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, 2023						Dec 31, 2022
Assets
Cash and due from banks			$	4,782					$	5,379
Interest-bearing deposits with banks			25,228						16,042
Securities borrowed or purchased under agreements to resell			2,315						3,181
Trading assets at fair value			4,097						4,905
AFS securities at fair value			68,965						71,801
HTM securities (fair value of $45,956 and $47,791, respectively)			55,958						57,713
LHFS (including $1,645 and $1,065 at fair value, respectively)			1,923						1,444
Loans and leases (including $16 and $18 at fair value, respectively)			322,092						325,991
ALLL			(4,606)						(4,377)
Loans and leases, net of ALLL			317,486						321,614
Premises and equipment			3,453						3,605
Goodwill			27,013						27,013
CDI and other intangible assets			3,403						3,672
Loan servicing rights at fair value			3,497						3,758
Other assets (including $1,715 and $1,582 at fair value, respectively)			36,429						35,128
Total assets			$	554,549					$	555,255
Liabilities
Noninterest-bearing deposits			$	121,831					$	135,742
Interest-bearing deposits			284,212						277,753
Short-term borrowings (including $1,585 and $1,551 at fair value, respectively)			24,456						23,422
Long-term debt			44,749						43,203
Other liabilities (including $3,128 and $2,971 at fair value, respectively)			15,620						14,598
Total liabilities			490,868						494,718
Shareholders’ Equity
Preferred stock			6,673						6,673
Common stock, $5 par value			6,660						6,634
Additional paid-in capital			35,990						34,544
Retained earnings			27,577						26,264
AOCI, net of deferred income taxes			(13,374)						(13,601)
Noncontrolling interests			155						23
Total shareholders’ equity			63,681						60,537
Total liabilities and shareholders’ equity			$	554,549					$	555,255
Common shares outstanding			1,331,976						1,326,829
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,
			2023						2022						2023						2022
Interest Income
Interest and fees on loans and leases						$	4,915					$	2,898					$	9,571					$	5,542
Interest on securities						749						675						1,501						1,315
Interest on other earning assets						512						100						889						173
Total interest income						6,176						3,673						11,961						7,030
Interest Expense
Interest on deposits						1,506						99						2,631						131
Interest on long-term debt						734						137						1,248						269
Interest on other borrowings						311						30						589						40
Total interest expense						2,551						266						4,468						440
Net Interest Income						3,625						3,407						7,493						6,590
Provision for credit losses						538						171						1,040						76
Net Interest Income After Provision for Credit Losses						3,087						3,236						6,453						6,514
Noninterest Income
Insurance income						935						825						1,748						1,552
Wealth management income						330						337						669						680
Investment banking and trading income						211						255						472						516
Service charges on deposits						240						254						489						506
Card and payment related fees						236						246						466						458
Mortgage banking income						99						100						241						221
Lending related fees						86						100						192						185
Operating lease income						64						66						131						124
Securities gains (losses)						—						(1)						—						(70)
Other income						92						66						119						218
Total noninterest income						2,293						2,248						4,527						4,390
Noninterest Expense
Personnel expense						2,256						2,102						4,437						4,153
Professional fees and outside processing						352						349						666						712
Software expense						237						234						451						466
Net occupancy expense						180						181						363						389
Amortization of intangibles						131						143						267						280
Equipment expense						92						114						202						232
Marketing and customer development						79						93						157						177
Operating lease depreciation						44						47						90						95
Regulatory costs						73						44						148						79
Merger-related and restructuring charges						54						121						117						337
Other expense						250						152						541						334
Total noninterest expense						3,748						3,580						7,439						7,254
Earnings
Income before income taxes						1,632						1,904						3,541						3,650
Provision for income taxes						287						372						681						702
Net income						1,345						1,532						2,860						2,948
Noncontrolling interests						36						1						38						2
Preferred stock dividends and other						75						77						178						165
Net income available to common shareholders						$	1,234					$	1,454					$	2,644					$	2,781
Basic EPS						$	0.93					$	1.09					$	1.99					$	2.09
Diluted EPS						0.92						1.09						1.98						2.08
Basic weighted average shares outstanding						1,331,953						1,330,160						1,330,286						1,329,601
Diluted weighted average shares outstanding						1,337,307						1,338,864						1,338,346						1,340,225

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,
2023						2022						2023						2022
Net income			$	1,345					$	1,532					$	2,860					$	2,948
OCI, net of tax:
Net change in net pension and postretirement costs			8						5						(6)						13
Net change in cash flow hedges			(317)						49						(192)						54
Net change in AFS securities			(550)						(2,849)						303						(7,838)
Net change in HTM securities			65						92						120						136
Other, net			1						(2)						2						(1)
Total OCI, net of tax			(793)						(2,705)						227						(7,636)
Total OCI			$	552					$	(1,173)					$	3,087					$	(4,688)
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs			$	3					$	3					$	—					$	5
Net change in cash flow hedges			(97)						15						(59)						16
Net change in AFS securities			(187)						(867)						75						(2,380)
Net change in HTM securities			17						27						32						40
Total income taxes related to OCI			$	(264)					$	(822)					$	48					$	(2,319)

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, 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, April 1, 2023			1,331,918						$	6,673					$	6,660					$	34,582					$	27,038					$	(12,581)					$	22					$	62,394
Net income			—						—						—						—						1,309						—						36						1,345
OCI			—						—						—						—						—						(793)						—						(793)
Received in connection with IH minority stake sale, net			—						—						—						1,317						—						—						96						1,413
Issued in connection with equity awards, net			58						—						—						1						(2)						—						—						(1)
Cash dividends declared on common stock			—						—						—						—						(693)						—						—						(693)
Cash dividends declared on preferred stock			—						—						—						—						(75)						—						—						(75)
Equity-based compensation expense			—						—						—						90						—						—						—						90
Other, net			—						—						—						—						—						—						1						1
Balance, June 30, 2023			1,331,976						$	6,673					$	6,660					$	35,990					$	27,577					$	(13,374)					$	155					$	63,681
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
Balance, January 1, 2023			1,326,829						$	6,673					$	6,634					$	34,544					$	26,264					$	(13,601)					$	23					$	60,537
Net income			—						—						—						—						2,822						—						38						2,860
OCI			—						—						—						—						—						227						—						227
Received in connection with IH minority stake sale, net			—						—						—						1,317						—						—						96						1,413
Issued in connection with equity awards, net			5,147						—						26						(44)						(3)						—						—						(21)
Cash dividends declared on common stock			—						—						—						—						(1,384)						—						—						(1,384)
Cash dividends declared on preferred stock			—						—						—						—						(178)						—						—						(178)
Equity-based compensation expense			—						—						—						173						—						—						—						173
Other, net			—						—						—						—						56						—						(2)						54
Balance, June 30, 2023			1,331,976						$	6,673					$	6,660					$	35,990					$	27,577					$	(13,374)					$	155					$	63,681

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,
			2023						2022
Cash Flows From Operating Activities:
Net income						$	2,860					$	2,948
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses						1,040						76
Depreciation						350						397
Amortization of intangibles						267						280
Securities (gains) losses						—						70
Net change in operating assets and liabilities:
LHFS						(580)						395
Loan servicing rights						(45)						(638)
Pension asset						(1,388)						(468)
Derivative assets and liabilities						414						2,143
Trading assets						808						(807)
Other assets and other liabilities						592						(228)
Other, net						(470)						(391)
Net cash from operating activities						3,848						3,777
Cash Flows From Investing Activities:
Proceeds from sales of AFS securities						4						3,198
Proceeds from maturities, calls and paydowns of AFS securities						3,518						8,285
Purchases of AFS securities						(282)						(8,658)
Proceeds from maturities, calls and paydowns of HTM securities						1,918						2,567
Purchases of HTM securities						—						(3,020)
Originations and purchases of loans and leases, net of sales and principal collected						3,258						(13,356)
Net cash received (paid) for securities borrowed or purchased under agreements to resell						866						1,378
Net cash received (paid) for asset acquisitions, business combinations, and divestitures						—						(505)
Other, net						235						(694)
Net cash from investing activities						9,517						(10,805)
Cash Flows From Financing Activities:
Net change in deposits						(7,452)						8,275
Net change in short-term borrowings						1,003						8,444
Proceeds from issuance of long-term debt						40,884						943
Repayment of long-term debt						(39,152)						(5,831)
Repurchase of common stock						—						(250)
Cash dividends paid on common stock						(1,384)						(1,276)
Cash dividends paid on preferred stock						(178)						(165)
Net cash received (paid) for hedge unwinds						(378)						(198)
Net cash from IH minority stake sale						1,922						—
Other, net						(41)						(96)
Net cash from financing activities						(4,776)						9,846
Net Change in Cash and Cash Equivalents						8,589						2,818
Cash and Cash Equivalents, January 1						21,421						20,295
Cash and Cash Equivalents, June 30						$	30,010					$	23,113
Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:
Interest expense						$	4,041					$	430
Income taxes						560						418
Noncash investing activities:
Transfer of AFS securities to HTM						—						59,436

