Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions, except per share data, shares in thousands)	Sep 30, 2023		Dec 31, 2022
Assets
Cash and due from banks	$	5,156	$	5,379
Interest-bearing deposits with banks	24,676		16,042
Securities borrowed or purchased under agreements to resell	2,018		3,181
Trading assets at fair value	4,384		4,905
AFS securities at fair value	65,117		71,801
HTM securities (fair value of $42,501 and $47,791, respectively)	54,942		57,713
LHFS (including $1,269 and $1,065 at fair value, respectively)	1,413		1,444
Loans and leases (including $16 and $18 at fair value, respectively)	315,699		325,991
ALLL	(4,693)		(4,377)
Loans and leases, net of ALLL	311,006		321,614
Premises and equipment	3,394		3,605
Goodwill	26,979		27,013
CDI and other intangible assets	3,292		3,672
Loan servicing rights at fair value	3,537		3,758
Other assets (including $1,079 and $1,582 at fair value, respectively)	36,793		35,128
Total assets	$	542,707	$	555,255
Liabilities
Noninterest-bearing deposits	$	116,674	$	135,742
Interest-bearing deposits	283,350		277,753
Short-term borrowings (including $1,718 and $1,551 at fair value, respectively)	23,485		23,422
Long-term debt	41,232		43,203
Other liabilities (including $3,474 and $2,971 at fair value, respectively)	15,959		14,598
Total liabilities	480,700		494,718
Shareholders’ Equity
Preferred stock	6,673		6,673
Common stock, $5 par value	6,668		6,634
Additional paid-in capital	36,114		34,544
Retained earnings	27,944		26,264
AOCI, net of deferred income taxes	(15,559)		(13,601)
Noncontrolling interests	167		23
Total shareholders’ equity	62,007		60,537
Total liabilities and shareholders’ equity	$	542,707	$	555,255
Common shares outstanding	1,333,668		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 September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Interest Income
Interest and fees on loans and leases		$	4,976		$	3,490		$	14,547		$	9,032
Interest on securities		763			709			2,264			2,024
Interest on other earning assets		490			170			1,379			343
Total interest income		6,229			4,369			18,190			11,399
Interest Expense
Interest on deposits		1,831			331			4,462			462
Interest on long-term debt		491			190			1,739			459
Interest on other borrowings		343			103			932			143
Total interest expense		2,665			624			7,133			1,064
Net Interest Income		3,564			3,745			11,057			10,335
Provision for credit losses		497			234			1,537			310
Net Interest Income After Provision for Credit Losses		3,067			3,511			9,520			10,025
Noninterest Income
Insurance income		793			725			2,541			2,277
Wealth management income		343			334			1,012			1,014
Investment banking and trading income		185			222			657			738
Service charges on deposits		152			263			641			769
Card and payment related fees		238			241			704			699
Mortgage banking income		102			122			343			343
Lending related fees		102			80			294			265
Operating lease income		63			66			194			190


Securities gains (losses)		—			(1)			—			(71)
Other income		130			50			249			268
Total noninterest income		2,108			2,102			6,635			6,492
Noninterest Expense
Personnel expense		2,200			2,116			6,637			6,269
Professional fees and outside processing		317			352			983			1,064
Software expense		238			225			689			691
Net occupancy expense		180			176			543			565
Amortization of intangibles		130			140			397			420
Equipment expense		97			122			299			354
Marketing and customer development		78			105			235			282
Operating lease depreciation		43			45			133			140

Regulatory costs		77			52			225			131
Merger-related and restructuring charges		75			62			192			399

Other expense		312			218			853			552
Total noninterest expense		3,747			3,613			11,186			10,867
Earnings
Income before income taxes		1,428			2,000			4,969			5,650
Provision for income taxes		245			363			926			1,065
Net income		1,183			1,637			4,043			4,585
Noncontrolling interests		6			4			44			6

Preferred stock dividends and other		106			97			284			262
Net income available to common shareholders		$	1,071		$	1,536		$	3,715		$	4,317
Basic EPS		$	0.80		$	1.16		$	2.79		$	3.25
Diluted EPS		0.80			1.15			2.77			3.22
Basic weighted average shares outstanding		1,333,522			1,326,539			1,331,377			1,328,569
Diluted weighted average shares outstanding		1,340,574			1,336,659			1,339,041			1,339,071

