Truist Financial (TFC) 10-K risk factor changes: FY2021 vs FY2020

*•*The effects of COVID-19 have adversely [removed: impacted, and will likely continue to adversely impact,] [added: impacted] the [removed: Company's financial condition] [added: Company’s operations; the duration] and [removed: results] [added: impact] of [removed: operations.][added: these effects is still unknown.]

*•*Changes in interest rates could adversely affect revenue and expenses, the value of assets and liabilities, as well as the availability and cost of capital, [removed: cash flows] and liquidity.

*•*The monetary and fiscal policies of the [added: U.S.] federal government [removed: and its agencies] could have a material adverse effect on profitability.

*•*Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on the [removed: Company's operations, earnings] [added: Company’s results of operations] and financial condition.

*•*The Company may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower [removed: type] [added: type,] or location of the borrower or collateral.

[removed: *•*Truist's] [added: *•*Truist’s] liquidity could be impaired by an inability to access short-term [removed: funding or] [added: funding,] an unforeseen outflow of [removed: cash.][added: cash, or the inability to monetize liquid assets.]

[removed: *•*Loss] [added: - Loss] of deposits or a change in deposit mix could increase [removed: Truist's] [added: Truist’s] funding costs.

*•*Any reduction in the [removed: Company's] [added: Company’s] credit [removed: rating] [added: ratings] could increase the [added: Company’s] cost of [removed: the Company's] funding [removed: from] [added: or reduce its access to] the capital markets.

*•*The Parent Company [removed: has] [added: could have] less access to funding sources and its liquidity could be constrained if the Bank becomes unable to pay dividends during a time of stress.

*•*Truist is subject to extensive and evolving government regulation and supervision, which could increase the cost of doing business, limit [removed: Truist's] [added: Truist’s] ability to make investments and generate [removed: revenue] [added: revenue,] and lead to costly enforcement actions.

*•*Truist is subject to regulatory capital and liquidity standards that affect the [removed: Company's] [added: Company’s] business, [removed: operations] [added: operations,] and ability to pay [removed: dividends] [added: dividends,] or otherwise return capital to shareholders.

*•*Competition may reduce [removed: Truist's] [added: Truist’s] client base or cause Truist to modify pricing for products and [removed: services in order to maintain market share.][added: services.]

*•*Scrutiny of the [removed: Company's] [added: Company’s] sales, [removed: training] [added: training,] and incentive compensation practices could damage the Company’s reputation and adversely impact business and revenues.

*•*Truist depends on the expertise of key [removed: personnel.][added: teammates.]

*•*The Company may not be able to hire or retain additional qualified [removed: personnel] [added: teammates] and recruiting and compensation costs may increase as a result of changes in the marketplace, which may increase costs and adversely impact the [removed: Company's] [added: Company’s] ability to implement business strategies.

*•*Natural disasters and other catastrophic [removed: events] [added: events, which may increase in frequency and intensity due to climate change,] could have a material adverse impact on the Company’s operations or the Company’s financial condition and results.

*•*The [removed: Company's] [added: Company’s] accounting policies and processes are critical to how [removed: it reports] the [removed: Company's] [added: Company reports its] financial condition and results of [removed: operations.][added: operations and require management to make estimates about matters that are uncertain.]

*•*The Company faces cybersecurity risks, including denial of service, [removed: hacking] [added: hacking,] and [removed: social engineering attacks that] [added: malware or ransomware attacks, which] could result in the disclosure of confidential information, adversely affect the [removed: Company's] [added: Company’s] operations or [removed: reputation] [added: reputation,] and create significant legal and financial exposure.

*•*Truist will continually encounter technological change and must effectively [removed: develop] [added: anticipate, develop,] and implement new technology.

Additional risks that are not presently known or risks deemed immaterial may have a material adverse effect on Truist's financial condition, results of operations, [removed: business] [added: business,] and prospects.

Truist may encounter difficulties [removed: during integration,] [added: as it completes integration activities,] such as:

- unexpected issues with costs, operations, [removed: personnel,] [added: teammates,] technology; and

- problems with the assimilation of new operations, [removed: sites] [added: sites,] or [removed: personnel.][added: teammates.]

In addition, general market and economic conditions or governmental actions affecting the financial industry may inhibit the [removed: Company's successful] [added: Company’s continued] integration of [removed: these] [added: the heritage] entities.

BB&T and SunTrust merged with the expectation that the Merger would result in various synergies, including benefits relating to enhanced revenues, a strengthened and expanded market position for the combined organization, technology efficiencies, cost [removed: savings] [added: savings,] and operating efficiencies.

Achieving the anticipated benefits of the Merger is subject to a number of uncertainties, including whether the Company [removed: integrates] [added: continues] the [added: integration of the] institutions in an efficient and effective manner, as well as general competitive factors in the marketplace.

There [removed: are a large number of] [added: continue to be] processes, policies, procedures, operations, [removed: technologies] [added: technologies,] and systems that must be [removed: integrated.][added: integrated or decommissioned.]

The amount and timing of future charges to earnings as a result of Merger or integration expenses [removed: are] [added: remain] uncertain.

*The effects of COVID-19 have adversely [removed: impacted, and will likely continue to adversely impact,] [added: impacted] the [removed: Company's financial condition] [added: Company’s operations; the duration] and [removed: results] [added: impact] of [removed: operations.*][added: these effects is still unknown.*]

The effects of the pandemic [removed: have already] [added: initially] resulted in an increase in the allowance for credit losses, a reduction of fee income, a reduction of net interest [removed: margin] [added: margin, a decrease in demand for certain types of loans,] and an increase in expenses.

[removed: Prolonged continuation] [added: A resurgence] of [removed: current conditions] [added: the pandemic] could [added: reintroduce or continue to] worsen these impacts and also affect the [removed: Company's] [added: Company’s] capital and liquidity position, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause an outflow of deposits, [removed: cause significant property damage, in case of civil unrest or vandalism,] influence the recognition of credit losses on loans and securities and further increase the allowance for credit losses, result in additional lost revenue, cause additional increases in expenses, result in goodwill impairment charges, result in the impairment of other financial and nonfinancial assets, and increase the [removed: Company's] [added: Company’s] cost of capital.

Truist participated in the SBA's [removed: PPP, which was recently expanded to permit a second round of funding,] [added: PPP] as an eligible lender with the benefit of a government guaranty of loans to small business clients, many of whom may face difficulties even after being granted such a loan.

The Company faces increased risks, in terms of credit, fraud [removed: risk] [added: risk,] and litigation, in light of participation in this program.

*Changes in interest rates could adversely affect revenue and expenses, the value of assets and liabilities, as well as the availability and cost of capital, [removed: cash flows] and liquidity.*

When interest rates rise, funding costs may rise faster than the yield the Company earns on assets, causing [removed: net] interest margin to contract.

[removed: Further,] Truist cannot predict the nature or timing of future changes in monetary policies [removed: in response to the COVID-19 pandemic] or the [added: precise] effects that they may have on the [removed: Company's] [added: Company’s] activities and financial results.

*The monetary and fiscal policies of the [added: U.S.] federal government [removed: and its agencies] could have a material adverse effect on profitability.*

- artificially inflate asset values during prolonged periods of accommodative policy, which could in turn cause volatile markets and rapidly declining collateral [removed: values.][added: values during times of restrictive monetary and fiscal policies.]

Truist earns fee income from, among other activities, managing assets for [removed: clients] [added: clients,] and providing brokerage and other investment advisory and wealth management services.

*Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on the [removed: Company's operations, earnings] [added: Company’s results of operations] and financial condition.*

Climate Risks

*•*Physical, transition, or other risks associated with climate change have the potential to negatively impact operations, business results, and clients.

*•*The Company faces risks associated with quality, availability and retention of key data for operational, strategic, and compliance purposes.

Since the closing of the Merger, Truist has expended significant time and resources, and incurred substantial expenses, in the integration of systems, operations, and teammates of BB&T and SunTrust.

Although many integration milestones have been achieved, important integration steps remain to be completed.

In addition, the core bank conversion of heritage SunTrust clients occurred in February 2022.

Conversion activities remain subject to validation, and issues related to this and other conversions may not be discovered until a later date.

Additionally, systems that are no longer being used may still need to be retained for a period of time.

Although the global economy has begun to recover from the COVID-19 pandemic, as many health and safety restrictions have been lifted and vaccine distribution has increased, certain adverse consequences of the pandemic continue to impact the macroeconomic environment and may persist, including labor shortages and disruptions of global supply chains.

The growth in economic activity and demand for goods and services, alongside labor shortages and supply chain complications, has also contributed to rising inflationary pressures.

Since the onset of the pandemic, the majority of the Company’s workforce has been working remotely, which may increase cybersecurity risks to the Company.

Certain industries have been particularly susceptible to the effects of the pandemic, including industries where Truist has outstanding loans to clients.

Since the inception of the COVID-19 pandemic governmental authorities enacted regulations, and protocols, including governmental programs to provide economic relief to businesses and individuals.

The extent to which the consequences of the COVID-19 pandemic affect the Company’s financial condition, results of operation, and liquidity and capital position will depend on future developments, which are highly uncertain and cannot be predicted, including the rate of distribution and administration of vaccines globally, the severity and duration of any resurgence of COVID-19 variants, future actions taken by governmental authorities, central banks and other third parties in response to the pandemic, and the effects on customers, counterparties, employees and third-party service providers.

Climate Risks

*Physical, transition, or other risks associated with climate change have the potential to negatively impact operations, business results, and clients.*

There is an increasing concern over the risks of climate change and related environmental sustainability matters.

Climate change presents (i) physical risks from the direct impacts of changing climate patterns and acute weather events, such as damage to physical assets and service disruptions, and (ii) transition risks from changes in regulations, disruptive technologies, and shifting market dynamics towards a lower carbon economy.

The physical risks of climate change include discrete events, such as flooding, hurricanes, tornadoes, and wildfires, and longer-term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought.

Such events could also disrupt the Company’s operations or those of its clients or third parties the Company relies on, not only through direct damage to assets, but also from indirect impacts due to supply chain disruption and market volatility.

Additionally, transitioning to a low-carbon economy will entail extensive policy, legal, technology, and market initiatives.

Additionally, the Company faces potential reputational risks as a result of its practices related to climate change, including as a result of the Company’s direct or indirect involvement in certain industries, as well as any decisions management makes in response to managing climate risk.

As climate risk is interconnected with all key risk types, Truist continues to embed climate risk considerations into risk management strategies.

Due to the level of uncertainty around the future path of climate change, the Company’s risk management strategies may not be effective in fully mitigating climate risk exposures.

Truist’s balance sheet can be sensitive to movements in market interest rates and spreads.

While interest rates remain low, the FRB is expected to begin raising interest rates during 2022.

Elevated inflation and expectations for elevated future inflation can adversely impact economic growth, consumer and business confidence, and the Company’s financial condition and results.

In addition, elevated inflation may cause unexpected changes in monetary policies and actions which may adversely affect confidence, the economy, and the Company’s financial condition and results.

In addition, global demand for products may exceed supply during the economic recovery from the COVID-19 pandemic, and such shortages may cause inflation, adversely impact consumer and business confidence, and adversely affect the economy as well as the Company’s financial condition and results.

A transition away from the widespread use of LIBOR to alternative rates and other potential interest rate benchmark reforms will continue over the course of the next few years.

Truist will also support “credit sensitive” alternatives, such as Bloomberg Short Term Bank Yield and other alternatives as they develop in the market.

At this time, it is impossible to predict whether SOFR will become an accepted alternative to LIBOR.

Credit ratings are influenced by many factors, including the Company’s profitability, asset quality, capital levels, liquidity, business mix, operations, and risk management practices.

