Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions, except per share data, shares in thousands)	Jun 30, 2022		Dec 31, 2021
Assets
Cash and due from banks	$	5,511	$	5,085
Interest-bearing deposits with banks	17,602		15,210
Securities borrowed or purchased under agreements to resell	2,650		4,028
Trading assets at fair value	5,230		4,423
AFS securities at fair value	79,278		153,123
HTM securities ($53,905 and $1,495 at fair value, respectively)	60,081		1,494
LHFS (including $3,149 and $3,544 at fair value, respectively)	3,638		4,812
Loans and leases (including $20 and $23 at fair value, respectively)	303,662		289,513
ALLL	(4,187)		(4,435)
Loans and leases, net of ALLL	299,475		285,078
Premises and equipment	3,682		3,700
Goodwill	26,299		26,098
CDI and other intangible assets	3,535		3,408
Loan servicing rights at fair value	3,466		2,633
Other assets (including $2,336 and $3,436 at fair value, respectively)	34,676		32,149
Total assets	$	545,123	$	541,241
Liabilities
Noninterest-bearing deposits	$	147,752	$	145,892
Interest-bearing deposits	277,007		270,596
Short-term borrowings (including $1,816 and $1,731 at fair value, respectively)	13,736		5,292
Long-term debt	30,319		35,913
Other liabilities (including $1,914 and $586 at fair value, respectively)	13,310		14,277
Total liabilities	482,124		471,970
Shareholders’ Equity
Preferred stock	6,673		6,673
Common stock, $5 par value	6,632		6,639
Additional paid-in capital	34,410		34,565
Retained earnings	24,500		22,998
AOCI, net of deferred income taxes	(9,240)		(1,604)
Noncontrolling interests	24		—
Total shareholders’ equity	62,999		69,271
Total liabilities and shareholders’ equity	$	545,123	$	541,241
Common shares outstanding	1,326,393		1,327,818
Common shares authorized	2,000,000		2,000,000
Preferred shares outstanding	223		223
Preferred shares authorized	5,000		5,000

The accompanying notes are an integral part of these consolidated financial statements.

4 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions, except per share data, shares in thousands)		Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Interest Income
Interest and fees on loans and leases		$	2,898		$	2,901		$	5,542		$	5,903
Interest on securities		675			497			1,315			940
Interest on other earning assets		100			45			173			94
Total interest income		3,673			3,443			7,030			6,937
Interest Expense
Interest on deposits		99			36			131			83
Interest on long-term debt		137			147			269			295
Interest on other borrowings		30			15			40			29
Total interest expense		266			198			440			407
Net Interest Income		3,407			3,245			6,590			6,530
Provision for credit losses		171			(434)			76			(386)
Net Interest Income After Provision for Credit Losses		3,236			3,679			6,514			6,916
Noninterest Income
Insurance income		825			690			1,552			1,316
Investment banking and trading income		255			402			516			748
Wealth management income		337			345			680			686
Service charges on deposits		254			253			506			511
Card and payment related fees		246			225			458			425
Residential mortgage income		74			117			163			217
Lending related fees		100			94			185			194
Operating lease income		66			66			124			134
Commercial mortgage income		26			47			58			80
Income from bank-owned life insurance		50			46			101			96
Securities gains (losses)		(1)			—			(70)			—
Other income		16			120			117			195
Total noninterest income		2,248			2,405			4,390			4,602
Noninterest Expense
Personnel expense		2,102			2,207			4,153			4,349
Professional fees and outside processing		349			341			712			691
Software expense		234			246			466			456
Net occupancy expense		181			182			389			391
Amortization of intangibles		143			142			280			286
Equipment expense		114			122			232			235
Marketing and customer development		93			66			177			132
Operating lease depreciation		47			47			95			97
Loan-related expense		47			55			91			109
Regulatory costs		44			31			79			56
Merger-related and restructuring charges		121			297			337			438
Loss (gain) on early extinguishment of debt		(39)			—			(39)			(3)
Other expense		144			275			282			384
Total noninterest expense		3,580			4,011			7,254			7,621
Earnings
Income before income taxes		1,904			2,073			3,650			3,897
Provision for income taxes		372			415			702			766
Net income		1,532			1,658			2,948			3,131
Noncontrolling interests		1			1			2			(3)
Net income available to the bank holding company		1,531			1,657			2,946			3,134
Preferred stock dividends and other		77			98			165			241
Net income available to common shareholders		$	1,454		$	1,559		$	2,781		$	2,893
Basic EPS		$	1.09		$	1.16		$	2.09		$	2.16
Diluted EPS		1.09			1.16			2.08			2.14
Basic weighted average shares outstanding		1,330,160			1,338,302			1,329,601			1,341,963
Diluted weighted average shares outstanding		1,338,864			1,349,492			1,340,225			1,354,210

The accompanying notes are an integral part of these consolidated financial statements.

Truist Financial Corporation 5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions)	Three Months Ended June 30,						Six Months Ended June 30,
2022			2021			2022			2021
Net income	$	1,532		$	1,658		$	2,948		$	3,131
OCI, net of tax:
Net change in net pension and postretirement costs	5			(2)			13			33
Net change in cash flow hedges	49			10			54			46
Net change in AFS securities	(2,849)			459			(7,838)			(1,845)
Net change in HTM securities	92			—			136			—
Other, net	(2)			1			(1)			2
Total OCI, net of tax	(2,705)			468			(7,636)			(1,764)
Total comprehensive income	$	(1,173)		$	2,126		$	(4,688)		$	1,367
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs	$	3		$	(1)		$	5		$	10
Net change in cash flow hedges	15			3			16			14
Net change in AFS securities	(867)			139			(2,380)			(568)
Net change in HTM securities	27			—			40			—
Other, net	—			—			—			—
Total income taxes related to OCI	$	(822)		$	141		$	(2,319)		$	(544)

The accompanying notes are an integral part of these consolidated financial statements.

6 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES




Unaudited (Dollars in millions, shares in thousands)	Shares of Common Stock	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		AOCI		Noncontrolling Interests		Total Shareholders’ Equity
Balance, April 1, 2021	1,344,845	$	7,124	$	6,724	$	35,360	$	20,184	$	(1,516)	$	—	$	67,876
Net income	—	—		—		—		1,657		—		1		1,658
OCI	—	—		—		—		—		468		—		468

Issued in connection with equity awards, net	209	—		1		(3)		(2)		—		—		(4)

Repurchase of common stock	(10,284)	—		(51)		(559)		—		—		—		(610)
Redemption of preferred stock	—	(451)		—		—		(14)		—		—		(465)
Cash dividends declared on common stock	—	—		—		—		(602)		—		—		(602)
Cash dividends declared on preferred stock	—	—		—		—		(84)		—		—		(84)
Equity-based compensation expense	—	—		—		100		—		—		—		100

Other, net	—	—		—		—		—		—		(1)		(1)
Balance, June 30, 2021	1,334,770	$	6,673	$	6,674	$	34,898	$	21,139	$	(1,048)	$	—	$	68,336
Balance, April 1, 2022	1,331,414	$	6,673	$	6,657	$	34,539	$	23,687	$	(6,535)	$	23	$	65,044
Net income	—	—		—		—		1,531		—		1		1,532
OCI	—	—		—		—		—		(2,705)		—		(2,705)

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

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

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

Balance, June 30, 2022	1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999















Balance, January 1, 2021	1,348,961	$	8,048	$	6,745	$	35,843	$	19,455	$	716	$	105	$	70,912
Net income	—	—		—		—		3,134		—		(3)		3,131
OCI	—	—		—		—		—		(1,764)		—		(1,764)

Issued in connection with equity awards, net	5,597	—		28		(114)		(2)		—		—		(88)

Repurchase of common stock	(19,788)	—		(99)		(1,017)		—		—		—		(1,116)
Redemption of preferred stock	—	(1,375)		—		—		(40)		—		—		(1,415)
Cash dividends declared on common stock	—	—		—		—		(1,207)		—		—		(1,207)
Cash dividends declared on preferred stock	—	—		—		—		(201)		—		—		(201)
Equity-based compensation expense	—	—		—		186		—		—		—		186

Other, net	—	—		—		—		—		—		(102)		(102)
Balance, June 30, 2021	1,334,770	$	6,673	$	6,674	$	34,898	$	21,139	$	(1,048)	$	—	$	68,336
Balance, January 1, 2022	1,327,818	$	6,673	$	6,639	$	34,565	$	22,998	$	(1,604)	$	—	$	69,271
Net income	—	—		—		—		2,946		—		2		2,948
OCI	—	—		—		—		—		(7,636)		—		(7,636)

Issued in connection with equity awards, net	3,683	—		19		(107)		(3)		—		—		(91)

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

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

Other, net	—	—		—		—		—		—		22		22
Balance, June 30, 2022	1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999

The accompanying notes are an integral part of these consolidated financial statements.