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

Truist Financial Corporation 5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
2023			2022			2023			2022
Net income	$	1,183		$	1,637		$	4,043		$	4,585
OCI, net of tax:
Net change in net pension and postretirement costs	23			6			17			19
Net change in cash flow hedges	(255)			(139)			(447)			(85)
Net change in AFS securities	(2,015)			(3,051)			(1,712)			(10,889)
Net change in HTM securities	63			80			183			216
Other, net	(1)			(6)			1			(7)
Total OCI, net of tax	(2,185)			(3,110)			(1,958)			(10,746)
Total OCI	$	(1,002)		$	(1,473)		$	2,085		$	(6,161)
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs	$	—		$	1		$	—		$	6
Net change in cash flow hedges	(79)			(42)			(138)			(26)
Net change in AFS securities	(618)			(927)			(543)			(3,307)
Net change in HTM securities	19			25			51			65

Total income taxes related to OCI	$	(678)		$	(943)		$	(630)		$	(3,262)

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

6 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES




Unaudited (Dollars in millions, shares in thousands)	Shares of Common Stock	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		AOCI		Noncontrolling Interests		Total Shareholders’ Equity
Balance, July 1, 2022	1,326,393	$	6,673	$	6,632	$	34,410	$	24,500	$	(9,240)	$	24	$	62,999
Net income	—	—		—		—		1,633		—		4		1,637
OCI	—	—		—		—		—		(3,110)		—		(3,110)

Issued in connection with equity awards, net	373	—		2		(5)		(1)		—		—		(4)



Cash dividends declared on common stock	—	—		—		—		(691)		—		—		(691)
Cash dividends declared on preferred stock	—	—		—		—		(97)		—		—		(97)
Equity-based compensation expense	—	—		—		82		—		—		—		82

Other, net	—	—		—		—		—		—		(5)		(5)
Balance, September 30, 2022	1,326,766	$	6,673	$	6,634	$	34,487	$	25,344	$	(12,350)	$	23	$	60,811
Balance, July 1, 2023	1,331,976	$	6,673	$	6,660	$	35,990	$	27,577	$	(13,374)	$	155	$	63,681
Net income	—	—		—		—		1,177		—		6		1,183
OCI	—	—		—		—		—		(2,185)		—		(2,185)

Issued in connection with equity awards, net	1,692	—		8		43		(4)		—		—		47



Cash dividends declared on common stock	—	—		—		—		(693)		—		—		(693)
Cash dividends declared on preferred stock	—	—		—		—		(106)		—		—		(106)
Equity-based compensation expense	—	—		—		78		—		—		—		78
Other, net	—	—		—		3		(7)		—		6		2
Balance, September 30, 2023	1,333,668	$	6,673	$	6,668	$	36,114	$	27,944	$	(15,559)	$	167	$	62,007
















Balance, January 1, 2022	1,327,818	$	6,673	$	6,639	$	34,565	$	22,998	$	(1,604)	$	—	$	69,271
Net income	—	—		—		—		4,579		—		6		4,585
OCI	—	—		—		—		—		(10,746)		—		(10,746)

Issued in connection with equity awards, net	4,056	—		21		(112)		(4)		—		—		(95)

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

Cash dividends declared on common stock	—	—		—		—		(1,967)		—		—		(1,967)
Cash dividends declared on preferred stock	—	—		—		—		(262)		—		—		(262)
Equity-based compensation expense	—	—		—		258		—		—		—		258

Other, net	—	—		—		—		—		—		17		17
Balance, September 30, 2022	1,326,766	$	6,673	$	6,634	$	34,487	$	25,344	$	(12,350)	$	23	$	60,811
Balance, January 1, 2023	1,326,829	$	6,673	$	6,634	$	34,544	$	26,264	$	(13,601)	$	23	$	60,537
Net income	—	—		—		—		3,999		—		44		4,043
OCI	—	—		—		—		—		(1,958)		—		(1,958)
Received in connection with IH minority stake sale, net	—	—		—		1,317		—		—		96		1,413
Issued in connection with equity awards, net	6,839	—		34		(1)		(7)		—		—		26



Cash dividends declared on common stock	—	—		—		—		(2,077)		—		—		(2,077)
Cash dividends declared on preferred stock	—	—		—		—		(284)		—		—		(284)
Equity-based compensation expense	—	—		—		251		—		—		—		251

