92 1,631 371 2,421 463 
States and political subdivisions251 21 20 3 271 24 
Non-agency MBS— — 3,117 810 3,117 810 
Other21 — — — 21 — 
Total$28,352 $3,439 $43,118 $8,831 $71,470 $12,270 
HTM securities:      
Agency MBS - residential$29,369 $5,613 $18,422 $4,309 $47,791 $9,922 

At September 30, 2023 and December 31, 2022, no ACL was established for AFS or HTM securities. Substantially all of the unrealized losses on the securities portfolio, including non-agency MBS, were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. HTM debt securities consist of residential agency MBS. Accordingly, the Company does not expect to incur any credit losses on investment securities.

The following table presents gross securities gains and losses recognized in earnings:
(Dollars in millions)Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Gross realized gains$— $— $— $13 
Gross realized losses— (1)— (84)
Securities gains (losses), net$— $(1)$— $(71)

Truist Financial Corporation 13

NOTE 5. Loans and ACL

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

The following tables present loans and leases HFI by aging category. Government guaranteed loans are not placed on nonperforming status regardless of delinquency because collection of principal and interest is reasonably assured. Truist sold its student loan portfolio at the end of the second quarter of 2023, which had a carrying value of $4.7 billion. The nine months ended September 30, 2023 includes $98 million of charge-offs related to the sale, which was previously provided for in the allowance.
Accruing
September 30, 2023
(Dollars in millions)		Current30-89 Days Past Due
90 Days Or More Past Due(1)
NonperformingTotal
Commercial:     
Commercial and industrial$161,656 $98 $15 $561 $162,330 
CRE22,419 28 — 289 22,736 
Commercial construction6,313 1 — 29 6,343 
Consumer:
Residential mortgage54,832 563 486 132 56,013 
Home equity9,967 61 9 123 10,160 
Indirect auto23,219 598 1 266 24,084 
Other consumer28,818 219 16 52 29,105 
Credit card4,813 68 47 — 4,928 
Total$312,037 $1,636 $574 $1,452 $315,699 
(1)Includes government guaranteed loans of $456 million in the residential mortgage portfolio.
Accruing
December 31, 2022
(Dollars in millions)		Current30-89 Days Past Due
90 Days Or More Past Due(1)
NonperformingTotal
Commercial:     
Commercial and industrial$163,604 $256 $49 $398 $164,307 
CRE22,568 25 1 82 22,676 
Commercial construction5,844 5 — — 5,849 
Consumer:    
Residential mortgage55,005 614 786 240 56,645 
Home equity10,661 68 12 135 10,876 
Indirect auto27,015 646 1 289 27,951 
Other consumer27,289 187 13 44 27,533 
Student4,179 402 706 — 5,287 
Credit card4,766 64 37 — 4,867 
Total$320,931 $2,267 $1,605 $1,188 $325,991 
(1)Includes government guaranteed loans of $759 million in the residential mortgage portfolio and $702 million in the student portfolio.

14 Truist Financial Corporation

The following tables present the amortized cost basis of loans by origination year and credit quality indicator:
September 30, 2023
(Dollars in millions)		Amortized Cost Basis by Origination YearRevolving Credit Loans Converted to Term
Other(1)
20232022202120202019Prior Total
Commercial:    
Commercial and industrial:
Pass$21,868 $34,323 $16,084 $8,740 $6,125 $11,692 $56,472 $— $(235)$155,069 
Special mention420 712 663 142 145 238 939 — — 3,259 
Substandard373 895 426 264 286 353 844 — — 3,441 
Nonperforming7 158 141 11 31 27 186 — — 561 
Total22,668 36,088 17,314 9,157 6,587 12,310 58,441 — (235)162,330 
Gross charge-offs11 51 83 21 3 21 90 280 
CRE:
Pass3,215 5,000 2,740 2,051 2,982 2,948 1,102 — (73)19,965 
Special mention220 490 88 88 85 52 56 — — 1,079 
Substandard75 382 268 51 332 295 — — — 1,403 
Nonperforming— 90 4 24 156 15 — — — 289 
Total3,510 5,962 3,100 2,214 3,555 3,310 1,158 — (73)22,736 
Gross charge-offs— 52 1 10 8 47 — — — 118 
Commercial construction:
Pass689 2,020 1,550 305 158 129 969 — — 5,820 
Special mention38 131 104 — — — 1 — — 274 
Substandard22 46 25 110 — — 17 — — 220 
Nonperforming— 28 — — 1 — — — — 29 
Total749 2,225 1,679 415 159 129 987 — — 6,343 
Consumer:
Residential mortgage:
Current2,468 13,609 16,733 5,827 2,884 13,311 — — — 54,832 
30 - 89 days past due3 39 40 36 35 410 — — — 563 
90 days or more past due3 26 25 33 34 365 — — — 486 
Nonperforming— 2 6 6 12 106 — — — 132 
Total2,474 13,676 16,804 5,902 2,965 14,192 — — — 56,013 
Gross charge-offs— — 2 1 1 6 — — — 10 
Home equity:
Current— — — — — — 6,209 3,758 — 9,967 
30 - 89 days past due— — — — — — 41 20 — 61 
90 days or more past due— — — — — — 6 3 — 9 
Nonperforming— — — — — — 42 81 — 123 
Total— — — — — — 6,298 3,862 — 10,160 
Gross charge-offs— — — — — — 8 — — 8 
Indirect auto:
Current3,893 8,865 5,236 2,835 1,574 829 — — (13)23,219 
30 - 89 days past due48 187 140 83 71 69 — — — 598 
90 days or more past due— 1 — — — — — — — 1 
Nonperforming11 78 66 42 37 32 — — — 266 
Total3,952 9,131 5,442 2,960 1,682 930 — — (13)24,084 
Gross charge-offs10 138 88 44 44 53 — — — 377 
Other consumer:
Current8,656 8,453 4,146 2,160 1,194 1,336 2,856 14 3 28,818 
30 - 89 days past due56 72 37 20 14 13 6 1 — 219 
90 days or more past due6 7 1 — — — 2 — — 16 
Nonperforming3 11 14 8 7 8 — 1 — 52 
Total8,721 8,543 4,198 2,188 1,215 1,357 2,864 16 3 29,105 
Gross charge-offs53 116 69 37 26 11 17 — — 329 
Student:(2)
Gross charge-offs— — — — — 108 — — — 108 
Credit card:
Current— — — — — — 4,793 20 — 4,813 
30 - 89 days past due— — — — — — 65 3 — 68 
90 days or more past due— — — — — — 45 2 — 47 
Total— — — — — — 4,903 25 — 4,928 
Gross charge-offs— — — — — — 157 2 — 159 
Total$42,074 $75,625 $48,537 $22,836 $16,163 $32,228 $74,651 $3,903 $(318)$315,699 
Gross charge-offs$74 $357 $243 $113 $82 $246 $272 $2 $— $1,389 
Truist Financial Corporation 15

December 31, 2022
(Dollars in millions)		Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to Term
Other(1)
20222021202020192018PriorTotal
Commercial:
Commercial and industrial:
Pass$45,890 $21,642 $11,219 $8,258 $4,977 $9,686 $57,854 $— $(199)$159,327 
Special mention243 302 143 160 61 88 721 — — 1,718 
Substandard518 387 113 413 249 187 997 — — 2,864 
Nonperforming47 53 10 28 46 27 187 — — 398 
Total46,698 22,384 11,485 8,859 5,333 9,988 59,759 — (199)164,307 
CRE:
Pass6,141 3,595 2,220 3,846 2,092 2,265 757 — (70)20,846 
Special mention106 118 74 229 281 5 18 — — 831 
Substandard106 99 35 422 121 134 — — — 917 
Nonperforming— 3 — — 77 2 — — — 82 
Total6,353 3,815 2,329 4,497 2,571 2,406 775 — (70)22,676 
Commercial construction:
Pass1,501 1,500 825 290 212 71 1,056 — — 5,455 
Special mention80 — 93 — — — 35 — — 208 
Substandard114 — 18 1 53 — — — — 186 
Total1,695 1,500 936 291 265 71 1,091 — — 5,849 
Consumer:
Residential mortgage:
Current13,824 17,340 6,167 3,084 1,384 13,206 — — — 55,005 
30 - 89 days past due55 61 32 37 43 386 — — — 614 
90 or more days past due5 31 62 62 91 535 — — — 786 
Nonperforming4 6 10 12 17 191 — — — 240 
Total13,888 17,438 6,271 3,195 1,535 14,318 — — — 56,645 
Home equity:
Current— — — — — — 6,843 3,818 — 10,661 
30 - 89 days past due— — — — — — 48 20 — 68 
90 days or more past due— — — — — — 9 3 — 12 
Nonperforming— — — — — — 44 91 — 135 
Total— — — — — — 6,944 3,932 — 10,876 
Indirect auto:
Current11,646 7,141 4,105 2,461 1,096 559 — — 7 27,015 
30 - 89 days past due147 174 111 100 60 54 — — — 646 
90 days or more past due1 — — — — — — — — 1 
Nonperforming41 77 56 56 34 25 — — — 289 
Total11,835 7,392 4,272 2,617 1,190 638 — — 7 27,951 
Other consumer:
Current11,270 5,805 3,167 1,814 865 1,061 3,278 29 — 27,289 
30 - 89 days past due68 44 26 20 10 7 10 2 — 187 
90 days or more past due8 1 1 1 — — 2 — — 13 
Nonperforming4 11 8 9 2 8 2 — — 44 
Total11,350 5,861 3,202 1,844 877 1,076 3,292 31 — 27,533 
Student:
Current— — 17 71 57 4,034 — — — 4,179 
30 - 89 days past due— — — 1 1 400 — — — 402 
90 days or more past due— — — 1 1 704 — — — 706 
Total— — 17 73 59 5,138 — — — 5,287 
Credit card:
Current— — — — — — 4,750 16 — 4,766 
30 - 89 days past due— — — — — — 63 1 — 64 
90 days or more past due— — — — — — 36 1 — 37 
Total— — — — — — 4,849 18 — 4,867 
Total$91,819 $58,390 $28,512 $21,376 $11,830 $33,635 $76,710 $3,981 $(262)$325,991 
(1)Includes certain deferred fees and costs and other adjustments.
(2)Truist sold its student loan portfolio at the end of the second quarter of 2023. Charge-offs include $98 million related to the sale.

16 Truist Financial Corporation

ACL

The following tables present activity in the ACL:
(Dollars in millions)Balance at Jul 1, 2022Charge-OffsRecoveriesProvision (Benefit)
Other(1)
Balance at Sep 30, 2022
Commercial:
Commercial and industrial$1,357 $(51)$43 $(48)$— $1,301 
CRE237 — — (3)— 234 
Commercial construction50 — 2 (5)— 47 
Consumer:
Residential mortgage327 (4)3 50 — 376 
Home equity88 (3)8 (10)— 83 
Indirect auto952 (103)21 96 — 966 
Other Consumer728 (109)21 115 — 755 
Student100 (7)— — — 93 
Credit card348 (42)8 36 — 350 
ALLL4,187 (319)106 231 — 4,205 
RUFC247 — — 3 — 250 
ACL$4,434 $(319)$106 $234 $— $4,455 
(Dollars in millions)Balance at Jul 1, 2023 Charge-OffsRecoveriesProvision (Benefit)
Other(1)
Balance at Sep 30, 2023
Commercial: 
Commercial and industrial$1,536 $(98)$28 $(114)$(1)$1,351 
CRE402 (77)2 278 — 605 
Commercial construction109 — — 56 — 165 
Consumer:
Residential mortgage320 (8)1 (12)— 301 
Home equity85 (4)7 (2)— 86 
Indirect auto981 (135)25 74 — 945 
Other consumer808 (120)20 158 — 866 
Credit card365 (55)9 55 — 374 
ALLL4,606 (497)92 493 (1)4,693 
RUFC273 — — 4 — 277 
ACL$4,879 $(497)$92 $497 $(1)$4,970 
(Dollars in millions)Balance at Jan 1, 2022Charge-OffsRecoveriesProvision (Benefit)
Other(1)
Balance at Sep 30, 2022
Commercial:
Commercial and industrial$1,426 $(99)$73 $(99)$— $1,301 
CRE350 (2)7 (121)— 234 
Commercial construction52 (1)4 (8)— 47 
Consumer:
Residential mortgage308 (8)13 63 — 376 
Home equity96 (7)19 (25)— 83 
Indirect auto1,022 (282)70 156 — 966 
Other consumer714 (285)62 264 — 755 
Student117 (17)— (7)— 93 
Credit card350 (123)26 97 — 350 
ALLL4,435 (824)274 320 — 4,205 
RUFC260 — — (10)— 250 
ACL$4,695 $(824)$274 $310 $— $4,455 
Truist Financial Corporation 17

(Dollars in millions)Balance at Jan 1, 2023Charge-OffsRecoveriesProvision (Benefit)
Other(1)
Balance at Sep 30, 2023
Commercial:      
Commercial and industrial$1,409 $(280)$54 $170 $(2)$1,351 
CRE224 (118)3 496 — 605 
Commercial construction46 — 1 118 — 165 
Consumer:     
Residential mortgage399 (10)5 (12)(81)301 
Home equity90 (8)18 (14)— 86 
Indirect auto981 (377)82 246 13 945 
Other consumer770 (329)57 369 (1)866 
Student(2)
98 (108)— 10 — — 
Credit card360 (159)27 149 (3)374 
ALLL4,377 (1,389)247 1,532 (74)4,693 
RUFC272 — — 5 — 277 
ACL$4,649 $(1,389)$247 $1,537 $(74)$4,970 
(1)Includes the amounts for the ALLL for PCD acquisitions, the impact of adopting the Troubled Debt Restructurings and Vintage Disclosures accounting standard, and other activity.
(2)Truist sold its student loan portfolio at the end of the second quarter of 2023. Charge-offs include $98 million related to the sale.

The commercial ALLL increased $74 million and $442 million and the consumer ALLL increased $4 million and decreased $140 million during the three and nine months ended September 30, 2023, respectively. The increase in the commercial ALLL primarily reflects an increase in reserves related to the CRE and commercial construction portfolios. The slight increase in the consumer ALLL compared to the prior quarter reflects loan growth in certain indirect consumer portfolios, offset by run-off primarily in indirect auto and residential mortgage. The decrease in the consumer ALLL for the year-to-date period primarily reflects the sale of the student portfolio in the second quarter as well as impacts associated with the adoption of the Troubled Debt Restructurings and Vintage Disclosure accounting standard in the first quarter of 2023.

The quantitative models have been designed to estimate losses using macro-economic forecasts over a reasonable and supportable forecast period of two years, followed by a reversion to long-term historical loss conditions over a one-year period. Forecasts of macroeconomic variables used in loss forecasting include, but are not limited to, unemployment trends, U.S. real GDP, corporate credit spreads, rental rates, property values, home price indices, and used car prices.

The overall economic forecast incorporates a third-party baseline forecast that is adjusted to reflect Truist’s interest rate outlook. Management also considers optimistic and pessimistic third-party macro-economic forecasts in order to capture uncertainty in the economic environment. These forecasts, along with the primary economic forecast, are weighted 40% baseline, 30% optimistic, and 30% pessimistic in the September 30, 2023 ACL, unchanged since December 31, 2022. While the scenario weightings were unchanged, each forecast scenario reflected deterioration in certain economic variables over the reasonable and supportable forecast period when compared to the prior period. The overall economic forecast shaping the ACL estimate at September 30, 2023 included GDP growth in the low-single digits and an unemployment rate near mid-single digits.