Credit ratings may also be influenced by other factors, some of which are outside the Company’s control, such as recent and anticipated economic trends, geopolitical risk, legislative and regulatory developments, including implied levels of government support during a crisis, environmental, social, and governance considerations, and litigation, as well as changes to the rating agencies’ methodologies, among others.

Under the current presidential administration and Congress, the Company and other large financial institutions are becoming subject to increased scrutiny, more intense supervision and regulation, and a higher risk of enforcement action.

Financial regulators’ prudential and supervisory authority gives them broad power and discretion to direct Truist’s actions, and they have assumed an active oversight, examination, and enforcement role across the financial services industry on both the federal and state levels.

During November 2019, SunTrust Bank entered into a consent order with the FRB, relating to certain identified legacy compliance issues, and requiring certain remediation actions and the verification of such actions regarding the identified issues.

In June 2021, the FDIC terminated this consent order.

Additionally, misconduct by teammates, including unethical, fraudulent, improper, or illegal conduct, or other unfair, deceptive, abusive, or discriminatory practices, can result in litigation, or government investigations and enforcement actions, and cause significant reputational harm.

Truist will likely be subject to new and evolving data privacy laws in the U.S. and abroad, which could result in additional costs of compliance, litigation, regulatory fines, and enforcement actions.

They require management to make estimates about matters that are uncertain.

Truist anticipates further integration of systems, operations, and personnel of BB&T and SunTrust over the next couple of years.

The successful integration of BB&T's and SunTrust's operations will depend substantially on the Company's ability to successfully consolidate operations, management teams, corporate cultures, systems and procedures and to eliminate redundancies and costs.

These expenses could, particularly in the near term, exceed the expected savings from the elimination of duplicative expenses and the realization of economies of scale.

The COVID-19 pandemic has severely disrupted almost all economic activity in the U.S. Despite the partial lifting of federal and state shelter-in-place orders, some of which have been renewed, it remains unknown when there will be a return to normal economic activity due to

continued significant numbers of new cases, potential impact of new COVID strains, uncertain vaccination rollout timeline, and increased economic stress associated with the pandemic.

Truist temporarily limited access to certain offices, limited branches to drive-thru and appointment only, suspended some services and the majority of the Company's workforce is working remotely, which may increase cybersecurity risks to the Company.

Approximately 90% of branches are open and unlocked, or open with controlled access.

Truist continues to follow appropriate COVID-19 safety protocols, including proper social distancing.

Certain industries have been particularly susceptible to the effects of the pandemic, such as hotels, resorts, cruise lines, oil and gas companies, senior and acute care facilities, restaurants, and other sensitive retail businesses, and Truist has outstanding loans to clients in these industries.

In 2020, several credit rating agencies downgraded their outlook on U.S. banks due in part to the concerns presented by the pandemic.

The global financial markets have also experienced significant volatility.

Intensive government actions to mitigate the economic suffering caused by the pandemic may not be successful or may result in increased pressure on the banking sector.

Net interest margin has been, and is likely to continue to be, affected by the very low interest rate environment.

Truist has been named in several lawsuits relating to its participation in the PPP.

It is possible that the pandemic and its aftermath will lead to a prolonged economic slowdown or recession in the U.S. economy or the world economy in general.

The ultimate impact on the Company's financial condition, results of operation, and liquidity and capital position will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the pandemic and the actions to contain or treat its impact.

Truist’s balance sheet can be sensitive to movements in market interest rates and spreads as well as basis risk arising from the Company's ALM activities, which management must closely monitor.

In addition, in response to the outbreak of COVID-19 pandemic and its economic consequences, the FRB lowered its target for the federal funds rate to a range of 0% to 0.25%.

Low rates increase the risk of a negative interest rate environment, either broadly or for some types of instruments.

For example, in March 2020 the yields on one-month and three-month Treasuries briefly dropped below zero.

A negative interest rate environment could have a material adverse effect on Truist's financial condition and results of operations.

In a negative interest rate environment, some depositors may choose to withdraw their deposits in lieu of paying an interest rate to Truist to hold such deposits.

Negative rates would also diminish the spreads on loans and securities.

A negative change in economic conditions, the performance of foreign sovereign debt, changes of trade policies and other matters could adversely affect the Company's business, financial condition and liquidity.

Domestic and global political activity, geopolitical matters, including international political unrest or disturbances, terrorist activities, military conflicts, concerns over energy prices, trade wars and economic instability or recession in certain regions could cause volatility in the financial markets, undermine investor confidence or cause a contraction of available credit.

Any of these could reduce the value of the Company's assets or cause a reduction in liquidity that adversely impacts the Company's financial condition and results of operations.

LIBOR in its current form was anticipated to no longer be available after 2021.

Timelines and priorities include assessing the impact on the Company's clients, as well as assessing system requirements for operational processes.

Shorter term transition risks arising from regulatory changes or technological breakthroughs may require an acceleration of certain risk mitigation strategies.

Ratings agencies regularly evaluate Truist and its subsidiaries.

Ratings are based on a number of factors, including the financial strength of the Company as well as conditions affecting the financial services industry generally.

It is possible that the new presidential administration and the new Congress could reconsider this rebalancing of the legal and regulatory framework and also impose significant new regulatory and supervisory burdens on the financial sector.

The financial services industry faces scrutiny from bank supervisors in the examination process and stringent enforcement of regulations on both the federal and state levels.

For example, during November 2019, SunTrust Bank entered into a consent order with the FRB in connection with marketing, enrollment and billing practices related to deposit account add-on and similar products provided to certain business customers.

Current and future actions by regulators could impact Truist's operations.

Certain external environmental factors could also impact the Company's strategy.

Claims and legal actions, including supervisory actions by the Company's regulators, could involve large monetary claims and significant defense costs.

They require management to make estimates about matters that are uncertain.*

[removed: This] 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 [removed: Statements and] [added: Statements, the] accompanying Notes to the Consolidated Financial Statements in this Form 10-K, [removed: as well as with the] [added: and] other information contained in this document.

For discussion of [removed: 2019] [added: 2020] results as compared to [removed: 2018] [added: 2019] results, see "Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Annual Report on Form 10-K for the year ended December 31, [removed: 2019.][added: 2020.]

[removed: *Integration Efforts*][added: Integration Efforts]

[removed: -] Truist [removed: reaffirmed] [added: achieved] its [added: fourth quarter 2021 net cost saves target and continues to reaffirm its] commitment to achieving $1.6 billion in net cost saves on a run rate basis by the fourth quarter of 2022.

The carrying value of PPP loans was [removed: $11.0] [added: $2.1] billion [added: and $10.8 billion] as of December 31, [removed: 2020.][added: 2021 and 2020, respectively.]

Net income available to common shareholders totaled [removed: $4.2] [added: $6.0] billion for [removed: 2020,] [added: 2021,] a [removed: 38.2%] [added: 44%] increase from the prior year.

On a diluted per common share basis, earnings for [removed: 2020] [added: 2021] were [removed: $3.08,] [added: $4.47,] compared to [removed: $3.71] [added: $3.08] for [removed: 2019.][added: 2020.]

Truist's results of operations for [removed: 2020] [added: 2021] produced a return on average assets of [removed: 0.90%] [added: 1.23%] and a return on average common shareholders' equity of [removed: 6.82%] [added: 9.7%] compared to prior year ratios of [removed: 1.31%] [added: 0.90%] and [removed: 9.87%,] [added: 6.8%,] respectively.

Results include merger-related and restructuring charges of [removed: $860] [added: $822] million [removed: ($660] [added: ($631] million after-tax) for [removed: 2020] [added: 2021] compared to [removed: $360] [added: $860] million [removed: ($285] [added: ($660] million after-tax) for [removed: 2019,] [added: 2020,] and incremental operating expenses related to the Merger of [removed: $534] [added: $771] million [removed: ($409] [added: ($592] million after-tax) for [removed: 2020] [added: 2021] compared to [removed: $164] [added: $534] million [removed: ($127] [added: ($409] million after-tax) for [removed: 2019.][added: 2020.]

[removed: Additionally, the] [added: The] 2020 results include [added: securities gains of $402 million ($308 million after-tax),] a loss on extinguishment of debt of $235 million ($180 million [removed: after-tax)] [added: after tax),] and charitable contributions of $50 million ($38 million [removed: after-tax), offset by securities gains of $402 million ($308 million] after-tax).

Truist's revenue for [removed: 2020] [added: 2021] was [removed: $22.7] [added: $22.3] billion.

On a TE basis, revenue was [removed: $22.8] [added: $22.4] billion, which represents [removed: an increase] [added: a decrease] of [removed: $10.2 billion] [added: $426 million] compared to [removed: 2019.][added: 2020.]

The [removed: increase] [added: decrease] in net interest income was due primarily to [added: lower purchase accounting accretion and] a [removed: $152.9] [added: $21.1] billion [removed: increase] [added: decrease] in average outstanding loans, [added: partially offset by] a [removed: $32.6] [added: $56.3] billion increase in average [removed: securities, partially offset by] [added: securities as] a [removed: 78 basis point decrease in earning asset yields.][added: result of strong deposit growth.]

NIM was [removed: 3.22%] [added: 2.86%] for [removed: 2020,] [added: 2021,] down [removed: 20] [added: 36] basis points compared to the prior year.

Average earning assets increased [removed: $217.2] [added: $24.4] billion or [removed: 100.4%,] [added: 5.6%,] while average interest-bearing liabilities [removed: increased $153.7] [added: decreased $1.4] billion or [removed: 101.8%,] [added: 0.5%,] and noninterest-bearing deposits increased [removed: $59.1] [added: $24.2] billion or [removed: 106.4%.][added: 21%.]

The TE yield on the total loan portfolio for [removed: 2020] [added: 2021] was [removed: 4.33%,] [added: 3.95%,] down [removed: 66] [added: 38] basis [removed: points compared to the prior year.][added: points.]

The TE yield on the average securities portfolio was [removed: 2.09%,] [added: 1.50%,] down [removed: 53] [added: 59] basis [removed: points compared to the prior year.][added: points.]

The average cost of interest-bearing deposits was [removed: 0.32%,] [added: 0.06%,] down [removed: 61] [added: 26] basis [removed: points compared to the prior year.][added: points.]

The average cost of total deposits was [removed: 0.22%,] [added: 0.04% for the year ended December 31, 2021,] down [removed: 42] [added: 18] basis points compared to the prior year.

The provision for credit losses was [removed: $2.3 billion,] [added: a benefit of $813 million,] compared to [removed: $615 million] [added: a cost of $2.3 billion] for the prior year.

Net charge-offs were [removed: $1.1 billion,] [added: $697 million,] compared to [removed: $634 million] [added: $1.1 billion] for the prior year.

Asset quality ratios were relatively stable at December 31, [removed: 2020] [added: 2021] compared to the prior year, reflecting [removed: diversification benefits of the Merger] [added: Truist’s prudent risk culture, portfolio diversification, improving economic conditions,] and [removed: effective problem asset resolution.][added: the ongoing effects of government stimulus.]

The ratio of the ALLL to net charge-offs was [removed: 5.21X] [added: 6.36X] for [removed: 2020,] [added: 2021,] compared to [removed: 2.44X] [added: 5.21X] in [removed: 2019,] [added: 2020,] reflecting [removed: the CECL adoption build, as well as a reserve build in 2020 in connection with COVID-19 and the economic downturn.][added: lower net charge-offs.]