Other, net	—	—		—		3		49		—		4		56
Balance, September 30, 2023	1,333,668	$	6,673	$	6,668	$	36,114	$	27,944	$	(15,559)	$	167	$	62,007

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

Truist Financial Corporation 7

CONSOLIDATED STATEMENTS OF CASH FLOWS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES



Unaudited (Dollars in millions)		Nine Months Ended September 30,
	2023			2022
Cash Flows From Operating Activities:
Net income		$	4,043		$	4,585
Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses		1,537			310

Depreciation		522			581

Amortization of intangibles		397			420

Securities (gains) losses		—			71
Net change in operating assets and liabilities:
LHFS		(204)			1,676
Loan servicing rights		(187)			(850)
Pension asset		(1,425)			(526)
Derivative assets and liabilities		852			3,850
Trading assets		521			(1,441)
Other assets and other liabilities		262			(247)

Other, net		(63)			(882)
Net cash from operating activities		6,255			7,547
Cash Flows From Investing Activities:
Proceeds from sales of AFS securities		15			3,311
Proceeds from maturities, calls and paydowns of AFS securities		6,340			10,619
Purchases of AFS securities		(2,261)			(9,025)
Proceeds from maturities, calls and paydowns of HTM securities		3,023			4,006
Purchases of HTM securities		—			(3,020)
Originations and purchases of loans and leases, net of sales and principal collected		9,332			(24,135)
Net cash received (paid) for FHLB stock		(5)			(609)
Net cash received (paid) for securities borrowed or purchased under agreements to resell		1,163			1,460

Net cash received (paid) for asset acquisitions, business combinations, and divestitures		(15)			(1,325)

Other, net		273			(491)
Net cash from investing activities		17,865			(19,209)
Cash Flows From Financing Activities:
Net change in deposits		(13,471)			(490)
Net change in short-term borrowings		47			20,395
Proceeds from issuance of long-term debt		48,172			3,461
Repayment of long-term debt		(49,609)			(6,991)
Repurchase of common stock		—			(250)


Cash dividends paid on common stock		(2,077)			(1,967)
Cash dividends paid on preferred stock		(284)			(262)
Net cash received (paid) for hedge unwinds		(424)			(198)
Net cash from IH minority stake sale		1,922			—
Other, net		15			(106)
Net cash from financing activities		(15,709)			13,592
Net Change in Cash and Cash Equivalents		8,411			1,930
Cash and Cash Equivalents, January 1		21,421			20,295
Cash and Cash Equivalents, September 30		$	29,832		$	22,225
Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:
Interest expense		$	6,430		$	982
Income taxes		785			422



Noncash investing activities:





Transfer of AFS securities to HTM		—			59,436

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

8 Truist Financial Corporation

NOTE 1. Basis of Presentation

General

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

Reclassifications

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

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

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

Use of Estimates in the Preparation of Financial Statements

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

Loan Modifications

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

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

Truist Financial Corporation 9

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

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

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

ALLL

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

Income Taxes

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

Changes in Accounting Principles and Effects of New Accounting Pronouncements


Standard / Adoption 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 equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. Previously, reporting entities were only permitted to apply the proportional amortization method only to qualifying equity investments in low-income housing tax credit structures.	Truist adopted this standard early on a modified-retrospective basis. The adoption of this standard did not have a material impact on the financial statements. Refer to “Note 14. Commitments and Contingencies” for additional information regarding tax credit investments.

10 Truist Financial Corporation

NOTE 2. Business Combinations, Divestitures, and Noncontrolling Interests

Noncontrolling Interest

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

NOTE 3. Securities Financing Activities

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Securities purchased under agreements to resell	$	826	$	2,415
Securities borrowed	1,192		766
Total securities borrowed or purchased under agreements to resell	$	2,018	$	3,181

Fair value of collateral permitted to be resold or repledged	$	1,789	$	3,058
Fair value of securities resold or repledged	—		864

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


	September 30, 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	$	—	$	—	$	—	$	318	$	—	$	318
State and Municipal	195		—		195		272		—		272
GSE	—		—		—		74		—		74
Agency MBS - residential	—		1,500		1,500		1,019		26		1,045
Corporate and other debt securities	230		205		435		369		50		419
Total securities sold under agreements to repurchase	$	425	$	1,705	$	2,130	$	2,052	$	76	$	2,128