Truist Financial Corporation 7

CONSOLIDATED STATEMENTS OF CASH FLOWS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions)		Six Months Ended June 30,
	2022			2021
Cash Flows From Operating Activities:
Net income		$	2,948		$	3,131
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		76			(386)

Depreciation		397			401

Amortization of intangibles		280			286

Securities (gains) losses		70			—
Net change in operating assets and liabilities:
LHFS		395			2,139
Loan servicing rights		(638)			(156)
Pension asset		(468)			(479)
Derivative assets and liabilities		2,143			668
Trading assets		(807)			(2,073)
Other assets and other liabilities		(228)			(223)

Other, net		(391)			(5)
Net cash from operating activities		3,777			3,303
Cash Flows From Investing Activities:
Proceeds from sales of AFS securities		3,198			112
Proceeds from maturities, calls and paydowns of AFS securities		8,285			17,175
Purchases of AFS securities		(8,658)			(39,378)
Proceeds from maturities, calls and paydowns of HTM securities		2,567			—
Purchases of HTM securities		(3,020)			—
Originations and purchases of loans and leases, net of sales and principal collected		(13,356)			13,451

Net cash received (paid) for securities borrowed or purchased under agreements to resell		1,378			503

Net cash received (paid) for asset acquisitions, business combinations, and divestitures		(505)			1,130

Other, net		(694)			(18)
Net cash from investing activities		(10,805)			(7,025)
Cash Flows From Financing Activities:
Net change in deposits		8,275			17,209
Net change in short-term borrowings		8,444			(440)
Proceeds from issuance of long-term debt		943			3,333
Repayment of long-term debt		(5,831)			(4,546)
Repurchase of common stock		(250)			(1,116)

Redemption of preferred stock		—			(1,415)
Cash dividends paid on common stock		(1,276)			(1,207)
Cash dividends paid on preferred stock		(165)			(201)
Net cash received (paid) for hedge unwinds		(198)			—
Other, net		(96)			(206)
Net cash from financing activities		9,846			11,411
Net Change in Cash and Cash Equivalents		2,818			7,689
Cash and Cash Equivalents, January 1		20,295			18,868
Cash and Cash Equivalents, June 30		$	23,113		$	26,557
Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:
Interest expense		$	430		$	461
Income taxes		418			579



Noncash investing activities:





Transfer of AFS securities to HTM		59,436			—

The accompanying notes are an integral part of these consolidated financial statements.

8 Truist Financial Corporation

NOTE 1. Basis of Presentation

General

See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with GAAP. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. The year-end consolidated balance sheet data was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2021 should be referred to in connection with these unaudited interim consolidated financial statements. There were no significant changes to the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021 that could have a material effect on the Company’s financial statements.

Reclassifications

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

Use of Estimates in the Preparation of Financial Statements

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

Changes in Accounting Principles and Effects of New Accounting Pronouncements


Standard / Adoption Date	Description	Effects on the Financial Statements



Standards Not Yet Adopted
Troubled Debt Restructurings and Vintage Disclosures January 1, 2023	Eliminates the accounting guidance for TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Additionally, requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.	Truist has created a project plan and is actively engaged with its lines of business to establish reporting mechanisms consistent with the requirements of this standard. While implementation efforts are ongoing, the Company does not expect that the implementation of this standard will have a material impact on the Company. Upon adoption, Truist expects the newly required disclosures to be included in the Loans and ACL footnote.
Fair Value Hedging – Portfolio Layer Method January 1, 2023	Introduces the portfolio layer method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method (previously named, last-of-layer method). Additionally, expands the scope of the portfolio layer method to include non-prepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.	Truist is continuing to evaluate the use of the portfolio layer method in its hedging programs, although future use of the standard is dependent on its asset-liability management strategies in the context of the then current interest rate outlook. Truist does not believe adoption of the standard will have a material impact on its active last-of-layer hedges.

Truist Financial Corporation 9

NOTE 2. Business Combinations

On March 1, 2022, Truist acquired Kensington Vanguard National Land Services, one of the country’s largest independent full-service national title insurance agencies, which resulted in approximately $198 million of goodwill and $138 million of identifiable intangible assets in the IH segment. Fair value estimates related to the acquired assets and liabilities are subject to adjustment during the one-year measurement period following the closing of the acquisition. The intangible assets are being amortized over a term of 15 years based upon the estimated duration of economic benefits received. Goodwill of $130 million and identifiable intangible assets of $110 million are deductible for tax purposes.

NOTE 3. Securities Financing Activities

Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently sold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. The following table presents securities borrowed or purchased under agreements to resell:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Securities purchased under agreements to resell	$	2,010	$	3,460
Securities borrowed	640		568
Total securities borrowed or purchased under agreements to resell	$	2,650	$	4,028

Fair value of collateral held available to be resold or repledged	$	2,637	$	4,005
Fair value of securities repledged	707		1,141

For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to “Note 14. Commitments and Contingencies” for additional information related to pledged securities. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:


	June 30, 2022				December 31, 2021
(Dollars in millions)	Overnight and Continuous		Up to 30 days		Total		Overnight and Continuous		Up to 30 days		Total
U.S. Treasury	$	154	$	—	$	154	$	749	$	409	$	1,158
State and Municipal	200		—		200		—		—		—
GSE	10		8		18		53		25		78
Agency MBS - residential	1,079		24		1,103		720		141		861
Corporate and other debt securities	150		313		463		213		125		338
Total securities sold under agreements to repurchase	$	1,593	$	345	$	1,938	$	1,735	$	700	$	2,435

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

10 Truist Financial Corporation

NOTE 4. Investment Securities

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


June 30, 2022 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
	Gains		Losses
AFS securities:
U.S. Treasury	$	10,855	$	—	$	597	$	10,258
GSE	269		—		19		250
Agency MBS - residential	69,071		5		6,879		62,197
Agency MBS - commercial	2,966		2		314		2,654
States and political subdivisions	383		14		23		374
Non-agency MBS	4,050		—		625		3,425
Other	123		—		3		120
Total AFS securities	$	87,717	$	21	$	8,460	$	79,278
HTM securities:


Agency MBS - residential	$	60,081	$	—	$	6,176	$	53,905





December 31, 2021 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
	Gains		Losses
AFS securities:
U.S. Treasury	$	9,892	$	9	$	106	$	9,795
GSE	1,667		33		2		1,698
Agency MBS - residential	135,886		656		2,500		134,042
Agency MBS - commercial	2,928		18		64		2,882
States and political subdivisions	382		39		1		420
Non-agency MBS	4,305		—		47		4,258
Other	28		—		—		28
Total AFS securities	$	155,088	$	755	$	2,720	$	153,123
HTM securities:


Agency MBS - residential	$	1,494	$	1	$	—	$	1,495

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

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


	Jun 30, 2022
(Dollars in millions)	Amortized Cost		Fair Value
FNMA	$	44,022	$	39,503
FHLMC	44,548		39,828

Truist Financial Corporation 11

The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table. The expected life of MBS may be shorter than the contractual maturities because borrowers may have the right to prepay their obligations with or without penalties.


	Amortized Cost										Fair Value
June 30, 2022 (Dollars in millions)	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total
AFS securities:
U.S. Treasury	$	1,120	$	8,746	$	983	$	6	$	10,855	$	1,106	$	8,252	$	894	$	6	$	10,258
GSE	—		—		—		269		269		—		—		—		250		250
Agency MBS - residential	—		1		587		68,483		69,071		—		1		573		61,623		62,197
Agency MBS - commercial	—		8		17		2,941		2,966		—		8		16		2,630		2,654
States and political subdivisions	15		76		124		168		383		15		76		125		158		374
Non-agency MBS	—		—		—		4,050		4,050		—		—		—		3,425		3,425
Other	4		37		18		64		123		4		37		17		62		120
Total AFS securities	$	1,139	$	8,868	$	1,729	$	75,981	$	87,717	$	1,125	$	8,374	$	1,625	$	68,154	$	79,278
HTM securities:


Agency MBS - residential	$	—	$	—	$	—	$	60,081	$	60,081	$	—	$	—	$	—	$	53,905	$	53,905

The following tables present the fair values and gross unrealized losses of investments based on the length of time that individual securities have been in a continuous unrealized loss position:


	Less than 12 months				12 months or more				Total
June 30, 2022 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
U.S. Treasury	$	9,644	$	541	$	594	$	56	$	10,238	$	597
GSE	230		19		—		—		230		19
Agency MBS - residential	54,268		5,703		7,489		1,176		61,757		6,879
Agency MBS - commercial	1,031		79		1,552		235		2,583		314
States and political subdivisions	198		20		20		3		218		23
Non-agency MBS	3,425		625		—		—		3,425		625
Other	115		3		—		—		115		3
Total	$	68,911	$	6,990	$	9,655	$	1,470	$	78,566	$	8,460
HTM securities:


Agency MBS - residential	$	34,004	$	3,516	$	19,901	$	2,660	$	53,905	$	6,176








	Less than 12 months				12 months or more				Total
December 31, 2021 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

AFS securities:
U.S. Treasury	$	8,412	$	88	$	582	$	18	$	8,994	$	106
GSE	104		2		—		—		104		2
Agency MBS - residential	101,262		2,377		2,638		123		103,900		2,500
Agency MBS - commercial	1,749		50		413		14		2,162		64
States and political subdivisions	—		—		22		1		22		1
Non-agency MBS	4,258		47		—		—		4,258		47
Other	6		—		—		—		6		—
Total	$	115,791	$	2,564	$	3,655	$	156	$	119,446	$	2,720

At June 30, 2022 and December 31, 2021, no ACL was established for AFS or HTM securities. Substantially all of the unrealized losses on the securities portfolio, including non-agency MBS, were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. HTM debt securities consist of residential agency MBS. Accordingly, the Company does not expect to incur any credit losses on HTM investment securities.