Quantitative models have certain limitations with respect to estimating expected losses, particularly in times of rapidly changing macro-economic conditions and forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to be an important component of the ACL for the foreseeable future. The September 30, 2023 ACL estimate includes adjustments to consider the impact of current and expected events or risks not captured by the loss forecasting models, the outcomes of which are uncertain and may not be completely considered by quantitative models. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.

18 Truist Financial Corporation

NPAs

The following table provides a summary of nonperforming loans and leases, excluding LHFS:
September 30, 2023December 31, 2022
Recorded InvestmentRecorded Investment
(Dollars in millions)Without an ALLLWith an ALLLWithout an ALLLWith an ALLL
Commercial: 
Commercial and industrial$179 $382 $120 $278 
CRE55 234 75 7 
Commercial construction— 29 — — 
Consumer:
Residential mortgage2 130 4 236 
Home equity1 122 2 133 
Indirect auto23 243 3 286 
Other consumer— 52 — 44 
Total$260 $1,192 $204 $984 

The following table presents a summary of nonperforming assets and residential mortgage loans in the process of foreclosure:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Nonperforming loans and leases HFI$1,452 $1,188 
Nonperforming LHFS75 — 
Foreclosed real estate3 4 
Other foreclosed property54 58 
Total nonperforming assets$1,584 $1,250 
Residential mortgage loans in the process of foreclosure$233 $248 

Loan Modifications

The following tables summarize the period-end amortized cost basis and the weighted average financial effect of loans to borrowers experiencing financial difficulty that were modified during the period, disaggregated by class of financing receivable and type of modification granted. These tables include modification activity that occurred on or after January 1, 2023. The volume of payment delay modifications is expected to increase throughout 2023 as the cumulative period over which such modifications are evaluated gradually extends to a full 12-month rolling period:
Three Months Ended September 30, 2023
(Dollars in millions)		RenewalsTerm ExtensionsCapitalizationsPayment DelaysCombination -
Interest Rate Adjustment and Term Extension		Combination -
Capitalization and Term Extension		Combination -
Capitalization, Interest Rate and Term Extension		OtherTotal Modified LoansPercentage of Total Class of Financing Receivable
Commercial:
Commercial and industrial$426 $— $— $3 $— $— $— $— $429 0.26 %
CRE28 — — — — — — — 28 0.12 
Commercial construction21 — — — — — — — 21 0.33 
Consumer:
Residential mortgage— 30 27 23 — 79 15 1 175 0.31 
Home equity— — — 2 2 — — 1 5 0.05 
Indirect auto— 7 — 388 4 — — 2 401 1.67 
Other consumer— 6 — — 1 — — — 7 0.02 
Credit card— — — — — — — 4 4 0.08 
Total$475 $43 $27 $416 $7 $79 $15 $8 $1,070 0.34 

Truist Financial Corporation 19

Nine Months Ended September 30, 2023
(Dollars in millions)		RenewalsTerm ExtensionsCapitalizationsPayment DelaysCombination -
Interest Rate Adjustment and Term Extension		Combination -
Capitalization and Term Extension		Combination -
Capitalization, Interest Rate and Term Extension		OtherTotal Modified LoansPercentage of Total Class of Financing Receivable
Commercial:
Commercial and industrial$884 $51 $— $23 $44 $— $— $— $1,002 0.62 %
CRE173 — — 72 — — — — 245 1.08 
Commercial construction24 — — — — — — — 24 0.38 
Consumer:
Residential mortgage— 82 95 62 2 254 52 4 551 0.98 
Home equity— — — 2 7 — — 2 11 0.11 
Indirect auto— 19 — 483 13 — — 5 520 2.16 
Other consumer— 15 — 1 4 — — 1 21 0.07 
Credit card— — — — — — — 14 14 0.28 
Total$1,081 $167 $95 $643 $70 $254 $52 $26 $2,388 0.76 


Three Months Ended September 30, 2023
Loan TypeFinancial Effect
Renewals
Commercial and industrialExtended the term by 9 months and increased the interest rate by 0.7%
CREExtended the term by 15 months and increased the interest rate by 0.9%
Commercial constructionExtended the term by 2 months
Term Extensions
Residential mortgageExtended the term by 117 months.
Indirect autoExtended the term by 24 months.
Other consumerExtended the term by 24 months.
Capitalizations
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.
Payment Delays
Commercial and industrialProvided 120 days of payment deferral.
Residential mortgageProvided 214 days of payment deferral.
Home equityProvided 177 days of payment deferral.
Indirect autoProvided 135 days of payment deferral.
Combination - Interest Rate Adjustment and Term Extension
Home equityExtended the term by 322 months and decreased the interest rate by 5%.
Indirect autoExtended the term by 12 months and decreased the interest rate by 5%.
Other consumerExtended the term by 56 months and decreased the interest rate by 1%.
Combination - Capitalization and Term Extension
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 101 months.
Combination - Capitalization, Interest Rate and Term Extension
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 144 months, and decreased the interest rate by 0.4%.
20 Truist Financial Corporation

Nine Months Ended September 30, 2023
Loan TypeFinancial Effect
Renewals
Commercial and industrialExtended the term by 8 months and increased the interest rate by 0.6%
CREExtended the term by 11 months and increased the interest rate by 0.2%
Commercial constructionExtended the term by 2 months
Term Extensions
Commercial and industrialExtended the term by 3 months.
Residential mortgageExtended the term by 139 months.
Indirect autoExtended the term by 22 months.
Other consumerExtended the term by 24 months.
Capitalizations
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.
Payment Delays
Commercial and industrialProvided 183 days of payment deferral.
CREProvided 232 days of payment deferral.
Residential mortgageProvided 212 days of payment deferral.
Home equityProvided 167 days of payment deferral.
Indirect autoProvided 133 days of payment deferral.
Other consumerProvided 153 days of payment deferral.
Combination - Interest Rate Adjustment and Term Extension
Commercial and industrialExtended the term by 76 months and increased the interest rate by 3%.
Residential mortgageExtended the term by 124 months and increased the interest rate by 0.5%.
Home equityExtended the term by 258 months and decreased the interest rate by 3%.
Indirect autoExtended the term by 11 months and decreased the interest rate by 7%.
Other consumerExtended the term by 61 months and decreased the interest rate by 1%.
Combination - Capitalization and Term Extension
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 105 months.
Combination - Capitalization, Interest Rate and Term Extension
Residential mortgageCapitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 130 months, and decreased the interest rate by 0.2%.

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

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

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

Truist Financial Corporation 21

Truist closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table summarizes the period-end delinquency status and amortized cost of loans that were modified since January 1, 2023. The period-end delinquency status of loans that were modified are disclosed at amortized cost and reflect the impact of any paydowns, payoffs, and/or charge-offs that occurred subsequent to modification.
Payment Status (Amortized Cost Basis)
September 30, 2023
(Dollars in millions)
Current30-89 Days Past Due90 Days or More Past DueTotal
Commercial:
Commercial and industrial$743 $2 $32 $777 
CRE120 — 21 141 
Commercial construction21 — — 21 
Consumer:
Residential mortgage354 104 74 532 
Home equity9 — — 9 
Indirect auto438 65 7 510 
Other consumer18 1 — 19 
Credit card9 1 1 11 
Total$1,712 $173 $135 $2,020 
Total nonaccrual loans included above$227 $28 $82 $337 

The following table provides the amortized cost basis of financing receivables that were modified and were in payment default:
September 30, 2023
(Dollars in millions)
RenewalsTerm ExtensionsCapitalizationsPayment DelaysCombination -
Capitalization and Term Extension		Combination -
Capitalization, Interest Rate and Term Extension		OtherTotal
Commercial:
Commercial and industrial$32 $— $— $— $— $— $— $32 
CRE21 — — — — — — 21 
Consumer:
Residential mortgage— 7 8 28 25 4 2 74 
Indirect auto— — — 5 — — 2 7 
Credit card— — — — — — 1 1 
Total$53 $7 $8 $33 $25 $4 $5 $135 

TDRs

The following table presents a summary of TDRs:
(Dollars in millions)Dec 31, 2022
Performing TDRs: 
Commercial: 
Commercial and industrial$136 
CRE5 
Commercial construction1 
Consumer:
Residential mortgage1,252 
Home equity51 
Indirect auto462 
Other consumer31 
Student30 
Credit card18 
Total performing TDRs1,986 
Nonperforming TDRs214 
Total TDRs$2,200 
ALLL attributable to TDRs$152 

The primary type of modification for TDRs designated in 2022 is summarized in the tables below. TDR balances represent the recorded investment at the end of the quarter in which the modification was made. The prior quarter balance represents recorded investment at the beginning of the quarter in which the modification was made. Rate modifications consist of TDRs made with below market interest rates, including those that also have modifications of loan structures.
22 Truist Financial Corporation

As of / For the Three Months Ended September 30, 2022As of / For the Nine Months Ended September 30, 2022
Type of ModificationPrior Quarter Loan BalanceRelated ALLL at Period EndType of ModificationPrior Quarter Loan BalanceRelated ALLL at Period End
(Dollars in millions)RateStructureRateStructure
Newly designated TDRs:
Commercial$66 $— $66 $9 $66 $9 $77 $9 
Consumer123 117 236 12 368 505 858 41 
Credit card2 — 2 1 6 — 6 3 
Re-modification of previously designated TDRs43 50 73 90 

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

The following table presents additional information about loans and leases:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Unearned income, discounts, and net deferred loan fees and costs$528 $269 

NOTE 6. Goodwill and Other Intangible Assets

During the third quarter of 2023, the Company observed continuing declines in its financial forecasts for its CB&W and C&CB reporting units. The Company considered such declines in the context of industry related factors, including a decline in bank share prices, concluding that a triggering event had occurred for its CB&W and C&CB reporting units, and therefore Truist performed a quantitative test for these reporting units as of August 1, 2023. Based on the results of the impairment analyses, the Company concluded that the fair values of the reporting units exceed their respective carrying values; therefore, there was no goodwill impairment. However, for the CB&W, and C&CB reporting units, the fair value of the reporting unit exceeded its carrying value by less than 10%, indicating that the goodwill of these reporting units may be at risk of impairment. The Company monitored events and circumstances during the period from August 1, 2023 through September 30, 2023, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, a comparison of management’s forecast and assumptions to those used in its August 1, 2023 quantitative impairment test, and the sensitivity of the August 1, 2023 quantitative test results to changes in assumptions through September 30, 2023. Based on these considerations, the Company concluded that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of September 30, 2023. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. Activity during 2023 relates to the realignment of Prime Rate Premium Finance Corporation into the C&CB segment from the IH segment. Activity during 2022 reflects the acquisition of BankDirect Capital Finance, BenefitMall, and Kensington Vanguard National Land Services. Refer to “Note 2. Business Combinations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information on the acquisitions and “Note 18. Operating Segments” for additional information on segments.
(Dollars in millions)CB&WC&CBIHTotal
Goodwill, January 1, 2022$16,870 $6,149 $3,079 $26,098 
Mergers and acquisitions— — 912 912 
Adjustments and other(5)5 3 3 
Goodwill, December 31, 202216,865 6,154 3,994 27,013 
Adjustments and other— 215 (249)(34)
Goodwill, September 30, 2023$16,865 $6,369 $3,745 $26,979 

The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:
 September 30, 2023December 31, 2022
(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
CDI$2,473 $(1,589)$884 $2,473 $(1,403)$1,070 
Other, primarily client relationship intangibles
3,807 (1,399)2,408 3,812 (1,210)2,602 
Total$6,280 $(2,988)$3,292 $6,285 $(2,613)$3,672 

Truist Financial Corporation 23

NOTE 7. Loan Servicing

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

Residential Mortgage Activities

The following tables summarize residential mortgage servicing activities:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
UPB of residential mortgage loan servicing portfolio$271,632 $274,028 
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate
214,953 217,046 
Mortgage loans sold with recourse180 200 
Maximum recourse exposure from mortgage loans sold with recourse liability114 127 
Indemnification, recourse and repurchase reserves52 56 
As of / For the Nine Months Ended September 30,
(Dollars in millions)		20232022
UPB of residential mortgage loans sold from LHFS$10,643 $22,971 
Pre-tax gains recognized on mortgage loans sold and held for sale49 62 
Servicing fees recognized from mortgage loans serviced for others517 462 
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others
0.27 %0.30 %
Weighted average interest rate on mortgage loans serviced for others3.51 3.45 

The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:
(Dollars in millions)20232022
Residential MSRs, carrying value, January 1$3,428 $2,305 
Acquired123 321 
Additions199 372 
Sales(531)— 
Change in fair value due to changes in valuation inputs or assumptions(1)
207 771 
Realization of expected net servicing cash flows, passage of time, and other(204)(306)
Residential MSRs, carrying value, September 30$3,222 $3,463 
(1)The nine months ended September 30, 2023 includes realized gains on the portfolio sale of excess servicing.

The sensitivity of the fair value of the Company’s residential MSRs to changes in key assumptions is presented in the following table:
September 30, 2023December 31, 2022
RangeWeighted AverageRangeWeighted Average
(Dollars in millions)MinMaxMinMax
Prepayment speed6.6 %11.3 %7.1 %8.6 %12.5 %9.0 %
Effect on fair value of a 10% increase$(83)$(110)
Effect on fair value of a 20% increase(160)(211)
OAS2.3 %12.3 %4.8 %1.2 %11.4 %4.0 %
Effect on fair value of a 10% increase$(63)$(55)
Effect on fair value of a 20% increase(124)(108)
Composition of loans serviced for others:   
Fixed-rate residential mortgage loans99.6 %99.5 %
Adjustable-rate residential mortgage loans
0.4 0.5 
Total  100.0 %  100.0 %
Weighted average life  7.7 years  6.8 years

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

24 Truist Financial Corporation

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
UPB of CRE mortgages serviced for others$34,179 $36,622 
CRE mortgages serviced for others covered by recourse provisions9,718 9,955 
Maximum recourse exposure from CRE mortgages sold with recourse liability2,827 2,861 
Recorded reserves related to recourse exposure17 17 
CRE mortgages originated during the year-to-date period2,866 7,779 
Commercial MSRs at fair value295 301 

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

The Company leases certain assets, consisting primarily of real estate, and assesses at contract inception whether a contract is, or contains, a lease. The following tables present additional information on leases, excluding leases related to the lease financing businesses:
September 30, 2023December 31, 2022
(Dollars in millions)Operating LeasesFinance LeasesOperating LeasesFinance Leases
ROU assets$1,112 $11 $1,193 $20 
Total lease liabilities1,436 12 1,545 23 
Weighted average remaining term6.2 years5.6 years6.6 years5.6 years
Weighted average discount rate3.0 %4.8 %2.7 %3.4 %
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2023202220232022
Operating lease costs$74 $81 $230 $241 

Lessor Operating Leases

The Company’s two primary lessor businesses are equipment financing and structured real estate with income recorded in Operating lease income on the Consolidated Statements of Income. The following table presents a summary of assets under operating leases held for investment. This table excludes subleases on assets included in premises and equipment.
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Assets held under operating leases(1)(2)
$2,028 $2,090 
Accumulated depreciation (575)(550)
Net$1,453 $1,540 
(1)Includes certain land parcels subject to operating leases that have indefinite lives.
(2)Excludes operating leases held-for-sale that totaled $421 million and $516 million at September 30, 2023 and December 31, 2022, respectively.