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

Truist Financial Corporation 11

NOTE 4. Investment Securities

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


September 30, 2023 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
	Gains		Losses
AFS securities:
U.S. Treasury	$	11,031	$	—	$	670	$	10,361
GSE	372		—		48		324
Agency MBS - residential	61,202		—		12,126		49,076
Agency MBS - commercial	2,827		—		692		2,135
States and political subdivisions	421		7		34		394
Non-agency MBS	3,754		—		946		2,808
Other	20		—		1		19
Total AFS securities	$	79,627	$	7	$	14,517	$	65,117
HTM securities:


Agency MBS - residential	$	54,942	$	—	$	12,441	$	42,501





December 31, 2022 (Dollars in millions)	Amortized 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:


	September 30, 2023
(Dollars in millions)	Amortized Cost		Fair Value
FNMA	$	40,167	$	31,590
FHLMC	40,710		31,724

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


	Amortized Cost										Fair Value
September 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	$	3,996	$	6,989	$	17	$	29	$	11,031	$	3,923	$	6,401	$	15	$	22	$	10,361
GSE	—		7		11		354		372		—		7		10		307		324
Agency MBS - residential	—		125		453		60,624		61,202		—		118		413		48,545		49,076
Agency MBS - commercial	—		—		71		2,756		2,827		—		—		63		2,072		2,135
States and political subdivisions	4		94		142		181		421		5		90		140		159		394
Non-agency MBS	—		—		222		3,532		3,754		—		—		165		2,643		2,808
Other	—		8		12		—		20		—		7		12		—		19
Total AFS securities	$	4,000	$	7,223	$	928	$	67,476	$	79,627	$	3,928	$	6,623	$	818	$	53,748	$	65,117
HTM securities:


Agency MBS - residential	$	—	$	—	$	—	$	54,942	$	54,942	$	—	$	—	$	—	$	42,501	$	42,501

12 Truist Financial Corporation

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


	Less than 12 months				12 months or more				Total
September 30, 2023 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
U.S. Treasury	$	567	$	6	$	9,177	$	664	$	9,744	$	670
GSE	75		3		248		45		323		48
Agency MBS - residential	307		7		48,743		12,119		49,050		12,126
Agency MBS - commercial	62		5		2,073		687		2,135		692
States and political subdivisions	60		1		234		33		294		34
Non-agency MBS	—		—		2,808		946		2,808		946
Other	—		—		20		1		20		1
Total	$	1,071	$	22	$	63,303	$	14,495	$	64,374	$	14,517
HTM securities:


Agency MBS - residential	$	—	$	—	$	42,501	$	12,441	$	42,501	$	12,441








	Less than 12 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 September 30, 2023 and December 31, 2022, no ACL was established for AFS or HTM securities. Substantially all of the unrealized losses on the securities portfolio, including non-agency MBS, were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. HTM debt securities consist of residential agency MBS. Accordingly, the Company does not expect to incur any credit losses on investment securities.

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


(Dollars in millions)		Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Gross realized gains		$	—		$	—		$	—		$	13
Gross realized losses		—			(1)			—			(84)


Securities gains (losses), net		$	—		$	(1)		$	—		$	(71)

Truist Financial Corporation 13

NOTE 5. Loans and ACL

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

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


	Accruing
September 30, 2023 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due(1)		Nonperforming		Total
Commercial:
Commercial and industrial	$	161,656	$	98	$	15	$	561	$	162,330
CRE	22,419		28		—		289		22,736
Commercial construction	6,313		1		—		29		6,343

Consumer:
Residential mortgage	54,832		563		486		132		56,013
Home equity	9,967		61		9		123		10,160
Indirect auto	23,219		598		1		266		24,084
Other consumer	28,818		219		16		52		29,105

Credit card	4,813		68		47		—		4,928

Total	$	312,037	$	1,636	$	574	$	1,452	$	315,699
(1)Includes government guaranteed loans of $456 million in the residential mortgage portfolio.