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


(Dollars in millions)		Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Gross realized gains		$	—		$	—		$	13		$	—
Gross realized losses		(1)			—			(83)			—


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

12 Truist Financial Corporation

NOTE 5. Loans and ACL

The following tables present loans and leases HFI by aging category. Government guaranteed loans are not placed on nonperforming status regardless of delinquency because collection of principal and interest is reasonably assured. The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period. In certain limited circumstances, accommodation programs result in the delinquency status being reset to current.


	Accruing
June 30, 2022 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due (1)		Nonperforming		Total
Commercial:
Commercial and industrial	$	149,197	$	223	$	27	$	393	$	149,840
CRE	22,117		10		3		19		22,149
Commercial construction	5,150		4		3		—		5,157

Consumer:
Residential mortgage	49,188		535		911		269		50,903
Residential home equity and direct	25,020		156		10		159		25,345
Indirect auto	26,590		584		1		244		27,419
Indirect other	11,874		78		3		6		11,961
Student	4,890		453		801		—		6,144
Credit card	4,668		48		28		—		4,744

Total	$	298,694	$	2,091	$	1,787	$	1,090	$	303,662
(1)Includes government guaranteed loans of $884 million in the residential mortgage portfolio and $796 million in the student portfolio.

	Accruing
December 31, 2021 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due (1)		Nonperforming		Total
Commercial:
Commercial and industrial	$	138,225	$	130	$	13	$	394	$	138,762
CRE	23,902		20		—		29		23,951
Commercial construction	4,962		2		—		7		4,971

Consumer:
Residential mortgage	46,033		514		1,009		296		47,852
Residential home equity and direct	24,809		107		9		141		25,066
Indirect auto	25,615		607		1		218		26,441
Indirect other	10,811		64		3		5		10,883
Student	5,357		555		868		—		6,780
Credit card	4,735		45		27		—		4,807

Total	$	284,449	$	2,044	$	1,930	$	1,090	$	289,513
(1)Includes government guaranteed loans of $978 million in the residential mortgage portfolio and $864 million in the student portfolio.

Truist Financial Corporation 13

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


June 30, 2022 (Dollars in millions)	Amortized Cost Basis by Origination Year																	Revolving Credit		Loans Converted to Term		Other (1)
2022			2021			2020			2019			2018			Prior					Total
Commercial:
Commercial and industrial:
Pass	$	24,294		$	27,579		$	13,238		$	10,294		$	6,785		$	11,523	$	52,024	$	—	$	(188)	$	145,549
Special mention	124			150			325			139			200			45		517		—		—		1,500
Substandard	178			324			357			360			183			240		756		—		—		2,398
Nonperforming	7			52			13			77			48			25		171		—		—		393
Total	24,603			28,105			13,933			10,870			7,216			11,833		53,468		—		(188)		149,840
CRE:
Pass	2,598			3,801			2,607			4,456			2,956			2,925		690		—		(50)		19,983
Special mention	10			87			108			177			237			35		—		—		—		654
Substandard	95			161			168			411			340			318		—		—		—		1,493
Nonperforming	4			3			1			1			—			10		—		—		—		19
Total	2,707			4,052			2,884			5,045			3,533			3,288		690		—		(50)		22,149
Commercial construction:
Pass	768			1,259			1,072			469			201			130		1,008		—		(1)		4,906
Special mention	2			2			30			53			53			—		—		—		—		140
Substandard	11			3			30			33			34			—		—		—		—		111
Nonperforming	—			—			—			—			—			—		—		—		—		—
Total	781			1,264			1,132			555			288			130		1,008		—		(1)		5,157






Consumer:
Residential mortgage:

Current	6,223			17,625			6,385			3,235			1,471			14,249		—		—		—		49,188
30 - 89 days past due	32			50			34			36			38			345		—		—		—		535
90 days or more past due	2			5			59			76			111			658		—		—		—		911
Nonperforming	—			3			9			17			21			219		—		—		—		269
Total	6,257			17,683			6,487			3,364			1,641			15,471		—		—		—		50,903
Residential home equity and direct:

Current	3,044			3,886			1,928			1,141			444			399		10,624		3,569		(15)		25,020
30 - 89 days past due	45			12			8			8			4			2		51		26		—		156
90 days or more past due	—			—			—			—			—			—		8		2		—		10
Nonperforming	—			5			5			5			2			7		46		89		—		159
Total	3,089			3,903			1,941			1,154			450			408		10,729		3,686		(15)		25,345
Indirect auto:

Current	6,833			8,737			5,219			3,265			1,565			971		—		—		—		26,590
30 - 89 days past due	43			163			118			115			72			73		—		—		—		584
90 days or more past due	1			—			—			—			—			—		—		—		—		1
Nonperforming	5			56			53			60			38			32		—		—		—		244
Total	6,882			8,956			5,390			3,440			1,675			1,076		—		—		—		27,419
Indirect other:

Current	3,516			3,386			2,113			1,235			706			918		—		—		—		11,874
30 - 89 days past due	13			22			16			12			9			6		—		—		—		78
90 days or more past due	1			1			1			—			—			—		—		—		—		3
Nonperforming	—			1			1			2			—			2		—		—		—		6
Total	3,530			3,410			2,131			1,249			715			926		—		—		—		11,961
Student:
Current	—			—			19			78			63			4,714		—		—		16		4,890
30 - 89 days past due	—			—			—			—			1			450		—		—		2		453
90 days or more past due	—			—			—			—			1			797		—		—		3		801

Total	—			—			19			78			65			5,961		—		—		21		6,144
Credit card:
Current																		4,648		19		1		4,668
30 - 89 days past due																		46		2		—		48
90 days or more past due																		27		1		—		28

Total	—			—			—			—			—			—		4,721		22		1		4,744
Total	$	47,849		$	67,373		$	33,917		$	25,755		$	15,583		$	39,093	$	70,616	$	3,708	$	(232)	$	303,662

14 Truist Financial Corporation


December 31, 2021 (Dollars in millions)	Amortized Cost Basis by Origination Year																	Revolving Credit		Loans Converted to Term		Other (1)
2021			2020			2019			2018			2017			Prior					Total
Commercial:
Commercial and industrial:
Pass	$	35,530		$	17,430		$	14,105		$	8,994		$	5,633		$	9,424	$	43,035	$	—	$	(169)	$	133,982
Special mention	195			221			326			317			46			70		691		—		—		1,866
Substandard	352			356			395			197			91			335		794		—		—		2,520
Nonperforming	50			19			49			42			16			34		184		—		—		394
Total	36,127			18,026			14,875			9,550			5,786			9,863		44,704		—		(169)		138,762
CRE:
Pass	4,836			2,946			5,109			3,201			1,774			2,131		762		—		(61)		20,698
Special mention	13			118			483			247			44			83		—		—		—		988
Substandard	321			264			523			528			321			279		—		—		—		2,236
Nonperforming	1			1			11			—			9			7		—		—		—		29
Total	5,171			3,329			6,126			3,976			2,148			2,500		762		—		(61)		23,951
Commercial construction:
Pass	1,113			1,179			1,259			419			44			95		558		—		12		4,679
Special mention	—			14			72			50			—			—		—		—		—		136
Substandard	7			13			45			67			17			—		—		—		—		149
Nonperforming	—			—			1			—			5			—		—		—		1		7
Total	1,120			1,206			1,377			536			66			95		558		—		13		4,971






Consumer:
Residential mortgage:

Current	17,271			6,798			3,642			1,753			2,237			14,240		—		—		92		46,033
30 - 89 days past due	58			31			32			40			31			322		—		—		—		514
90 or more days past due	3			44			91			133			95			643		—		—		—		1,009
Nonperforming	1			5			18			27			20			226		—		—		(1)		296
Total	17,333			6,878			3,783			1,953			2,383			15,431		—		—		91		47,852
Residential home equity and direct:

Current	4,962			2,630			1,717			691			189			425		10,757		3,388		50		24,809
30 - 89 days past due	8			8			10			3			1			3		53		21		—		107
90 days or more past due	—			—			—			—			—			—		5		4		—		9
Nonperforming	2			3			4			1			—			7		48		75		1		141
Total	4,972			2,641			1,731			695			190			435		10,863		3,488		51		25,066
Indirect auto:

Current	10,699			6,691			4,293			2,158			1,081			504		—		—		189		25,615
30 - 89 days past due	119			138			145			97			56			52		—		—		—		607
90 days or more past due	—			—			—			—			—			1		—		—		—		1
Nonperforming	28			48			61			41			21			19		—		—		—		218
Total	10,846			6,877			4,499			2,296			1,158			576		—		—		189		26,441
Indirect other:

Current	4,333			2,724			1,638			937			455			691		—		—		33		10,811
30 - 89 days past due	14			15			15			12			4			4		—		—		—		64
90 days or more past due	1			1			1			—			—			—		—		—		—		3
Nonperforming	1			1			1			—			—			2		—		—		—		5
Total	4,349			2,741			1,655			949			459			697		—		—		33		10,883
Student:
Current	—			21			88			73			61			5,122		—		—		(8)		5,357
30 - 89 days past due	—			—			1			1			1			552		—		—		—		555
90 days or more past due	—			—			—			—			1			867		—		—		—		868

Total	—			21			89			74			63			6,541		—		—		(8)		6,780
Credit card:
Current																		4,711		24		—		4,735
30 - 89 days past due																		43		2		—		45
90 days or more past due																		26		1		—		27

Total	—			—			—			—			—			—		4,780		27		—		4,807
Total	$	79,918		$	41,719		$	34,135		$	20,029		$	12,253		$	36,138	$	61,667	$	3,515	$	139	$	289,513

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

Truist Financial Corporation 15

ACL

The following tables present activity in the ACL:








(Dollars in millions)	Balance at Apr 1, 2021		Charge-Offs		Recoveries		Provision (Benefit)		Other (1)		Balance at Jun 30, 2021
Commercial:
Commercial and industrial	$	2,136	$	(53)	$	23	$	(302)	$	—	$	1,804
CRE	544		—		4		(108)		—		440
Commercial construction	77		—		1		(9)		—		69

Consumer:
Residential mortgage	343		(4)		5		(23)		—		321
Residential home equity and direct	707		(57)		20		24		—		694
Indirect auto	1,176		(69)		27		(18)		—		1,116
Indirect other	187		(11)		7		(2)		—		181
Student	131		(3)		—		—		1		129
Credit card	361		(42)		10		38		—		367

ALLL	5,662		(239)		97		(400)		1		5,121
RUFC	349		—		—		(34)		—		315
ACL	$	6,011	$	(239)	$	97	$	(434)	$	1	$	5,436

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

Consumer:
Residential mortgage	310		(2)		4		15		—		327
Residential home equity and direct	574		(85)		20		79		—		588
Indirect auto	957		(77)		26		46		—		952
Indirect other	211		(18)		6		29		—		228
Student	115		(4)		—		(10)		(1)		100
Credit card	348		(40)		9		31		—		348

ALLL	4,170		(244)		85		177		(1)		4,187
RUFC	253		—		—		(6)		—		247
ACL	$	4,423	$	(244)	$	85	$	171	$	(1)	$	4,434



















(Dollars in millions)	Balance at Jan 1, 2021		Charge-Offs		Recoveries		Provision (Benefit)		Other (1)		Balance at Jun 30, 2021
Commercial:
Commercial and industrial	$	2,204	$	(132)	$	42	$	(310)	$	—	$	1,804
CRE	573		(4)		5		(134)		—		440
Commercial construction	81		(2)		2		(12)		—		69

Consumer:
Residential mortgage	368		(15)		7		(39)		—		321
Residential home equity and direct	714		(112)		38		54		—		694
Indirect auto	1,198		(174)		49		43		—		1,116
Indirect other	208		(28)		13		(12)		—		181
Student	130		(6)		—		2		3		129
Credit card	359		(82)		19		71		—		367

ALLL	5,835		(555)		175		(337)		3		5,121
RUFC	364		—		—		(49)		—		315
ACL	$	6,199	$	(555)	$	175	$	(386)	$	3	$	5,436

16 Truist Financial Corporation


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

Consumer:
Residential mortgage	308		(4)		10		13		—		327
Residential home equity and direct	615		(143)		40		76		—		588
Indirect auto	1,022		(179)		49		60		—		952
Indirect other	195		(37)		12		58		—		228
Student	117		(10)		—		(7)		—		100
Credit card	350		(81)		18		61		—		348

ALLL	4,435		(505)		168		89		—		4,187
RUFC	260		—		—		(13)		—		247
ACL	$	4,695	$	(505)	$	168	$	76	$	—	$	4,434

(1)Includes the amounts for the ALLL for PCD acquisitions, and other activity.

The commercial ALLL decreased $11 million and $184 million and the consumer ALLL increased $28 million and decreased $62 million for the three and six months ended June 30, 2022, respectively. The decreases, with the exception of the consumer portfolio for purposes of the three months ended June 30, 2022 which saw a slight increase, reflect a continued favorable credit environment tempered by uncertainty associated with inflation, supply chain disruption, rising rates, and geopolitical events, partially offset by growth in the loan portfolio.

The RUFC decreased $6 million and $13 million for the three and six months ended June 30, 2022, respectively. The decreases reflect a continued favorable credit environment.

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

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

Quantitative models have certain limitations with respect to estimating expected losses, particularly in times of rapidly changing macro-economic conditions and forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to be an important component of the ACL for the foreseeable future. The June 30, 2022 ACL estimate includes adjustments to consider the impact of current and expected events or risks not captured by the loss forecasting models, the outcomes of which are uncertain and may not be completely considered by quantitative models. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

Truist Financial Corporation 17

NPAs

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


	June 30, 2022				December 31, 2021
	Recorded Investment				Recorded Investment
(Dollars in millions)	Without an ALLL		With an ALLL		Without an ALLL		With an ALLL
Commercial:
Commercial and industrial	$	128	$	265	$	125	$	269
CRE	8		11		12		17
Commercial construction	—		—		—		7

Consumer:
Residential mortgage	4		265		4		292
Residential home equity and direct	2		157		3		138
Indirect auto	4		240		1		217
Indirect other	—		6		—		5


Total	$	146	$	944	$	145	$	945

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


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Nonperforming loans and leases HFI	$	1,090	$	1,090
Nonperforming LHFS	33		22
Foreclosed real estate	3		8
Other foreclosed property	47		43
Total nonperforming assets	$	1,173	$	1,163

Residential mortgage loans in the process of foreclosure	$	245	$	135

TDRs

The following table presents a summary of TDRs:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Performing TDRs:
Commercial:
Commercial and industrial	$	105	$	147
CRE	5		5
Commercial construction	1		—

Consumer:
Residential mortgage	1,042		692
Residential home equity and direct	84		98
Indirect auto	401		389
Indirect other	6		7
Student	27		25
Credit card	22		27
Total performing TDRs	1,693		1,390
Nonperforming TDRs	204		152
Total TDRs	$	1,897	$	1,542
ALLL attributable to TDRs	$	122	$	102

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

18 Truist Financial Corporation



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




Consumer	97			197		293			14			245		388		622		29





Credit card	2			—		2			1			4		—		4		2
Re-modification of previously designated TDRs	9			29								30		40


	As of / For the Three Months Ended June 30, 2021											As of / For the Six Months Ended June 30, 2021
	Type of Modification					Prior Quarter Loan Balance			Related ALLL at Period End			Type of Modification				Prior Quarter Loan Balance		Related ALLL at Period End
(Dollars in millions)	Rate			Structure					Rate			Structure
Newly designated TDRs:
Commercial	$	—		$	6	$	6		$	—		$	27	$	109	$	153	$	13




Consumer	63			71		137			10			138		226		370		23





Credit card	2			—		3			1			6		—		7		3
Re-modification of previously designated TDRs	14			6								28		20

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

The following table presents additional information about loans and leases:


(Dollars in millions)			Jun 30, 2022						Dec 31, 2021
Unearned income, discounts, and net deferred loan fees and costs			$	329					$	849

Truist Financial Corporation 19

NOTE 6. Goodwill and Other Intangible Assets

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

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. Activity during 2022 reflects the acquisition of Kensington Vanguard National Land Services. Activity during 2021 primarily reflects the acquisitions of Service Finance, LLC, and Constellation Affiliated Partners. Refer to “Note 2. Business Combinations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on the acquisitions and “Note 18. Operating Segments” for additional information on segments.