Excluding merger-related and restructuring charges, incremental operating expenses related to the Merger, the [removed: loss on] [added: impact of the] extinguishment of debt, charitable [removed: contribution] [added: contributions, an acceleration of loss recognition related to certain terminated cash flow hedges, a one-time professional fee expense,] and the impact of [removed: an increase of $521 million of] amortization expense for intangibles, noninterest expense increased [removed: $5.3 billion, primarily reflecting the impact of the Merger.][added: $154 million, or 1.2%.]

Truist's total assets at December 31, [removed: 2020] [added: 2021] were [removed: $509.2] [added: $541.2] billion, an increase of [removed: $36.2] [added: $32.0] billion compared to December 31, [removed: 2019,] [added: 2020,] reflecting a [removed: $46.1] [added: $33.8] billion increase in [removed: AFS] securities, [removed: partially offset by an] [added: a $2.3 billion] increase in [removed: ALLL of $4.3 billion,] [added: securities borrowed or purchased under agreements to resell,] a [removed: decrease in LHFS of $2.3] [added: $2.1] billion [added: increase in goodwill] and [added: intangible assets, partially offset by] a decrease [removed: in other assets] of [removed: $1.2] [added: loans and leases HFI, net of ALLL, of $8.8] billion.

Total liabilities at December 31, [removed: 2020] [added: 2021] were [removed: $438.3] [added: $472.0] billion, an increase of [removed: $31.8] [added: $33.7] billion from the prior year, reflecting an increase of [removed: $46.4] [added: $35.4] billion in deposits, partially offset by a decrease of [removed: $12.1] [added: $3.7] billion in [removed: short-term borrowings.][added: long-term debt.]

Truist maintained strong capital and liquidity in [removed: 2020.][added: 2021.]

As of December 31, [removed: 2020,] [added: 2021,] the CET1 ratio was [removed: 10.0%] [added: 9.6%] and the average LCR was [removed: 113%.][added: 114%.]

[removed: In early 2021,] Truist [removed: declared] [added: increased] common dividends [removed: of $0.450] [added: 7% to $0.48] per share [removed: for] [added: starting in] the [removed: first] [added: third] quarter of 2021.

In the opinion of management, the following [removed: challenges] are the [added: key areas of focus] most likely to impact Truist’s near to medium term performance:

- Achieving the benefits from the Merger, including anticipated synergies [removed: and] [added: through] cost [removed: savings;][added: saving and Truist’s Integrated Relationship Management approach; and]

- Managing the integration of systems and operations, while safeguarding the Company against external [removed: threats;][added: threats.]

[removed: *2020] [added: *2021] compared to [removed: 2019*][added: 2020*]

[removed: The net] [added: Net] interest margin was [removed: 3.22%] [added: 2.86%] for the year ended December 31, [removed: 2020,] [added: 2021,] down [removed: 20] [added: 36] basis points compared to the [removed: earlier period.][added: prior year.]

The yield on the total loan portfolio for the year ended December 31, [removed: 2020] [added: 2021] was [removed: 4.33%,] [added: 3.95%,] down [removed: 66] [added: 38] basis points compared to the [removed: earlier period,] [added: prior year,] reflecting the impact of [removed: rate decreases and deferred interest for loans granted an accommodation in connection with COVID-19, partially offset by] [added: lower] purchase accounting accretion [removed: from merged loans.][added: and the ongoing impact of the low rate environment.]

The yield on the average securities portfolio [added: was 1.50%] for the year ended December 31, [removed: 2020 was 2.09%,] [added: 2021,] down [removed: 53] [added: 59] basis points compared to the [removed: earlier period] [added: prior year] primarily due to lower yields on new purchases and higher premium amortization.

The average cost of total deposits was [removed: 0.22%,] [added: 0.04%,] down [removed: 42] [added: 18] basis [removed: points compared to the earlier period.][added: points.]

The average [removed: rate] [added: cost] on short-term borrowings was [removed: 1.35%,] [added: 0.76% for the year ended December 31, 2021,] down [removed: 99] [added: 59] basis points compared to the [removed: earlier period.][added: prior year.]

Truist financial performance in 2021 was solid, highlighted by strong performances from investment banking, insurance, wealth and card and payment related fees, and positive trends in a number of other businesses given improving economic conditions.

Improving economic conditions also led to a strong credit performance and a benefit from the provision for credit losses.

Truist also continues to closely monitor the COVID-19 pandemic and its effects on stakeholders and the financial markets, and is actively supporting teammates, clients, and communities.

Truist formed a Together Safely Committee focused on developing new working models in a post-pandemic era.

Further, Truist continued to activate its Integrated Relationship Management approach, which is designed to deepen client relationships and bring the full breadth and depth of Truist’s products and services to meet clients’ financial needs.

As we enter 2022 and shift priorities, aiming past systems integrations and the pandemic, Truist is well positioned for purposeful growth.

Executive Leadership Changes

Truist made several Executive Leadership changes during 2021 as we continued to execute on the strategy first agreed upon in the Merger.

In September 2021, Kelly S.

King, transitioned to the role of Executive Chairman, and William H.

Rogers, Jr. became the CEO of Truist.

There were other changes to Truist’s Executive Leadership team that included the addition of John M.

Howard, as Chief Insurance Officer, the appointment of Hugh S.

Cummins III as Vice Chair, and the retirement of Christopher L.

Henson, Head of Banking and Insurance.

The members of the Executive Leadership team as of December 31, 2021 are detailed in the Executive Officers table within Item 1 “Business.”

In January 2022, Truist appointed Denise M.

DeMaio as Chief Audit Officer, effective February 28, 2022.

Denise will join the Executive leadership team and will lead Truist's internal audit function and provide counsel to senior management on emerging risk trends from the vantage points of governance, processes, technologies and reporting.

Major milestones during 2021 and early 2022 include:

- Made critical progress on core bank conversions, including migrating heritage BB&T clients to the Truist ecosystem in October.

We recently completed the core bank conversion in February 2022 for heritage SunTrust clients.

- Completed the Wealth brokerage and trust transitions and the mortgage systems transition.

- Introduced the new Truist digital app for Truist retail, wealth, and small business commercial clients.

- Launched new Truist.com and Truist Digital Commerce platform offering Truist‑branded products in a goal-based, mobile-optimized experience.

ESG Efforts

Truist is committed to investing in and serving all clients, no matter where they are in their financial journey.

Some of the ways we are helping clients include:

- In January 2022, Truist announced a first-of-its-kind approach to the checking account experience, designed to address clients’ direct feedback, which will be available to clients beginning in the summer of 2022.

The Truist One checking account features will include: no overdraft fees; a $100 negative balance buffer for qualifying clients; an easily accessible, deposit-based line of credit of up to $750; and premium rewards that instantly recognize relationships and honor loyalty.

In addition, Truist will offer an alternative checking account product created for clients who are new to credit and want simplicity and control without overdraft fees.

This will help clients avoid high fees from check-cashing and payday lenders, bring many more households into mainstream banking, and create a pathway to upgrade to Truist One.

- Increased access to financial education for Truist’s clients through a partnership with Operation HOPE.

- Partnering with the Bank Policy Institute to publish the Child Tax Credit Toolkit and promoting Child Tax Credit expansion awareness with modules on all digital financial education platforms.

- Truist continues to work closely with clients as they navigate through the continuing challenges from the COVID-19 pandemic.

- Truist met its commitment to increase racially and ethnically diverse representation in senior leadership roles to more than 15% one year early with 15.1% as of December 31, 2021.

- Truist offered a voluntary separation and retirement program to eligible teammates in June 2021.

While Truist is hiring in some areas and rightsizing in others through natural attrition, planned staffing reductions, and the voluntary separation and retirement program, Truist is actively supporting all teammates affected by reductions with opportunities and tools for internal placement, severance payments, and outplacement assistance and coaching.

The Company recognized $231 million of merger-related and restructuring charges in 2021 related to the voluntary separation and retirement program.

- Implemented onsite, remote, and hybrid work styles in order to provide the most flexible work environment.

Truist’s financial results for 2020 reflect the first full calendar year of operations of the combined Company.

Results for 2019 reflect heritage BB&T results prior to the completion of the Merger on December 6, 2019, and Truist results from the Merger closing date forward.

Despite the challenges Truist and its clients faced in 2020, significant progress was made on integration and conversion efforts during the year.

Below is an overview on progress in a few key areas.

Truist completed the Merger on December 6, 2019, and made significant progress on integration and conversion efforts in 2020.

Some milestones include unveiling Truist’s purpose, mission, and values; launching the Truist brand and visual identity; completing the purchase of Truist Center, the new corporate headquarters in Charlotte, NC; launching Truist social media platforms; announcing brand conversions for several business units including Truist Insurance, Truist Securities, and Truist Leadership Institute; launching Truist Foundation and Truist Ventures; beginning early migrations for the mortgage business; and introducing the blended branch program.

Recent highlights include:

- Completed the job regrading initiative for all teammates.

- Activated Integrated Relationship Management.

- Migrated correspondent mortgage lenders to the Truist origination ecosystem.

- Executed numerous corporate function integration activities across Audit, Risk, Legal and Finance.

Truist acted swiftly to support clients, teammates and communities in response to the COVID-19 pandemic last year and continues to support these stakeholders.

Truist is actively helping clients impacted by COVID-19, providing payment relief assistance for credit cards, personal loans, auto loans, home equity lines of credit, and residential mortgages.

Truist was one of the largest lenders of PPP loans in 2020 and remains committed to helping small businesses get access to emergency funds for first and second-draw PPP loans.

Truist is working closely with clients, providing resources and guidance to ensure a smooth and efficient experience from application to funding and forgiveness.

Through the challenges faced, Truist’s concern for teammates and their families remains a top priority.

Truist provided over $100 million in special COVID-19 support to teammates, including bonuses, special reimbursement for childcare and an increase in emergency child- and elder-care benefits, enhanced onsite pay, and steps to enhance wellness and family support.

Truist released its first Corporate Social Responsibility report, which included a commitment to increasing the number of racially and ethnically diverse teammates among senior leadership positions from approximately 12% to at least 15%.

Truist is also committed to ensuring regular, ongoing pay equity reviews for teammates.

On the topic of racial inequity, Truist hosted more than 260 "Days of Understanding" sessions designed to encourage bold dialogue on real world topics in an open, trusting environment.

The Company also rolled out enhanced unconscious bias training for teammates and Executive Leadership.

In response to COVID-19 in 2020, the Company launched Truist Cares, providing a total of $50 million in philanthropic support to aid charities meeting basic needs, furnishing medical supplies and addressing financial hardships across the nation, and have provided a total of 355 grants to community partners.

Truist is committed to addressing racial and social inequity and has taken a number of actions to expand efforts towards advancing equity, economic empowerment and education for clients, communities and teammates.

In 2020, Truist provided $78 million to support historically underrepresented communities, including a $40 million initial donation to help establish CornerSquare Community Capital made through the Truist Foundation, Inc. and the Truist Charitable Fund, and approximately $20 million over three years to develop and strengthen partnerships, programs, and scholarships that benefit historically black colleges and universities and their students.

The Company increased financial resources for low- and moderate-income communities through a $60 billion Community Benefits Plan from 2020-2022 to support home ownership, small business growth and community revitalization.

The 2019 results include securities losses of $116 million ($90 million after-tax), a reduction in net income available to common shareholders of $46 million arising from the redemption of preferred stock, partially offset by a $14 million after-tax net gain from the sale of residential mortgage loans.

Net interest income on a TE basis was $14.0 billion, an increase of $6.5 billion compared to the prior year, which reflects a $6.2 billion increase in interest income and a $374 million decrease in interest expense.

NPAs increased $703 million year over year, primarily due to PCI loans that would have been classified as nonperforming at December 31, 2019 and loans exiting certain accommodation programs related to the CARES Act.