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain teammates for which the Company is the beneficiary. The carrying value of bank-owned life insurance was $7.7 billion at September 30, 2023 and $7.6 billion at December 31, 2022.
Truist Financial Corporation 25

NOTE 9. Borrowings

The following table presents a summary of short-term borrowings:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
FHLB advances$18,900 $18,900 
Securities sold under agreements to repurchase2,130 2,128 
Securities sold short1,718 1,551 
Collateral in excess of derivative exposures
451 403 
Master notes200 370 
Other short-term borrowings86 70 
Total short-term borrowings$23,485 $23,422 

The following table presents a summary of long-term debt:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Truist Financial Corporation:
Fixed rate senior notes$18,801 $14,107 
Floating rate senior notes999 999 
Fixed rate subordinated notes(1)
1,824 1,882 
Capital notes(1)
628 625 
Structured notes(2)
— 12 
Truist Bank:
Fixed rate senior notes4,142 6,982 
Floating rate senior notes1,250 1,749 
Fixed rate subordinated notes(1)
4,740 4,767 
Fixed rate FHLB advances2 2 
Floating rate FHLB advances
7,600 10,800 
Other long-term debt(3)
1,246 1,278 
Total long-term debt$41,232 $43,203 
(1)Subordinated and capital notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.
(2)Consist of notes with various terms that include fixed or floating rate interest or returns that are linked to an equity index.
(3)Includes debt associated with finance leases, tax credit investments, and other.

26 Truist Financial Corporation

NOTE 10. Shareholders’ Equity

Common Stock

The following table presents total dividends declared per share of common stock:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cash dividends declared per share$0.52 $0.52 $1.56 $1.48 

NOTE 11. AOCI

AOCI includes the after-tax change in unrecognized net costs related to defined benefit pension and OPEB plans as well as unrealized gains and losses on cash flow hedges, AFS securities, and HTM securities transferred from AFS securities.
(Dollars in millions)Pension and OPEB CostsCash Flow HedgesAFS SecuritiesHTM SecuritiesOther, netTotal
AOCI balance, July 1, 2022$(73)$45 $(6,476)$(2,736)$— $(9,240)
OCI before reclassifications, net of tax— (140)(3,047)— (6)(3,193)
Amounts reclassified from AOCI:     
Before tax6 1 (6)105 — 106 
Tax effect— — (2)25 — 23 
Amounts reclassified, net of tax6 1 (4)80 — 83 
Total OCI, net of tax6 (139)(3,051)80 (6)(3,110)
AOCI balance, September 30, 2022$(67)$(94)$(9,527)$(2,656)$(6)$(12,350)
AOCI balance, July 1, 2023$(1,541)$(270)$(9,092)$(2,468)$(3)$(13,374)
OCI before reclassifications, net of tax10 (268)(1,938)— (1)(2,197)
Amounts reclassified from AOCI:     
Before tax16 17 (100)82 — 15 
Tax effect3 4 (23)19 — 3 
Amounts reclassified, net of tax13 13 (77)63 — 12 
Total OCI, net of tax23 (255)(2,015)63 (1)(2,185)
AOCI balance, September 30, 2023$(1,518)$(525)$(11,107)$(2,405)$(4)$(15,559)
(Dollars in millions)Pension and OPEB CostsCash Flow HedgesAFS SecuritiesHTM SecuritiesOther, netTotal
AOCI balance, January 1, 2022$(86)$(9)$(1,510)$— $1 $(1,604)
OCI before reclassifications, net of tax2 (94)(10,956)— (7)(11,055)
AFS Securities transferred to HTM, net of tax— — 2,872 (2,872)— — 
Amounts reclassified from AOCI:     
Before tax22 12 87 281 — 402 
Tax effect5 3 20 65 — 93 
Amounts reclassified, net of tax17 9 67 216 — 309 
Total OCI, net of tax19 (85)(10,889)216 (7)(10,746)
AOCI balance, September 30, 2022$(67)$(94)$(9,527)$(2,656)$(6)$(12,350)
AOCI balance, January 1, 2023$(1,535)$(78)$(9,395)$(2,588)$(5)$(13,601)
OCI before reclassifications, net of tax(21)(464)(1,531)— 1 (2,015)
Amounts reclassified from AOCI:     
Before tax49 22 (236)234— 69 
Tax effect11 5 (55)51— 12 
Amounts reclassified, net of tax38 17 (181)183 — 57 
Total OCI, net of tax17 (447)(1,712)183 1 (1,958)
AOCI balance, September 30, 2023$(1,518)$(525)$(11,107)$(2,405)$(4)$(15,559)
Primary income statement location of amounts reclassified from AOCI
Other expenseNet interest income and Other expenseSecurities gains (losses) and Net interest income Net interest incomeNet interest income

Truist Financial Corporation 27

NOTE 12. Income Taxes


For the three months ended September 30, 2023 and 2022, the provision for income taxes was $245 million and $363 million, respectively, representing effective tax rates of 17.2% and 18.2%, respectively. The lower effective tax rate for the three months ended September 30, 2023 was primarily driven by decreases in the full year forecasted effective tax rate, partially offset by changes in discrete tax items. For the nine months ended September 30, 2023 and 2022, the provision for income taxes was $926 million and $1.1 billion, respectively, representing effective tax rates of 18.6% and 18.8%, respectively. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

NOTE 13. Benefit Plans

The components of net periodic (benefit) cost for defined benefit pension plans are summarized in the following table:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)Income Statement Location2023202220232022
Service costPersonnel expense$77 $139 $263 $418 
Interest costOther expense112 87 334 263 
Estimated return on plan assetsOther expense(226)(269)(682)(808)
Amortization and otherOther expense19 10 59 27 
Net periodic (benefit) cost$(18)$(33)$(26)$(100)

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

28 Truist Financial Corporation

NOTE 14. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

The Company invests as a limited partner in certain projects through the New Market Tax Credit program, which is a Federal financial program aimed to stimulate business and real estate investment in underserved communities via a Federal tax credit. Following the first quarter of 2023 adoption of the Investments in Tax Credit Structures accounting standard, these tax credits, referred to as “Other qualified tax credits” below, qualify for the proportional amortization method. The Company also applied the proportional amortization method to investments through the Production Tax Credits program. Refer to “Note 1. Basis of Presentation” for additional information.

The following table summarizes certain tax credit and certain equity investments:
(Dollars in millions)Balance Sheet LocationSep 30, 2023Dec 31, 2022
Investments in affordable housing projects and other qualified tax credits:  
Carrying amountOther assets$6,368 $5,869 
Amount of future funding commitments included in carrying amountOther liabilities2,150 1,762 
Lending exposureLoans and leases for funded amounts1,773 1,547 
Renewable energy investments:
Carrying amountOther assets310 264 
Amount of future funding commitments not included in carrying amountNA721 361 
SBIC and certain other equity method investments:
Carrying amountOther assets670 596 
Amount of future funding commitments not included in carrying amountNA603 532 

The following table presents a summary of tax credits and amortization expense associated with the Company’s tax credit investment activity. Activity related to the Company’s renewable energy investments was immaterial.
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)Income Statement Location2023202220232022
Tax credits:
Investments in affordable housing projects, other qualified tax credits, and other community development investmentsProvision for income taxes$163 $163 $480 $465 
Amortization and other changes in carrying amount:
Investments in affordable housing projects and other qualified tax credits(1)
Provision for income taxes$153 $143 $451 $391 
Other community development investments(1)
Other noninterest income3 21 8 60 
(1)In the first quarter of 2023, the Company adopted the Investments in Tax Credit Structures accounting standard. As a result, amortization related to these tax credits started being recognized in the Provision for income taxes as of the adoption of this standard. This activity was previously recognized in Other income. Refer to “Note 1. Basis of Presentation” for additional information.

Truist Financial Corporation 29

Letters of Credit and Financial Guarantees

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

The following is a summary of selected notional amounts of off-balance sheet financial instruments:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Commitments to extend, originate, or purchase credit and other commitments$212,827 $216,838 
Residential mortgage loans sold with recourse180 200 
CRE mortgages serviced for others covered by recourse provisions9,718 9,955 
Other loans serviced for others covered by recourse provisions819 723 
Letters of credit6,306 6,030 

Total Return Swaps

The Company facilitates matched book TRS transactions on behalf of clients, whereby a VIE purchases reference assets identified by a client and the Company enters into a TRS with the VIE, with a mirror-image TRS facing the client. The Company provides senior financing to the VIE in the form of demand notes to fund the purchase of the reference assets. Reference assets are typically fixed income instruments primarily composed of syndicated bank loans. The TRS contracts pass through interest and other cash flows on the reference assets to the third-party clients, along with exposing those clients to decreases in value on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial margin collateral, as well as ongoing margin as the fair values of the underlying reference assets change. The following table provides a summary of the TRS transactions with VIE purchases. VIE assets include trading loans and bonds:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Total return swaps:
VIE assets$1,780 $1,830 
Trading loans and bonds1,732 1,790 
VIE liabilities92 163 

The Company concluded that the associated VIEs should be consolidated because the Company has (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses and the right to receive benefits, which could potentially be significant. The activities of the VIEs are restricted to buying and selling the reference assets, and the risks/benefits of any such assets owned by the VIEs are passed to the third-party clients via the TRS contracts. For additional information on TRS contracts and the related VIEs, see “Note 16. Derivative Financial Instruments.”

Pledged Assets

Certain assets were pledged to secure municipal deposits, securities sold under agreements to repurchase, certain derivative agreements, and borrowings or borrowing capacity, as well as to fund certain obligations related to nonqualified defined benefit and defined contribution retirement plans and for other purposes as required or permitted by law. Assets pledged to the FHLB and FRB are subject to applicable asset discounts when determining borrowing capacity. The Company has capacity for secured financing from both the FRB and FHLB and letters of credit from the FHLB. The Company’s letters of credit from the FHLB can be used to secure various client deposits, including public fund relationships. Excluding assets related to nonqualified benefit plans, the majority of the agreements governing the pledged assets do not permit the other party to sell or repledge the collateral. The following table provides the total carrying amount of pledged assets by asset type:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Pledged securities$39,702 $38,012 
Pledged loans:
FRB74,463 71,234 
FHLB68,488 68,988 
Unused borrowing capacity:
FRB54,633 49,250 
FHLB23,615 20,770 


30 Truist Financial Corporation

Litigation and Regulatory Matters

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

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

The Company estimates reasonably possible losses, in excess of amounts accrued, of up to approximately $200 million as of September 30, 2023. This estimate does not represent Truist’s maximum loss exposure, and actual losses may vary significantly. Also, the outcome of a particular matter may be one that the Company did not take into account in its estimate because the Company deemed the likelihood of that outcome to be remote. In addition, the matters underlying this estimate will change from time to time. Estimated losses are based upon currently available information and involve considerable judgment, given that claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete, and material facts may be disputed or unsubstantiated, among other factors.

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

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

Bickerstaff v. SunTrust Bank

This class action case was filed in the Fulton County State Court on July 12, 2010, and an amended complaint was filed on August 9, 2010. Plaintiff alleges that all overdraft fees charged to his account which related to debit card and ATM transactions are actually interest charges and therefore subject to the usury laws of Georgia. The amended complaint asserts claims for violations of civil and criminal usury laws, conversion, and money had and received, and seeks damages on a class-wide basis, including refunds of challenged overdraft fees and pre-judgment interest. On October 6, 2017, the trial court granted plaintiff’s motion for class certification and defined the class as “Every Georgia citizen who had or has one or more accounts with SunTrust Bank and who, from July 12, 2006, to October 6, 2017 (i) had at least one overdraft of $500.00 or less resulting from an ATM or debit card transaction (the “Transaction”); (ii) paid any Overdraft Fees as a result of the Transaction; and (iii) did not receive a refund of those Fees,” and the granting of a certified class was affirmed on appeal. On behalf of the certified class as currently defined, Plaintiff seeks a return of up to $452 million in paid overdraft fees from the 2006 to 2017 period above, plus prejudgment interest. Truist intends to file motions to amend the class definition to narrow the scope of the class, to compel arbitration against certain class members, and for summary judgment by the current dispositive motion deadline of October 31, 2023. Trial is presently set to commence on April 29, 2024. The Company continues to believe that it has substantial defenses against the underlying claims.

United Services Automobile Association v. Truist Bank

USAA filed a lawsuit on July 29, 2022 against the Company in the United States District Court for the Eastern District of Texas alleging that the Company’s mobile remote deposit capture (“RDC”) systems infringed three patents held by USAA. The complaint sought damages, including for alleged willful infringement and a corresponding request that the amount of actual damages be trebled, as well as injunctive and other equitable relief. USAA later amended its complaint to assert two additional RDC patents in the lawsuit. The Company filed its answer and affirmative defenses on October 11, 2022, denying that it infringed any of the patents at issue in the lawsuit and asserting that USAA’s patents were invalid or unenforceable. The Company further asserted counterclaims seeking damages as well as injunctive relief against USAA for infringing six patents owned by the Company and practiced by USAA’s mobile RDC systems. The Company also filed petitions for inter partes review (“IPR”) at the Patent Trial and Appeal Board challenging the validity of each of the five patents asserted by USAA in the lawsuit, and review was granted for two of the patents and denied for one of the patents.

Truist Financial Corporation 31

Effective September 29, 2023, the Company and USAA entered into a Settlement and Patent License Agreement resolving the lawsuit. The lawsuit was dismissed with prejudice on October 10, 2023, and the Company’s pending IPR proceedings regarding USAA’s RDC patents have been terminated. The financial impact of the resolution did not have a material adverse effect on the Company’s financial condition or operating results.

Recordkeeping Matters

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

FDIC Special Assessment

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

32 Truist Financial Corporation

NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

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

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

The following tables present fair value information for assets and liabilities measured at fair value on a recurring basis:
September 30, 2023
(Dollars in millions)		TotalLevel 1Level 2Level 3
Netting Adjustments(1)
Assets:    
Trading assets:
U.S. Treasury$117 $— $117 $— $— 
GSE47 — 47 — — 
Agency MBS - residential— — — — — 
States and political subdivisions511 — 511 — — 
Corporate and other debt securities1,480 — 1,480 — — 
Loans1,775 — 1,775 — — 
Other454 363 91 — — 
Total trading assets4,384 363 4,021 — — 
AFS securities: 
U.S. Treasury10,361 — 10,361 — — 
GSE324 — 324 — — 
Agency MBS - residential49,076 — 49,076 — — 
Agency MBS - commercial2,135 — 2,135 — — 
States and political subdivisions394 — 394 — — 
Non-agency MBS2,808 — 2,808 — — 
Other19 — 19 — — 
Total AFS securities65,117 — 65,117 — — 
LHFS at fair value1,269 — 1,269 — — 
Loans and leases16 — — 16 — 
Loan servicing rights at fair value3,537 — — 3,537 — 
Other assets:
Derivative assets749 685 2,090 1 (2,027)
Equity securities330 227 103 — — 
Total assets$75,402 $1,275 $72,600 $3,554 $(2,027)
Liabilities:    
Derivative liabilities$3,474 $428 $5,002 $40 $(1,996)
Securities sold short1,718 214 1,504 — — 
Total liabilities$5,192 $642 $6,506 $40 $(1,996)
Truist Financial Corporation 33

December 31, 2022
(Dollars in millions)		TotalLevel 1Level 2Level 3
Netting Adjustments(1)
Assets:    
Trading assets:
U.S. Treasury$137 $— $137 $— $— 
GSE457 — 457 — — 
Agency MBS - residential804 — 804 — — 
Agency MBS - commercial62 — 62 — — 
States and political subdivisions422 — 422 — — 
Corporate and other debt securities761 — 761 — — 
Loans1,960 — 1,960 — — 
Other302 261 41 — — 
Total trading assets4,905 261 4,644 — — 
AFS securities:    
U.S. Treasury10,295 — 10,295 — — 
GSE303 — 303 — — 
Agency MBS - residential55,225 — 55,225 — — 
Agency MBS - commercial2,424 — 2,424 — — 
States and political subdivisions416 — 416 — — 
Non-agency MBS3,117 — 3,117 — — 
Other21 — 21 — — 
Total AFS securities71,801 — 71,801 — — 
LHFS at fair value1,065 — 1,065 — — 
Loans and leases18 — — 18 — 
Loan servicing rights at fair value3,758 — — 3,758 — 
Other assets:    
Derivative assets684 472 1,980 1 (1,769)
Equity securities898 796 102 — — 
Total assets$83,129 $1,529 $79,592 $3,777 $(1,769)
Liabilities:    
Derivative liabilities$2,971 $364 $4,348 $37 $(1,778)
Securities sold short1,551 114 1,437 — — 
Total liabilities$4,522 $478 $5,785 $37 $(1,778)
(1)Refer to “Note 16. Derivative Financial Instruments” for additional discussion on netting adjustments.