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



Goodwill, January 1, 2021	$	15,841	$	6,167	$	2,439	$	24,447
Mergers and acquisitions	1,168		—		556		1,724
Adjustments and other	(139)		(18)		84		(73)
Goodwill, December 31, 2021	16,870		6,149		3,079		26,098
Mergers and acquisitions	—		—		187		187
Adjustments and other	—		—		14		14
Goodwill, June 30, 2022	$	16,870	$	6,149	$	3,280	$	26,299

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


		June 30, 2022									December 31, 2021
(Dollars in millions)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
CDI		$	2,519		$	(1,300)		$	1,219		$	2,563		$	(1,190)		$	1,373
Other, primarily client relationship intangibles		3,494			(1,178)			2,316			3,116			(1,081)			2,035
Total		$	6,013		$	(2,478)		$	3,535		$	5,679		$	(2,271)		$	3,408

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

20 Truist Financial Corporation

NOTE 7. Loan Servicing

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

Residential Mortgage Activities

The following tables summarize residential mortgage servicing activities:



(Dollars in millions)	Jun 30, 2022			Dec 31, 2021
UPB of residential mortgage loan servicing portfolio	$	262,845		$	246,727
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	209,504			196,011
Mortgage loans sold with recourse	214			244
Maximum recourse exposure from mortgage loans sold with recourse liability	135			155
Indemnification, recourse and repurchase reserves	58			74

As of / For the Six Months Ended June 30, (Dollars in millions)	2022			2021
UPB of residential mortgage loans sold from LHFS	$	15,907		$	22,020
Pre-tax gains recognized on mortgage loans sold and held for sale	66			223
Servicing fees recognized from mortgage loans serviced for others	297			280
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.30		%	0.31		%
Weighted average interest rate on mortgage loans serviced for others	3.42			3.66

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



(Dollars in millions)	2022		2021
Residential MSRs, carrying value, January 1	$	2,305	$	1,778
Acquired	195		52
Additions	257		347
Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds	630		20
OAS	(24)		153

Realization of expected net servicing cash flows, passage of time and other	(215)		(387)
Residential MSRs, carrying value, June 30	$	3,148	$	1,963

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


	June 30, 2022								December 31, 2021
	Range				Weighted Average				Range					Weighted Average
(Dollars in millions)	Min		Max					Min			Max
Prepayment speed	8.9	%	10.7	%	9.4		%		11.4	%		15.3	%	13.8		%
Effect on fair value of a 10% increase					$	(109)								$	(113)
Effect on fair value of a 20% increase					(210)									(216)
OAS	1.3	%	11.6	%	4.3		%		1.5	%		10.7	%	4.2		%
Effect on fair value of a 10% increase					$	(55)								$	(37)
Effect on fair value of a 20% increase					(107)									(73)
Composition of loans serviced for others:
Fixed-rate residential mortgage loans					99.4		%							99.3		%
Adjustable-rate residential mortgage loans					0.6									0.7
Total					100.0		%							100.0		%
Weighted average life					6.7 years									5.2 years

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

Truist Financial Corporation 21

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:



(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
UPB of CRE mortgages serviced for others	$	36,759	$	37,960
CRE mortgages serviced for others covered by recourse provisions	9,889		10,243
Maximum recourse exposure from CRE mortgages sold with recourse liability	2,845		2,958
Recorded reserves related to recourse exposure	15		16
CRE mortgages originated during the year-to-date period	3,460		9,380
Commercial MSRs at fair value	283		280

Other Servicing Activities

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

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

The Company leases certain assets, consisting primarily of real estate, and assesses at contract inception whether a contract is, or contains, a lease. The following tables present additional information on leases, excluding leases related to the lease financing businesses:




	June 30, 2022						December 31, 2021
(Dollars in millions)	Operating Leases			Finance Leases			Operating Leases			Finance Leases
ROU assets	$	1,095		$	21		$	1,168		$	22
Lease liabilities	1,471			25			1,600			26
Weighted average remaining term	6.4 years			6.0 years			6.6 years			6.4 years
Weighted average discount rate	2.4		%	3.4		%	2.3		%	3.5		%


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Operating lease costs	$	75	$	85	$	160	$	170

Lessor Operating Leases

The Company’s two primary lessor businesses are equipment financing and structured real estate with income recorded in Operating lease income on the Consolidated Statements of Income. The following table presents a summary of assets under operating leases. This table excludes subleases on assets included in premises and equipment.


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Assets held under operating leases (1)	$	2,136	$	2,110


Accumulated depreciation	(540)		(539)
Net	$	1,596	$	1,571

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

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain teammates for which the Company is the beneficiary. These policies provide the Company an efficient form of funding for retirement and other employee benefits costs. The carrying value of bank-owned life insurance was $7.6 billion at June 30, 2022 and $7.3 billion December 31, 2021.

22 Truist Financial Corporation

NOTE 9. Borrowings

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


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Federal funds purchased	$	2,942		$	—
Securities sold under agreements to repurchase	1,938			2,435
FHLB advances	6,000			—
Collateral in excess of derivative exposures	420			318
Master notes	620			808
Securities sold short	1,816			1,731

Total short-term borrowings	$	13,736		$	5,292

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


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Truist Financial Corporation:
Fixed rate senior notes (1)	$	11,481	$	13,271
Floating rate senior notes (1)	999		1,348
Fixed rate subordinated notes (2)	930		1,254
Capital Notes (2)	622		620
Structured notes (3)	11		11
Truist Bank:
Fixed rate senior notes (1)	8,058		9,545
Floating rate senior notes (1)	1,749		2,399
Fixed rate subordinated notes (2)	4,898		5,043

FHLB advances	3		863

Other long-term debt (4)	1,275		1,263
Nonbank subsidiaries:
Other long-term debt (5)	293		296
Total long-term debt	$	30,319	$	35,913

(1)Prior period was revised to reclassify certain floating rate senior notes that were reported as fixed rate senior notes at December 31, 2021.

(2)Subordinated and capital notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.

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

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

(5)Includes debt associated with structured real estate leases.

NOTE 10. Shareholders’ Equity

Common Stock

The following table presents total dividends declared per share of common stock:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cash dividends declared per share	$	0.48	$	0.45	$	0.96	$	0.90

Share Repurchase Activity

The Board of Directors has authorized the repurchase of up to $4.2 billion of the Company’s common stock through September 30, 2022. At June 30, 2022, Truist had remaining authorization to repurchase $2.3 billion of common stock under the Board approved repurchase plan. Truist’s share repurchase activity is dependent on capital deployment through organic growth and acquisitions, giving consideration to economic and regulatory conditions. For the six months ended June 30, 2022, the Company repurchased $250 million of common stock, which represented 5.1 million shares.

Truist Financial Corporation 23

NOTE 11. AOCI

AOCI includes the after-tax change in unrecognized net costs related to defined benefit pension and OPEB plans as well as unrealized gains and losses on cash flow hedges, AFS securities, and HTM securities transferred from AFS securities.





(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total
AOCI balance, April 1, 2021	$	(840)	$	(28)	$	(650)	$	—	$	2	$	(1,516)
OCI before reclassifications, net of tax	(9)		—		394		—		1		386
Amounts reclassified from AOCI:
Before tax	9		13		85		—		—		107
Tax effect	2		3		20		—		—		25
Amounts reclassified, net of tax	7		10		65		—		—		82
Total OCI, net of tax	(2)		10		459		—		1		468
AOCI balance, June 30, 2021	$	(842)	$	(18)	$	(191)	$	—	$	3	$	(1,048)
AOCI balance, April 1, 2022	$	(78)	$	(4)	$	(3,627)	$	(2,828)	$	2	$	(6,535)
OCI before reclassifications, net of tax	—		46		(2,873)		—		(2)		(2,829)

Amounts reclassified from AOCI:
Before tax	8		5		32		119		—		164
Tax effect	3		2		8		27		—		40
Amounts reclassified, net of tax	5		3		24		92		—		124
Total OCI, net of tax	5		49		(2,849)		92		(2)		(2,705)
AOCI balance, June 30, 2022	$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)

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








AOCI balance, January 1, 2021	$	(875)	$	(64)	$	1,654	$	—	$	1	$	716
OCI before reclassifications, net of tax	19		—		(2,014)		—		2		(1,993)
Amounts reclassified from AOCI:
Before tax	18		60		221		—		—		299
Tax effect	4		14		52		—		—		70
Amounts reclassified, net of tax	14		46		169		—		—		229
Total OCI, net of tax	33		46		(1,845)		—		2		(1,764)
AOCI balance, June 30, 2021	$	(842)	$	(18)	$	(191)	$	—	$	3	$	(1,048)
AOCI balance, January 1, 2022	$	(86)	$	(9)	$	(1,510)	$	—	$	1	$	(1,604)
OCI before reclassifications, net of tax	2		46		(7,909)		—		(1)		(7,862)
AFS Securities transferred to HTM, net of tax	—		—		2,872		(2,872)		—		—
Amounts reclassified from AOCI:
Before tax	16		11		93		176		—		296
Tax effect	5		3		22		40		—		70
Amounts reclassified, net of tax	11		8		71		136		—		226
Total OCI, net of tax	13		54		(7,838)		136		(1)		(7,636)
AOCI balance, June 30, 2022	$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)
Primary income statement location of amounts reclassified from AOCI	Other expense		Net interest income and Other expense		Securities gains (losses) and Net interest income		Net interest income		Net interest income