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

8 Truist Financial Corporation

NOTE 1. Basis of Presentation

General

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

Reclassifications

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

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

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

Use of Estimates in the Preparation of Financial Statements

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

Loan Modifications

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

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

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

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

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

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

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

Truist Financial Corporation 9

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

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

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

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

ALLL

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

Income Taxes

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

Changes in Accounting Principles and Effects of New Accounting Pronouncements

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

10 Truist Financial Corporation

NOTE 2. Business Combinations, Divestitures, and Noncontrolling Interests

Noncontrolling Interest

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

NOTE 3. Securities Financing Activities

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

(Dollars in millions)						Jun 30, 2023						Dec 31, 2022
Securities purchased under agreements to resell						$	998					$	2,415
Securities borrowed						1,317						766
Total securities borrowed or purchased under agreements to resell						$	2,315					$	3,181
Fair value of collateral permitted to be resold or repledged						$	2,044					$	3,058
Fair value of securities resold or repledged						491						864

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

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

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

Truist Financial Corporation 11

NOTE 4. Investment Securities

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

June 30, 2023 (Dollars in millions)						Amortized Cost						Gross Unrealized												Fair Value
						Gains						Losses
AFS securities:
U.S. Treasury						$	10,423					$	—					$	705					$	9,718
GSE						325						—						37						288
Agency MBS - residential						62,983						—						9,788						53,195
Agency MBS - commercial						2,843						—						551						2,292
States and political subdivisions						425						14						21						418
Non-agency MBS						3,817						—						789						3,028
Other						26						—						—						26
Total AFS securities						$	80,842					$	14					$	11,891					$	68,965
HTM securities:
Agency MBS - residential						$	55,958					$	—					$	10,002					$	45,956
December 31, 2022 (Dollars in millions)						Amortized Cost						Gross Unrealized												Fair Value
						Gains						Losses
AFS securities:
U.S. Treasury						$	11,080					$	—					$	785					$	10,295
GSE						339						—						36						303
Agency MBS - residential						65,377						—						10,152						55,225
Agency MBS - commercial						2,887						—						463						2,424
States and political subdivisions						425						15						24						416
Non-agency MBS						3,927						—						810						3,117
Other						21						—						—						21
Total AFS securities						$	84,056					$	15					$	12,270					$	71,801
HTM securities:
Agency MBS - residential						$	57,713					$	—					$	9,922					$	47,791

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

						June 30, 2023
(Dollars in millions)						Amortized Cost						Fair Value
FNMA						$	41,052					$	34,325
FHLMC						41,601						34,612

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

			Amortized Cost																														Fair Value
June 30, 2023 (Dollars in millions)			Due in one year or less						Due after one year through five years						Due after five years through ten years						Due after ten years						Total						Due in one year or less						Due after one year through five years						Due after five years through ten years						Due after ten years						Total
AFS securities:
U.S. Treasury			$	2,885					$	7,492					$	17					$	29					$	10,423					$	2,803					$	6,874					$	15					$	26					$	9,718
GSE			—						7						11						307						325						—						7						10						271						288
Agency MBS - residential			—						99						511						62,373						62,983						—						93						476						52,626						53,195
Agency MBS - commercial			1						—						71						2,771						2,843						1						—						66						2,225						2,292
States and political subdivisions			3						94						139						189						425						4						92						144						178						418
Non-agency MBS			—						—						—						3,817						3,817						—						—						—						3,028						3,028
Other			5						8						13						—						26						5						8						13						—						26
Total AFS securities			$	2,894					$	7,700					$	762					$	69,486					$	80,842					$	2,813					$	7,074					$	724					$	58,354					$	68,965
HTM securities:
Agency MBS - residential			$	—					$	—					$	—					$	55,958					$	55,958					$	—					$	—					$	—					$	45,956					$	45,956

12 Truist Financial Corporation

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

			Less than 12 months												12 months or more												Total
June 30, 2023 (Dollars in millions)			Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
AFS securities:
U.S. Treasury			$	859					$	21					$	8,841					$	684					$	9,700					$	705
GSE			110						7						169						30						279						37
Agency MBS - residential			888						47						52,284						9,741						53,172						9,788
Agency MBS - commercial			116						7						2,176						544						2,292						551
States and political subdivisions			66						3						206						18						272						21
Non-agency MBS			—						—						3,028						789						3,028						789
Other			—						—						21						—						21						—
Total			$	2,039					$	85					$	66,725					$	11,806					$	68,764					$	11,891
HTM securities:
Agency MBS - residential			$	—					$	—					$	45,956					$	10,002					$	45,956					$	10,002
			Less than 12 months												12 months or more												Total
December 31, 2022 (Dollars in millions)			Fair Value						Unrealized Losses						Fair Value						Unrealized Losses						Fair Value						Unrealized Losses
AFS securities:
U.S. Treasury			$	2,069					$	49					$	8,186					$	736					$	10,255					$	785
GSE			180						14						114						22						294						36
Agency MBS - residential			25,041						3,263						30,050						6,889						55,091						10,152
Agency MBS - commercial			790						92						1,631						371						2,421						463
States and political subdivisions			251						21						20						3						271						24
Non-agency MBS			—						—						3,117						810						3,117						810
Other			21						—						—						—						21						—
Total			$	28,352					$	3,439					$	43,118					$	8,831					$	71,470					$	12,270
HTM securities:
Agency MBS - residential			$	29,369					$	5,613					$	18,422					$	4,309					$	47,791					$	9,922

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

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

(Dollars in millions)						Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
Gross realized gains						$	—					$	—					$	—					$	13
Gross realized losses						—						(1)						—						(83)
Securities gains (losses), net						$	—					$	(1)					$	—					$	(70)

Truist Financial Corporation 13

NOTE 5. Loans and ACL

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

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

						Accruing
June 30, 2023 (Dollars in millions)						Current						30-89 Days Past Due						90 Days Or More Past Due**(1)**						Nonperforming						Total
Commercial:
Commercial and industrial						$	166,413					$	142					$	36					$	562					$	167,153
CRE						22,512						38						—						275						22,825
Commercial construction						5,916						6						5						16						5,943
Consumer:
Residential mortgage						55,170						521						564						221						56,476
Home equity						10,156						56						7						129						10,348
Indirect auto						24,948						549						—						262						25,759
Other consumer						28,522						175						12						46						28,755
Credit card						4,732						63						38						—						4,833
Total						$	318,369					$	1,550					$	662					$	1,511					$	322,092
(1)Includes government guaranteed loans of $541 million in the residential mortgage portfolio.
						Accruing
December 31, 2022 (Dollars in millions)						Current						30-89 Days Past Due						90 Days Or More Past Due**(1)**						Nonperforming						Total
Commercial:
Commercial and industrial						$	163,604					$	256					$	49					$	398					$	164,307
CRE						22,568						25						1						82						22,676
Commercial construction						5,844						5						—						—						5,849
Consumer:
Residential mortgage						55,005						614						786						240						56,645
Home equity						10,661						68						12						135						10,876
Indirect auto						27,015						646						1						289						27,951
Other consumer						27,289						187						13						44						27,533
Student						4,179						402						706						—						5,287
Credit card						4,766						64						37						—						4,867
Total						$	320,931					$	2,267					$	1,605					$	1,188					$	325,991
(1)Includes government guaranteed loans of $759 million in the residential mortgage portfolio and $702 million in the student portfolio.