At September 30, 2023 and December 31, 2022, investments totaling $402 million and $385 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 18. Fair Value Disclosures” of the Annual Report on Form 10-K for the year ended December 31, 2022.

34 Truist Financial Corporation

Activity for Level 3 assets and liabilities is summarized below:
Three Months Ended September 30, 2023 and 2022
(Dollars in millions)		Loans and LeasesLoan Servicing RightsNet Derivatives
Balance at July 1, 2022$20 $3,466 $(36)
Total realized and unrealized gains (losses):
Included in earnings— 190 (61)
Purchases— 126 — 
Issuances— 130 (30)
Sales— (6)— 
Settlements— (109)56 
Other(1)— — 
Balance at September 30, 2022$19 $3,797 $(71)
Balance at July 1, 2023$16 $3,497 $(31)
Total realized and unrealized gains (losses):
Included in earnings— 151 (25)
Issuances— 78 1 
Sales— (102)— 
Settlements— (87)16 
Balance at September 30, 2023$16 $3,537 $(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023$— $150 $(21)
Nine Months Ended September 30, 2023 and 2022
(Dollars in millions)		Loans and LeasesLoan Servicing RightsNet Derivatives
Balance at January 1, 2022$23 $2,633 $(12)
Total realized and unrealized gains (losses): 
Included in earnings— 807 (324)
Purchases— 321 — 
Issuances— 411 10 
Sales— (7)— 
Settlements— (368)255 
Other(4)— — 
Balance at September 30, 2022$19 $3,797 $(71)
Balance at January 1, 2023$18 $3,758 $(36)
Total realized and unrealized gains (losses):
Included in earnings— 216 (47)
Purchases— 123 — 
Issuances— 218 17 
Sales— (531)— 
Settlements(2)(247)27 
Balance at September 30, 2023$16 $3,537 $(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023$— $166 $(39)
Primary income statement location of realized gains (losses) included in earnings
Other incomeMortgage banking incomeMortgage banking income

Truist Financial Corporation 35

Fair Value Option

The following table details the fair value and UPB of certain loans that were elected to be measured at fair value:
 September 30, 2023December 31, 2022
(Dollars in millions)Fair ValueUPBDifferenceFair ValueUPBDifference
Trading loans$1,775 $1,864 $(89)$1,960 $2,101 $(141)
Loans and leases16 17 (1)18 20 (2)
LHFS at fair value1,269 1,288 (19)1,065 1,056 9 
Nonrecurring Fair Value Measurements

The following table provides information about certain assets measured at fair value on a nonrecurring basis still held as of period end. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. These assets are considered to be Level 3 assets.
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Carrying value:
LHFS$119 $271 
Loans and leases679 500 
Other506 120 

The following table provides information about valuation adjustments for certain assets measured at fair value on a nonrecurring basis. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end.
Nine Months Ended September 30,
(Dollars in millions)20232022
Valuation adjustments:
LHFS$(40)$(9)
Loans and leases(428)(280)
Other(1)
(198)(87)
(1)Prior period amounts were revised.

LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at LOCOM. The table above excludes $25 million and $108 million of LHFS carried at cost at September 30, 2023 and December 31, 2022, respectively, that did not require a valuation adjustment during the period. Additionally, the table above excludes $98 million of charge-offs related to the student loan portfolio sale that occurred in the second quarter of 2023, which was previously provided for. The remainder of LHFS is carried at fair value.

Loans and leases consist of larger commercial loans and leases that are collateral-dependent and other secured loans and leases that have been charged-off to the fair value of the collateral. Valuation adjustments for loans and leases are primarily recorded in the Provision for credit losses in the Consolidated Statement of Income. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion of individually evaluated loans and leases.

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

36 Truist Financial Corporation

Financial Instruments Not Recorded at Fair Value

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

An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets. In addition, changes in assumptions could significantly affect these fair value estimates. Financial assets and liabilities not recorded at fair value are summarized below:
September 30, 2023December 31, 2022
(Dollars in millions)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
Financial assets:
HTM securitiesLevel 2$54,942 $42,501 $57,713 $47,791 
Loans and leases HFI, net of ALLLLevel 3310,990 299,829 321,596 308,738 
Financial liabilities:  
Time depositsLevel 242,148 41,900 23,474 23,383 
Long-term debtLevel 241,232 39,705 43,203 40,951 

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

Truist Financial Corporation 37

NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

The following table presents the gross notional amounts and estimated fair value of derivative instruments employed by the Company:
September 30, 2023December 31, 2022
 Notional AmountFair ValueNotional AmountFair Value
(Dollars in millions)AssetsLiabilitiesAssetsLiabilities
Cash flow hedges:      
Interest rate contracts:      
Swaps hedging commercial loans$20,900 $— $— $16,650 $— $— 
Fair value hedges:   
Interest rate contracts:   
Swaps hedging long-term debt 19,268 — (56)16,393 — (68)
Swaps hedging AFS securities20,052 — — 7,097 — — 
Total39,320 — (56)23,490 — (68)
Not designated as hedges:      
Client-related and other risk management:      
Interest rate contracts:      
Swaps158,550 618 (3,026)155,670 579 (2,665)
Options38,430 145 (168)29,840 172 (192)
Forward commitments372 4 (2)1,495 8 (2)
Other3,239 — — 3,823 1 — 
Equity contracts40,653 824 (1,331)33,185 644 (901)
Credit contracts:
Trading assets600 — — 140 — — 
Loans and leases465 — — 394 — — 
Risk participation agreements7,638 — (2)6,824 — (3)
Total return swaps1,693 41 (10)1,729 81 (2)
Foreign exchange contracts21,679 346 (298)19,022 364 (380)
Commodity9,156 476 (465)4,881 444 (447)
Total282,475 2,454 (5,302)257,003 2,293 (4,592)
Mortgage banking:      
Interest rate contracts:      
Swaps148 — — 115 — — 
Options(1)
400 3 — 400 1 — 
Interest rate lock commitments1,259 1 (23)999 1 (17)
When issued securities, forward rate agreements and forward commitments(1)
2,013 56 — 1,728 24 (6)
Other68 — — 140 1 — 
Total3,888 60 (23)3,382 27 (23)
MSRs:      
Interest rate contracts:      
Swaps13,355 1 — 14,566 — — 
Options(1)
17,112 261 (77)15,505 125 (48)
When issued securities, forward rate agreements and forward commitments(1)
712 — (10)884 8 (15)
Other2,009 — (2)1,532 — (3)
Total33,188 262 (89)32,487 133 (66)
Total derivatives not designated as hedges319,551 2,776 (5,414)292,872 2,453 (4,681)
Total derivatives$379,771 2,776 (5,470)$333,012 2,453 (4,749)
Gross amounts in the Consolidated Balance Sheets:    
Amounts subject to master netting arrangements and exchange traded derivatives
(1,325)1,325  (1,223)1,223 
Cash collateral (received) posted for amounts subject to master netting arrangements
 (702)671  (546)555 
Net amount $749 $(3,474) $684 $(2,971)
(1)In the second quarter of 2023, Truist reclassified TBA MBS options into the options line item. Prior periods were reclassified to conform to the current presentation.
38 Truist Financial Corporation

The following table presents the offsetting of derivative instruments including financial instrument collateral related to legally enforceable master netting agreements and amounts held or pledged as collateral. U.S. GAAP does not permit netting of non-cash collateral balances in the Consolidated Balance Sheets:
September 30, 2023
(Dollars in millions)		Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement$2,014 $(1,602)$412 $— $412 
Derivatives not subject to master netting arrangement or similar arrangement77 — 77 — 77 
Exchange traded derivatives685 (425)260 — 260 
Total derivative assets$2,776 $(2,027)$749 $— $749 
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement$(4,207)$1,571 $(2,636)$119 $(2,517)
Derivatives not subject to master netting arrangement or similar arrangement(835)— (835)— (835)
Exchange traded derivatives(428)425 (3)— (3)
Total derivative liabilities$(5,470)$1,996 $(3,474)$119 $(3,355)
December 31, 2022
(Dollars in millions)		Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement$1,895 $(1,408)$487 $— $487 
Derivatives not subject to master netting arrangement or similar arrangement86 — 86 — 86 
Exchange traded derivatives472 (361)111 — 111 
Total derivative assets$2,453 $(1,769)$684 $— $684 
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement$(3,688)$1,417 $(2,271)$43 $(2,228)
Derivatives not subject to master netting arrangement or similar arrangement(697)— (697)— (697)
Exchange traded derivatives(364)361 (3)— (3)
Total derivative liabilities$(4,749)$1,778 $(2,971)$43 $(2,928)

The following table presents the carrying value of hedged items in fair value hedging relationships:
September 30, 2023December 31, 2022
Hedge Basis AdjustmentHedge Basis Adjustment
(Dollars in millions)Hedged Asset / Liability BasisItems Currently DesignatedDiscontinued HedgesHedged Asset / Liability BasisItems Currently DesignatedDiscontinued Hedges
AFS securities(1)
$45,402 $(926)$(4)$38,773 $(630)$(4)
Loans and leases331 — 8 353 — 10 
Long-term debt28,242 (855)(192)25,378 (780)218 
(1)The amortized cost of AFS securities was $57.2 billion at September 30, 2023 and $46.2 billion at December 31, 2022. Further, as of September 30, 2023, closed portfolios of securities hedged under the portfolio layer method have an amortized cost of $51.5 billion, of which $20.1 billion was designated as hedged. The remaining amount of amortized cost is from securities with terminated hedges where the basis adjustment is being amortized into earnings using the effective interest method over the contractual life of the security.

Truist Financial Corporation 39

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

Derivatives Designated as Hedging Instruments under GAAP

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

The following table summarizes amounts related to cash flow hedges, which consist of interest rate contracts:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2023202220232022
Pre-tax gain (loss) recognized in OCI:
Commercial loans$(351)$(182)$(607)$(123)
Pre-tax gain (loss) reclassified from AOCI into interest expense:
Long-term debt— (1)— (12)
Commercial Loans(17)— (22)— 

The following table summarizes the impact on net interest income related to fair value hedges:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2023202220232022
Investment securities:
Amounts related to interest settlements$119 $36 $282 $40 
Recognized on derivatives326 157 273 631 
Recognized on hedged items
(323)(142)(248)(586)
Net income (expense) recognized(1)
122 51 307 85 
Loans and leases:
Recognized on hedged items
(1)(1)(2)(2)
Net income (expense) recognized(1)(1)(2)(2)
Long-term debt:
Amounts related to interest settlements(56)(23)(149)(4)
Recognized on derivatives(319)(445)(454)(912)
Recognized on hedged items
326 482 483 1,050 
Net income (expense) recognized(49)14 (120)134 
Net income (expense) recognized, total
$72 $64 $185 $217 
(1)Includes $12 million and $33 million of income recognized for the three and nine months ended September 30, 2023, respectively, and $15 million and $41 million for the three and nine months ended September 30, 2022, respectively, from securities with terminated hedges that were reclassified to HTM. The income recognized was offset by the amortization of the fair value mark.
40 Truist Financial Corporation

The following table presents information about the Company’s cash flow and fair value hedges:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI$(573)$(118)
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)
48 40 
Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months
(201)(31)
Maximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instruments
5 years6 years
Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges(1)
$229 $669 
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months
22 163 
(1)Includes deferred gains that are recorded in AOCI as a result of the reclassification to HTM of previously hedged securities of $425 million at September 30, 2023 and $457 million at December 31, 2022.

Derivatives Not Designated as Hedging Instruments under GAAP

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

The following table presents pre-tax gain (loss) recognized in income for derivative instruments not designated as hedges:
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)Income Statement Location2023202220232022
Client-related and other risk management:  
Interest rate contractsInvestment banking and trading income and other income$37 $59 $123 $187 
Foreign exchange contractsInvestment banking and trading income and other income118 202 89 381 
Equity contractsInvestment banking and trading income and other income(14)(57)(34)(50)
Credit contractsInvestment banking and trading income and other income(33)(7)(92)84 
Commodity contractsInvestment banking and trading income3 9 20 9 
Mortgage banking:  
Interest rate contracts - residentialMortgage banking income39 94 61 572 
Interest rate contracts - commercialMortgage banking income— 6 (1)5 
MSRs:  
Interest rate contracts - residentialMortgage banking income(162)(175)(244)(789)
Interest rate contracts - commercialMortgage banking income(9)(9)(13)(23)
Total$(21)$122 $(91)$376 


Truist Financial Corporation 41

Credit Derivative Instruments

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

Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on the derivative due to a failure to pay by the counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At September 30, 2023, the remaining terms on these risk participations ranged from less than one year to 14 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming 100% default by all obligors on the maximum value.

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

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

The following table presents additional information related to interest rate derivative risk participation agreements and total return swaps:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Risk participation agreements:
Maximum potential amount of exposure
$434 $575 
Total return swaps:
Cash collateral held435 453 

The following table summarizes collateral positions with counterparties:
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Dealer and other counterparties:
Cash and other collateral received from counterparties$702 $542 
Derivatives in a net gain position secured by collateral received787 618 
Unsecured positions in a net gain with counterparties after collateral postings
83 76 
Cash collateral posted to counterparties789 590 
Derivatives in a net loss position secured by collateral855 692 
Central counterparties clearing:
Cash collateral, including initial margin, received from central clearing parties— 4 
Cash collateral, including initial margin, posted to central clearing parties12 45 
Derivatives in a net loss position— 13 
Derivatives in a net gain position16 12 
Securities pledged to central counterparties clearing1,112 639 

42 Truist Financial Corporation

NOTE 17. Computation of EPS

Basic and diluted EPS calculations are presented in the following table:
 Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions, except per share data, shares in thousands)2023202220232022
Net income available to common shareholders$1,071 $1,536 $3,715 $4,317 
Weighted average number of common shares1,333,522 1,326,539 1,331,377 1,328,569 
Effect of dilutive outstanding equity-based awards7,052 10,120 7,664 10,502 
Weighted average number of diluted common shares1,340,574 1,336,659 1,339,041 1,339,071 
Basic EPS$0.80 $1.16 $2.79 $3.25 
Diluted EPS$0.80 $1.15 $2.77 $3.22 
Anti-dilutive awards5,875 — 4,665 85 

NOTE 18. Operating Segments

Truist operates and measures business activity across three segments: CB&W, C&CB, and IH, with functional activities included in OT&C. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see “Note 21. Operating Segments” of the Annual Report on Form 10-K for the year ended December 31, 2022.

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

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

Also related to the same transaction, IH’s recapitalized from a corporate entity to an LLC, such that each partner is allocated its share of Insurance Holding’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 IH’s previous status as a corporate entity. The Company recognized $30 million and $84 million for the three and nine months ended September 30, 2023, respectively, of tax provision related to IH in OT&C. In the third quarter of 2023, IH recognized $3 million of taxes for certain state jurisdictions that impose income taxes on partnerships and LLCs.