Noninterest income increased $3.6 billion for the year with nearly all categories of noninterest income being impacted by the Merger.

Additional increases in noninterest income were primarily due to higher insurance income driven by improved production levels and acquisitions.

Noninterest expense increased $7.0 billion for the year.

During 2020, the Company also issued $6.5 billion of senior and subordinated long-term debt.

Total shareholders' equity was $70.9 billion at December 31, 2020, up $4.4 billion compared to the prior year.

The increase is due to net income in excess of dividends paid of $1.8 billion and OCI of $1.6 billion.

During 2020, Truist issued $3.5 billion in preferred stock, gross of issuance costs, to further strengthen its capital position and redeemed $500 million of series K preferred stock.

The increases in shareholders equity were partially offset by a $2.1 billion cumulative effect adjustment related to the adoption of CECL.

Truist declared common dividends of $1.80 per share during 2020.

The dividend and total payout ratios for 2020 were 58.0% compared to 43.2% for the prior year.

In December 2020, Truist’s Board of Directors authorized the repurchase of up to $2.0 billion of the company’s common stock beginning in the first quarter of 2021, consistent with recent FRB capital restriction guidance.

Key Challenges

Truist Bank provides a wide range of banking and trust services for clients through [removed: 2,781] [added: 2,517] offices as of December 31, [removed: 2020] [added: 2021] and its digital platform.

| | | | [removed: Home equity] [added: Credit card] lending | | | | | | Commercial deposit and treasury services | | |

| | | | Home [removed: mortgage] [added: equity] lending | | | | | | Commercial [removed: finance] [added: lending] | | |

| | | | Mobile/online banking | | | | | | [removed: Corporate banking] [added: Insurance] | | |

| | | | [removed: Payment solutions] [added: Home mortgage lending] | | | | | | Floor plan lending | | |

| | | | [removed: Retail deposit] [added: Investment brokerage] services | | | | | | Institutional trust services | | |

| | | | Small business lending | | | | | | [removed: Insurance] [added: Leasing] | | |

| | | | [removed: Student lending] [added: Payment solutions] | | | | | | Insurance premium finance | | |

| | | | Wealth management/private banking | | | | | | [removed: International banking services] [added: Mortgage warehouse lending] | | |

| | | | [added: Student lending] | | | | | | Merchant services | | |

| | | | | | | | | | [removed: Treasury and payment] [added: Payment] solutions | | |

| Florida | | | | | | [removed: 23] [added: 22] | | % | | | | 3rd | | | | | | [removed: 637] [added: 572] | | |

| Georgia | | | | | | [removed: 16] [added: 19] | | | | | | 1st | | | | | | [removed: 325] [added: 288] | | |

| Virginia | | | | | | 15 | | | | | | 2nd | | | | | | [removed: 406] [added: 365] | | |

| North Carolina (1) | | | | | | [removed: 15] [added: 14] | | | | | | 1st | | | | | | [removed: 371] [added: 348] | | |

| Maryland | | | | | | [removed: 7] [added: 6] | | | | | | 3rd | | | | | | [removed: 232] [added: 208] | | |

| South Carolina | | | | | | 4 | | | | | | 3rd | | | | | | [removed: 128] [added: 112] | | |

| West Virginia | | | | | | 2 | | | | | | 1st | | | | | | [removed: 52] [added: 48] | | |

| Kentucky | | | | | | 2 | | | | | | 4th | | | | | | [removed: 73] [added: 62] | | |

| Washington, D.C. | | | | | | 2 | | | | | | [removed: 4th] [added: 5th] | | | | | | [removed: 28] [added: 27] | | |

| Alabama | | | | | | 1 | | | | | | 6th | | | | | | [removed: 70] [added: 67] | | |

[removed: (1)Excludes] [added: (1)Deposit market share rank excludes] home office deposits.

(2)Source: FDIC.gov data as of June 30, [removed: 2020.][added: 2021.]

[removed: (3)As] [added: (1)Source: EEO-1 data as] of December 31, 2020.

Legislative, regulatory, economic, and technological [removed: changes] [added: changes,] as well as continued consolidation within the [removed: industry] [added: industry,] could result in [added: increased] competition from new and existing market participants.

[removed: Truist's] [added: Truist’s] subsidiaries compete actively with national, [removed: regional] [added: regional,] and local financial services providers, including banks, thrifts, securities dealers, mortgage bankers, finance companies, financial technology [removed: companies] [added: companies,] and insurance companies.

[removed: Truist's] [added: Truist’s] long-term strategy encompasses both organic and inorganic growth, including mergers or acquisitions of [removed: complimentary] [added: complementary] financial institutions or other businesses.

[removed: Truist's] [added: Truist’s] growth in business, [removed: profitability] [added: profitability,] and market share has historically been enhanced by strategic mergers and acquisitions.

Truist will assess future opportunities, based on geography and market [removed: conditions] [added: conditions,] and may, among other possibilities, pursue economically advantageous acquisitions of [added: banks,] insurance agencies, certain lending [removed: businesses] [added: businesses,] and fee income generating financial services businesses.

Banking and other financial services [removed: statutes regulations] [added: statutes, regulations,] and policies are continually under review by Congress, state legislatures, and federal and state regulatory agencies.

In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive [removed: letters] [added: letters,] and similar written guidance applicable to Truist and its subsidiaries.

Any change in the statutes, [removed: regulations] [added: regulations,] or regulatory policies applicable to Truist, including changes in their interpretation or implementation, could have a material effect on its business or organization.

The scope of the laws and regulations, and the intensity of the supervision to which Truist is subject have increased in recent years, initially in response to the financial crisis, and more recently in light of other [removed: factors such as] [added: factors, including] technological [removed: and] [added: factors,] market [removed: changes.][added: changes, climate, as well as increased scrutiny and possible denials of bank mergers and acquisitions by federal bank regulators.]

[removed: They] [added: These descriptions] do not summarize all possible or proposed changes in [removed: current] laws or regulations and are not intended to be a substitute for the related statues or regulatory provisions.

As a BHC, Truist is subject to regulation under the BHCA and to regulation, [removed: examination] [added: examination,] and supervision by the FRB.

Truist Bank, a North Carolina state-chartered commercial bank that is not a member of the Federal Reserve System, is subject to regulation, [removed: supervision] [added: supervision,] and examination by the NCCOB and the FDIC.

Truist and certain of its subsidiaries and affiliates, including those that engage in derivatives transactions, securities underwriting, market making, brokerage, investment [removed: advisory] [added: advisory,] and insurance activities, are subject to other federal and state laws and regulations, as well as supervision and examination by other federal and state regulatory agencies and other regulatory authorities, including the SEC, CFTC, [removed: FINRA] [added: FINRA,] and the NYSE.

Examinations by [removed: Truist's] [added: Truist’s] regulators consider not only compliance with applicable laws, [removed: regulations] [added: regulations,] and supervisory policies of the agency, but also capital levels, asset quality, risk management effectiveness, the ability and performance of [removed: management] [added: management,] and the board of directors, the effectiveness of internal controls, earnings, [removed: liquidity] [added: liquidity,] and various other factors.

This supervisory framework, including the examination reports and supervisory ratings, which are considered confidential supervisory information, could materially impact the conduct, [removed: growth] [added: growth,] and profitability of [removed: Truist's] [added: Truist’s] operations.

These regulatory agencies generally have broad enforcement authority and discretion to impose restrictions and limitations on the operations of a regulated entity, including the imposition of substantial monetary penalties and nonmonetary requirements against a regulated entity where the relevant agency determines that the operations of the regulated entity or any of its subsidiaries fail to comply with applicable [removed: law] [added: laws] or regulations, are conducted in an unsafe or unsound manner, or represent an unfair or deceptive act or practice.

Truist Financial Corporation is a purpose-driven financial services company committed to inspiring and building better lives and communities.

Formed by the historic merger of equals of BB&T and SunTrust, Truist has leading market share in many high-growth markets in the country.

The Company offers a wide range of services.

Headquartered in Charlotte, North Carolina, Truist is a top 10 U.S. commercial bank.

The following table reflects examples of services provided by Truist:

| | | | Consumer finance | | | | | | Commercial finance | | |

| | | | Insurance | | | | | | Debt and equity derivative services | | |

| | | | Point-of-sale lending | | | | | | International banking | | |

| | | | Retail deposit products | | | | | | Investment banking and capital markets services | | |

| Tennessee | | | | | | 5 | | | | | | 5th | | | | | | 130 | | |

| Pennsylvania | | | | | | 5 | | | | | | 9th | | | | | | 157 | | |

| Texas | | | | | | 2 | | | | | | 18th | | | | | | 102 | | |

(3)As of December 31, 2021.

While FHCs may engage in certain acquisitions without prior approval of the FRB, any acquisition over $10 billion in assets would require prior approval by the FRB.

Longstanding federal regulations require a FHC to act as a source of financial and managerial strength for its subsidiary banks.

In times of severe financial stress, the obligation to serve as a source of strength could cause Truist to commit significant resources to supporting Truist Bank that otherwise would be available to Truist’s creditors and shareholders.

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

The FDIC issued a policy statement in June 2021 announcing that it will resume requiring bank level resolution plans for large banks, including Truist Bank, and that such bank-level resolution plans will have more streamlined content requirements than previous requirements.

Truist Bank will be required to submit a bank-level resolution plan every three years.

During 2021, Truist Bank was informed by the FDIC that its next resolution plan will be due on or before December 1, 2022.

The FDIC also clarified the content requirements of the next resolution plan that Truist Bank is required to submit.

These actions could include requiring Truist commit capital to Truist Bank in abnormal operating conditions which would otherwise be available to Truist’s creditors and shareholders.

The FRB announced plans to invite public comment on several potential supplementary leverage ratio modifications to ensure that the supplementary leverage ratio remains effective in an environment of higher reserves, though such proposal has not been published as of the date of this report.

The standards by which bank and financial institution acquisitions are evaluated are under review.

Among other things, in July 2021, an executive order was issued on competition that requires the banking agencies to review the standards for bank mergers, and the Department of Justice has announced that it is reviewing its bank merger guidelines.

Additionally, some members of Congressional leadership are closely tracking the standards for bank mergers and can be expected to engage in hearings and public statements in connection with any pending or future merger activity.

These reviews and engagements could change the standards for bank mergers.

As of September 30, 2021, the DIF reserve ratio was 1.27%.

In June 2021, the FDIC terminated this consent order.

Truist continues to be subject to examinations and ongoing monitoring to assess compliance with BSA/AML laws and regulations.

These laws and regulations are designed to protect the financial system by requiring financial institutions to develop and implement BSA/AML programs designed to detect, deter, and prevent the use of the financial system to facilitate the funding of illicit and criminal activities.

In addition, Truist is also subject to prohibitions with respect to engaging in financial transactions with certain individuals, entities, and countries as prohibited by the OFAC regulator of the U.S. Treasury.

Federal law grants substantial enforcement powers to federal financial institution regulators, OFAC and law enforcement agencies with respect to AML laws and regulations.

This enforcement authority includes, among other things, the ability to assess significant civil or criminal monetary penalties, fines, or restitution; to issue cease and desist or removal orders; and to initiate injunctive actions against financial institutions and institution-affiliated parties.

These enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.

Various federal and state laws and regulations contain extensive data privacy and cybersecurity provisions, and the regulatory framework for data privacy and cybersecurity is rapidly evolving.

Truist may be subject to similar laws in other states where Truist does business or in states where Truist may collect personal information of residents.

Truist is also subject to rules and regulations issued by the Federal Trade Commission, which regulates unfair or deceptive acts or practices, including with respect to data privacy and cybersecurity.