NOTE 12. Income Taxes

For the three months ended June 30, 2022 and 2021, the provision for income taxes was $372 million and $415 million, respectively, representing effective tax rates of 19.5% and 20.0%, respectively. For the six months ended June 30, 2022 and 2021, the provision for income taxes was $702 million and $766 million, respectively, representing effective tax rates of 19.2% and 19.7%, respectively. The lower effective tax rate for the three months ended June 30, 2022 was primarily driven by lower pre-tax income. The lower effective tax rate for the six months ended June 30, 2022 was primarily driven by changes in discrete taxes. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

24 Truist Financial Corporation

NOTE 13. Benefit Plans

The components of net periodic (benefit) cost for defined benefit pension plans are summarized in the following table:


		Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	Income Statement Location	2022		2021		2022		2021
Service cost	Personnel expense	$	140	$	157	$	279	$	315
Interest cost	Other expense	88		80		176		159
Estimated return on plan assets	Other expense	(270)		(249)		(539)		(498)
Amortization and other	Other expense	9		9		17		17
Net periodic (benefit) cost		$	(33)	$	(3)	$	(67)	$	(7)

Truist makes contributions to the qualified pension plans up to the maximum deductible for federal income tax purposes. Discretionary contributions totaling $351 million were made to the Truist pension plan during the six months ended June 30, 2022. There are no required contributions for 2022.

NOTE 14. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

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


(Dollars in millions)	Balance Sheet Location	Jun 30, 2022		Dec 31, 2021
Investments in affordable housing projects:
Carrying amount	Other assets	$	4,279	$	4,107
Amount of future funding commitments included in carrying amount	Other liabilities	1,445		1,285
Lending exposure	Loans and leases for funded amounts	1,151		763

Renewable energy investments:
Carrying amount	Other assets	192		257
Amount of future funding commitments not included in carrying amount	NA	510		71
Private equity and certain other equity method investments:
Carrying amount	Other assets	1,819		1,822
Amount of future funding commitments not included in carrying amount	NA	424		411

The following table presents a summary of tax credits and amortization associated with the Company’s tax credit investment activity:


		Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	Income Statement Location	2022		2021		2022		2021
Tax credits:
Investments in affordable housing projects	Provision for income taxes	$	127	$	119	$	255	$	239
Other community development investments	Provision for income taxes	24		23		47		46
Renewable energy investments	NA (1)	24		21		61		60
Amortization and other changes in carrying amount:
Investments in affordable housing projects	Provision for income taxes	$	124	$	117	$	248	$	236
Other community development investments	Other noninterest income	20		19		39		38
Renewable energy investments	Other noninterest income	—		2		4		2

(1)Tax credits received for these investments are recorded as a reduction to the carrying value of these investments.

Truist Financial Corporation 25

Letters of Credit and Financial Guarantees

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

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


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Commitments to extend, originate, or purchase credit	$	210,385	$	198,658
Residential mortgage loans sold with recourse	214		244
CRE mortgages serviced for others covered by recourse provisions	9,889		10,243
Other loans serviced for others covered by recourse provisions	646		588
Letters of credit	5,725		5,568

Total Return Swaps

The Company facilitates matched book TRS transactions on behalf of clients, whereby a VIE purchases reference assets identified by a client and the Company enters into a TRS with the VIE, with a mirror-image TRS facing the client. The Company provides senior financing to the VIE in the form of demand notes to fund the purchase of the reference assets. Reference assets are typically fixed income instruments primarily composed of syndicated bank loans. The TRS contracts pass through interest and other cash flows on the reference assets to the third party clients, along with exposing those clients to decreases in value on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial margin collateral, as well as ongoing margin as the fair values of the underlying reference assets change. The following table provides a summary of the TRS transactions with VIE purchases. VIE assets include trading loans and bonds:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Total return swaps:
VIE assets	$	1,531	$	1,519
Trading loans and bonds	1,440		1,491
VIE liabilities	73		50

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

Pledged Assets

Certain assets were pledged to secure municipal deposits, securities sold under agreements to repurchase, certain derivative agreements, and borrowings or borrowing capacity, as well as to fund certain obligations related to nonqualified defined benefit and defined contribution retirement plans and for other purposes as required or permitted by law. Assets pledged to the FHLB and FRB are subject to applicable asset discounts when determining borrowing capacity. The Company obtains secured financing and letters of credit from the FRB and FHLB. The Company’s letters of credit from the FHLB can be used to secure various client deposits, including public fund relationships. Excluding assets related to nonqualified benefit plans, the majority of the agreements governing the pledged assets do not permit the other party to sell or repledge the collateral. The following table provides the total carrying amount of pledged assets by asset type:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Pledged securities	$	28,837	$	29,678

Pledged loans:
FRB	67,658		73,349
FHLB	62,876		64,698
Unused borrowing capacity:
FRB	48,122		52,170
FHLB	41,379		49,244

26 Truist Financial Corporation

Litigation and Regulatory Matters

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

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

The Company estimates reasonably possible losses, in excess of amounts accrued, of up to approximately $200 million as of June 30, 2022. This estimate does not represent Truist’s maximum loss exposure, and actual losses may vary significantly. In addition, the matters underlying this estimate will change from time to time. Estimated losses are based upon currently available information and involve considerable judgment, given that claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete, and material facts may be disputed or unsubstantiated, among other factors.

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

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

Bickerstaff v. SunTrust Bank

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

United Services Automobile Association v. Truist Bank

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

Truist Financial Corporation 27

NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

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

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

The following tables present fair value information for assets and liabilities measured at fair value on a recurring basis:


June 30, 2022 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:
Trading assets:
U.S. Treasury	$	678	$	—	$	678	$	—	$	—
GSE	341		—		341		—		—
Agency MBS - residential	1,088		—		1,088		—		—
Agency MBS - commercial	75		—		75		—		—
States and political subdivisions	299		—		299		—		—

Corporate and other debt securities	832		—		832		—		—
Loans	1,596		—		1,596		—		—
Other	321		246		75		—		—
Total trading assets	5,230		246		4,984		—		—
AFS securities:
U.S. Treasury	10,258		—		10,258		—		—
GSE	250		—		250		—		—
Agency MBS - residential	62,197		—		62,197		—		—
Agency MBS - commercial	2,654		—		2,654		—		—
States and political subdivisions	374		—		374		—		—
Non-agency MBS	3,425		—		3,425		—		—
Other	120		—		120		—		—
Total AFS securities	79,278		—		79,278		—		—
LHFS at fair value	3,149		—		3,149		—		—
Loans and leases	20		—		—		20		—
Loan servicing rights at fair value	3,466		—		—		3,466		—
Other assets:
Derivative assets	1,386		420		2,712		12		(1,758)
Equity securities	950		828		122		—		—

Total assets	$	93,479	$	1,494	$	90,245	$	3,498	$	(1,758)
Liabilities:
Derivative liabilities	$	1,914	$	329	$	3,985	$	48	$	(2,448)
Securities sold short	1,816		7		1,809		—		—
Total liabilities	$	3,730	$	336	$	5,794	$	48	$	(2,448)

28 Truist Financial Corporation


December 31, 2021 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:
Trading assets:
U.S. Treasury	$	125	$	—	$	125	$	—	$	—
GSE	306		—		306		—		—
Agency MBS - residential	1,016		—		1,016		—		—
Agency MBS - commercial	13		—		13		—		—
States and political subdivisions	91		—		91		—		—

Corporate and other debt securities	738		—		738		—		—
Loans	1,791		—		1,791		—		—
Other	343		285		58		—		—
Total trading assets	4,423		285		4,138		—		—
AFS securities:
U.S. Treasury	9,795		—		9,795		—		—
GSE	1,698		—		1,698		—		—
Agency MBS - residential	134,042		—		134,042		—		—
Agency MBS - commercial	2,882		—		2,882		—		—
States and political subdivisions	420		—		420		—		—
Non-agency MBS	4,258		—		4,258		—		—
Other	28		—		28		—		—
Total AFS securities	153,123		—		153,123		—		—
LHFS at fair value	3,544		—		3,544		—		—
Loans and leases	23		—		—		23		—
Loan servicing rights at fair value	2,633		—		—		2,633		—
Other assets:
Derivative assets	2,370		887		3,110		30		(1,657)
Equity securities	1,066		967		99		—		—

Total assets	$	167,182	$	2,139	$	164,014	$	2,686	$	(1,657)
Liabilities:
Derivative liabilities	$	586	$	438	$	3,056	$	42	$	(2,950)
Securities sold short	1,731		8		1,723		—		—
Total liabilities	$	2,317	$	446	$	4,779	$	42	$	(2,950)

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

At June 30, 2022 and December 31, 2021, investments totaling $361 million and $440 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 18. Fair Value Disclosures” of the Annual Report on Form 10-K for the year ended December 31, 2021.