Truist Financial Corporation 43

The following table presents results by segment:
Three Months Ended September 30,
(Dollars in millions)		CB&WC&CBIH
OT&C(1)
Total
2023202220232022202320222023202220232022
Net interest income (expense)$1,269 $1,690 $2,427 $1,635 $1 $1 $(133)$419 $3,564 $3,745 
Net intersegment interest income (expense)1,388 992 (776)10 (81)10 (531)(1,012)— — 
Segment net interest income2,657 2,682 1,651 1,645 (80)11 (664)(593)3,564 3,745 
Allocated provision for credit losses248 283 254 (48)— — (5)(1)497 234 
Segment net interest income after provision2,409 2,399 1,397 1,693 (80)11 (659)(592)3,067 3,511 
Noninterest income756 836 584 645 801 731 (33)(110)2,108 2,102 
Amortization of intangibles67 76 31 33 32 31 — — 130 140 
Other noninterest expense1,998 1,854 843 795 669 597 107 227 3,617 3,473 
Income (loss) before income taxes1,100 1,305 1,107 1,510 20 114 (799)(929)1,428 2,000 
Provision (benefit) for income taxes266 309 215 324 3 29 (239)(299)245 363 
Segment net income (loss)$834 $996 $892 $1,186 $17 $85 $(560)$(630)$1,183 $1,637 
Identifiable assets (period end)$161,881 $170,196 $205,163 $198,522 $8,766 $7,459 $166,897 $172,261 $542,707 $548,438 
Nine Months Ended September 30,
(Dollars in millions)		CB&WC&CBIH
OT&C(1)
Total
2023202220232022202320222023202220232022
Net interest income (expense)$4,335 $4,794 $7,144 $4,050 $3 $2 $(425)$1,489 $11,057 $10,335 
Net intersegment interest income (expense)3,773 2,395 (2,050)225 (153)17 (1,570)(2,637)— — 
Segment net interest income8,108 7,189 5,094 4,275 (150)19 (1,995)(1,148)11,057 10,335 
Allocated provision for credit losses746 556 797 (229)— — (6)(17)1,537 310 
Segment net interest income after provision7,362 6,633 4,297 4,504 (150)19 (1,989)(1,131)9,520 10,025 
Noninterest income2,457 2,578 1,790 1,988 2,562 2,295 (174)(369)6,635 6,492 
Amortization of intangibles204 229 93 100 100 91 — — 397 420 
Other noninterest expense5,971 5,514 2,531 2,333 1,994 1,691 293 909 10,789 10,447 
Income (loss) before income taxes3,644 3,468 3,463 4,059 318 532 (2,456)(2,409)4,969 5,650 
Provision (benefit) for income taxes873 827 690 876 39 131 (676)(769)926 1,065 
Segment net income (loss)$2,771 $2,641 $2,773 $3,183 $279 $401 $(1,780)$(1,640)$4,043 $4,585 
Identifiable assets (period end)$161,881 $170,196 $205,163 $198,522 $8,766 $7,459 $166,897 $172,261 $542,707 $548,438 
(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.

44 Truist Financial Corporation

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

MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements, the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, other information contained in this document, as well as with Truist’s Annual Report on Form 10-K for the year ended December 31, 2022.

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022.

Regulatory Considerations

The regulatory framework applicable to banking organizations is intended primarily for the protection of depositors and the stability of the financial system, rather than for the protection of shareholders and creditors. Truist is subject to banking laws and regulations, and various other laws and regulations, which affect the operations and management of Truist and its ability to make distributions to shareholders. Truist and its subsidiaries are also subject to supervision and examination by multiple regulators. The descriptions below summarize certain updates since the filing of the Annual Report on Form 10-K for the year ended December 31, 2022 to state and federal laws to which Truist is subject. These descriptions do not summarize all possible or proposed changes in current laws or regulations and are not intended to be a substitute for the related statues or regulatory provisions. Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures.

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

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

Banking agencies have proposed certain actions described below. We continue to evaluate these proposals and the potential impacts, if adopted as proposed, on the Company and Truist Bank.

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

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

Truist Financial Corporation 45

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

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

Executive Overview

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

Noninterest expense was flat compared to the second quarter, and down 50 basis points on an adjusted basis, reflecting our expense discipline. Our $750 million gross cost saves program and efforts to simplify the organization are underway and we are focused on expense discipline while also investing in our core franchise and risk management systems.

Our cost save program includes:

•Reductions in force
◦Spans and layers
◦Consolidation of redundant/similar functions
◦Select business restructuring
◦Geographic simplification
•Organizational alignment and simplification
◦Consolidate businesses for operational efficiency
◦More efficient branch network and staffing structure
◦Simplified and streamlined compensation and benefits programs
◦Reallocate investments to core businesses
•Rationalize technology spend
◦Focus on opportunities in core businesses

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

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

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

46 Truist Financial Corporation

Financial Results

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

•Results for the third quarter of 2023 included merger-related and restructuring charges of $75 million ($58 million after-tax, or $0.04 per share).
•Results for the third quarter of 2022 included $62 million ($48 million after-tax, or $0.04 per share) of merger-related and restructuring charges and $90 million ($69 million after-tax, or $0.05 per share) of incremental operating expenses related to the Merger.

Taxable-equivalent net interest income for the third quarter of 2023 was down $162 million, or 4.3%, compared to the third quarter of 2022 primarily due to higher funding costs and lower purchase accounting accretion, partially offset by higher market interest rates. Net interest margin was 2.95%, down 17 basis points.

•The yield on the total loan portfolio was 6.25%, up 176 basis points, primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was 2.26%, up 31 basis points primarily due to the higher rate environment. Average deposits decreased $19.1 billion, or 4.5%, average short-term borrowings increased $7.5 billion, and average long-term debt increased $12.0 billion.
•The average cost of total deposits was 1.81%, up 150 basis points. The average cost of short-term borrowings was 5.47%, up 313 basis points. The average cost of long-term debt was 4.51%, up 208 basis points. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

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

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

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

An increase in the loan loss reserve reflects normalization of asset quality.

•Nonperforming loans and leases held for investment were 0.46% of loans and leases held for investment at September 30, 2023, down one basis point compared to June 30, 2023.
•The allowance for credit losses was $5.0 billion and includes $4.7 billion for the allowance for loan and lease losses and $277 million for the reserve for unfunded commitments. The ALLL ratio was 1.49%, up six basis points compared with June 30, 2023.
•The provision for credit losses was $497 million compared to $234 million for the third quarter of 2022. The increase in the current quarter provision expense primarily reflects higher net charge-offs and an allowance build.
•The net charge-off ratio was 51 basis points, up 24 basis points compared to the third quarter of 2022 due to higher charge-offs in the CRE, commercial and industrial, and indirect auto portfolios.

Capital strengthened during the third quarter of 2023.

•Truist’s CET1 ratio was 9.9% as of September 30, 2023. The increase since June 30, 2023 resulted from organic capital generation and RWA optimization.
•Truist declared common dividends of $0.52 per share during the third quarter of 2023. The dividend payout ratio for the third quarter of 2023 was 65%. Truist did not repurchase any shares in the third quarter of 2023.
•Truist’s average consolidated LCR was 110% for the three months ended September 30, 2023, compared to the regulatory minimum of 100%.
Truist Financial Corporation 47


Analysis of Results of Operations

Net Interest Income and NIM

Taxable-equivalent net interest income for the third quarter of 2023 was down $162 million, or 4.3%, compared to the third quarter of 2022 primarily due to higher funding costs and lower purchase accounting accretion, partially offset by higher market interest rates. Net interest margin was 2.95%, down 17 basis points.

•Average earning assets increased $6.4 billion, or 1.3%, primarily due to growth in average total loans of $8.0 billion, or 2.6%, and growth in other earning assets of $9.4 billion, or 48%, primarily due to an increase in balances held at the Federal Reserve to support liquidity, partially offset by a decrease in average securities of $9.9 billion, or 6.8%.
•The yield on the total loan portfolio was 6.25%, up 176 basis points, primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was 2.26%, up 31 basis points primarily due to the higher rate environment.
•Average deposits decreased $19.1 billion, or 4.5%, average short-term borrowings increased $7.5 billion, and average long-term debt increased $12.0 billion.
•The average cost of total deposits was 1.81%, up 150 basis points. The average cost of short-term borrowings was 5.47%, up 313 basis points. The average cost of long-term debt was 4.51%, up 208 basis points. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

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

•Average earning assets increased $21.9 billion, or 4.6%, compared to the prior period primarily due to growth in average total loans of $23.7 billion, or 7.9%, and growth in other earning assets of $9.9 billion, or 50%, primarily due to an increase in balances held at the Federal Reserve to support liquidity build, partially offset by a $10.8 billion, or 7.2%, decrease in average securities.
•The yield on the total loan portfolio was 6.04% for the nine months ended September 30, 2023, up 200 basis points, compared to the prior period primarily reflecting higher market interest rates, partially offset by lower purchase accounting accretion. The yield on the average securities portfolio was 2.19% for the nine months ended September 30, 2023, up 37 basis points compared to the prior period primarily due to the higher rate environment.
•Average deposits decreased $16.6 billion, or 4.0%, while average short-term borrowings increased $13.0 billion, or 114%, compared to the prior period and average long-term debt increased $20.0 billion, or 61%.
•The average cost of total deposits was 1.48% for the nine months ended September 30, 2023, up 133 basis points compared to the prior period. The average cost of short-term borrowings was 5.13% for the nine months ended September 30, 2023, up 345 basis points compared to the prior period. The average cost on long-term debt was 4.41% for the nine months ended September 30, 2023, up 253 basis points compared to the prior period. The increases in rates on deposits and other funding sources was largely attributable to the higher rate environment.

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

The remaining unamortized purchase accounting fair value mark on loans and leases consists of $367 million for consumer loans and leases, and $161 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as paydowns occur.

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

48 Truist Financial Corporation

Table 1-1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Three Months Ended September 30,
(Dollars in millions)
Average Balances(1)
Annualized Yield/Rate(2)
Income/ExpenseIncr.
(Decr.)		Change due to
202320222023202220232022RateVolume
Assets         
AFS and HTM securities at amortized cost:         
U.S. Treasury$10,886 $10,925 1.27 %0.93 %$34 $26 $8 $8 $— 
GSE339 305 2.92 2.56 3 1 2 1 1 
Agency MBS120,078 129,703 2.33 2.02 701 655 46 97 (51)
States and political subdivisions423 395 4.12 3.92 4 4 — — — 
Non-agency MBS3,781 4,016 2.33 2.32 22 24 (2)— (2)
Other20 52 5.55 3.94 1 — 1 — 1 
Total securities135,527 145,396 2.26 1.95 765 710 55 106 (51)
Interest earning trading assets4,380 5,446 6.91 4.49 76 62 14 28 (14)
Other earning assets(3)
29,006 19,631 5.68 2.24 415 109 306 234 72 
Loans and leases, net of unearned income:        
Commercial and industrial164,022 152,123 6.50 4.08 2,686 1,564 1,122 991 131 
CRE22,812 22,245 6.85 4.32 396 245 151 145 6 
Commercial Construction6,194 5,284 7.83 4.83 120 62 58 45 13 
Residential mortgage56,135 53,271 3.79 3.59 532 478 54 27 27 
Home equity10,243 10,767 7.61 5.17 196 142 54 61 (7)
Indirect auto24,872 28,057 6.16 5.40 386 382 4 50 (46)
Other consumer28,963 26,927 7.43 6.21 542 419 123 88 35 
Student— 5,958 — 5.64 1 85 (84)— (84)
Credit card4,875 4,755 11.62 9.97 143 119 24 21 3 
Total loans and leases HFI318,116 309,387 6.25 4.49 5,002 3,496 1,506 1,428 78 
LHFS1,765 2,489 6.20 4.81 28 30 (2)7 (9)
Total loans and leases319,881 311,876 6.25 4.49 5,030 3,526 1,504 1,435 69 
Total earning assets488,794 482,349 5.11 3.63 6,286 4,407 1,879 1,803 76 
Nonearning assets58,910 63,257       
Total assets$547,704 $545,606       
Liabilities and Shareholders’ Equity        
Interest-bearing deposits:        
Interest-checking$101,252 $111,645 2.29 0.56 584 158 426 442 (16)
Money market and savings139,961 147,659 2.35 0.43 829 159 670 679 (9)
Time deposits40,920 14,751 4.05 0.40 418 14 404 338 66 
Total interest-bearing deposits282,133 274,055 2.57 0.48 1,831 331 1,500 1,459 41 
Short-term borrowings24,894 17,392 5.47 2.34 343 103 240 181 59 
Long-term debt43,353 31,381 4.51 2.43 491 190 301 208 93 
Total interest-bearing liabilities350,380 322,828 3.02 0.77 2,665 624 2,041 1,848 193 
Noninterest-bearing deposits118,905 146,041        
Other liabilities15,107 13,227        
Shareholders’ equity63,312 63,510        
Total liabilities and shareholders’ equity$547,704 $545,606        
Average interest-rate spread  2.09 %2.86 %     
NIM/net interest income - taxable equivalent  2.95 %3.12 %$3,621 $3,783 $(162)$(45)$(117)
Taxable-equivalent adjustment    $57 $38    
Memo: Total deposits$401,038 $420,096 1.81 %0.31 %$1,831 $331 $1,500 
(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.
(2)Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs, and dividends.
(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets.
Truist Financial Corporation 49

Table 1-2: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Nine Months Ended September 30,
(Dollars in millions)
Average Balances(1)
Annualized Yield/Rate(2)
Income/ExpenseIncr.
(Decr.)		Change due to
202320222023202220232022RateVolume
Assets         
AFS and HTM securities at amortized cost:         
U.S. Treasury$11,039 $10,457 1.14 %0.84 %$94 $66 $28 $24 $4 
GSE334 557 2.83 2.19 8 8 — 3 (3)
Agency MBS122,473 133,338 2.27 1.87 2,085 1,870 215 376 (161)
States and political subdivisions424 380 4.12 3.82 13 11 2 1 1 
Non-agency MBS3,846 4,112 2.33 2.29 67 71 (4)1 (5)
Other23 51 5.34 3.46 1 1 — 1 (1)
Total securities138,139 148,895 2.19 1.82 2,268 2,027 241 406 (165)
Interest earning trading assets4,759 5,784 6.54 3.67 234 160 74 106 (32)
Other earning assets(3)
29,872 19,924 5.13 1.24 1,147 184 963 831 132 
Loans and leases, net of unearned income:   
Commercial and industrial165,231 145,566 6.26 3.42 7,732 3,725 4,007 3,447 560 
CRE22,736 22,765 6.64 3.52 1,135 606 529 530 (1)
Commercial Construction5,994 5,196 7.54 3.80 332 140 192 166 26 
Residential mortgage56,291 50,180 3.76 3.58 1,589 1,346 243 71 172 
Home equity10,483 10,755 7.22 4.68 566 376 190 200 (10)
Indirect auto26,381 26,888 5.99 5.47 1,182 1,101 81 102 (21)
Other consumer28,242 25,930 7.10 6.15 1,500 1,193 307 195 112 
Student3,280 6,310 6.92 4.54 170 214 (44)84 (128)
Credit card4,836 4,721 11.51 9.29 416 328 88 80 8 
Total loans and leases HFI323,474 298,311 6.04 4.04 14,622 9,029 5,593 4,875 718 
LHFS1,727 3,167 6.25 3.82 81 91 (10)42 (52)
Total loans and leases325,201 301,478 6.04 4.04 14,703 9,120 5,583 4,917 666 
Total earning assets497,971 476,081 4.92 3.22 18,352 11,491 6,861 6,260 601 
Nonearning assets59,703 64,673        
Total assets$557,674 $540,754        
Liabilities and Shareholders’ Equity         
Interest-bearing deposits:         
Interest-checking$104,053 $112,058 1.93 0.26 1,501 215 1,286 1,303 (17)
Money market and savings139,305 145,953 1.91 0.20 1,991 220 1,771 1,781 (10)
Time deposits35,189 14,840 3.68 0.25 970 27 943 858 85 
Total interest-bearing deposits278,547 272,851 2.14 0.23 4,462 462 4,000 3,942 58 
Short-term borrowings24,317 11,356 5.13 1.68 932 143 789 507 282 
Long-term debt52,663 32,646 4.41 1.88 1,739 459 1,280 879 401 
Total interest-bearing liabilities355,527 316,853 2.68 0.45 7,133 1,064 6,069 5,328 741 
Noninterest-bearing deposits124,533 146,862        
Other liabilities14,446 12,448        
Shareholders’ equity63,168 64,591        
Total liabilities and shareholders’ equity$557,674 $540,754        
Average interest-rate spread  2.24 %2.77 %     
NIM/net interest income - taxable equivalent  3.01 %2.93 %$11,219 $10,427 $792 $932 $(140)
Taxable-equivalent adjustment    $162 $92    
Memo: Total deposits$403,080 $419,713 1.48 %0.15 %$4,462 $462 $4,000 
(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.
(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.
50 Truist Financial Corporation

Provision for Credit Losses

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

•The increase in the current quarter provision expense primarily reflects an allowance build and higher net charge-offs.
•The net charge-off ratio was up compared to the third quarter of 2022 driven by higher charge-offs in the CRE, commercial and industrial, and indirect auto portfolios.