14 Truist Financial Corporation

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

June 30, 2023 (Dollars in millions)			Amortized Cost Basis by Origination Year																																				Revolving Credit						Loans Converted to Term						Other**(1)**
2023						2022						2021						2020						2019						Prior															Total
Commercial:
Commercial and industrial:
Pass			$	18,434					$	37,324					$	17,548					$	9,277					$	6,628					$	12,487					$	59,200					$	—					$	(240)					$	160,658
Special mention			328						619						702						196						117						181						755						—						—						2,898
Substandard			133						780						420						188						385						431						698						—						—						3,035
Nonperforming			82						175						51						11						21						38						184						—						—						562
Total			18,977						38,898						18,721						9,672						7,151						13,137						60,837						—						(240)						167,153
Gross charge-offs			20						46						28						18						3						17						50						—						—						182
CRE:
Pass			2,463						5,055						3,025						2,179						3,139						3,324						997						—						(71)						20,111
Special mention			237						446						39						86						123						56						55						—						—						1,042
Substandard			104						355						231						40						366						301						—						—						—						1,397
Nonperforming			—						110						2						2						85						76						—						—						—						275
Total			2,804						5,966						3,297						2,307						3,713						3,757						1,052						—						(71)						22,825
Gross charge-offs			—						11						1						—						—						29						—						—						—						41
Commercial construction:
Pass			423						1,806						1,640						419						149						135						852						—						—						5,424
Special mention			39						135						90						129						—						—						15						—						—						408
Substandard			3						30						7						55						—						—						—						—						—						95
Nonperforming			15						—						—						—						1						—						—						—						—						16
Total			480						1,971						1,737						603						150						135						867						—						—						5,943
Consumer:
Residential mortgage:
Current			1,811						13,731						16,985						5,933						2,957						13,753						—						—						—						55,170
30 - 89 days past due			4						33						37						26						30						391						—						—						—						521
90 days or more past due			—						17						29						45						42						431						—						—						—						564
Nonperforming			—						6						10						11						16						178						—						—						—						221
Total			1,815						13,787						17,061						6,015						3,045						14,753						—						—						—						56,476
Gross charge-offs			—						—						2						—						—						—						—						—						—						2
Home equity:
Current			—						—						—						—						—						—						6,350						3,806						—						10,156
30 - 89 days past due			—						—						—						—						—						—						37						19						—						56
90 days or more past due			—						—						—						—						—						—						4						3						—						7
Nonperforming			—						—						—						—						—						—						47						82						—						129
Total			—						—						—						—						—						—						6,438						3,910						—						10,348
Gross charge-offs			—						—						—						—						—						—						4						—						—						4
Indirect auto:
Current			3,203						9,764						5,842						3,236						1,851						1,061						—						—						(9)						24,948
30 - 89 days past due			25						166						135						80						70						73						—						—						—						549
Nonperforming			4						68						68						44						41						37						—						—						—						262
Total			3,232						9,998						6,045						3,360						1,962						1,171						—						—						(9)						25,759
Gross charge-offs			1						88						58						29						29						37						—						—						—						242
Other consumer:
Current			6,258						9,337						4,638						2,445						1,363						1,499						2,964						15						3						28,522
30 - 89 days past due			30						60						33						20						15						11						4						2						—						175
90 days or more past due			1						8						1						1						—						—						1						—						—						12
Nonperforming			1						7						14						8						6						9						—						1						—						46
Total			6,290						9,412						4,686						2,474						1,384						1,519						2,969						18						3						28,755
Gross charge-offs			24						76						46						26						18						7						12						—						—						209
Student:(2)
Gross charge-offs			—						—						—						—						—						108						—						—						—						108
Credit card:
Current			—						—						—						—						—						—						4,715						17						—						4,732
30 - 89 days past due			—						—						—						—						—						—						62						1						—						63
90 days or more past due			—						—						—						—						—						—						37						1						—						38
Total			—						—						—						—						—						—						4,814						19						—						4,833
Gross charge-offs			—						—						—						—						—						—						103						1						—						104
Total			$	33,598					$	80,032					$	51,547					$	24,431					$	17,405					$	34,472					$	76,977					$	3,947					$	(317)					$	322,092
Gross charge-offs			$	45					$	221					$	135					$	73					$	50					$	198					$	169					$	1					$	—					$	892

Truist Financial Corporation 15

December 31, 2022 (Dollars in millions)			Amortized Cost Basis by Origination Year																																				Revolving Credit						Loans Converted to Term						Other**(1)**
2022						2021						2020						2019						2018						Prior															Total
Commercial:
Commercial and industrial:
Pass			$	45,890					$	21,642					$	11,219					$	8,258					$	4,977					$	9,686					$	57,854					$	—					$	(199)					$	159,327
Special mention			243						302						143						160						61						88						721						—						—						1,718
Substandard			518						387						113						413						249						187						997						—						—						2,864
Nonperforming			47						53						10						28						46						27						187						—						—						398
Total			46,698						22,384						11,485						8,859						5,333						9,988						59,759						—						(199)						164,307
CRE:
Pass			6,141						3,595						2,220						3,846						2,092						2,265						757						—						(70)						20,846
Special mention			106						118						74						229						281						5						18						—						—						831
Substandard			106						99						35						422						121						134						—						—						—						917
Nonperforming			—						3						—						—						77						2						—						—						—						82
Total			6,353						3,815						2,329						4,497						2,571						2,406						775						—						(70)						22,676
Commercial construction:
Pass			1,501						1,500						825						290						212						71						1,056						—						—						5,455
Special mention			80						—						93						—						—						—						35						—						—						208
Substandard			114						—						18						1						53						—						—						—						—						186
Total			1,695						1,500						936						291						265						71						1,091						—						—						5,849
Consumer:
Residential mortgage:
Current			13,824						17,340						6,167						3,084						1,384						13,206						—						—						—						55,005
30 - 89 days past due			55						61						32						37						43						386						—						—						—						614
90 or more days past due			5						31						62						62						91						535						—						—						—						786
Nonperforming			4						6						10						12						17						191						—						—						—						240
Total			13,888						17,438						6,271						3,195						1,535						14,318						—						—						—						56,645
Home equity:
Current			—						—						—						—						—						—						6,843						3,818						—						10,661
30 - 89 days past due			—						—						—						—						—						—						48						20						—						68
90 days or more past due			—						—						—						—						—						—						9						3						—						12
Nonperforming			—						—						—						—						—						—						44						91						—						135
Total			—						—						—						—						—						—						6,944						3,932						—						10,876
Indirect auto:
Current			11,646						7,141						4,105						2,461						1,096						559						—						—						7						27,015
30 - 89 days past due			147						174						111						100						60						54						—						—						—						646
90 days or more past due			1						—						—						—						—						—						—						—						—						1
Nonperforming			41						77						56						56						34						25						—						—						—						289
Total			11,835						7,392						4,272						2,617						1,190						638						—						—						7						27,951
Other consumer:
Current			11,270						5,805						3,167						1,814						865						1,061						3,278						29						—						27,289
30 - 89 days past due			68						44						26						20						10						7						10						2						—						187
90 days or more past due			8						1						1						1						—						—						2						—						—						13
Nonperforming			4						11						8						9						2						8						2						—						—						44
Total			11,350						5,861						3,202						1,844						877						1,076						3,292						31						—						27,533
Student:
Current			—						—						17						71						57						4,034						—						—						—						4,179
30 - 89 days past due			—						—						—						1						1						400						—						—						—						402
90 days or more past due			—						—						—						1						1						704						—						—						—						706
Total			—						—						17						73						59						5,138						—						—						—						5,287
Credit card:
Current			—						—						—						—						—						—						4,750						16						—						4,766
30 - 89 days past due			—						—						—						—						—						—						63						1						—						64
90 days or more past due			—						—						—						—						—						—						36						1						—						37
Total			—						—						—						—						—						—						4,849						18						—						4,867
Total			$	91,819					$	58,390					$	28,512					$	21,376					$	11,830					$	33,635					$	76,710					$	3,981					$	(262)					$	325,991

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

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

16 Truist Financial Corporation

ACL

The following tables present activity in the ACL:

(Dollars in millions)						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
Home equity						88						(3)						6						(3)						—						88
Indirect auto						957						(77)						26						46						—						952
Other Consumer						697						(100)						20						111						—						728
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 Apr 1, 2023						Charge-Offs						Recoveries						Provision (Benefit)						Other**(1)**						Balance at Jun 30, 2023
Commercial:
Commercial and industrial						$	1,497					$	(107)					$	13					$	133					$	—					$	1,536
CRE						251						(35)						—						186						—						402
Commercial construction						87						—						—						22						—						109
Consumer:
Residential mortgage						332						(1)						2						(13)						—						320
Home equity						87						(2)						5						(5)						—						85
Indirect auto						993						(115)						31						72						—						981
Other consumer						779						(104)						20						113						—						808
Student(2)						98						(103)						—						5						—						—
Credit card						355						(53)						9						54						—						365
ALLL						4,479						(520)						80						567						—						4,606
RUFC						282						—						—						(9)						—						273
ACL						$	4,761					$	(520)					$	80					$	558					$	—					$	4,879
(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
Home equity						96						(4)						11						(15)						—						88
Indirect auto						1,022						(179)						49						60						—						952
Other consumer						714						(176)						41						149						—						728
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

Truist Financial Corporation 17

(Dollars in millions)						Balance at Jan 1, 2023						Charge-Offs						Recoveries						Provision (Benefit)						Other**(1)**						Balance at Jun 30, 2023
Commercial:
Commercial and industrial						$	1,409					$	(182)					$	26					$	284					$	(1)					$	1,536
CRE						224						(41)						1						218						—						402
Commercial construction						46						—						1						62						—						109
Consumer:
Residential mortgage						399						(2)						4						—						(81)						320
Home equity						90						(4)						11						(12)						—						85
Indirect auto						981						(242)						57						172						13						981
Other consumer						770						(209)						37						211						(1)						808
Student(2)						98						(108)						—						10						—						—
Credit card						360						(104)						18						94						(3)						365
ALLL						4,377						(892)						155						1,039						(73)						4,606
RUFC						272						—						—						1						—						273
ACL						$	4,649					$	(892)					$	155					$	1,040					$	(73)					$	4,879

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

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

The commercial ALLL increased $212 million and $368 million and the consumer ALLL decreased $95 million and $144 million during the three and six months ended June 30, 2023, respectively. The increase in the commercial ALLL primarily reflects loan growth and an updated economic outlook. The decrease in the consumer ALLL was primarily driven by the sale of the student portfolio in the current quarter as well as first quarter 2023 impacts associated with the adoption of the Troubled Debt Restructurings and Vintage Disclosure accounting standard. Considerations for the updated economic outlook include the potential impacts related to the risks associated with inflation, rising rates, geopolitical events, and recession.

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

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

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

18 Truist Financial Corporation

NPAs

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

			June 30, 2023												December 31, 2022
			Recorded Investment												Recorded Investment
(Dollars in millions)			Without an ALLL						With an ALLL						Without an ALLL						With an ALLL
Commercial:
Commercial and industrial			$	93					$	469					$	120					$	278
CRE			69						206						75						7
Commercial construction			—						16						—						—
Consumer:
Residential mortgage			1						220						4						236
Home equity			1						128						2						133
Indirect auto			22						240						3						286
Other consumer			—						46						—						44
Total			$	186					$	1,325					$	204					$	984

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

(Dollars in millions)			Jun 30, 2023						Dec 31, 2022
Nonperforming loans and leases HFI			$	1,511					$	1,188
Nonperforming LHFS			13						—
Foreclosed real estate			3						4
Other foreclosed property			56						58
Total nonperforming assets			$	1,583					$	1,250
Residential mortgage loans in the process of foreclosure			$	229					$	248

Loan Modifications

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

Three Months Ended June 30, 2023 (Dollars in millions)			Renewals						Term Extensions						Capitalizations						Payment Delays						Combination - Interest Rate Adjustment and Term Extension						Combination - Capitalization and Term Extension						Combination - Capitalization, Interest Rate and Term Extension						Other						Total Modified Loans						Percentage of Total Class of Financing Receivable
Commercial:
Commercial and industrial			$	265					$	—					$	—					$	21					$	44					$	—					$	—					$	—					$	330					0.20		%
CRE			49						—						—						—						—						—						—						—						49						0.21
Commercial construction			2						—						—						—						—						—						—						—						2						0.03
Consumer:
Residential mortgage			—						25						39						36						1						89						18						5						213						0.38
Home equity			—						—						—						—						3						—						—						1						4						0.04
Indirect auto			—						7						—						141						4						—						—						7						159						0.62
Other consumer			—						5						—						—						1						—						—						1						7						0.02
Credit card			—						—						—						—						—						—						—						5						5						0.10
Total			$	316					$	37					$	39					$	198					$	53					$	89					$	18					$	19					$	769					0.24

Truist Financial Corporation 19

Six Months Ended June 30, 2023 (Dollars in millions)			Renewals						Term Extensions						Capitalizations						Payment Delays						Combination - Interest Rate Adjustment and Term Extension						Combination - Capitalization and Term Extension						Combination - Capitalization, Interest Rate and Term Extension						Other						Total Modified Loans						Percentage of Total Class of Financing Receivable
Commercial:
Commercial and industrial			$	499					$	—					$	—					$	21					$	44					$	—					$	—					$	—					$	564					0.34		%
CRE			139						—						—						48						—						—						—						—						187						0.82
Commercial construction			3						—						—						—						—						—						—						—						3						0.05
Consumer:
Residential mortgage			—						53						69						54						2						180						37						8						403						0.71
Home equity			—						—						—						—						5						—						—						2						7						0.07
Indirect auto			—						12						—						145						9						—						—						11						177						0.69
Other consumer			—						9						—						1						3						—						—						2						15						0.05
Credit card			—						—						—						—						—						—						—						9						9						0.19
Total			$	641					$	74					$	69					$	269					$	63					$	180					$	37					$	32					$	1,365					0.42

Three Months Ended June 30, 2023
Loan Type						Financial Effect
Renewals
Commercial and industrial						Extended the term by 5 months and increased the interest rate by 0.3%.
CRE						Extended the term by 11 months.
Commercial construction						Extended the term by 2 months.
Term Extensions
Residential mortgage						Extended the term by 145 months.
Indirect auto						Extended the term by 22 months.
Other consumer						Extended the term by 24 months.
Capitalizations
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.
Payment Delays
Commercial and industrial						Provided payment deferral of 189 days.
Residential mortgage						Provided payment deferral of 214 days.
Indirect auto						Provided payment deferral of 125 days.
Combination - Interest Rate Adjustment and Term Extension
Commercial and industrial						Extended the term by 76 months and increased the interest rate by 3%.
Residential mortgage						Extended the term by 123 months and increased the interest rate by 1%.
Home equity						Extended the term by 169 months and decreased the interest rate by 3%.
Indirect auto						Extended the term by 10 months and decreased the interest rate by 7%.
Other consumer						Extended the term by 26 months and decreased the interest rate by 1%.
Combination - Capitalization and Term Extension
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 103 months.
Combination - Capitalization, Interest Rate and Term Extension
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 169 months, and increased the interest rate by 0.1%.

20 Truist Financial Corporation

Six Months Ended June 30, 2023
Loan Type						Financial Effect
Renewals
Commercial and industrial						Extended the term by 5 months and increased the interest rate by 0.3%.
CRE						Extended the term by 10 months and increased the interest rate by 0.1%.
Commercial construction						Extended the term by 3 months.
Term Extensions
Residential mortgage						Extended the term by 151 months.
Indirect auto						Extended the term by 22 months.
Other consumer						Extended the term by 24 months.
Capitalizations
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance.
Payment Delays
Commercial and industrial						Provided 189 days of payment deferral.
CRE						Provided 232 days of payment deferral.
Residential mortgage						Provided 209 days of payment deferral.
Indirect auto						Provided 125 days of payment deferral.
Other consumer						Provided 151 days of payment deferral.
Combination - Interest Rate Adjustment and Term Extension
Commercial and industrial						Extended the term by 76 months and increased the interest rate by 3%.
Residential mortgage						Extended the term by 114 months and increased the interest rate by 0.4%.
Home equity						Extended the term by 229 months and decreased the interest rate by 3%.
Indirect auto						Extended the term by 11 months and decreased the interest rate by 7%.
Other consumer						Extended the term by 63 months and decreased the interest rate by 2%.
Combination - Capitalization and Term Extension
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance and extended the term by 107 months.
Combination - Capitalization, Interest Rate and Term Extension
Residential mortgage						Capitalized a portion of forborne loan and other advanced payments into the outstanding loan balance, extended the term by 125 months, and decreased the interest rate by 0.1%.