Moreover, the U.S. Congress has recently considered, and is currently considering various proposals for more comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed.

In 2021, Truist received the highest possible overall rating of "Outstanding" from the FDIC for its most recent CRA examination period.

Truist is a banking organization headquartered in Charlotte, North Carolina.

Truist conducts its business operations primarily through its bank subsidiary, Truist Bank, and other nonbank subsidiaries.

Merger with SunTrust

The Company completed its Merger with SunTrust on December 6, 2019.

Refer to "Note 2.

Business Combinations" for additional details related to the Merger.

Operating Subsidiaries

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Bankcard lending | | | | | | Association services | | |

| | | | Consumer finance | | | | | | Capital markets services | | |

| | | | Insurance | | | | | | Commercial middle market lending | | |

| | | | Investment brokerage services | | | | | | Commercial mortgage lending | | |

| | | | Private equity investments | | | | | | Governmental finance | | |

| | | | | | | | | | Investment banking services | | |

| | | | | | | | | | Leasing | | |

| | | | | | | | | | Mortgage warehouse lending | | |

| | | | | | | | | | Private equity investments | | |

| Tennessee | | | | | | 5 | | | | | | 4th | | | | | | 145 | | |

| Pennsylvania | | | | | | 5 | | | | | | 8th | | | | | | 180 | | |

| Texas | | | | | | 2 | | | | | | 17th | | | | | | 103 | | |

For additional information concerning markets, Truist's competitive position and business strategies, see "Market Area" above and "General Business Development" in the discussion that follows.

The descriptions are qualified in their entirety by reference to the particular statutory or regulatory provisions summarized.

In April 2019, the FDIC issued an advanced notice of proposed rulemaking that would modify the content and frequency of resolution planning requirements for systemically important IDIs.

While this proposal did not include specific details regarding the content or frequency of future bank level resolution planning requirements, the FDIC indicated that the revised approach would establish tiered resolution planning requirements based on the size, complexity and other factors of applicable IDIs.

On January 19, 2021 the FDIC lifted a moratorium from November 2018 that delayed the next round of submissions of resolution plans for IDIs until this rulemaking process has been completed.

The FDIC has indicated that firms will not be required to submit a resolution plan without at least 12 months advance notice.

As Truist Bank has not received any written notice regarding its next resolution plan submission it does not currently have an anticipated submission date for a resolution plan.

The capital conservation buffer was 2.5% through September 30, 2020.

The interim final rule applies to BHCs.

The interim final rule became effective April 1, 2020 and will remain in effect through March 31, 2021.

While a similar rule providing relief to IDIs was issued, Truist Bank has elected not to take advantage of this provision for Truist Bank.

The following table presents the minimum regulatory capital ratios, well-capitalized minimums, and minimum ratio plus the SCB or capital conservation buffer, as applicable:

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Table 3: Capital Requirements Under Basel III Rules | | | | | | | | | | | | | | | | | |

| | | | Minimum Capital | | | | | | Well Capitalized (1) | | | | | | Minimum Capital Plus Applicable Buffer (2) | | |

| CET1 risk-based capital ratio: | | | | | | | | | | | | | | | | | |

| Truist | | | 4.5 | | % | | | | NA | | | | | | 7.2 | | % |

| Truist Bank | | | 4.5 | | | | | | 6.5 | | % | | | | 7.0 | | |

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: (Exact] [added: (Exact] name of registrant as specified in its [removed: charter)][added: charter)]

At January 31, [removed: 2021,] [added: 2022,] the Company had [removed: 1,347,198,511] [added: 1,328,120,453] shares of its common stock, $5 par value, outstanding.

As of June 30, [removed: 2020,] [added: 2021,] the aggregate market value of voting stock held by nonaffiliates of the Company was approximately [removed: $50.5] [added: $73.9] billion.

Documents incorporated by reference: Portions of the definitive proxy statement relating to the registrant's [removed: 2021] [added: 2022] annual meeting of stockholders are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.

| TABLE OF CONTENTS | | | | | | | | | | | | [added: | | |]

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| | | | [added: | | |] Glossary of Defined Terms | | | [removed: [1](#ib2319497cd2f41a99c10caedbf249bb1_16)] [added: [1](#i73eaf44e4d8f423a81f19d3796f0f2d0_16)] | | | | | |

| | | | [added: | | |] Forward-Looking Statements | | | [removed: [4](#ib2319497cd2f41a99c10caedbf249bb1_19)] [added: [3](#i73eaf44e4d8f423a81f19d3796f0f2d0_19)] | | | | | |

| Item 1A | | | [added: | | |] Risk Factors | | | [removed: [21](#ib2319497cd2f41a99c10caedbf249bb1_5355)] [added: [19](#i73eaf44e4d8f423a81f19d3796f0f2d0_529)] | | | | | |

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| Depositary Shares each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock | | | | | | TFC.PF | | | | | | New York Stock Exchange | | |

| Depositary Shares each representing 1/1,000th interest in a share of Series G Non-Cumulative Perpetual Preferred Stock | | | | | | TFC.PG | | | | | | New York Stock Exchange | | |

| Depositary Shares each representing 1/1,000th interest in a share of Series H Non-Cumulative Perpetual Preferred Stock | | | | | | TFC.PH | | | | | | New York Stock Exchange | | |

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| Item 3 | | | [added: | | |] Legal Proceedings (see Note 16) | | | [removed: [133](#ib2319497cd2f41a99c10caedbf249bb1_166)] [added: [121](#i73eaf44e4d8f423a81f19d3796f0f2d0_172)] | | | | | |

| Item 2 | | | | | | Properties | | | [36](#i73eaf44e4d8f423a81f19d3796f0f2d0_535) | | | | | |

| Item 2 | | | Properties | | | [37](#ib2319497cd2f41a99c10caedbf249bb1_514) | | | | | |

| PART II | | | | | | | | | | | | [added: | | |]

| Item 5 | | | [added: | | |] Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | [removed: [38](#ib2319497cd2f41a99c10caedbf249bb1_517)] [added: [36](#i73eaf44e4d8f423a81f19d3796f0f2d0_538)] | | | | | |

| Item 7 | | | [added: | | |] Management's Discussion and Analysis of Financial Condition and Results of Operations | | | [removed: [42](#ib2319497cd2f41a99c10caedbf249bb1_235)] [added: [39](#i73eaf44e4d8f423a81f19d3796f0f2d0_241)] | | | | | |

| Item 7A | | | [added: | | |] Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management) | | | [removed: [66](#ib2319497cd2f41a99c10caedbf249bb1_448)] [added: [64](#i73eaf44e4d8f423a81f19d3796f0f2d0_466)] | | | | | |

| | | | [added: | | |] Report of Independent Registered Public Accounting Firm [added: (PCAOB ID : 238)] | | | [removed: [85](#ib2319497cd2f41a99c10caedbf249bb1_28)] [added: [80](#i73eaf44e4d8f423a81f19d3796f0f2d0_28)] | | | | | |

| | | | [added: | | |] Consolidated Balance Sheets | | | [removed: [88](#ib2319497cd2f41a99c10caedbf249bb1_31)] [added: [82](#i73eaf44e4d8f423a81f19d3796f0f2d0_31)] | | | | | |

| | | | [added: | | |] Consolidated Statements of Income | | | [removed: [89](#ib2319497cd2f41a99c10caedbf249bb1_37)] [added: [83](#i73eaf44e4d8f423a81f19d3796f0f2d0_37)] | | | | | |

| | | | [added: | | |] Consolidated Statements of Comprehensive Income | | | [removed: [90](#ib2319497cd2f41a99c10caedbf249bb1_40)] [added: [84](#i73eaf44e4d8f423a81f19d3796f0f2d0_40)] | | | | | |

| | | | [added: | | |] Consolidated Statements of Changes in Shareholders' Equity | | | [removed: [91](#ib2319497cd2f41a99c10caedbf249bb1_43)] [added: [85](#i73eaf44e4d8f423a81f19d3796f0f2d0_43)] | | | | | |

| | | | [added: | | |] Consolidated Statements of Cash Flows | | | [removed: [92](#ib2319497cd2f41a99c10caedbf249bb1_49)] [added: [86](#i73eaf44e4d8f423a81f19d3796f0f2d0_49)] | | | | | |

| | | | [added: | | |] Notes to Consolidated Financial Statements | | | | | | | | |

| | | | [added: | | |] Note 1. Basis of Presentation | | | [removed: [93](#ib2319497cd2f41a99c10caedbf249bb1_55)] [added: [87](#i73eaf44e4d8f423a81f19d3796f0f2d0_55)] | | | | | |

| | | | [added: | | |] Note 2. Business Combinations | | | [removed: [108](#ib2319497cd2f41a99c10caedbf249bb1_70)] [added: [100](#i73eaf44e4d8f423a81f19d3796f0f2d0_70)] | | | | | |

| | | | [added: | | |] Note 3. Securities Financing Activities | | | [removed: [110](#ib2319497cd2f41a99c10caedbf249bb1_76)] [added: [101](#i73eaf44e4d8f423a81f19d3796f0f2d0_79)] | | | | | |

| | | | [added: | | |] Note 4. Investment Securities | | | [removed: [111](#ib2319497cd2f41a99c10caedbf249bb1_79)] [added: [101](#i73eaf44e4d8f423a81f19d3796f0f2d0_82)] | | | | | |

| | | | [added: | | |] Note 5. Loans and ACL | | | [removed: [113](#ib2319497cd2f41a99c10caedbf249bb1_85)] [added: [103](#i73eaf44e4d8f423a81f19d3796f0f2d0_88)] | | | | | |

| | | | [added: | | |] Note 6. Premises and Equipment | | | [removed: [120](#ib2319497cd2f41a99c10caedbf249bb1_91)] [added: [109](#i73eaf44e4d8f423a81f19d3796f0f2d0_94)] | | | | | |

| | | | [added: | | |] Note 7. Goodwill and Other Intangible Assets | | | [removed: [120](#ib2319497cd2f41a99c10caedbf249bb1_94)] [added: [109](#i73eaf44e4d8f423a81f19d3796f0f2d0_97)] | | | | | |

| | | | [added: | | |] Note 9. Other Assets and Liabilities | | | [removed: [122](#ib2319497cd2f41a99c10caedbf249bb1_109)] [added: [111](#i73eaf44e4d8f423a81f19d3796f0f2d0_112)] | | | | | |

| | | | [added: | | |] Note 12. [removed: Shareholders'] [added: Shareholders’] Equity | | | [removed: [125](#ib2319497cd2f41a99c10caedbf249bb1_127)] [added: [113](#i73eaf44e4d8f423a81f19d3796f0f2d0_130)] | | | | | |

| | | | [added: | | |] Note 14. Income Taxes | | | [removed: [128](#ib2319497cd2f41a99c10caedbf249bb1_139)] [added: [116](#i73eaf44e4d8f423a81f19d3796f0f2d0_142)] | | | | | |

| | | | [added: | | |] Note 15. Benefit Plans | | | [removed: [130](#ib2319497cd2f41a99c10caedbf249bb1_154)] [added: [118](#i73eaf44e4d8f423a81f19d3796f0f2d0_160)] | | | | | |

| | | | [added: | | |] Note 16. Commitments and Contingencies | | | [removed: [133](#ib2319497cd2f41a99c10caedbf249bb1_166)] [added: [121](#i73eaf44e4d8f423a81f19d3796f0f2d0_172)] | | | | | |

| | | | [added: | | |] Note 17. Regulatory Requirements and Other Restrictions | | | [removed: [137](#ib2319497cd2f41a99c10caedbf249bb1_193)] [added: [125](#i73eaf44e4d8f423a81f19d3796f0f2d0_199)] | | | | | |