The provision for credit losses was $1.5 billion for the nine months ended September 30, 2023 compared to $310 million in the same period in 2022. The net charge-off ratio for the current period of 0.47% was up 22 basis points compared to the prior period.

•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 period 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.

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

Noninterest Income

Noninterest income is a significant contributor to Truist’s financial results. Management focuses on diversifying its sources of revenue to reduce Truist’s reliance on traditional spread-based interest income, as certain fee-based activities are a relatively stable revenue source during periods of changing interest rates. The following table provides a breakdown of Truist’s noninterest income:
Table 2: Noninterest Income
Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
(Dollars in millions)202320222023 vs. 2022202320222023 vs. 2022
Insurance income$793 $725 9.4 %$2,541 $2,277 11.6 %
Wealth management income343 334 2.7 1,012 1,014 (0.2)
Investment banking and trading income185 222 (16.7)657 738 (11.0)
Service charges on deposits152 263 (42.2)641 769 (16.6)
Card and payment related fees238 241 (1.2)704 699 0.7 
Mortgage banking income102 122 (16.4)343 343 — 
Lending related fees102 80 27.5 294 265 10.9 
Operating lease income63 66 (4.5)194 190 2.1 
Securities gains (losses)— (1)NM— (71)NM
Other income130 50 160.0 249 268 (7.1)
Total noninterest income$2,108 $2,102 0.3 $6,635 $6,492 2.2 

Noninterest income was relatively stable compared to the third quarter of 2022 due to higher other income and insurance income, partially offset by lower service charges on deposits and lower investment banking and trading income.

•Other income increased primarily due to higher income on certain equity investments and higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense).
•Insurance income increased primarily due to 6.3% organic growth and acquisitions.
•Service charges on deposits decreased primarily due to an $87 million reduction in deposit service charge fees due to client refund accruals resulting from a revision in deposit service fee protocols, as well as reduced overdraft fees.
•Investment banking and trading income decreased due to lower structured real estate income, partially offset by higher merger and acquisition activity and equity originations.

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

•Insurance income increased primarily due to 6.8% organic growth and acquisitions.
•Service charges on deposits decreased primarily due to the aforementioned service fee protocol revision, as well as reduced overdraft fees.
•Investment banking and trading income decreased due to lower structured real estate income, partially offset by higher merger and acquisition fees as well as higher equity and bond originations.
Truist Financial Corporation 51

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

Noninterest Expense

The following table provides a breakdown of Truist’s noninterest expense:
Table 3: Noninterest Expense
Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
(Dollars in millions)202320222023 vs. 2022202320222023 vs. 2022
Personnel expense$2,200 $2,116 4.0 %$6,637 $6,269 5.9 %
Professional fees and outside processing317 352 (9.9)983 1,064 (7.6)
Software expense238 225 5.8 689 691 (0.3)
Net occupancy expense180 176 2.3 543 565 (3.9)
Amortization of intangibles130 140 (7.1)397 420 (5.5)
Equipment expense97 122 (20.5)299 354 (15.5)
Marketing and customer development78 105 (25.7)235 282 (16.7)
Operating lease depreciation43 45 (4.4)133 140 (5.0)
Regulatory costs77 52 48.1 225 131 71.8 
Merger-related and restructuring charges75 62 21.0 192 399 (51.9)
Other expense312 218 43.1 853 552 54.5 
Total noninterest expense$3,747 $3,613 3.7 $11,186 $10,867 2.9 

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

•Personnel expense increased due to investments in teammates by increasing Truist’s minimum wage, the impact from acquisitions, and investments in revenue producing businesses and enterprise technology, as well as higher other post-retirement benefit expense (which is almost entirely offset by higher other income). These increases were partially offset by lower pension expenses and lower incentives.
•Other expense increased primarily due to higher pension expense (driven primarily by lower plan assets) and includes $70 million of costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, partially offset by lower operating losses.
•Regulatory costs increased primarily due to an increase in the FDIC’s deposit insurance assessment rate.
•Professional fees and outside processing expenses decreased due to prior period incremental operating expenses related to the merger, partially offset by higher enterprise technology and other investments.
•Marketing and customer development decreased due to reduced marketing compared to the prior year.

52 Truist Financial Corporation

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

•Personnel expense increased due to investments in teammates by increasing Truist’s minimum wage, the impact from acquisitions, investments in revenue producing businesses and enterprise technology, and higher other post-retirement benefit expense (which is almost entirely offset by higher other income), partially offset by lower pension expenses.
•Other expense increased primarily due to higher pension expense (driven primarily by lower plan assets) and includes $70 million of costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, partially offset by lower operating losses.
•Regulatory costs increased primarily due to an increase in the FDIC’s deposit insurance assessment rate.
•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.
•Marketing and customer development expense decreased due to reduced marketing compared to the prior year.

Merger-Related and Restructuring Charges

The following table presents a summary of merger-related and restructuring charges and the related accruals. The 2023 merger-related and restructuring costs predominately reflect various restructuring initiatives, including costs for severance and other benefits and costs related to exiting facilities.
Table 4: Merger-Related and Restructuring Accrual Activity
Three Months Ended September 30, 2023Nine Months Ended September 30, 2023
(Dollars in millions)Accrual at Jul 1, 2023ExpenseUtilizedAccrual at Sep 30, 2023Accrual at Jan 1, 2023ExpenseUtilizedAccrual at Sep 30, 2023
Severance and personnel-related$18 $60 $(61)$17 $9 $139 $(131)$17 
Occupancy and equipment— 5 (5)— — 35 (35)— 
Professional services— 4 (4)— 12 7 (19)— 
Other2 6 (6)2 5 11 (14)2 
Total$20 $75 $(76)$19 $26 $192 $(199)$19 

Provision for Income Taxes

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

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

Truist Financial Corporation 53

Segment Results

Truist operates and measures business activity across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury, and Corporate. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served.

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

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

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

See “Note 18. Operating Segments” herein and “Note 21. Operating Segments” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures related to Truist’s reportable business segments, including additional details related to results of operations. Fluctuations in noninterest income and noninterest expense are more fully discussed in the Noninterest Income and Noninterest Expense sections above.
Table 5: Net Income by Reportable Segment
 Three Months Ended September 30,% ChangeNine Months Ended September 30,% Change
(Dollars in millions)202320222023 vs. 2022202320222023 vs. 2022
Consumer Banking and Wealth$834 $996 (16.3)%$2,771 $2,641 4.9 %
Corporate and Commercial Banking892 1,186 (24.8)2,773 3,183 (12.9)
Insurance Holdings17 85 (80.0)279 401 (30.4)
Other, Treasury & Corporate(560)(630)11.1 (1,780)(1,640)(8.5)
Truist Financial Corporation$1,183 $1,637 (27.7)$4,043 $4,585 (11.8)

Consumer Banking and Wealth

CB&W net income was $834 million for the third quarter of 2023, a decrease of $162 million compared to the third quarter of 2022.

•Segment net interest income decreased $25 million primarily driven by lower average deposit balances, decrease in loan spread and lower average loan balances, partially offset by higher funding credit on deposits.
•The provision for credit losses decreased $35 million reflecting an allowance release whereas the earlier period included an allowance build, partially offset by higher charge offs in the indirect auto and other consumer portfolios.
•Noninterest income decreased $80 million compared to earlier quarter primarily due to decreased service charge fees on deposits driven by client refund accruals resulting from a revision in deposit service fee protocols as well as reduced overdraft fees, partially offset by higher residential mortgage income and wealth brokerage fees and commissions.
•Noninterest expense increased $135 million compared to the earlier quarter driven by higher corporate technology, risk, and operations support expenses along with higher pension cost and FDIC’s deposit insurance assessment rate, partially offset by lower marketing and customer development and professional fees and outside processing.

CB&W average loans and leases held for investment decreased $3.7 billion, or 2.6%, for the third quarter of 2023 compared to the third quarter of 2022, primarily driven by the sale of the student loan portfolio at the end of the second quarter of 2023 and a decrease in indirect auto balances, partially offset by increases in residential mortgage, Service Finance, and Sheffield balances.

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

54 Truist Financial Corporation

Corporate and Commercial Banking

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

•Segment net interest income was flat compared to the earlier quarter.
•The provision for credit losses increased $302 million which reflects higher commercial and industrial loan charge offs, an allowance build, and loan growth in the current quarter as well as an allowance release in the earlier quarter.
•Noninterest income decreased $61 million compared to the earlier quarter primarily due to lower structured real estate fees and commercial mortgage income, partially offset by higher income from lending related fees, merger and acquisition activity, and equity originations.
•Noninterest expense increased $46 million compared to the earlier quarter primarily due to higher corporate technology expenses and merger-related and restructuring charges, partially offset by lower corporate marketing expense.

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

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

Insurance Holdings

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

•Segment net interest income decreased $91 million driven primarily by interest expense accruals on new intercompany mandatorily redeemable preferred units resulting from the recapitalization of IH.
•Noninterest income increased $70 million primarily due to continued organic growth and acquisitions.
•Noninterest expense increased $73 million primarily due to the impact of acquisitions, investments in new hires and teammates, performance-driven incentive expense, and higher professional fees and outside processing.

Other, Treasury & Corporate

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

•Segment net interest income decreased $71 million primarily due to higher rates on Treasury funding and funding credit on deposits to other segments, partially offset by funding charges to other segments and interest income on cash balances and securities resulting from the higher rate environment.
•The provision for credit losses was flat compared to the earlier quarter.
•Noninterest income increased $77 million primarily due to higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense).
•Noninterest expense decreased $120 million compared to the earlier quarter primarily due to a decrease in incremental operating expenses related to the merger as well as credit from other segments for corporate technology project support, partially offset by an increase in operating charge-offs due to costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, professional fees and outside processing and personnel expenses excluding merger related costs.

Nine Months of 2023 compared to Nine Months of 2022

Consumer Banking and Wealth

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

•Segment net interest income increased $919 million driven by favorable funding credit on deposits attributable to the higher rate environment and higher average loans, partially offset by higher funding costs, lower average deposits, and lower purchase accounting accretion.
•The provision for credit losses increased $190 million reflecting higher charge offs in the indirect auto and other consumer portfolios, an allowance build in the current period, and a reserve release in the earlier period. The impact of the student loan sale in the second quarter was net neutral to provision.
Truist Financial Corporation 55

•Noninterest income decreased $121 million primarily due to decreased service charge fees on deposits driven by client refund accruals resulting from a revision in deposit service fee protocols and a gain on the redemption of noncontrolling equity interest in the earlier period, partially offset by higher mortgage banking income in the current period.
•Noninterest expense increased $432 million primarily driven by higher corporate technology costs, salaries expense, pension cost, corporate risk and operations support expenses, and FDIC’s deposit insurance assessment rate, partially offset by lower marketing and customer development, professional fees and outside processing, operational losses, and amortization of intangibles.

CB&W average loans and leases held for investment increased $5.3 billion, or 3.9%, for the nine months ended September 30, 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.

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

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

Corporate and Commercial Banking

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

•Segment net interest income increased $819 million primarily due to higher funding credit on deposits and higher average loan balances, partially offset by lower purchase accounting accretion.
•The provision for credit losses increased $1.0 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 $198 million primarily due to lower structured real estate fees, higher derivative collateral related costs, and lower commercial mortgage income, partially offset by increases in merger and acquisition fees, lending related fees, and equity originations.
•Noninterest expense increased $191 million primarily due to higher corporate technology expenses, merger-related and restructuring charges, personnel expenses, and FDIC insurance expense, partially offset by lower corporate marketing expense.

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

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

Insurance Holdings

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

•Segment net interest income decreased $169 million driven primarily by interest expense accruals on new intercompany mandatorily redeemable preferred units resulting from the recapitalization of IH.
•Noninterest income increased $267 million primarily due to continued organic growth and acquisitions.
•Noninterest expense increased $312 million primarily due to the impact of acquisitions, investments in new hires and teammates, performance-driven incentive expense, and higher operational loss reserves.

Other, Treasury, and Corporate

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

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

•The provision for credit losses increased $11 million, which reflects a reserve release in the prior year as well as an allowance build in the current period.
•Noninterest income increased $195 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 $616 million primarily due to a decrease in incremental operating expenses related to the merger and credit from other segments for corporate technology project support, partially offset by an increase in professional fees and outside processing, personnel expenses, operating charge-offs due to costs associated with a revision in deposit service fee protocols as well as settlement of certain litigation matters, including a settlement and patent licensing agreement that resolved the USAA remote deposit capture patent infringement lawsuit, and a gain on the redemption of FHLB advances in the prior year.

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled $120.1 billion at September 30, 2023, compared to $129.5 billion at December 31, 2022. U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of September 30, 2023 and December 31, 2022. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company also holds AAA rated non-agency MBS as the risk adjusted returns for these securities are more attractive than agency MBS.

•The decrease includes paydowns and maturities of $9.4 billion during 2023.
•As of September 30, 2023, 41% of the investment securities portfolio was classified as held-to-maturity based on amortized cost.
•As of September 30, 2023 and December 31, 2022, approximately 5.7% of the securities portfolio was variable rate, excluding the impact of swaps.
•The effective duration of the AFS securities portfolio was 5.8 years at September 30, 2023 and 6.2 years at December 31, 2022, excluding the impact of swaps. The effective duration of the HTM securities portfolio was 7.0 years at September 30, 2023 and 7.3 years at December 31, 2022.

Lending Activities

The following table presents the composition of average loans and leases:
Table 6: Average Loans and Leases
Three Months Ended
(Dollars in millions)Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022
Commercial:
Commercial and industrial$164,022 $166,588 $165,095 $159,308 $152,123 
CRE22,812 22,706 22,689 22,497 22,245 
Commercial construction6,194 5,921 5,863 5,711 5,284 
Consumer:
Residential mortgage56,135 56,320 56,422 56,292 53,271 
Home equity10,243 10,478 10,735 10,887 10,767 
Indirect auto24,872 26,558 27,743 28,117 28,057 
Other consumer28,963 28,189 27,559 27,479 26,927 
Student— 4,766 5,129 5,533 5,958 
Credit card4,875 4,846 4,785 4,842 4,755 
Total average loans and leases HFI$318,116 $326,372 $326,020 $320,666 $309,387 

Average loans held for investment decreased $8.3 billion, or 2.5%, compared to the prior quarter, primarily due to the sale of the student loan portfolio at the end of the second quarter of 2023 and balance sheet optimization in lower return portfolios. Excluding the student loan sale, average loans held for investment declined 1.1% compared to the prior quarter.