Truist Financial Corporation 29

Activity for Level 3 assets and liabilities is summarized below:




Three Months Ended June 30, 2022 and 2021 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives
Balance at April 1, 2021	$	—	$	2,365	$	(10)
Total realized and unrealized gains (losses):
Included in earnings	—		(192)		81

Purchases	—		20		—
Issuances	—		227		81

Settlements	—		(189)		(114)


Balance at June 30, 2021	$	—	$	2,231	$	38
Balance at April 1, 2022	$	21	$	3,013	$	(74)
Total realized and unrealized gains (losses):
Included in earnings	—		260		(93)

Purchases	—		195		—
Issuances	—		123		23
Sales	—		(1)		—
Settlements	—		(124)		108
Other	(1)		—		—

Balance at June 30, 2022	$	20	$	3,466	$	(36)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022	$	—	$	2	$	—

Six Months Ended June 30, 2022 and 2021 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives












Balance at January 1, 2021	$	—	$	2,023	$	172
Total realized and unrealized gains (losses):
Included in earnings	—		182		(83)

Purchases	—		52		—
Issuances	—		387		177

Settlements	—		(413)		(228)



Balance at June 30, 2021	$	—	$	2,231	$	38
Balance at January 1, 2022	$	23	$	2,633	$	(12)
Total realized and unrealized gains (losses):
Included in earnings	—		617		(263)

Purchases	—		195		—
Issuances	—		281		40
Sales	—		(1)		—
Settlements	—		(259)		199


Other	(3)		—		—
Balance at June 30, 2022	$	20	$	3,466	$	(36)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2022	$	—	$	617	$	(7)
Primary income statement location of realized gains (losses) included in earnings	Other income		Residential mortgage income and Commercial mortgage income		Residential mortgage income and Commercial mortgage income

Fair Value Option

The following table details the fair value and UPB of certain loans that were elected to be measured at fair value:


	June 30, 2022						December 31, 2021
(Dollars in millions)	Fair Value		UPB		Difference		Fair Value		UPB		Difference
Trading loans	$	1,596	$	1,713	$	(117)	$	1,791	$	1,784	$	7
Loans and leases	20		22		(2)		23		35		(12)
LHFS at fair value	3,149		3,135		14		3,544		3,450		94

30 Truist Financial Corporation

Nonrecurring Fair Value Measurements

The following table provides information about certain assets measured at fair value on a nonrecurring basis still held as of period end. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. These assets are considered to be Level 3 assets.


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Carrying value:
LHFS	$	114	$	101
Loans and leases	402		443
Other	50		100

The following table provides information about valuation adjustments for certain assets measured at fair value on a nonrecurring basis. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end.


	Six Months Ended June 30,
(Dollars in millions)	2022		2021
Valuation adjustments:
LHFS	$	(4)	$	(26)
Loans and leases	(165)		(243)
Other	(160)		(127)

LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at LOCOM. The table above excludes $375 million and $1.2 billion of LHFS carried at cost at June 30, 2022 and December 31, 2021, respectively, that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value.

Loans and leases consists of larger commercial loans and leases that are collateral-dependent and other secured loans and leases that have been charged-off to the fair value of the collateral. Valuation adjustments for loans and leases are primarily recorded in the Provision for credit losses in the Consolidated statement of income. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional discussion of individually evaluated loans and leases.

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

Financial Instruments Not Recorded at Fair Value

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

An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets. In addition, changes in assumptions could significantly affect these fair value estimates. Financial assets and liabilities not recorded at fair value are summarized below:


		June 30, 2022				December 31, 2021
(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
HTM securities	Level 2	$	60,081	$	53,905	$	1,494	$	1,495
Loans and leases HFI, net of ALLL	Level 3	299,455		292,846		285,055		284,914
Financial liabilities:
Time deposits	Level 2	13,562		13,660		15,886		16,017
Long-term debt	Level 2	30,319		29,020		35,913		36,251

The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was $247 million and $260 million at June 30, 2022 and December 31, 2021, respectively.

Truist Financial Corporation 31

NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

The following table presents the gross notional amounts and estimated fair value of derivative instruments employed by the Company.


	June 30, 2022								December 31, 2021
	Notional Amount			Fair Value					Notional Amount		Fair Value
(Dollars in millions)			Assets			Liabilities			Assets		Liabilities
Cash flow hedges:
Interest rate contracts:

Swaps hedging commercial loans	$	10,500		$	—		$	—	$	—	$	—	$	—
Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt	12,893			—			(41)		12,690		—		(6)


Swaps hedging AFS securities	7,097			—			—		12,711		—		(2)


Total	19,990			—			(41)		25,401		—		(8)
Not designated as hedges:
Client-related and other risk management:
Interest rate contracts:
Swaps	154,805			525			(1,759)		150,223		1,716		(733)

Options	29,619			140			(130)		23,659		43		(30)
Forward commitments	2,039			11			(11)		2,404		2		(5)
Other	2,836			2			(3)		2,927		—		—
Equity contracts	36,531			717			(811)		34,232		1,582		(2,089)
Credit contracts:
Loans and leases	484			—			(1)		570		—		(2)
Risk participation agreements	6,429			—			(2)		8,145		—		(4)
Total return swaps	1,542			89			—		1,445		3		(19)

Foreign exchange contracts	19,446			449			(427)		16,102		160		(156)
Commodity	6,699			1,067			(1,076)		4,641		475		(468)

Total	260,430			3,000			(4,220)		244,348		3,981		(3,506)
Mortgage banking:
Interest rate contracts:
Swaps	573			—			—		441		—		—
Options	216			3			—		—		—		—
Interest rate lock commitments	2,597			12			(19)		4,163		30		(7)
When issued securities, forward rate agreements and forward commitments	5,592			24			(12)		6,913		7		(15)
Other	317			1			—		424		1		—

Total	9,295			40			(31)		11,941		38		(22)
MSRs:
Interest rate contracts:
Swaps	14,727			—			—		12,837		—		—

Options	13,241			77			(23)		101		1		—
When issued securities, forward rate agreements and forward commitments	2,168			25			(47)		3,927		7		—
Other	1,320			2			—		2,017		—		—
Total	31,456			104			(70)		18,882		8		—
Total derivatives not designated as hedges	301,181			3,144			(4,321)		275,171		4,027		(3,528)
Total derivatives	$	331,671		3,144			(4,362)		$	300,572	4,027		(3,536)
Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements				(1,395)			1,395				(1,312)		1,312
Cash collateral (received) posted for amounts subject to master netting arrangements				(363)			1,053				(345)		1,638

Net amount				$	1,386		$	(1,914)			$	2,370	$	(586)

32 Truist Financial Corporation

The following table presents the offsetting of derivative instruments including financial instrument collateral related to legally enforceable master netting agreements and amounts held or pledged as collateral. U.S. GAAP does not permit netting of non-cash collateral balances in the Consolidated Balance Sheets:


June 30, 2022 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	$	2,604	$	(1,433)	$	1,171	$	—	$	1,171
Derivatives not subject to master netting arrangement or similar arrangement	120		—		120		—		120
Exchange traded derivatives	420		(325)		95		—		95
Total derivative assets	$	3,144	$	(1,758)	$	1,386	$	—	$	1,386
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	$	(3,567)	$	2,123	$	(1,444)	$	27	$	(1,417)
Derivatives not subject to master netting arrangement or similar arrangement	(466)		—		(466)		—		(466)
Exchange traded derivatives	(329)		325		(4)		—		(4)
Total derivative liabilities	$	(4,362)	$	2,448	$	(1,914)	$	27	$	(1,887)

December 31, 2021 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	$	2,752	$	(1,221)	$	1,531	$	(1)	$	1,530
Derivatives not subject to master netting arrangement or similar arrangement	388		—		388		—		388
Exchange traded derivatives	887		(436)		451		—		451
Total derivative assets	$	4,027	$	(1,657)	$	2,370	$	(1)	$	2,369
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	$	(2,873)	$	2,514	$	(359)	$	66	$	(293)
Derivatives not subject to master netting arrangement or similar arrangement	(225)		—		(225)		—		(225)
Exchange traded derivatives	(438)		436		(2)		—		(2)
Total derivative liabilities	$	(3,536)	$	2,950	$	(586)	$	66	$	(520)

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


	June 30, 2022						December 31, 2021
			Hedge Basis Adjustment						Hedge Basis Adjustment
(Dollars in millions)	Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges		Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges
AFS securities (1)	$	43,783	$	(505)	$	(4)	$	108,758	$	(400)	$	(150)
Loans and leases	373		—		11		382		—		12

Long-term debt	23,108		(394)		278		27,361		(137)		629

(1)The amortized cost of AFS securities was $48.9 billion at June 30, 2022 and $110.6 billion at December 31, 2021.