| | | | [added: | | |] Note 18. Fair Value Disclosures | | | [removed: [138](#ib2319497cd2f41a99c10caedbf249bb1_196)] [added: [126](#i73eaf44e4d8f423a81f19d3796f0f2d0_202)] | | | | | |

| | | | [added: | | |] Note 19. Derivative Financial Instruments | | | [removed: [144](#ib2319497cd2f41a99c10caedbf249bb1_205)] [added: [131](#i73eaf44e4d8f423a81f19d3796f0f2d0_211)] | | | | | |

| | | | [added: | | |] Note 20. Computation of EPS | | | [removed: [148](#ib2319497cd2f41a99c10caedbf249bb1_211)] [added: [135](#i73eaf44e4d8f423a81f19d3796f0f2d0_217)] | | | | | |

| | | | [added: | | |] Note 21. Operating Segments | | | [removed: [148](#ib2319497cd2f41a99c10caedbf249bb1_214)] [added: [136](#i73eaf44e4d8f423a81f19d3796f0f2d0_220)] | | | | | |

| | | | [added: | | |] Note 22. Parent Company Financial Information | | | [removed: [152](#ib2319497cd2f41a99c10caedbf249bb1_229)] [added: [139](#i73eaf44e4d8f423a81f19d3796f0f2d0_235)] | | | | | |

| | | | | | | Note 8. Loan Servicing | | | [110](#i73eaf44e4d8f423a81f19d3796f0f2d0_109) | | | | | |

| | | | | | | Note 10. Deposits | | | [112](#i73eaf44e4d8f423a81f19d3796f0f2d0_118) | | | | | |

| | | | | | | Note 11. Borrowings | | | [112](#i73eaf44e4d8f423a81f19d3796f0f2d0_121) | | | | | |

| | | | | | | Note 13. AOCI | | | [115](#i73eaf44e4d8f423a81f19d3796f0f2d0_139) | | | | | |

| | | | | | | | | | | | | | | |

| Item 6 | | | Selected Financial Data | | | [41](#ib2319497cd2f41a99c10caedbf249bb1_526) | | | | | |

| | | | Quarterly Financial Summary | | | [79](#ib2319497cd2f41a99c10caedbf249bb1_499) | | | | | |

| | | | Note 8. Loan Servicing | | | [121](#ib2319497cd2f41a99c10caedbf249bb1_106) | | | | | |

| | | | Note 10. Deposits | | | [123](#ib2319497cd2f41a99c10caedbf249bb1_115) | | | | | |

| | | | Note 11. Borrowings | | | [124](#ib2319497cd2f41a99c10caedbf249bb1_118) | | | | | |

| | | | Note 13. AOCI | | | [127](#ib2319497cd2f41a99c10caedbf249bb1_136) | | | | | |

| | | | | | | | | | | | |

| Item 9A | | | [added: | | |] Controls and Procedures | | | [removed: [154](#ib2319497cd2f41a99c10caedbf249bb1_532)] [added: [141](#i73eaf44e4d8f423a81f19d3796f0f2d0_544)] | | | | | |

| PART III | | | | | | | | | | | |

| PART III | | | | | | | | | | | | | | |

| PART IV | | | | | | | | | | | | [added: | | |]

| | | | [added: | | |] Financial Statements (see Listing in Item 8 above) | | | | | | | | |

| | | | [added: | | |] Financial Statement Schedules (None required) | | | | | | | | |

| | | | | | | Exhibits | | | [142](#i73eaf44e4d8f423a81f19d3796f0f2d0_562) | | | | | |

| | | | Exhibits | | | [155](#ib2319497cd2f41a99c10caedbf249bb1_553) | | | | | |

| * | | | [added: | | |] For information regarding executive officers, refer to "Executive Officers" in Part I. The other information required by Item 10 is incorporated herein by reference to the information that appears under the headings "Nominees for Election as Directors for a One-Year Term Expiring in [removed: 2022,"] [added: 2023,"] "Nominating and Governance Committee Director Nominations," "Ethics at Truist," "Corporate Governance Guidelines," "Audit Committee Report" and "Audit Committee" in the Registrant's Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders. The information required by Item 11 is incorporated herein by reference to the information that appears under the headings "Compensation Discussion and Analysis," "Compensation of Executive Officers," "Compensation and Human Capital Committee Report on Executive Compensation," "Compensation and Human Capital Committee Interlocks and Insider Participation" and "Compensation of Directors" in the Registrant's Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders. For information regarding the registrant's securities authorized for issuance under equity compensation plans, refer to "Equity Compensation Plan Information" in Part II herein. The other information required by Item 12 is incorporated herein by reference to the information that appears under the heading "Stock Ownership Information" in the Registrant's Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders. The information required by Item 13 is incorporated herein by reference to the information that appears under the headings "Director Independence" and "Related Person Transactions" in the Registrant's Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders. The information required by Item 14 is incorporated herein by reference to the information that appears under the headings "Fees to Independent Registered Public Accounting Firm" and "Audit Committee Pre-Approval Policy" in the Registrant's Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders. | | | | | | | | |

| Basel III Rules | | | Rules issued by the FRB, [removed: OCC] [added: OCC,] and FDIC on capital adequacy and liquidity requirements in the U.S for banking organizations. | | |

| [removed: ECRPMC] [added: ECRC] | | | Enterprise Credit Risk [removed: and Portfolio Management] Committee | | |

| Tailoring Rules | | | The final rules changing the applicability thresholds for regulatory capital and liquidity requirements, issued by the OCC, FRB, and FDIC, together with the final rules changing the applicability thresholds for enhanced prudential standards [removed: issues] [added: issued] by the FRB | | |

Words such as [removed: "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," "would," "could"] [added: “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 [removed: management's] [added: management’s] expectations and assumptions regarding [removed: Truist's] [added: Truist’s] business, the [removed: economy] [added: economy,] and other future conditions.

Such statements involve inherent uncertainties, [removed: risks] [added: risks,] and changes in circumstances that are difficult to predict.

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 [removed: under] [added: in] Item 1A-Risk Factors:

- the COVID-19 pandemic [removed: has] disrupted the global [removed: economy,] [added: economy and] adversely impacted [removed: Truist's] [added: Truist’s] financial condition and results of operations, including through increased expenses, reduced fee income and net interest [removed: margin] [added: margin, decreased demand for certain types of loans,] and increases in the allowance for credit [removed: losses, and continuation] [added: losses; a resurgence] of [removed: current conditions] [added: the pandemic, whether due to new variants of the coronavirus or other factors,] could [removed: worsen] [added: reintroduce or prolong] these [added: negative] impacts and also adversely affect [removed: Truist's] [added: Truist’s] capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets;

- Truist is subject to credit risk by lending or committing to lend [removed: money] [added: money,] and may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

- changes in the interest rate environment, including the replacement of LIBOR as an interest rate [removed: benchmark and potentially negative interest rates,] [added: benchmark,] which could adversely affect [removed: Truist's] [added: Truist’s] revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity;

- increased competition, including from [added: (i)] new or existing competitors that could have greater financial resources or be subject to different regulatory standards, [removed: for] [added: and (ii)] products and services offered by non-bank financial technology [removed: companies] [added: companies,] may reduce [removed: Truist's] [added: Truist’s] client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact [removed: Truist's] [added: Truist’s] businesses or results of operations;

- increased scrutiny regarding [removed: Truist's] [added: Truist’s] consumer sales practices, training practices, incentive compensation [removed: design] [added: design,] and governance;

- regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on [removed: Truist's] [added: Truist’s] business activities, reputational harm, negative [removed: publicity] [added: publicity,] or other adverse consequences;

- evolving legislative, accounting and regulatory standards, including with respect to capital and liquidity requirements, and results of regulatory [removed: examinations,] [added: examinations] may adversely affect [removed: Truist's] [added: Truist’s] financial condition and results of operations;

- general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, and instability in global geopolitical matters or volatility in financial markets could result in, among other things, slower deposit or asset growth, a deterioration in credit [removed: quality] [added: quality,] or a reduced demand for credit, [removed: insurance] [added: insurance,] or other services;

- risks relating to [removed: Truist's] [added: Truist’s] role as a loan servicer, including an increase in the scope or costs of the services Truist is required to [removed: perform] [added: perform,] without any corresponding increase in servicing [removed: fees,] [added: fees] or a breach of Truist’s obligations as servicer;

- [removed: Truist's] [added: Truist’s] success depends on hiring and retaining key [removed: personnel,] [added: teammates,] and if these individuals leave or change roles without effective replacements, [removed: Truist's] [added: Truist’s] operations and integration activities could be adversely impacted, which could be exacerbated [removed: as Truist continues to integrate] [added: in] the [removed: management teams of heritage BB&T and heritage SunTrust;][added: increased work-from-home environment caused by the COVID-19 pandemic as job markets may be less constrained by physical geography;]

- fraud or misconduct by internal or external parties, which Truist may not be able to prevent, [removed: detect] [added: detect,] or mitigate;

- security risks, including denial of service attacks, hacking, social engineering attacks targeting [removed: Truist's] [added: Truist’s] teammates and clients, malware intrusion, data corruption attempts, system breaches, [removed: cyber attacks and] [added: cyber-attacks,] identity theft, [added: 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 [removed: Truist's] [added: Truist’s] business or reputation or create significant legal or financial exposure; and

- widespread outages of operational, [removed: communication] [added: 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 [removed: change] [added: 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 [removed: Truist's] [added: Truist’s] financial condition and results of operations, [removed: or] lead to material disruption of [removed: Truist's] [added: Truist’s] operations or the ability or willingness of clients to access [removed: Truist's] [added: Truist’s] products and services.

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| CVA | | | Credit valuation adjustment | | |

| ESG | | | Environmental, Social, and Governance | | |

| ETF | | | Exchange traded fund | | |

| NFA | | | National Futures Association | | |

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| Term | | | Definition | | |

| Branch Bank | | | Branch Banking and Trust Company (changed to "Truist Bank" effective with the Merger) | | |

| BU | | | Business Unit | | |

| Peer Group | | | Financial holding companies included in the industry peer group index | | |

| Short-Term Borrowings | | | Federal funds purchased, securities sold under repurchase agreements and other short-term borrowed funds with original maturities of less than one year | | |

| VA | | | United States Department of the Veterans Affairs | | |

Management believes that these [removed: premises] [added: premises, in the aggregate,] are well-located and suitably equipped to serve as financial services facilities.

Premises and Equipment" for additional [removed: disclosures related to properties and other fixed assets.][added: disclosures.]

[removed: Truist's] [added: Truist’s] common stock is traded on the NYSE under the symbol "TFC." As of December 31, [removed: 2020, Truist's] [added: 2021, Truist’s] common stock was held by [removed: 92,600] [added: 87,467] registered shareholders.

[removed: Truist's] [added: Truist’s] common dividend payout ratio was [removed: 58.0%] [added: 41%] in [removed: 2020] [added: 2021] compared to [removed: 43.2%] [added: 58%] in [removed: 2019] [added: 2020] and [removed: 39.3%] [added: 43%] in [removed: 2018.][added: 2019.]

Truist expects common dividend declarations, if made, to occur in January, April, [removed: July] [added: July,] and October with payment dates on or about the first of March, June, September and December.

| Table [removed: 6:] [added: 5:] Share Repurchase Activity | | | | | | | | | | | | | | | | | | | | | | | |

| (Dollars in millions, except per share data, shares in thousands) | | | Total Shares Repurchased (1) | | | | | | Average Price Paid Per Share (2) | | | | | | Total Shares Repurchased Pursuant to Publicly-Announced [removed: Plan] [added: Plan (3)] | | | | | | Maximum Remaining Dollar Value of Shares Available for Repurchase Pursuant to Publicly-Announced Plan | | |

During 2020, Truist issued $3.5 billion in series O, series P, series [removed: Q] [added: Q,] and series R preferred stock, gross of issuance cost, to further strengthen its capital position.