•Average commercial loans decreased 1.1% due to a decline in the commercial and industrial portfolio.
•Average consumer loans decreased 4.8% due to the sale of the student loan portfolio and lower indirect auto production, partially offset by growth in higher-return point-of-sale lending in the other consumer portfolio (Service Finance and Sheffield).

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

Truist Financial Corporation 57

Asset Quality

The following tables summarize asset quality information:
Table 7: Asset Quality
(Dollars in millions)Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022
NPAs:
NPLs:
Commercial and industrial$561 $562 $394 $398 $443 
CRE289 275 117 82 5 
Commercial construction29 16 1 — — 
Residential mortgage132 221 233 240 227 
Home equity123 129 132 135 132 
Indirect auto266 262 270 289 260 
Other consumer52 46 45 44 39 
Total NPLs HFI1,452 1,511 1,192 1,188 1,106 
Loans held for sale75 13 — — 72 
Total nonaccrual loans and leases1,527 1,524 1,192 1,188 1,178 
Foreclosed real estate3 3 3 4 4 
Other foreclosed property54 56 66 58 58 
Total nonperforming assets$1,584 $1,583 $1,261 $1,250 $1,240 
Loans 90 days or more past due and still accruing:
Commercial and industrial$15 $36 $35 $49 $44 
CRE— — — 1 1 
Commercial construction— 5 — — — 
Residential mortgage - government guaranteed456 541 649 759 808 
Residential mortgage - nonguaranteed30 23 25 27 26 
Home equity9 7 10 12 9 
Indirect auto1 — — 1 1 
Other consumer16 12 10 13 9 
Student - government guaranteed— — 590 702 770 
Student - nonguaranteed— — 4 4 5 
Credit card47 38 38 37 36 
Total loans 90 days or more past due and still accruing$574 $662 $1,361 $1,605 $1,709 
Loans 30-89 days past due and still accruing:
Commercial and industrial$98 $142 $125 $256 $162 
CRE28 38 34 25 15 
Commercial construction1 6 3 5 3 
Residential mortgage - government guaranteed293 267 232 268 234 
Residential mortgage - nonguaranteed270 254 259 346 300 
Home equity61 56 65 68 67 
Indirect auto598 549 511 646 591 
Other consumer219 175 164 187 152 
Student - government guaranteed— — 350 396 375 
Student - nonguaranteed— — 6 6 6 
Credit card68 63 56 64 52 
Total loans 30-89 days past due and still accruing$1,636 $1,550 $1,805 $2,267 $1,957 

Nonperforming assets totaled $1.6 billion at September 30, 2023, flat compared to June 30, 2023. Nonperforming loans and leases held for investment were 0.46% of loans and leases held for investment at September 30, 2023, down one basis point compared to June 30, 2023.

Loans 90 days or more past due and still accruing totaled $574 million at September 30, 2023, down $88 million, or three basis points as a percentage of loans and leases, compared with the prior quarter primarily due to a decline in government guaranteed residential mortgages. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at September 30, 2023, unchanged from June 30, 2023.

Loans 30-89 days past due and still accruing of $1.6 billion at September 30, 2023 were up $86 million, or four basis points as a percentage of loans and leases, compared to the prior quarter primarily due to increases in the consumer portfolio, partially offset by decreases in the commercial portfolio.

58 Truist Financial Corporation

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 7. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to “Note 5. Loans and ACL” for the amortized cost basis of loans by origination year and credit quality indicator as well as additional disclosures related to NPLs.
Table 8: Asset Quality Ratios
Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI
0.52 %0.48 %0.55 %0.70 %0.62 %
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI
0.18 0.21 0.42 0.49 0.54 
NPLs as a percentage of loans and leases HFI
0.46 0.47 0.36 0.36 0.35 
NPLs as a percentage of total loans and leases(1)
0.48 0.47 0.36 0.36 0.37 
NPAs as a percentage of:
Total assets(1)
0.29 0.29 0.22 0.23 0.23 
Loans and leases HFI plus foreclosed property
0.48 0.49 0.38 0.38 0.37 
ALLL as a percentage of loans and leases HFI
1.49 1.43 1.37 1.34 1.34 
Ratio of ALLL to NPLs
3.2x3.0x3.8x3.7x3.8x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)
0.04 %0.04 %0.04 %0.04 %0.04 %
(1)Includes LHFS.
(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio because collection of principal and interest is reasonably assured, or the ratio might not be comparable to other periods presented or to other portfolios that do not have government guarantees.

Table 9: Asset Quality Ratios (Continued)
As of/For the Year-to-Date
Three Months EndedPeriod Ended Sept. 30
Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 202220232022
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial0.17 %0.23 %0.15 %0.08 %0.02 %0.18 %0.02 %
CRE1.31 0.62 0.09 0.19 (0.01)0.68 (0.03)
Commercial construction(0.03)(0.02)(0.04)(0.06)(0.10)(0.03)(0.07)
Consumer:
Residential mortgage0.05 (0.01)— (0.02)0.01 0.01 (0.01)
Home equity(0.10)(0.12)(0.15)(0.01)(0.13)(0.13)(0.14)
Indirect auto1.75 1.28 1.47 1.52 1.15 1.50 1.05 
Other consumer1.37 1.20 1.29 1.11 1.31 1.29 1.16 
Student— 8.67 0.42 0.34 0.40 4.40 0.34 
Credit card3.78 3.66 3.54 3.68 2.80 3.66 2.74 
Total(1)
0.51 0.54 0.37 0.34 0.27 0.47 0.25 
Ratio of ALLL to net charge-offs(2)
2.9x2.6x3.7x4.1x5.0x3.1x5.7x
Ratios are annualized, as applicable.
(1)2Q23 includes 12 basis point impact from student loan portfolio sale.
(2)Excluding the impact from the student loan charge-offs, the ALLL to annualized net charge-offs was 3.4X at June 30, 2023.

Truist Financial Corporation 59

The following table presents activity related to NPAs:
Table 10: Rollforward of NPAs
(Dollars in millions)20232022
Balance, January 1$1,250 $1,163 
New NPAs2,365 1,452 
Advances and principal increases648 307 
Disposals of foreclosed assets(1)
(449)(331)
Disposals of NPLs(2)
(132)(80)
Charge-offs and losses(708)(332)
Payments(1,022)(590)
Transfers to performing status(359)(364)
Other, net(9)15 
Ending balance, September 30$1,584 $1,240 
(1)Includes charge-offs and losses recorded upon sale of $131 million and $87 million for the nine months ended September 30, 2023 and 2022, respectively.
(2)Includes charge-offs and losses recorded upon sale of $31 million and a net gain upon sale of $1 million for the nine months ended September 30, 2023 and 2022, respectively.

CRE and Commercial Construction

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

Our office portfolio, which makes up approximately 17% of total CRE and commercial construction loans, is weighted towards Class A properties as of September 30, 2023. Truist maintains rigorous credit risk management surveillance routines across all loan portfolios. During 2023, Truist performed multiple reviews of the CRE office portfolio. Nonperforming loans in this portfolio have increased in this period.
Table 11: CRE and Commercial Construction by Type
September 30, 2023December 31, 2022
(Dollars in millions)LHFINPLLHFINPL
CRE and commercial construction:
Multifamily$9,161 $30$7,762 $—
Office5,070 2785,258 75
Industrial4,846 34,329 —
Retail4,345 54,668 2
Hotel2,542 —2,965 —
Other
3,115 23,543 5
Total$29,079 $318$28,525 $82

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

ACL

Activity related to the ACL is presented in the following tables:
Table 12: Activity in ACL
Three Months Ended
Nine Months Ended September 30,
(Dollars in millions)Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 202220232022
Balance, beginning of period(1)
$4,879 $4,761 $4,649 $4,455 $4,434 $4,649 $4,695 
Provision for credit losses497 558 482 467 234 1,537 310 
Charge-offs:       
Commercial and industrial(98)(107)(75)(44)(51)(280)(99)
CRE(77)(35)(6)(11)— (118)(2)
Commercial construction— — — — — — (1)
Residential mortgage(8)(1)(1)(1)(4)(10)(8)
Home equity(4)(2)(2)(6)(3)(8)(7)
Indirect auto(135)(115)(127)(129)(103)(377)(282)
Other consumer(120)(104)(105)(96)(109)(329)(285)
Student— (103)(5)(5)(7)(108)(17)
Credit card(55)(53)(51)(53)(42)(159)(123)
Total charge-offs(497)(520)(372)(345)(319)(1,389)(824)
Recoveries:       
Commercial and industrial28 13 13 14 43 54 73 
CRE2 — 1 1 — 3 7 
Commercial construction— — 1 1 2 1 4 
Residential mortgage1 2 2 3 3 5 13 
Home equity7 5 6 6 8 18 19 
Indirect auto25 31 26 21 21 82 70 
Other consumer20 20 17 17 21 57 62 
Student— — — 1 — — — 
Credit card9 9 9 8 8 27 26 
Total recoveries92 80 75 72 106 247 274 
Net charge-offs(405)(440)(297)(273)(213)(1,142)(550)
Other(2)
(1)— (73)— — (74)— 
Balance, end of period$4,970 $4,879 $4,761 $4,649 $4,455 $4,970 $4,455 
ACL:(1)
ALLL$4,693 $4,606 $4,479 $4,377 $4,205 
RUFC277 273 282 272 250 
Total ACL$4,970 $4,879 $4,761 $4,649 $4,455 
(1)Excludes provision for credit losses and allowances related to other financial assets at amortized cost.
(2)The first quarter of 2023 includes the impact from the adoption of the Troubled Debt Restructurings and Vintage Disclosures accounting standard.

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

Truist Financial Corporation 61

The following table presents an allocation of the ALLL. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases.
Table 13: Allocation of ALLL by Category
September 30, 2023December 31, 2022
(Dollars in millions)Amount% ALLL in Each Category% Loans in Each CategoryAmount% ALLL in Each Category% Loans in Each Category
Commercial and industrial$1,351 28.8 %51.5 %$1,409 32.3 %50.3 %
CRE605 12.9 7.2 224 5.1 7.0 
Commercial construction165 3.5 2.0 46 1.1 1.8 
Residential mortgage301 6.4 17.7 399 9.1 17.4 
Home equity86 1.8 3.2 90 2.0 3.3 
Indirect auto945 20.1 7.6 981 22.4 8.6 
Other consumer866 18.5 9.2 770 17.6 8.5 
Student— — — 98 2.2 1.6 
Credit card374 8.0 1.6 360 8.2 1.5 
Total ALLL4,693 100.0 %100.0 %4,377 100.0 %100.0 %
RUFC277  272  
Total ACL$4,970  $4,649  

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

Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. Truist estimates credit losses on second lien loans where the first lien is delinquent based on historical experience; the increased risk of loss on these credits is reflected in the ALLL. As of September 30, 2023, Truist held or serviced the first lien on 32% of its second lien positions.

Other Assets

The components of other assets are presented in the following table:
Table 14: Other Assets as of Period End
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Bank-owned life insurance$7,694 $7,618 
Tax credit and other private equity investments7,449 6,825 
Prepaid pension assets5,964 4,539 
DTAs3,545 3,027 
Accounts receivable2,659 2,682 
Accrued income2,335 2,265 
Leased assets and related assets1,914 2,082 
FHLB stock1,284 1,279 
ROU assets1,112 1,193 
Prepaid expenses1,143 1,162 
Equity securities at fair value330 898 
Derivative assets749 684 
Other615 874 
Total other assets$36,793 $35,128 

62 Truist Financial Corporation

Funding Activities

Deposits

The following table presents average deposits:
Table 15: Average Deposits
Three Months Ended
(Dollars in millions)Sep 30, 2023Jun 30, 2023Mar 31, 2023Dec 31, 2022Sep 30, 2022
Noninterest-bearing deposits$118,905 $123,728 $131,099 $141,032 $146,041 
Interest checking101,252 102,105 108,886 110,001 111,645 
Money market and savings139,961 138,149 139,802 144,730 147,659 
Time deposits40,920 35,844 28,671 17,513 14,751 
Total average deposits$401,038 $399,826 $408,458 $413,276 $420,096 

Average deposits for the third quarter of 2023 were $401.0 billion, an increase of $1.2 billion, or 0.3%, compared to the prior quarter.

Average noninterest-bearing deposits decreased 3.9% compared to the prior quarter and represented 29.6% of total deposits for the third quarter of 2023 compared to 30.9% for the second quarter of 2023 and 34.8% compared to the year ago quarter. Average time deposits increased 14% due to increases in retail client time deposits, primarily due to migration from other deposit products, and brokered time deposits. Average brokered deposits were $33.0 billion, up $6.8 billion compared to the prior quarter.

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

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

Borrowings

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

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $41.2 billion at September 30, 2023, a decrease of $2.0 billion compared to December 31, 2022. During the nine months ended September 30, 2023, the Company had:

•Maturities and redemptions of $4.5 billion of senior notes.
•Issued $6.3 billion fixed-to-floating rate senior notes with interest rates between 4.87% and 6.05% due from June 8, 2027 to June 8, 2034.
•Net redemptions of $3.2 billion of FHLB floating rate advances as issuances in the first quarter of 2023 were more than offset by redemptions in the second and third quarters.

Truist Financial Corporation 63

Shareholders’ Equity

Truist’s book value per common share and TBVPS are presented in the following table:
Table 16: Book Value per Common Share
(Dollars in millions, except per share data, shares in thousands)Sep 30, 2023Dec 31, 2022
Common equity per common share$41.37 $40.58 
Non-GAAP capital measure:(1)
  
Tangible common equity per common share$19.25 $18.04 
Calculation of tangible common equity:(1)
  
Total shareholders’ equity$62,007 $60,537 
Less:  
Preferred stock6,673 6,673 
Noncontrolling interests167 23 
Goodwill and intangible assets, net of deferred taxes29,491 29,908 
Tangible common equity$25,676 $23,933 
Common shares outstanding at end of period1,333,668 1,326,829 
(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess profitability, returns relative to balance sheet risk, and shareholder value.

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

Risk Management

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

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

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

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

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

Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures under the section titled “Risk Management.”

Market Risk

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

64 Truist Financial Corporation

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

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

Interest Rate Market Risk

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

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

Deposit betas (the sensitivity of deposit rate changes relative to market rate changes) are an important assumption in the interest rate risk modeling process. Truist applies deposit beta assumptions to non-maturity interest-bearing deposit accounts when determining its interest rate sensitivity. Non-maturity, interest-bearing deposit accounts include interest checking accounts, savings accounts, and money market accounts that do not have a contractual maturity. Truist applies an average deposit beta of approximately 50% to its interest-bearing accounts when determining its interest rate sensitivity, which is consistent with Truist’s long-term expectations. Truist also regularly conducts sensitivity analyses on other key variables, including noninterest-bearing deposits, to determine the impact these variables could have on the Company’s interest rate risk position. The predictive value of the simulation model depends upon the accuracy of the assumptions, but management believes that it provides helpful information for the management of interest rate risk.

The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next 12 months assuming a gradual change in interest rates as described below.