Truist Financial Corporation 33

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

Derivatives Designated as Hedging Instruments under GAAP

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

The following table summarizes amounts related to cash flow hedges, which consist of interest rate contracts:


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
Pre-tax gain (loss) recognized in OCI:
Commercial loans	$	59	$	—	$	59	$	—




Pre-tax gain (loss) reclassified from AOCI into interest expense:

Deposits	$	—	$	(1)	$	—	$	(2)
Short-term borrowings	—		(7)		—		(12)
Long-term debt	(5)		(5)		(11)		(10)

Total	$	(5)	$	(13)	$	(11)	$	(24)
Pre-tax gain (loss) reclassified from AOCI into other expense: (1)
Deposits	$	—	$	—	$	—	$	(12)
Short-term borrowings	—		—		—		(20)
Long-term debt	—		—		—		(4)

Total	$	—	$	—	$	—	$	(36)

(1)Represents the accelerated amortization of amounts reclassified from AOCI, where management determined that the forecasted transaction is probable of not occurring.

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


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	2022		2021		2022		2021
AFS securities:
Amounts related to interest settlements	$	9	$	(13)	$	4	$	(24)
Recognized on derivatives	60		(163)		474		361
Recognized on hedged items	(42)		161		(444)		(365)
Net income (expense) recognized	27		(15)		34		(28)
Loans and leases:


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





Long-term debt:
Amounts related to interest settlements	3		—		19		—
Recognized on derivatives	(38)		—		(467)		—
Recognized on hedged items	82		75		568		154
Net income (expense) recognized	47		75		120		154
Net income (expense) recognized, total	$	74	$	60	$	153	$	125

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


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI	$	(44)	$	—
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)	(1)		(9)
Estimated portion of net after-tax gain (loss) on terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(3)		(9)
Maximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instruments	7 years		N/A
Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2030) (1)	$	756	$	767
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	179		231

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

34 Truist Financial Corporation

Derivatives Not Designated as Hedging Instruments under GAAP

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

The following table presents pre-tax gain (loss) recognized in income for derivative instruments not designated as hedges:


		Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions)	Income Statement Location	2022		2021		2022		2021
Client-related and other risk management:
Interest rate contracts	Investment banking and trading income and other income	$	72	$	12	$	128	$	114
Foreign exchange contracts	Investment banking and trading income and other income	147		8		179		34
Equity contracts	Investment banking and trading income and other income	2		(12)		7		(20)
Credit contracts	Investment banking and trading income and other income	83		(27)		91		(61)
Commodity contracts	Investment banking and trading income	(5)		3		—		5
Mortgage banking:
Interest rate contracts	Residential mortgage income	217		(88)		478		3
Interest rate contracts	Commercial mortgage income	—		—		(1)		(1)
MSRs:
Interest rate contracts	Residential mortgage income	(265)		219		(614)		(114)
Interest rate contracts	Commercial mortgage income	(5)		5		(14)		(7)
Total		$	246	$	120	$	254	$	(47)

Credit Derivative Instruments

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

Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on the derivative due to a failure to pay by the counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At June 30, 2022, the remaining terms on these risk participations ranged from less than one year to 16 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming 100% default by all obligors on the maximum value.

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

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

The following table presents additional information related to interest rate derivative risk participation agreements and total return swaps:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Risk participation agreements:


Maximum potential amount of exposure	$	261	$	521
Total return swaps:

Cash collateral held	385		290

Truist Financial Corporation 35

The following table summarizes collateral positions with counterparties:


(Dollars in millions)	Jun 30, 2022		Dec 31, 2021
Dealer and other counterparties:
Cash and other collateral received from counterparties	$	362	$	346
Derivatives in a net gain position secured by collateral received	467		506
Unsecured positions in a net gain with counterparties after collateral postings	110		143
Cash collateral posted to counterparties	1,045		1,704
Derivatives in a net loss position secured by collateral	1,289		2,591
Additional collateral that would have been posted had the Company’s credit ratings dropped below investment grade	—		3
Central counterparties clearing:
Cash collateral, including initial margin, posted to central clearing parties	45		31
Derivatives in a net loss position	36		18
Derivatives in a net gain position	2		—
Securities pledged to central counterparties clearing	808		904

NOTE 17. Computation of EPS

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


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in millions, except per share data, shares in thousands)	2022		2021		2022		2021
Net income available to common shareholders	$	1,454	$	1,559	$	2,781	$	2,893
Weighted average number of common shares	1,330,160		1,338,302		1,329,601		1,341,963
Effect of dilutive outstanding equity-based awards	8,704		11,190		10,624		12,247
Weighted average number of diluted common shares	1,338,864		1,349,492		1,340,225		1,354,210
Basic EPS	$	1.09	$	1.16	$	2.09	$	2.16
Diluted EPS	$	1.09	$	1.16	$	2.08	$	2.14
Anti-dilutive awards	4,843		—		130		3

NOTE 18. Operating Segments

Truist operates and measures business activity across three segments: CB&W, C&CB, and IH, with functional activities included in OT&C. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see “Note 21. Operating Segments” of the Annual Report on Form 10-K for the year ended December 31, 2021.

36 Truist Financial Corporation

The following table presents results by segment:


Three Months Ended June 30, (Dollars in millions)	CB&W						C&CB						IH						OT&C (1)						Total
2022			2021			2022			2021			2022			2021			2022			2021			2022			2021
Net interest income (expense)	$	1,567		$	1,687		$	1,277		$	1,182		$	30		$	25		$	533		$	351		$	3,407		$	3,245
Net intersegment interest income (expense)	707			385			57			114			(2)			—			(762)			(499)			—			—
Segment net interest income	2,274			2,072			1,334			1,296			28			25			(229)			(148)			3,407			3,245
Allocated provision for credit losses	199			(4)			(28)			(399)			1			(1)			(1)			(30)			171			(434)
Segment net interest income after provision	2,075			2,076			1,362			1,695			27			26			(228)			(118)			3,236			3,679
Noninterest income	892			925			636			808			833			698			(113)			(26)			2,248			2,405
Amortization of intangibles	79			78			32			38			32			24			—			2			143			142
Other noninterest expense	1,875			1,867			749			790			592			491			221			721			3,437			3,869
Income (loss) before income taxes	1,013			1,056			1,217			1,675			236			209			(562)			(867)			1,904			2,073
Provision (benefit) for income taxes	240			257			263			369			58			50			(189)			(261)			372			415
Segment net income (loss)	$	773		$	799		$	954		$	1,306		$	178		$	159		$	(373)		$	(606)		$	1,532		$	1,658

Identifiable assets (period end)	$	166,378		$	156,520		$	193,406		$	178,746		$	11,126		$	8,649		$	174,213		$	178,049		$	545,123		$	521,964

Six Months Ended June 30, (Dollars in millions)	CB&W						C&CB						IH						OT&C (1)						Total
2022			2021			2022			2021			2022			2021			2022			2021			2022			2021
Net interest income (expense)	$	3,095		$	3,440		$	2,371		$	2,391		$	54		$	49		$	1,070		$	650		$	6,590		$	6,530
Net intersegment interest income (expense)	1,361			616			233			187			(2)			—			(1,592)			(803)			—			—
Segment net interest income	4,456			4,056			2,604			2,578			52			49			(522)			(153)			6,590			6,530
Allocated provision for credit losses	272			96			(178)			(434)			1			—			(19)			(48)			76			(386)
Segment net interest income after provision	4,184			3,960			2,782			3,012			51			49			(503)			(105)			6,514			6,916
Noninterest income	1,842			1,845			1,255			1,500			1,571			1,332			(278)			(75)			4,390			4,602
Amortization of intangibles	152			157			65			75			63			51			—			3			280			286
Other noninterest expense	3,710			3,721			1,472			1,513			1,121			944			671			1,157			6,974			7,335
Income (loss) before income taxes	2,164			1,927			2,500			2,924			438			386			(1,452)			(1,340)			3,650			3,897
Provision (benefit) for income taxes	518			471			543			639			108			94			(467)			(438)			702			766
Segment net income (loss)	$	1,646		$	1,456		$	1,957		$	2,285		$	330		$	292		$	(985)		$	(902)		$	2,948		$	3,131

Identifiable assets (period end)	$	166,378		$	156,520		$	193,406		$	178,746		$	11,126		$	8,649		$	174,213		$	178,049		$	545,123		$	521,964

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

Truist Financial Corporation 37

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