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

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

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

Truist Financial Corporation 21

Truist closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table summarizes the delinquency status of loans that were modified:

			Payment Status (Amortized Cost Basis)
June 30, 2023 (Dollars in millions)			Current						30-89 Days Past Due						90 Days or More Past Due						Total
Commercial:
Commercial and industrial			$	528					$	3					$	33					$	564
CRE			187						—						—						187
Commercial construction			3						—						—						3
Consumer:
Residential mortgage			282						77						44						403
Home equity			6						—						1						7
Indirect auto			157						17						3						177
Other consumer			14						1						—						15
Credit card			7						1						1						9
Total			$	1,184					$	99					$	82					$	1,365
Total nonaccrual loans included above			$	291					$	23					$	47					$	361

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

June 30, 2023 (Dollars in millions)			Renewals						Term Extensions						Capitalizations						Payment Delays						Combination - Capitalization and Term Extension						Combination - Capitalization, Interest Rate and Term Extension						Other						Total
Commercial:
Commercial and industrial			$	33					$	—					$	—					$	—					$	—					$	—					$	—					$	33
Consumer:
Residential mortgage			—						5						3						18						14						2						2						44
Home equity			—						—						—						—						—						—						1						1
Indirect auto			—						—						—						—						—						—						3						3
Credit card			—						—						—						—						—						—						1						1
Total			$	33					$	5					$	3					$	18					$	14					$	2					$	7					$	82

TDRs

The following table presents a summary of TDRs:

(Dollars in millions)									Dec 31, 2022
Performing TDRs:
Commercial:
Commercial and industrial									$	136
CRE									5
Commercial construction									1
Consumer:
Residential mortgage									1,252
Home equity									51
Indirect auto									462
Other consumer									31
Student									30
Credit card									18
Total performing TDRs									1,986
Nonperforming TDRs									214
Total TDRs									$	2,200
ALLL attributable to TDRs									$	152

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

22 Truist Financial Corporation

			As of / For the Three Months Ended June 30, 2022																								As of / For the Six Months Ended June 30, 2022
			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			$	—					$	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

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, 2023						Dec 31, 2022
Unearned income, discounts, and net deferred loan fees and costs			$	401					$	269

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, 2022 qualitative impairment test. Truist concluded that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of June 30, 2023, 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, 2022 for additional information.

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

(Dollars in millions)			CB&W						C&CB						IH						Total
Goodwill, January 1, 2022			$	16,870					$	6,149					$	3,079					$	26,098
Mergers and acquisitions			—						—						912						912
Adjustments and other			(5)						5						3						3
Goodwill, December 31, 2022			16,865						6,154						3,994						27,013
Adjustments and other			—						216						(216)						—
Goodwill, June 30, 2023			$	16,865					$	6,370					$	3,778					$	27,013

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

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

Truist Financial Corporation 23

NOTE 7. Loan Servicing

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

Residential Mortgage Activities

The following tables summarize residential mortgage servicing activities:

(Dollars in millions)						Jun 30, 2023						Dec 31, 2022
UPB of residential mortgage loan servicing portfolio						$	280,064					$	274,028
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate						222,917						217,046
Mortgage loans sold with recourse						184						200
Maximum recourse exposure from mortgage loans sold with recourse liability						115						127
Indemnification, recourse and repurchase reserves						53						56
As of / For the Six Months Ended June 30, (Dollars in millions)						2023						2022
UPB of residential mortgage loans sold from LHFS						$	7,101					$	15,907
Pre-tax gains recognized on mortgage loans sold and held for sale						34						66
Servicing fees recognized from mortgage loans serviced for others						364						297
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others						0.27		%				0.30		%
Weighted average interest rate on mortgage loans serviced for others						3.54						3.42

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

(Dollars in millions)						2023						2022
Residential MSRs, carrying value, January 1						$	3,428					$	2,305
Acquired						123						195
Additions						129						257
Sales						(429)						—
Change in fair value due to changes in valuation inputs or assumptions(1)						64						606
Realization of expected net servicing cash flows, passage of time, and other						(133)						(215)
Residential MSRs, carrying value, June 30						$	3,182					$	3,148

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

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

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

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

24 Truist Financial Corporation

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:

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

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

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

			June 30, 2023												December 31, 2022
(Dollars in millions)			Operating Leases						Finance Leases						Operating Leases						Finance Leases
ROU assets			$	1,128					$	22					$	1,193					$	20
Total lease liabilities			1,460						25						1,545						23
Weighted average remaining term			6.3 years						5.8 years						6.6 years						5.6 years
Weighted average discount rate			2.9		%				3.6		%				2.7		%				3.4		%

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

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, 2023						Dec 31, 2022
Assets held under operating leases(1)									$	2,065					$	2,090
Accumulated depreciation									(561)						(550)
Net									$	1,504					$	1,540

(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. The carrying value of bank-owned life insurance was $7.7 billion at June 30, 2023 and $7.6 billion at December 31, 2022.

Truist Financial Corporation 25

NOTE 9. Borrowings

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

(Dollars in millions)						Jun 30, 2023									Dec 31, 2022
FHLB advances						$	18,900											$	18,900
Securities sold under agreements to repurchase						3,165												2,128
Securities sold short						1,585												1,551
Collateral in excess of derivative exposures						463												403
Master notes						242												370
Other short-term borrowings						101												70
Total short-term borrowings						$	24,456											$	23,422

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

(Dollars in millions)																																	Jun 30, 2023						Dec 31, 2022
Truist Financial Corporation:
Fixed rate senior notes																																	$	19,093					$	14,107
Floating rate senior notes																																	999						999
Fixed rate subordinated notes(1)																																	1,857						1,882
Capital notes(1)																																	627						625
Structured notes(2)																																	—						12
Truist Bank:
Fixed rate senior notes																																	4,634						6,982
Floating rate senior notes																																	1,250						1,749
Fixed rate subordinated notes(1)																																	4,758						4,767
Fixed rate FHLB advances																																	2						2
Floating rate FHLB advances																																	10,300						10,800
Other long-term debt(3)																																	1,229						1,278
Total long-term debt																																	$	44,749					$	43,203

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

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

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

26 Truist Financial Corporation

NOTE 10. Shareholders’ Equity

Common Stock

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

						Three Months Ended June 30,												Six Months Ended June 30,
						2023						2022						2023						2022
Cash dividends declared per share						$	0.52					$	0.48					$	1.04					$	0.96

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, 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)
AOCI balance, April 1, 2023			$	(1,549)					$	47					$	(8,542)					$	(2,533)					$	(4)					$	(12,581)
OCI before reclassifications, net of tax			(5)						(321)						(496)						—						1						(821)
Amounts reclassified from AOCI:
Before tax			17						5						(71)						82						—						33
Tax effect			4						1						(17)						17						—						5
Amounts reclassified, net of tax			13						4						(54)						65						—						28
Total OCI, net of tax			8						(317)						(550)						65						1						(793)
AOCI balance, June 30, 2023			$	(1,541)					$	(270)					$	(9,092)					$	(2,468)					$	(3)					$	(13,374)
(Dollars in millions)			Pension and OPEB Costs						Cash Flow Hedges						AFS Securities						HTM Securities						Other, net						Total
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)
AOCI balance, January 1, 2023			$	(1,535)					$	(78)					$	(9,395)					$	(2,588)					$	(5)					$	(13,601)
OCI before reclassifications, net of tax			(31)						(196)						407						—						2						182
Amounts reclassified from AOCI:
Before tax			33						5						(136)						152						—						54
Tax effect			8						1						(32)						32						—						9
Amounts reclassified, net of tax			25						4						(104)						120						—						45
Total OCI, net of tax			(6)						(192)						303						120						2						227
AOCI balance, June 30, 2023			$	(1,541)					$	(270)					$	(9,092)					$	(2,468)					$	(3)					$	(13,374)
Primary income statement location of amounts reclassified from AOCI			Other expense						Net interest income and Other expense						Securities gains (losses) and Net interest income						Net interest income						Net interest income