Table 17: Interest Sensitivity Simulation Analysis
Interest Rate ScenarioAnnualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)Prime Rate
Sep 30, 2023Sep 30, 2022Sep 30, 2023Sep 30, 2022
Up 1009.50 %7.25 %(1.03)%0.37 %
Up 509.00 6.75 (0.67)0.39 
No Change8.50 6.25 — — 
Down 50
8.00 5.75 0.11 (1.77)
Down 100
7.50 5.25 0.29 (2.43)

Net interest income is liability sensitive as elevated rates and quantitative tightening have led to a reduction in deposits, rotation into interest bearing deposits, and higher deposit betas.

Interest rate scenarios in table 17 assume no change in deposit mix. Further rotation from non-interest bearing into interest bearing deposits would increase the liability sensitivity of Truist’s balance sheet.

Management considers how the interest rate risk position could be impacted by changes in balance sheet mix.

The following table shows the results of Truist’s interest-rate sensitivity position assuming the loss of additional demand deposits and an associated increase in managed rate deposits versus current projections under various interest rate scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%
Truist Financial Corporation 65

.
Table 18: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)
Base Scenario at September 30, 2023(1)
Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
$20 Billion$40 Billion
Up 100(1.03)%(1.81)%(2.58)%
Up 50(0.67)(1.23)(1.80)
(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at September 30, 2023 as presented in the preceding table.

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

LIBOR Transition

The remaining tenors of U.S. dollar LIBOR ceased publication on June 30, 2023. Truist provided timely notices and information to impacted clients about the transition to new interest rates post cessation. Most contracts were transitioned to new rates in July and August 2023. A small number of contracts utilize longer tenor LIBOR rates and will transition by late 2023 (3-month LIBOR) or early 2024 (6-month and 12-month LIBOR) based on contractual agreements. Truist 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 contracts remaining without fallback language, Truist leveraged the LIBOR Act and corresponding safe harbor provision to transition these loans to SOFR. Truist’s adjustable-rate mortgage products had consistent and adequate fallback language to transition to SOFR, based on lender discretion and as supported by the LIBOR Act; therefore, these contracts did not require remediation. For many consumer lending portfolios, LIBOR transitioned to the SOFR rate specified in the LIBOR Act and the rules promulgated thereunder by the FRB and 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” in Truist’s Annual Report on Form 10-K for information about preferred stock using LIBOR.

66 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 comprehensive risk management approach, which includes measuring risk using VaR, stress testing, and sensitivity analysis. Risk metrics are monitored against a suite of limits on a daily basis at both the trading desk level and at the aggregate portfolio level, which is intended to ensure that exposures are in line with Truist’s risk appetite.

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

Covered Trading Positions

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

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

Securitizations

As of September 30, 2023, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $91 million, all of which were non-agency asset backed securities positions. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics including, but not limited to, deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s comprehensive risk management framework, which includes daily monitoring against a suite of limits. There were no off-balance sheet securitization positions during the reporting period.

Correlation Trading Positions

The trading portfolio of covered positions did not contain any correlation trading positions as of September 30, 2023.

VaR-Based Measures

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

The trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, and the correlation between different positions. A portfolio of trading positions is typically less risky than the sum of the risk from each of the individual sub-portfolios, because, under normal market conditions, risk within each category partially offsets the exposure to other risk categories. The following table summarizes certain VaR-based measures for the three months and nine months ended September 30, 2023 and 2022. Average one and ten-day VaR measures for the three months ended September 30, 2023 increased from the same period of last year, primarily driven by higher market making inventory.
Truist Financial Corporation 67

Table 19: VaR-based Measures
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(Dollars in millions)10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period
VaR-based Measures:
Maximum$22 $9 $27 $7 $24 $9 $38 $14 
Average18 7 18 5 17 6 17 5 
Minimum15 5 13 4 10 4 6 3 
Period-end17 7 20 6 17 7 20 6 
VaR by Risk Class:
Interest Rate Risk6 8 6 8 
Credit Spread Risk6 7 6 7 
Equity Price Risk4 2 4 2 
Foreign Exchange Risk— — — — 
Portfolio Diversification(10)(11)(10)(11)
Period-end6 6 6 6 

Stressed VaR-based measures

Stressed VaR, another component of market risk capital, is calculated using the same internal models as used for the VaR-based measure. Stressed VaR is calculated over a ten-day holding period at a one-tail, 99% confidence level and employs a historical simulation approach based on a continuous twelve-month historical window selected to reflect a period of significant financial stress for the Company’s trading portfolio. The following table summarizes Stressed VaR-based measures:
Table 20: Stressed VaR-based Measures - 10 Day Holding Period
Three Months Ended September 30,Nine Months Ended September 30,
(Dollars in millions)2023202220232022
Maximum$130 $91 $130 $109 
Average85 65 61 69 
Minimum44 48 25 40 
Period-end119 65 119 65 

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

Specific Risk Measures

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

VaR Model Backtesting

In accordance with the Market Risk Rule, the Company evaluates the accuracy of its VaR model through daily backtesting by comparing aggregate daily trading gains and losses (excluding fees, commissions, reserves, net interest income, and intraday trading) from covered positions with the corresponding daily VaR-based measures generated by the model. As illustrated in the following graph, there were no Company-wide VaR backtesting exceptions during the twelve months ended September 30, 2023. The total number of Company-wide VaR backtesting exceptions over the preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.
68 Truist Financial Corporation

12664
Model Risk Oversight

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

Stress Testing

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

Liquidity

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

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

Truist Financial Corporation 69

Internal Liquidity Stress Testing

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

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

Contingency Funding Plan

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

LCR and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of stress. Eligible HQLA, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy operational requirements of the LCR rule. Truist and Truist Bank are subject to the Category III reduced LCR requirements. Truist held average weighted eligible HQLA of $83.8 billion and Truist’s average LCR was 110% for the three months ended September 30, 2023.

Effective July 2021, Truist became subject to final rules implementing the NSFR, which are designed to ensure that banking organizations maintain a stable, long-term funding profile in relation to their asset composition and off-balance sheet activities. At September 30, 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 21: Selected Liquidity Sources
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Unused borrowing capacity:
FRB$54,633 $49,250 
FHLB23,615 20,770 
Available investment securities (after haircuts)
73,010 85,401 
Available secured borrowing capacity151,258 155,421 
Eligible cash at the FRB24,177 15,556 
Total$175,435 $170,977 

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

70 Truist Financial Corporation

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 or the Bank (as may be permitted by the terms of each respective series). See “Note 22. Parent Company Financial Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding dividends from subsidiaries and debt transactions.

Access to funding at the Parent Company is more sensitive to market disruptions. Therefore, Truist prudently manages cash levels at the Parent Company to cover a minimum of one year of projected cash outflows which includes unfunded external commitments, debt service, common and preferred dividends and scheduled debt maturities, without the benefit of any new cash inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, serving as a source of strength to Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At September 30, 2023 and December 31, 2022, the Parent Company had 42 months and 37 months, respectively, of cash on hand to satisfy projected cash outflows, and 25 months and 22 months, respectively, when including the payment of common stock dividends.

Credit Ratings

Credit ratings are forward-looking opinions of rating agencies as to the Company’s ability to meet its financial commitments and repay its securities and obligations in accordance with their terms of issuance. Credit ratings influence both borrowing costs and access to the capital markets. The Company’s credit ratings are continuously monitored by the rating agencies and are subject to change at any time. As Truist seeks to maintain high-quality credit ratings, management meets with the major rating agencies on a regular basis to provide financial and business updates and to discuss current outlooks and trends. See Item 1A, “Risk Factors” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding factors that influence credit ratings and potential risks that could materialize in the event of downgrade in the Company’s credit ratings: Recent changes in the Company’s credit ratings and outlooks include:

•On March 31, 2023, S&P Global Ratings affirmed the ratings of Truist and Truist Bank and revised the outlook on those ratings to “stable” from “positive,” citing heightened market volatility in the wake of recent bank failures and, with inflation still elevated, higher uncertainty, and greater downside risk in the economic outlook. The change in outlook was part of a broader action by S&P Global Ratings whereby the “positive” outlook on three other large U.S. banks was revised to “stable.”
•On August 7, 2023, Moody’s Investors Service placed the long-term ratings and certain short-term ratings of Truist and Truist Bank “under review for downgrade,” citing Truist’s comparatively low, though improving, level of capitalization, along with weaknesses in asset-liability management. The review also reflects Moody’s Investor Service view that the stability of U.S. banks’ deposit funding has declined, as reflected in the agency’s decision to lower the U.S. macro profile.
•On August 11, 2023, DBRS, Inc. affirmed the ratings of Truist and Truist Bank and maintained a “stable” ratings outlook, citing Truist’s highly scaled and diversified regional banking franchise, conservative risk profile, and sound liquidity management and capital levels. In affirming the ratings, DBRS, Inc. also noted the ratings take into account the more challenging operating environment and the expectation that funding costs and asset quality metrics could worsen from current levels, providing some pressure to earnings, and that credit deterioration associated with normalization of the credit cycle would be manageable.
•On August 21, 2023, S&P Global Ratings affirmed the ratings of Truist and Truist Bank and maintained a “stable” ratings outlook, citing Truist’s strong market position and diversified business model as a substantial offset to deposit and margin pressures. S&P Global Ratings viewed Truist’s capital ratios unfavorably after considering unrealized losses on securities but also wrote that Truist has the earnings capacity to build its capital ratios and support franchise growth over time.
•After the end of the third quarter, on October 16, 2023, Fitch Ratings affirmed the ratings of Truist and Truist Bank and revised the ratings outlook to “negative” from “stable.” In affirming Truist’s ratings, Fitch Ratings cited the company’s diverse revenue model, solid asset quality, and expected capital build over the rating horizon; however, “negative” ratings outlook reflects the view of Fitch Ratings that Truist currently has less “headroom” to face increasing earnings pressures than similarly-rated peers.

Truist Financial Corporation 71

Capital

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

Truist regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plans and stress testing results to the banking regulators. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, management’s objective is to maintain capital at levels that are in excess of internal capital limits, which are above the regulatory “well capitalized” minimums. Management has implemented internal stress capital ratio minimums to evaluate whether capital ratios calculated after the effect of alternative capital actions are likely to remain above internal minimums. Breaches of internal stressed minimums prompt a review of the planned capital actions included in Truist’s capital plan.
Table 22: Capital Requirements
 Minimum CapitalWell Capitalized
Minimum Capital Plus Stress Capital Buffer(1)
 TruistTruist Bank
CET1
4.5 %NA6.5 %7.0 %
Tier 1 capital6.0 6.0 %8.0 8.5 
Total capital8.0 10.0 10.0 10.5 
Leverage ratio4.0 NA5.0 NA
Supplementary leverage ratio3.0 NANANA
(1)Reflects Truist’s SCB requirement, received in the CCAR 2022 process, of 2.5% applicable from October 1, 2022 through September 30, 2023. Beginning on October 1, 2023, through September 30, 2024, Truist will be subject to a 2.9% SCB received in the CCAR 2023 process.

Truist’s capital ratios are presented in the following table:
Table 23: Capital Ratios - Truist Financial Corporation
(Dollars in millions)Sep 30, 2023Dec 31, 2022
Risk-based:(preliminary) 
CET19.9 %9.0 %
Tier 1 capital11.4 10.5 
Total capital13.5 12.4 
Leverage ratio9.2 8.5 
Supplementary leverage ratio7.8 7.3 
Risk-weighted assets$428,682 $434,413 

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

Truist’s CET1 ratio was 9.9% as of September 30, 2023. The increase since June 30, 2023 resulted from organic capital generation and RWA optimization.

Truist completed the 2023 CCAR process and received the SCB requirement of 2.9% for the period October 1, 2023 to September 30, 2024.

72 Truist Financial Corporation

Share Repurchase Activity

Table 24: Share Repurchase Activity
(Dollars in millions, except per share data, shares in thousands)
Total Number of Shares Purchased(1)
Average Price Paid Per Share(2)
Total Number of Shares Purchased as part of Publicly Announced Plans(3)
Approximate Dollar Value of Shares that may yet be Purchased Under the Plans(3)
July 1, 2023 to July 31, 2023— $— — $4,100 
August 1, 2023 to August 31, 2023— — — 4,100 
September 1, 2023 to September 30, 2023— — — — 
Total— $— — 
(1)Includes shares exchanged or surrendered in connection with the exercise of equity-based awards under equity-based compensation plans.
(2)Excludes commissions.
(3)The repurchase authority previously approved by the Board of Directors expired on September 30, 2023.

Critical Accounting Policies

The accounting and reporting policies of Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Truist’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities, and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in the consolidated financial position and/or consolidated results of operations, and related disclosures. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets; income taxes; and pension and postretirement benefit obligations. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. The critical accounting policies are discussed in MD&A in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1. Basis of Presentation” in Form 10-K for the year ended December 31, 2022. Disclosures regarding the effects of new accounting pronouncements are included in “Note 1. Basis of Presentation” in this report. There have been no changes to the significant accounting policies during 2023.

Goodwill and Other Intangible Assets

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

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

Multi-year financial forecasts are developed for each reporting unit by considering several inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital. The projection of net interest margin and noninterest expense are the most significant inputs to the financial projections of the CB&W and C&CB reporting units. The long-term growth rate used in determining the terminal value of each reporting unit was 3% as of August 1, 2023, based on management’s assessment of the minimum expected terminal growth rate of each reporting unit. Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk adjustments specific to a particular reporting unit. The discount rates are also calibrated based on risks related to the projected cash flows of each reporting unit. The discount rates utilized for the CB&W, C&CB, and IH reporting units as of August 1, 2023 were 12.5%, 11.5%, and 10.0%, respectively.
Truist Financial Corporation 73


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

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

The Company monitored events and circumstances during the period from August 1, 2023 through September 30, 2023, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, a comparison of management’s forecast and assumptions to those used in its August 1, 2023 quantitative impairment test, and the sensitivity of the August 1, 2023 quantitative test results to changes in assumptions through September 30, 2023. Based on these considerations, management concluded that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of September 30, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

74 Truist Financial Corporation

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Truist’s Annual Report on Form 10-K for the year ended December 31, 2022. Additional risks and uncertainties not currently known to Truist or that management has deemed to be immaterial also may materially adversely affect Truist’s business, financial condition, or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASE OF EQUITY SECURITIES

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

ITEM 5. OTHER INFORMATION

(c) During the three months ended September 30, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Truist Financial Corporation 75

ITEM 6. EXHIBITS
Exhibit No.DescriptionLocation
3.1Bylaws of Truist Financial Corporation, as Amended and Restated, Effective September 27, 2023.
10.1*
Sixth Amendment to the Truist Financial Corporation Pension Plan (October 1, 2020 Restatement)
10.2*
Fifth Amendment to the Truist Financial Corporation 401(k) Savings Plan (August 1, 2020 Restatement)
11Statement re computation of earnings per share.
31.1Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.Filed herewith.
101.SCHXBRL Taxonomy Extension Schema.Filed herewith.
101.CALXBRL Taxonomy Extension Calculation Linkbase.Filed herewith.
101.LAB
XBRL Taxonomy Extension Label Linkbase.
Filed herewith.
101.PREXBRL Taxonomy Extension Presentation Linkbase.Filed herewith.
101.DEFXBRL Taxonomy Definition Linkbase.Filed herewith.
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits101).Filed herewith.
*    Management compensatory plan or arrangement.
76 Truist Financial Corporation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
TRUIST FINANCIAL CORPORATION
(Registrant)
Date:October 30, 2023By:/s/ Michael B. Maguire
  Michael B. Maguire
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:October 30, 2023By:/s/ Cynthia B. Powell
  Cynthia B. Powell
Executive Vice President and Corporate Controller
(Principal Accounting Officer)

Truist Financial Corporation 77

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