[removed: Early in] [added: During] 2021, the Company [removed: announced the forthcoming redemption of] [added: redeemed] all 18,000 outstanding shares of its perpetual preferred stock series F and the corresponding depositary shares representing fractional interests in such series for $450 [removed: million and] [added: million,] all 20,000 outstanding shares of its perpetual preferred stock series G and the corresponding depositary shares representing fractional interests in such series for $500 [added: million, and all 18,600 outstanding shares of its perpetual preferred stock series H and the corresponding depositary shares representing fractional interests in such series for $465] million.

[removed: Shareholders'] [added: Shareholders’] Equity" for information about preferred [removed: stock and "Note 2.][added: stock.]

The following table provides information concerning securities to be issued upon the exercise of outstanding equity-based awards as of December 31, [removed: 2020:][added: 2021:]

| Table [removed: 7:] [added: 6:] Equity Compensation Plan Information | | | | | | | | | | | | | | | | | | | | |

(1)Includes [removed: 11,286,223] [added: 10,913,889] RSUs and PSUs in plans approved by security holders.

(2)Plans not approved by security holders consists of [removed: 668,015] [added: 325,263] options outstanding with a weighted average exercise price of [removed: $20.60] [added: $22.42] and [removed: 6,801,489] [added: 6,147,129] RSUs for plans that were assumed in mergers and acquisitions.

(4)Plans not approved by security holders consists of shares of common stock issuable pursuant to the 2012 Incentive Plan, as amended, in respect of shares reserved for issuance under the SunTrust Banks, Inc. 2018 Omnibus Incentive Compensation [removed: Plan, which share reserve was assumed by the Company on December 6, 2019 in connection with the Merger.][added: Plan.]

The [removed: companies in the] [added: Truist] peer group [removed: are] [added: consists of] Bank of America [removed: Corporation,] [added: Corporation;] Citizens Financial Group, [removed: Inc.,] [added: Inc.;] Fifth Third [removed: Bancorp,] [added: Bancorp;] JPMorgan Chase & [removed: Co, KeyCorp,] [added: Co.; KeyCorp;] M&T Bank [removed: Corporation,] [added: Corporation;] The PNC Financial Services Group, [removed: Inc.,] [added: Inc.;] Regions Financial [removed: Corporation,] [added: Corporation;] U.S. [removed: Bancorp] [added: Bancorp;] and Wells Fargo & Company.

[removed: ][added: ]

| Table [removed: 8:] [added: 7:] Cumulative Total Shareholder Return | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| As of / Through December 31, | | | [removed: 2015] [added: 2016] | | | | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | |

Common Stock

Truist would expect to periodically repurchase shares in the future, to the extent the Company has excess capital and does not have sufficient investment opportunities in the form of organic growth and / or acquisitions.

During 2021, the Company repurchased 27.6 million shares of common stock totaling $1.6 billion through open market purchases and shares exchanged or surrendered in connection with the exercise of equity-based awards.

| October 2021 | | | 4,277 | | | | | | $ | 63.56 | | | | | 4,277 | | | | | | $ | 2,793 | |

| November 2021 | | | 3,545 | | | | | | 64.37 | | | | | | 3,545 | | | | | | 2,565 | | |

| December 2021 | | | — | | | | | | — | | | | | | — | | | | | | 2,565 | | |

| Total | | | 7,822 | | | | | | 63.93 | | | | | | 7,822 | | | | | | | | |

(3)Pursuant to the 2020 Repurchase Plan, announced in December 2020, authorizing up to $2.0 billion of share repurchases beginning in the first quarter of 2021.

In June 2021, the Board of Directors increased, effective July 1, 2021, the previous repurchase authority to effectuate repurchases up to an additional $2.2 billion in shares of the Company’s common stock through September 30, 2022 (up to $4.2 billion in aggregate amount).

With the additional authorization, the Company has $2.6 billion remaining for share repurchases.

| Approved by security holders | | | | | | 11,669,654 | | | | | | $ | 32.89 | | | | | 4,884,430 | | |

| Not approved by security holders | | | | | | 6,472,392 | | | | | | 22.42 | | | | | | 8,261,255 | | |

| Total | | | | | | 18,142,046 | | | | | | $ | 29.74 | | | | | 13,145,685 | | |

Five-Year Common Stock Performance

The following graph and table compare the cumulative total shareholder return of the Company’s common stock, the S&P 500 Index, the KBW Nasdaq Bank Index, and the Truist peer group for the five years ended December 31, 2021.

The Company is a component of both indexes.

The graph and table assume an initial investment of $100 was made on December 31, 2016 in each of the Company’s common stock, the indexes, and the peer group, as well as reinvestment of all dividends without commissions.

| Truist Financial Corporation | | | $ | 100.00 | | | | | $ | 108.67 | | | | | $ | 97.57 | | | | | $ | 131.25 | | | | | $ | 116.64 | | | | | $ | 147.05 | | | | | | | | | | |

| S&P 500 Index | | | 100.00 | | | | | | 121.82 | | | | | | 116.47 | | | | | | 153.13 | | | | | | 181.29 | | | | | | 233.28 | | | | | | | | | | | |

| KBW Nasdaq Bank Index | | | 100.00 | | | | | | 118.59 | | | | | | 97.59 | | | | | | 132.84 | | | | | | 119.15 | | | | | | 164.83 | | | | | | | | | | | |

| Peer Group | | | 100.00 | | | | | | 122.32 | | | | | | 104.43 | | | | | | 145.11 | | | | | | 123.60 | | | | | | 172.29 | | | | | | | | | | | |

Common Stock, Dividends and Share Repurchases

Management's target total payout ratio (computed by dividing the sum of common stock dividends declared and share repurchases, excluding shares repurchased in connection with equity awards, by net income available to common shareholders) is between 30% and 80% during normal economic conditions.

Truist may consider higher total distributions based on its capital position, earnings and prevailing economic conditions.

The total payout ratio was 58.0%, 43.2% and 78.7% in 2020, 2019 and 2018, respectively.

During 2020, the Company had no common stock repurchases, except shares exchanged or surrendered in connection with the exercise of equity-based awards under equity-based compensation plans.

In December 2020, Truist announced that its Board of Directors had authorized the repurchase of up to $2.0 billion of the Company's common stock, beginning in the first quarter of 2021, consistent with recent FRB capital restriction guidance, to optimize Truist's capital position.

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| November 2020 | | | 4 | | | | | | $ | 43.47 | | | | | — | | | | | | $ | — | |

| December 2020 | | | — | | | | | | 47.93 | | | | | | — | | | | | | 2,000 | | |

| Total | | | 4 | | | | | | 43.64 | | | | | | — | | | | | | | | |

In connection with the redemptions, net income available to common shareholders was reduced by $46 million to recognize the difference in the redemption price and the carrying value.

Business Combinations" for additional information related to the Merger.

In connection with the Merger, each outstanding heritage SunTrust equity award granted under heritage SunTrust's equity compensation plans was converted into a corresponding award with respect to Company common stock, with the number of shares underlying such award (and, in the case of stock options, the applicable exercise price) adjusted based on the exchange ratio.

Each such converted Company equity award will continue to be subject to the same terms and conditions as applied to the corresponding heritage SunTrust equity award, except that, in the case of heritage SunTrust performance stock unit awards, the number of shares underlying the converted Company equity award was determined based on actual performance through September 30, 2019 and target performance for the balance of the applicable performance period and such award will continue to vest after the Merger solely based on continued service.

| Approved by security holders | | | | | | 13,220,891 | | | | | | $ | 32.20 | | | | | 8,876,596 | | |

| Not approved by security holders | | | | | | 7,469,504 | | | | | | 20.60 | | | | | | 10,938,274 | | |

| Total | | | | | | 20,690,395 | | | | | | $ | 29.22 | | | | | 19,814,870 | | |

Performance Graph

The following graph and table compares the cumulative total returns (assuming concurrent $100 initial investments as of December 31, 2015 and reinvestment of dividends without commissions) of Truist common stock, the S&P 500 Index and an industry peer group.

| Truist Financial Corporation | | | $ | 100.00 | | | | | $ | 128.47 | | | | | $ | 139.62 | | | | | $ | 125.35 | | | | | $ | 168.62 | | | | | $ | 149.85 | | | | | | | | | | |

| S&P 500 Index | | | 100.00 | | | | | | 111.95 | | | | | | 136.38 | | | | | | 130.39 | | | | | | 171.44 | | | | | | 202.96 | | | | | | | | | | | |

| Peer Group | | | 100.00 | | | | | | 124.02 | | | | | | 151.70 | | | | | | 129.52 | | | | | | 179.98 | | | | | | 153.29 | | | | | | | | | | | |

We have audited the accompanying consolidated balance sheets of Truist Financial Corporation and its subsidiaries (the [removed: "Company")] [added: “Company”)] as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for each of the [added: three] years in the [removed: three-year] period ended December 31, [removed: 2020,] [added: 2021,] including the related notes (collectively referred to as the [removed: "consolidated] [added: “consolidated] financial [removed: statements").][added: statements”).]

We also have audited the Company's internal control over financial reporting as of December 31, [removed: 2020] [added: 2021] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the [added: three] years in the [removed: three-year] period ended December 31, [removed: 2020] [added: 2021] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by [added: the] COSO.

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the consolidated financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (i) [removed: relate] [added: relates] to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

The consolidated ACL balance was [removed: $6.2] [added: $4.7] billion as of December 31, [removed: 2020,] [added: 2021,] including [removed: $2.9] [added: $1.8] billion for commercial portfolios and [removed: $2.6] [added: $2.3] billion for consumer portfolios.

The principal considerations for our determination that performing procedures relating to the ACL for certain commercial and consumer portfolios is a critical audit matter are (i) the significant judgment by management in determining the ACL quantitative model results and certain qualitative adjustments, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating [removed: the] audit evidence related to the quantitative model results and certain qualitative adjustments, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to the [added: Company’s] ACL estimation process for certain commercial and consumer portfolios, which included controls related to the quantitative model results and certain qualitative adjustments.