Truist Financial Corporation 27

NOTE 12. Income Taxes

For the three months ended June 30, 2023 and 2022, the provision for income taxes was $287 million and $372 million, respectively, representing effective tax rates of 17.6% and 19.5%, respectively. For the six months ended June 30, 2023 and 2022, the provision for income taxes was $681 million and $702 million, respectively, representing effective tax rates of 19.2% for both periods. The lower effective tax rate for the three months ended June 30, 2023 was primarily driven by lower income before taxes. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

NOTE 13. Benefit Plans

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Dollars in millions)			Income Statement Location			2023						2022						2023						2022
Service cost			Personnel expense			$	93					$	140					$	186					$	279
Interest cost			Other expense			112						88						223						176
Estimated return on plan assets			Other expense			(228)						(270)						(456)						(539)
Amortization and other			Other expense			19						9						39						17
Net periodic (benefit) cost						$	(4)					$	(33)					$	(8)					$	(67)

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

28 Truist Financial Corporation

NOTE 14. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

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

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

(Dollars in millions)			Balance Sheet Location			Jun 30, 2023						Dec 31, 2022
Investments in affordable housing projects and other qualified tax credits:
Carrying amount			Other assets			$	5,960					$	5,869
Amount of future funding commitments included in carrying amount			Other liabilities			1,796						1,762
Lending exposure			Loans and leases for funded amounts			1,667						1,547
Renewable energy investments:
Carrying amount			Other assets			246						264
Amount of future funding commitments not included in carrying amount			NA			662						361
SBIC and certain other equity method investments:
Carrying amount			Other assets			633						596
Amount of future funding commitments not included in carrying amount			NA			565						532

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Dollars in millions)			Income Statement Location			2023						2022						2023						2022
Tax credits:
Investments in affordable housing projects, other qualified tax credits, and other community development investments			Provision for income taxes			$	160					$	151					$	317					$	302
Amortization and other changes in carrying amount:
Investments in affordable housing projects and other qualified tax credits(1)			Provision for income taxes			$	150					$	124					$	298					$	248
Other community development investments(1)			Other noninterest income			3						20						5						39

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

Letters of Credit and Financial Guarantees

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

Truist Financial Corporation 29

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

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

Total Return Swaps

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

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

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

Pledged Assets

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

(Dollars in millions)						Jun 30, 2023						Dec 31, 2022
Pledged securities						$	40,590					$	38,012
Pledged loans:
FRB						72,823						71,234
FHLB						68,987						68,988
Unused borrowing capacity:
FRB						52,737						49,250
FHLB						23,219						20,770

Litigation and Regulatory Matters

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

30 Truist Financial Corporation

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

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

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

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

Bickerstaff v. SunTrust Bank

This class action case was filed in the Fulton County State Court on July 12, 2010, and an amended complaint was filed on August 9, 2010. Plaintiff asserts 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. The Company previously filed a motion to amend the class definition in which it sought to narrow the scope of the class and renewed motions to compel arbitration against certain class members, which the court found were premature. On September 22, 2022, the trial court entered a scheduling order holding that the court will consider such motions after discovery, which is ongoing, is completed. Trial is presently set to commence on April 29, 2024. 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 three patents held by USAA. The complaint seeks damages, including for alleged willful infringement and a corresponding request that the amount of actual damages be trebled, as well as injunctive and other equitable relief. The Company filed its answer and affirmative defenses on October 11, 2022, denying that it infringes any of the patents at issue in the lawsuit and asserting that USAA’s patents are invalid or unenforceable. On December 30, 2022, the Company filed a motion for leave to amend its answer to assert counterclaims seeking damages as well as injunctive relief against USAA for infringing four patents owned by the Company and practiced by USAA’s mobile remote deposit capture systems. On March 13, 2023, USAA filed a motion for leave to file a first amended complaint asserting infringement claims related to a fourth USAA patent. On April 8, 2023, the Company’s motion for leave to amend its answer to assert counterclaims was granted. On April 14, 2023, USAA filed a motion seeking to sever the Company’s counterclaims from the case, and on May 1, 2023, USAA filed a motion to dismiss claims related to two of the counterclaim patents. On May 3, 2023, USAA filed a motion for leave to file a second amended complaint asserting infringement claims related to a fifth USAA patent. On May 15, 2023, the Company filed a motion for leave to file a second amended answer and counterclaims to bring claims against USAA for infringement related to two additional patents owned by the Company. On June 21, 2023, the district court entered an order granting both USAA’s and the Company’s pending motions for leave to amend their pleadings. On June 27, 2023, USAA filed an updated motion to sever, seeking to sever the two additional patents asserted by Truist from the case, and USAA also moved to dismiss claims related to these patents on July 6, 2023. Discovery in the district court proceedings is ongoing, and trial is presently set to commence on March 18, 2024.

Truist Financial Corporation 31

At the Patent Trial and Appeal Board, the Company filed separate petitions for inter partes review on October 11, November 7, and November 15, 2022 challenging the validity of each of the first three patents asserted by USAA in the lawsuit. In addition, on April 13, 2023, the Company filed a petition for inter partes review challenging the validity of the fourth patent USAA added to the lawsuit. On May 16, 2023, the Patent Trial and Appeal Board denied institution of the Company’s petitions for inter partes review challenging one of the first three USAA patents, and the Company has filed a Request for Rehearing by the Director of one of the decisions denying institution. On May 18 and June 14, 2023, the Patent Trial and Appeal Board granted institution of the Company’s petitions for inter partes review challenging the second and third patents originally brought by USAA in its lawsuit. For those patents for which institution of the petitions for inter partes review has been granted, the Patent Trial and Appeal Board will review the validity of the claims in the applicable patent(s) upon further proceedings which will include briefing by the parties and a hearing before the assigned panel.

Recordkeeping Matters

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

FDIC Special Assessment

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

32 Truist Financial Corporation

NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

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

• Level 1: Quoted prices for identical instruments in active markets

• Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets

• Level 3: Valuations derived from valuation techniques in which one or more significant inputs are unobservable

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

June 30, 2023 (Dollars in millions)						Total						Level 1						Level 2						Level 3						Netting Adjustments**(1)**
Assets:
Trading assets:
U.S. Treasury						$	142					$	—					$	142					$	—					$	—
GSE						50						—						50						—						—
Agency MBS - residential						—						—						—						—						—
States and political subdivisions						466						—						466						—						—
Corporate and other debt securities						1,368						—						1,368						—						—
Loans						1,701						—						1,701						—						—
Other						370						306						64						—						—
Total trading assets						4,097						306						3,791						—						—
AFS securities:
U.S. Treasury						9,718						—						9,718						—						—
GSE						288						—						288						—						—
Agency MBS - residential						53,195						—						53,195						—						—
Agency MBS - commercial						2,292						—						2,292						—						—
States and political subdivisions						418						—						418						—						—
Non-agency MBS						3,028						—						3,028						—						—
Other						26						—						26						—						—
Total AFS securities						68,965						—						68,965						—						—
LHFS at fair value						1,645						—						1,645						—						—
Loans and leases						16						—						—						16						—
Loan servicing rights at fair value						3,497						—						—						3,497						—
Other assets:
Derivative assets						805						907						1,819						2						(1,923)
Equity securities						910						803						107						—						—
Total assets						$	79,935					$	2,016					$	76,327					$	3,515					$	(1,923)
Liabilities:
Derivative liabilities						$	3,128					$	486					$	4,665					$	33					$	(2,056)
Securities sold short						1,585						263						1,322						—						—
Total liabilities						$	4,713					$	749					$	5,987					$	33					$	(2,056)

Truist Financial Corporation 33

December 31, 2022 (Dollars in millions)						Total						Level 1						Level 2						Level 3						Netting Adjustments**(1)**
Assets:
Trading assets:
U.S. Treasury						$	137					$	—					$	137					$	—					$	—
GSE						457						—						457						—						—
Agency MBS - residential						804						—						804						—						—
Agency MBS - commercial						62						—						62						—						—
States and political subdivisions						422						—						422						—						—
Corporate and other debt securities						761						—						761						—						—
Loans						1,960						—						1,960						—						—
Other						302						261						41						—						—
Total trading assets						4,905						261						4,644						—						—
AFS securities:
U.S. Treasury						10,295						—						10,295						—						—
GSE						303						—						303						—						—
Agency MBS - residential						55,225						—						55,225						—						—
Agency MBS - commercial						2,424						—						2,424						—						—
States and political subdivisions						416						—						416						—						—
Non-agency MBS						3,117						—						3,117						—						—
Other						21						—						21						—						—
Total AFS securities						71,801						—						71,801						—						—
LHFS at fair value						1,065						—						1,065						—						—
Loans and leases						18						—						—						18						—
Loan servicing rights at fair value						3,758						—						—						3,758						—
Other assets:
Derivative assets						684						472						1,980						1						(1,769)
Equity securities						898						796						102						—						—
Total assets						$	83,129					$	1,529					$	79,592					$	3,777					$	(1,769)
Liabilities:
Derivative liabilities						$	2,971					$	364					$	4,348					$	37					$	(1,778)
Securities sold short						1,551						114						1,437						—						—
Total liabilities						$	4,522					$	478					$	5,785					$	37					$	(1,778)

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

At June 30, 2023 and December 31, 2022, investments totaling $379 million and $385 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

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

34 Truist Financial Corporation

Activity for Level 3 assets and liabilities is summarized below:

Three Months Ended June 30, 2023 and 2022 (Dollars in millions)															Loans and Leases						Loan Servicing Rights						Net Derivatives
Balance at April 1, 2022															$	21					$	3,013					$	(74)
Total realized and unrealized gains (losses):
Included in earnings															—						260						(93)
Purchases															—						195						—
Issuances															—						123						23
Sales															—						(1)						—
Settlements															—						(124)						108
Transfers out of level 3 and other															(1)						—						—
Balance at June 30, 2022															$	20					$	3,466					$	(36)
Balance at April 1, 2023															$	17					$	3,303					$	(18)
Total realized and unrealized gains (losses):
Included in earnings															—						70						(20)
Purchases															—						123						—
Issuances															—						92						18
Sales															—						(1)						—
Settlements															(1)						(90)						(11)
Balance at June 30, 2023															$	16					$	3,497					$	(31)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2023															$	—					$	71					$	(9)
Six Months Ended June 30, 2023 and 2022 (Dollars in millions)															Loans and Leases						Loan Servicing Rights						Net Derivatives
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)
Balance at January 1, 2023															$	18					$	3,758					$	(36)
Total realized and unrealized gains (losses):
Included in earnings															—						65						(22)
Purchases															—						123						—
Issuances															—						140						16
Sales															—						(429)						—
Settlements															(2)						(160)						11
Balance at June 30, 2023															$	16					$	3,497					$	(31)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at June 30, 2023															$	—					$	16					$	(20)
Primary income statement location of realized gains (losses) included in earnings															Other income						Mortgage banking income						Mortgage banking 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, 2023																		December 31, 2022
(Dollars in millions)						Fair Value						UPB						Difference						Fair Value						UPB						Difference
Trading loans						$	1,701					$	1,819					$	(118)					$	1,960					$	2,101					$	(141)
Loans and leases						16						18						(2)						18						20						(2)
LHFS at fair value						1,645						1,645						—						1,065						1,056						9

Truist Financial Corporation 35

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, 2023												Dec 31, 2022
Carrying value:
LHFS						$	123											$	271
Loans and leases						738												500
Other						91												120

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

						Six Months Ended June 30,
(Dollars in millions)						2023						2022
Valuation adjustments:
LHFS						$	(27)					$	(4)
Loans and leases						(311)						(165)
Other(1)						(86)						(50)

(1)Prior period amounts were revised.

LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at LOCOM. The table above excludes $155 million and $108 million of LHFS carried at cost at June 30, 2023 and December 31, 2022, respectively, that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value.

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

Other includes foreclosed real estate, other foreclosed property, ROU assets, premises and equipment, 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, 2023												December 31, 2022
(Dollars in millions)			Fair Value Hierarchy						Carrying Amount						Fair Value						Carrying Amount						Fair Value
Financial assets:
HTM securities			Level 2						$	55,958					$	45,956					$	57,713					$	47,791
Loans and leases HFI, net of ALLL			Level 3						317,470						308,846						321,596						308,738
Financial liabilities:
Time deposits			Level 2						42,227						41,992						23,474						23,383
Long-term debt			Level 2						44,749						43,072						43,203						40,951

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

36 Truist Financial Corporation

NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

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

			June 30, 2023																		December 31, 2022
			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			$	21,400					$	—					$	—					$	16,650					$	—					$	—
Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt			19,268						—						(66)						16,393						—						(68)
Swaps hedging AFS securities			8,627						—						—						7,097						—						—
Total			27,895						—						(66)						23,490						—						(68)
Not designated as hedges:
Client-related and other risk management:
Interest rate contracts:
Swaps			295,199						599						(2,620)						155,670						579						(2,665)
Options			44,020						164						(188)						29,840						172						(192)
Forward commitments			211						—						—						1,495						8						(2)
Other			3,337						—						—						3,823						1						—
Equity contracts			36,590						1,058						(1,481)						33,185						644						(901)
Credit contracts:
Trading assets			120						—						—						140						—						—
Loans and leases			465						—						(1)						394						—						—
Risk participation agreements			7,473						—						(2)						6,824						—						(3)
Total return swaps			1,802						62						(7)						1,729						81						(2)
Foreign exchange contracts			23,940						284						(277)						19,022						364						(380)
Commodity			9,062						439						(429)						4,881						444						(447)
Total			422,219						2,606						(5,005)						257,003						2,293						(4,592)
Mortgage banking:
Interest rate contracts:
Swaps			277						—						—						115						—						—
Options(1)			400						1						—						400						1						—
Interest rate lock commitments			1,426						2						(16)						999						1						(17)
When issued securities, forward rate agreements and forward commitments(1)			2,600						39						—						1,728						24						(6)
Other			99						—						—						140						1						—
Total			4,802						42						(16)						3,382						27						(23)
MSRs:
Interest rate contracts:
Swaps			14,605						—						—						14,566						—						—
Options(1)			15,882						80						(89)						15,505						125						(48)
When issued securities, forward rate agreements and forward commitments(1)			871						—						(7)						884						8						(15)
Other			2,161						—						(1)						1,532						—						(3)
Total			33,519						80						(97)						32,487						133						(66)
Total derivatives not designated as hedges			460,540						2,728						(5,118)						292,872						2,453						(4,681)
Total derivatives			$	509,835					2,728						(5,184)						$	333,012					2,453						(4,749)
Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements and exchange traded derivatives									(1,344)						1,344												(1,223)						1,223
Cash collateral (received) posted for amounts subject to master netting arrangements									(579)						712												(546)						555
Net amount									$	805					$	(3,128)											$	684					$	(2,971)

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

Truist Financial Corporation 37

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

June 30, 2023 (Dollars in millions)			Gross Amount						Amount Offset						Net Amount in Consolidated Balance Sheets						Held/Pledged Financial Instruments						Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement			$	1,738					$	(1,438)					$	300					$	—					$	300
Derivatives not subject to master netting arrangement or similar arrangement			83						—						83						—						83
Exchange traded derivatives			907						(485)						422						—						422
Total derivative assets			$	2,728					$	(1,923)					$	805					$	—					$	805
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement			$	(4,020)					$	1,571					$	(2,449)					$	126					$	(2,323)
Derivatives not subject to master netting arrangement or similar arrangement			(678)						—						(678)						—						(678)
Exchange traded derivatives			(486)						485						(1)						—						(1)
Total derivative liabilities			$	(5,184)					$	2,056					$	(3,128)					$	126					$	(3,002)
December 31, 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			$	1,895					$	(1,408)					$	487					$	—					$	487
Derivatives not subject to master netting arrangement or similar arrangement			86						—						86						—						86
Exchange traded derivatives			472						(361)						111						—						111
Total derivative assets			$	2,453					$	(1,769)					$	684					$	—					$	684
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement			$	(3,688)					$	1,417					$	(2,271)					$	43					$	(2,228)
Derivatives not subject to master netting arrangement or similar arrangement			(697)						—						(697)						—						(697)
Exchange traded derivatives			(364)						361						(3)						—						(3)
Total derivative liabilities			$	(4,749)					$	1,778					$	(2,971)					$	43					$	(2,928)