[removed: Management determines] [added: The quantitative impairment test estimates] the fair value of [added: the] reporting units using the income approach and [removed: the] market [removed: approach.][added: based approaches.]

| December 31, (Dollars in millions, except per share data, shares in thousands) | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | | | | | | | | | | | | | | | |

| Cash and due from banks | | | $ | [removed: 5,029] [added: 5,085] | | | | | $ | [removed: 4,084] [added: 5,029] | | | | | | | | | | | | | | | | | | | |

| Interest-bearing deposits with banks | | | [removed: 13,839] [added: 15,210] | | | | | | [removed: 14,981] [added: 13,839] | | | | | | | | | | | | | | | | | | | | |

| Securities borrowed or purchased under [removed: resale] agreements [added: to resell] | | | [removed: 1,745] [added: 4,028] | | | | | | [removed: 1,417] [added: 1,745] | | | | | | | | | | | | | | | | | | | | |

| Trading assets at fair value | | | [removed: 3,872] [added: 4,423] | | | | | | [removed: 5,733] [added: 3,872] | | | | | | | | | | | | | | | | | | | | |

| AFS securities at fair value | | | [removed: 120,788] [added: 153,123] | | | | | | [removed: 74,727] [added: 120,788] | | | | | | | | | | | | | | | | | | | | |

| LHFS (including [removed: $4,955] [added: $3,544] and [removed: $5,673] [added: $4,955] at fair value, respectively) | | | [removed: 6,059] [added: 4,812] | | | | | | [removed: 8,373] [added: 6,059] | | | | | | | | | | | | | | | | | | | | |

| Loans and leases | | | [removed: 299,734] | | | [added: 23] | | | [removed: 299,842] | | | [added: —] | | | | | | [added: —] | | | | | | [added: 23] | | | | | | [added: — | | | | | |]

| ALLL | | | [removed: (5,835)] [added: (4,435)] | | | | | | [removed: (1,549)] [added: (5,835)] | | | | | | | | | | | | | | | | | | | | |

| Loans and leases, net of ALLL | | | [removed: 293,899] [added: 285,078] | | | | | | [removed: 298,293] [added: 293,899] | | | | | | | | | | | | | | | | | | | | |

| Premises and equipment | | | [removed: 3,870] [added: 3,700] | | | | | | [removed: 3,712] [added: 3,870] | | | | | | | | | | | | | | | | | | | | |

| Goodwill | | | [removed: 24,447] [added: 26,098] | | | | | | [removed: 24,154] [added: 24,447] | | | | | | | | | | | | | | | | | | | | |

| CDI and other intangible assets | | | [removed: 2,984] [added: 3,408] | | | | | | [removed: 3,142] [added: 2,984] | | | | | | | | | | | | | | | | | | | | |

| Other assets (including [removed: $4,891] [added: $3,436] and [removed: $3,310] [added: $4,891] at fair value, respectively) | | | [removed: 30,673] [added: 32,149] | | | | | | [removed: 31,832] [added: 30,673] | | | | | | | | | | | | | | | | | | | | |

| Total assets | | | $ | [removed: 509,228] [added: 541,241] | | | | | $ | [removed: 473,078] [added: 509,228] | | | | | | | | | | | | | | | | | | | |

| Noninterest-bearing deposits | | | $ | [removed: 127,629] [added: 145,892] | | | | | $ | [removed: 92,405] [added: 127,629] | | | | | | | | | | | | | | | | | | | |

| Interest-bearing deposits | | | [removed: 253,448] [added: 270,596] | | | | | | [removed: 242,322] [added: 253,448] | | | | | | | | | | | | | | | | | | | | |

| Short-term borrowings (including [removed: $1,115] [added: $1,731] and [removed: $1,074] [added: $1,115] at fair value, respectively) | | | [removed: 6,092] [added: 5,292] | | | | | | [removed: 18,218] [added: 6,092] | | | | | | | | | | | | | | | | | | | | |

| Long-term debt | | | [removed: 39,597] [added: 35,913] | | | | | | [removed: 41,339] [added: 39,597] | | | | | | | | | | | | | | | | | | | | |

| Other liabilities (including [removed: $555] [added: $586] and [removed: $366] [added: $555] at fair value, respectively) | | | [removed: 11,550] [added: 14,277] | | | | | | [removed: 12,236] [added: 11,550] | | | | | | | | | | | | | | | | | | | | |

| Total liabilities | | | [removed: 438,316] [added: 471,970] | | | | | | [removed: 406,520] [added: 438,316] | | | | | | | | | | | | | | | | | | | | |

| Common stock, $5 par value | | | [removed: 6,745] [added: 6,639] | | | | | | [removed: 6,711] [added: 6,745] | | | | | | | | | | | | | | | | | | | | |

| Additional paid-in capital | | | [removed: 35,843] [added: 34,565] | | | | | | [removed: 35,609] [added: 35,843] | | | | | | | | | | | | | | | | | | | | |

| Retained earnings | | | [removed: 19,455] [added: 22,998] | | | | | | [removed: 19,806] [added: 19,455] | | | | | | | | | | | | | | | | | | | | |

| AOCI, net of deferred income taxes | | | [removed: 716] [added: (1,604)] | | | | | | [removed: (844)] [added: 716] | | | | | | | | | | | | | | | | | | | | |

| Noncontrolling interests | | | [removed: 105] [added: —] | | | | | | [removed: 174] [added: 105] | | | | | | | | | | | | | | | | | | | | |

| Total [removed: shareholders'] [added: shareholders’] equity | | | [removed: 70,912] [added: 69,271] | | | | | | [removed: 66,558] [added: 70,912] | | | | | | | | | | | | | | | | | | | | |

| Total liabilities and [removed: shareholders'] [added: shareholders’] equity | | | $ | [removed: 509,228] [added: 541,241] | | | | | $ | [removed: 473,078] [added: 509,228] | | | | | | | | | | | | | | | | | | | |

| Common shares outstanding | | | [removed: 1,348,961] [added: 1,327,818] | | | | | | [removed: 1,342,166] [added: 1,348,961] | | | | | | | | | | | | | | | | | | | | |

| Preferred shares outstanding | | | [removed: 280] [added: 223] | | | | | | [removed: 145] [added: 280] | | | | | | | | | | | | | | | | | | | | |

February 22, 2022

| HTM securities (fair value of $1,495 as of December 31, 2021) | | | 1,494 | | | | | | — | | | | | | | | | | | | | | | | | | | | |

| Loans and leases (including $23 at fair value as of December 31, 2021) | | | 289,513 | | | | | | 299,734 | | | | | | | | | | | | | | | | | | | | |

| Loan servicing rights at fair value | | | 2,633 | | | | | | 2,023 | | | | | | | | | | | | | | | | | | | | |

| Preferred stock | | | 6,673 | | | | | | 8,048 | | | | | | | | | | | | | | | | | | | | |

| Commercial mortgage income | | | | | | | | | | | | | | | | | | 179 | | | | | | 185 | | | | | | 102 | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,440 | | | | | | — | | | | | | (3) | | | | | | 6,437 | | | | | |

| OCI | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (2,320) | | | | | | — | | | | | | (2,320) | | | | | |

| Repurchase of common stock | | | (27,609) | | | | | | — | | | | | | (138) | | | | | | (1,478) | | | | | | — | | | | | | — | | | | | | — | | | | | | (1,616) | | | | | |

| Redemption of preferred stock | | | — | | | | | | (1,375) | | | | | | — | | | | | | — | | | | | | (40) | | | | | | — | | | | | | — | | | | | | (1,415) | | | | | |

| Balance, December 31, 2021 | | | 1,327,818 | | | | | | $ | 6,673 | | | | | $ | 6,639 | | | | | $ | 34,565 | | | | | $ | 22,998 | | | | | $ | (1,604) | | | | | $ | — | | | | | $ | 69,271 | | | | |

| Loan servicing rights | | | | | | (206) | | | | | | 607 | | | | | | 97 | | | | | |

| Net cash received (paid) for securities borrowed or purchased under agreements to resell | | | | | | (2,283) | | | | | | (328) | | | | | | (83) | | | | | |

| Net cash for (premiums) proceeds on bank-owned life insurance | | | | | | (606) | | | | | | 83 | | | | | | 58 | | | | | |

| Other, net | | | | | | (331) | | | | | | (461) | | | | | | 108 | | | | | |

| Purchases (sales) of securities not yet settled | | | | | | 2,275 | | | | | | — | | | | | | (1,442) | | | | | |

Headquartered in Charlotte, North Carolina, Truist is a top 10 U.S. commercial bank.

In the fourth quarter of 2021, the Company reclassified the lease financing portfolio to the commercial and industrial portfolio.

Additionally the Company reclassified certain structured real estate activity from commercial mortgage income to investment banking and trading income and certain LIHTC activity from commercial mortgage income to other income.

Prior periods were reclassified to conform to the current presentation.

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.

Securities borrowed or purchased under agreements to resell are accounted for as collateralized financing transactions and are recorded at the amounts at which the securities were borrowed or purchased.

The Company monitors collateral values daily and pledges collateral as warranted under the respective agreements.

Debt securities are classified as HTM when Truist has both the intent and ability to hold the securities to maturity.

HTM securities are reported at amortized cost.

Non-agency MBS in the portfolio reflect recent issuances that are highly rated, include excess collateral and are collateralized by loans to borrowers with high credit scores and low loan to value ratios.

Truist utilizes cash flow modeling for the evaluation of potential credit impairment on non-agency securities in an unrealized loss position.

Cash flow modeling incorporates a variety of factors that impact the long term expectation of collateral performance.

Impairment is attributable to factors other than credit when there continues to be an expectation of the collection of all contractual principal and interest.

At December 31, 2021, HTM debt securities consists of government guaranteed securities for which no loss is expected.

Other consumer loans are typically sold to unrelated third parties shortly after origination and are immaterial as of December 31, 2021.

Specifically identified LHFS, where management has committed to a formal plan of sale and the loans are available for immediate sale, are generally recorded at LOCOM.

Unearned income, discounts, and net deferred loan fees and costs includes direct costs associated with loan origination as well as premiums and discounts from origination or purchase, which are deferred and amortized over the respective loan terms.

For loan modification programs in response to the COVID-19 pandemic, Truist applied the relief from TDR accounting described in the CARES Act.

(2)The timing of nonaccrual and charge-off evaluations are accelerated in circumstances where the borrower has filed for bankruptcy.

When commercial loans are placed on nonperforming status, management evaluates whether a charge-off must be recorded.

For collateral-dependent loans, this evaluation is based on a comparison of the loan’s carrying value to the value of the related collateral, while for non-collateral dependent loans, this evaluation reflects management’s conclusions with regard to whether any portion of the loan is considered uncollectible.

On January 1, 2020, Truist adopted the CECL accounting standard, which changed the manner in which it accounts for the allowance for credit losses.

Loan Servicing Rights

For additional information on the Company’s benefit plans and VIEs, see “Note 15.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

*Annual Goodwill Impairment Assessment - CB&W and C&CB Reporting Units*

As described in Notes 1 and 7 to the consolidated financial statements, the Company’s consolidated goodwill balance was $24.4 billion as of December 31, 2020.

The goodwill associated with the CB&W and C&CB reporting units was $15.8 billion and $6.2 billion as of December 31, 2020, respectively.

Management reviews the goodwill of each reporting unit for impairment on an annual basis as of October 1, or more often, if events or circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit is below its carrying value.

For the income approach, management determines the fair value of the reporting units using a discounted cash flow analysis by utilizing a multi-year financial forecast for each reporting unit by considering several inputs and assumptions including net interest margin, expected credit losses, noninterest income, noninterest expense and required capital.

The principal considerations for our determination that performing procedures relating to the annual goodwill impairment assessment for the CB&W and C&CB reporting units is a critical audit matter are (i) the significant judgment by management when determining the fair value of these reporting units using the income approach, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating the audit evidence related to management’s discount rates and net interest margin assumptions used in the income approach, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

These procedures included testing the effectiveness of controls relating to management’s annual goodwill impairment assessment, including controls over the valuation of the CB&W and C&CB reporting units.

These procedures also included, among others, testing management’s process for determining the fair value of the CB&W and C&CB reporting units, evaluating the appropriateness of management’s income approach, testing the data used in the income approach, and evaluating the discount rates and net interest margin assumptions used by management in the income approach.

Evaluating management’s assumptions related to the discount rates and net interest margin involved evaluating whether the assumptions were reasonable considering the current and past performance of the reporting units and consistency with external market and industry data.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the income approach and the discount rate assumption.

February 24, 2021

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| MSRs (including $2,023 and $2,618 at fair value, respectively) | | | 2,023 | | | | | | 2,630 | | | | | | | | | | | | | | | | | | | | |

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| Preferred stock, $5 par value, liquidation preference of $25,000 per share | | | 8,048 | | | | | | 5,102 | | | | | | | | | | | | | | | | | | | | |

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