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

						June 30, 2023																		December 31, 2022
												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)						$	37,365					$	(576)					$	(4)					$	38,773					$	(630)					$	(4)
Loans and leases						347						—						9						353						—						10
Long-term debt						30,333						(579)						(141)						25,378						(780)						218

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

38 Truist Financial Corporation

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)			2023						2022						2023						2022
Pre-tax gain (loss) recognized in OCI:
Commercial loans			$	(419)					$	59					$	(256)					$	59
Pre-tax gain (loss) reclassified from AOCI into interest expense:
Long-term debt			—						(5)						—						(11)
Commercial Loans			(5)						—						(5)						—

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)			2023						2022						2023						2022
Investment securities:
Amounts related to interest settlements			$	87					$	9					$	163					$	4
Recognized on derivatives			42						60						(53)						474
Recognized on hedged items			(31)						(42)						75						(444)
Net income (expense) recognized(1)			98						27						185						34
Loans and leases:
Recognized on hedged items			—						—						(1)						(1)
Net income (expense) recognized			—						—						(1)						(1)
Long-term debt:
Amounts related to interest settlements			(47)						3						(93)						19
Recognized on derivatives			(291)						(38)						(135)						(467)
Recognized on hedged items			299						82						157						568
Net income (expense) recognized			(39)						47						(71)						120
Net income (expense) recognized, total			$	59					$	74					$	113					$	153

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

Truist Financial Corporation 39

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

(Dollars in millions)						Jun 30, 2023						Dec 31, 2022
Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI						$	(311)					$	(118)
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)						41						40
Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months						(142)						(31)
Maximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instruments						5 years						6 years
Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2033)(1)						$	290					$	669
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months						39						163

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

Derivatives Not Designated as Hedging Instruments under GAAP

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

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

						Three Months Ended June 30,												Six Months Ended June 30,
(Dollars in millions)			Income Statement Location			2023						2022						2023						2022
Client-related and other risk management:
Interest rate contracts			Investment banking and trading income and other income			$	52					$	72					$	86					$	128
Foreign exchange contracts			Investment banking and trading income and other income			(26)						147						(29)						179
Equity contracts			Investment banking and trading income and other income			(22)						2						(20)						7
Credit contracts			Investment banking and trading income and other income			(26)						83						(59)						91
Commodity contracts			Investment banking and trading income			7						(5)						17						—
Mortgage banking:
Interest rate contracts - residential			Mortgage banking income			23						217						22						478
Interest rate contracts - commercial			Mortgage banking income			(2)						—						(1)						(1)
MSRs:
Interest rate contracts - residential			Mortgage banking income			(83)						(265)						(82)						(614)
Interest rate contracts - commercial			Mortgage banking income			(7)						(5)						(4)						(14)
Total						$	(84)					$	246					$	(70)					$	254

Credit Derivative Instruments

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

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

40 Truist Financial Corporation

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

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

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

(Dollars in millions)			Jun 30, 2023						Dec 31, 2022
Risk participation agreements:
Maximum potential amount of exposure			$	543					$	575
Total return swaps:
Cash collateral held			461						453

The following table summarizes collateral positions with counterparties:

(Dollars in millions)			Jun 30, 2023						Dec 31, 2022
Dealer and other counterparties:
Cash and other collateral received from counterparties			$	579					$	542
Derivatives in a net gain position secured by collateral received			668						618
Unsecured positions in a net gain with counterparties after collateral postings			89						76
Cash collateral posted to counterparties			837						590
Derivatives in a net loss position secured by collateral			944						692
Central counterparties clearing:
Cash collateral, including initial margin, received from central clearing parties			—						4
Cash collateral, including initial margin, posted to central clearing parties			154						45
Derivatives in a net loss position			2						13
Derivatives in a net gain position			10						12
Securities pledged to central counterparties clearing			1,000						639

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)			2023						2022						2023						2022
Net income available to common shareholders			$	1,234					$	1,454					$	2,644					$	2,781
Weighted average number of common shares			1,331,953						1,330,160						1,330,286						1,329,601
Effect of dilutive outstanding equity-based awards			5,354						8,704						8,060						10,624
Weighted average number of diluted common shares			1,337,307						1,338,864						1,338,346						1,340,225
Basic EPS			$	0.93					$	1.09					$	1.99					$	2.09
Diluted EPS			$	0.92					$	1.09					$	1.98					$	2.08
Anti-dilutive awards			9,123						4,843						4,251						130

Truist Financial Corporation 41

NOTE 18. Operating Segments

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

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

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

Also related to the same transaction, IH was recapitalized from a corporate entity to an LLC, such that each member is allocated its share of IH’s income before taxes, and beginning in the second quarter of 2023 the Company recognizes its associated income tax provision through Other, Treasury & Corporate. The Company elected not to restate prior periods for this change based on IH’s previous status as a corporate entity. The Company recognized $54 million for the second quarter 2023 tax provision related to IH in Other, Treasury & Corporate.

42 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
2023						2022						2023						2022						2023						2022						2023						2022						2023						2022
Net interest income (expense)			$	1,454					$	1,568					$	2,420					$	1,305					$	1					$	1					$	(250)					$	533					$	3,625					$	3,407
Net intersegment interest income (expense)			1,214						725						(720)						54						(85)						5						(409)						(784)						—						—
Segment net interest income			2,668						2,293						1,700						1,359						(84)						6						(659)						(251)						3,625						3,407
Allocated provision for credit losses			224						199						312						(27)						—						—						2						(1)						538						171
Segment net interest income after provision			2,444						2,094						1,388						1,386						(84)						6						(661)						(250)						3,087						3,236
Noninterest income			828						831						576						688						944						830						(55)						(101)						2,293						2,248
Amortization of intangibles			68						79						31						33						32						31						—						—						131						143
Other noninterest expense			1,980						1,848						841						782						673						579						123						228						3,617						3,437
Income (loss) before income taxes			1,224						998						1,092						1,259						155						226						(839)						(579)						1,632						1,904
Provision (benefit) for income taxes			293						238						212						273						—						55						(218)						(194)						287						372
Segment net income (loss)			$	931					$	760					$	880					$	986					$	155					$	171					$	(621)					$	(385)					$	1,345					$	1,532
Identifiable assets (period end)			$	163,940					$	165,962					$	209,824					$	197,672					$	9,500					$	7,090					$	171,285					$	174,399					$	554,549					$	545,123
Six Months Ended June 30, (Dollars in millions)			CB&W												C&CB												IH												OT&C**(1)**												Total
2023						2022						2023						2022						2023						2022						2023						2022						2023						2022
Net interest income (expense)			$	3,057					$	3,095					$	4,726					$	2,424					$	2					$	1					$	(292)					$	1,070					$	7,493					$	6,590
Net intersegment interest income (expense)			2,359						1,387						(1,279)						220						(72)						7						(1,008)						(1,614)						—						—
Segment net interest income			5,416						4,482						3,447						2,644						(70)						8						(1,300)						(544)						7,493						6,590
Allocated provision for credit losses			498						272						544						(177)						—						—						(2)						(19)						1,040						76
Segment net interest income after provision			4,918						4,210						2,903						2,821						(70)						8						(1,298)						(525)						6,453						6,514
Noninterest income			1,701						1,742						1,206						1,344						1,761						1,563						(141)						(259)						4,527						4,390
Amortization of intangibles			137						153						62						66						68						61						—						—						267						280
Other noninterest expense			3,968						3,661						1,693						1,538						1,323						1,095						188						680						7,172						6,974
Income (loss) before income taxes			2,514						2,138						2,354						2,561						300						415						(1,627)						(1,464)						3,541						3,650
Provision (benefit) for income taxes			601						512						474						555						36						102						(430)						(467)						681						702
Segment net income (loss)			$	1,913					$	1,626					$	1,880					$	2,006					$	264					$	313					$	(1,197)					$	(997)					$	2,860					$	2,948
Identifiable assets (period end)			$	163,940					$	165,962					$	209,824					$	197,672					$	9,500					$	7,090					$	171,285					$	174,399					$	554,549					$	545,123

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

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