	Accruing
December 31, 2022 (Dollars in millions)	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:


September 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	$	21,868		$	34,323		$	16,084		$	8,740		$	6,125		$	11,692	$	56,472	$	—	$	(235)	$	155,069
Special mention	420			712			663			142			145			238		939		—		—		3,259
Substandard	373			895			426			264			286			353		844		—		—		3,441
Nonperforming	7			158			141			11			31			27		186		—		—		561
Total	22,668			36,088			17,314			9,157			6,587			12,310		58,441		—		(235)		162,330
Gross charge-offs	11			51			83			21			3			21		90						280
CRE:
Pass	3,215			5,000			2,740			2,051			2,982			2,948		1,102		—		(73)		19,965
Special mention	220			490			88			88			85			52		56		—		—		1,079
Substandard	75			382			268			51			332			295		—		—		—		1,403
Nonperforming	—			90			4			24			156			15		—		—		—		289
Total	3,510			5,962			3,100			2,214			3,555			3,310		1,158		—		(73)		22,736
Gross charge-offs	—			52			1			10			8			47		—		—		—		118
Commercial construction:
Pass	689			2,020			1,550			305			158			129		969		—		—		5,820
Special mention	38			131			104			—			—			—		1		—		—		274
Substandard	22			46			25			110			—			—		17		—		—		220
Nonperforming	—			28			—			—			1			—		—		—		—		29
Total	749			2,225			1,679			415			159			129		987		—		—		6,343








Consumer:
Residential mortgage:

Current	2,468			13,609			16,733			5,827			2,884			13,311		—		—		—		54,832
30 - 89 days past due	3			39			40			36			35			410		—		—		—		563
90 days or more past due	3			26			25			33			34			365		—		—		—		486
Nonperforming	—			2			6			6			12			106		—		—		—		132
Total	2,474			13,676			16,804			5,902			2,965			14,192		—		—		—		56,013
Gross charge-offs	—			—			2			1			1			6		—		—		—		10
Home equity:

Current	—			—			—			—			—			—		6,209		3,758		—		9,967
30 - 89 days past due	—			—			—			—			—			—		41		20		—		61
90 days or more past due	—			—			—			—			—			—		6		3		—		9
Nonperforming	—			—			—			—			—			—		42		81		—		123
Total	—			—			—			—			—			—		6,298		3,862		—		10,160
Gross charge-offs	—			—			—			—			—			—		8		—		—		8
Indirect auto:

Current	3,893			8,865			5,236			2,835			1,574			829		—		—		(13)		23,219
30 - 89 days past due	48			187			140			83			71			69		—		—		—		598
90 days or more past due	—			1			—			—			—			—		—		—		—		1
Nonperforming	11			78			66			42			37			32		—		—		—		266
Total	3,952			9,131			5,442			2,960			1,682			930		—		—		(13)		24,084
Gross charge-offs	10			138			88			44			44			53		—		—		—		377
Other consumer:

Current	8,656			8,453			4,146			2,160			1,194			1,336		2,856		14		3		28,818
30 - 89 days past due	56			72			37			20			14			13		6		1		—		219
90 days or more past due	6			7			1			—			—			—		2		—		—		16
Nonperforming	3			11			14			8			7			8		—		1		—		52
Total	8,721			8,543			4,198			2,188			1,215			1,357		2,864		16		3		29,105
Gross charge-offs	53			116			69			37			26			11		17		—		—		329
Student:(2)





Gross charge-offs	—			—			—			—			—			108		—		—		—		108
Credit card:
Current	—			—			—			—			—			—		4,793		20		—		4,813
30 - 89 days past due	—			—			—			—			—			—		65		3		—		68
90 days or more past due	—			—			—			—			—			—		45		2		—		47

Total	—			—			—			—			—			—		4,903		25		—		4,928
Gross charge-offs	—			—			—			—			—			—		157		2		—		159
Total	$	42,074		$	75,625		$	48,537		$	22,836		$	16,163		$	32,228	$	74,651	$	3,903	$	(318)	$	315,699
Gross charge-offs	$	74		$	357		$	243		$	113		$	82		$	246	$	272	$	2	$	—	$	1,389

Truist Financial Corporation 15


December 31, 2022 (Dollars in millions)	Amortized Cost Basis by Origination 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 Jul 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2022
Commercial:
Commercial and industrial	$	1,357	$	(51)	$	43	$	(48)	$	—	$	1,301
CRE	237		—		—		(3)		—		234
Commercial construction	50		—		2		(5)		—		47

Consumer:
Residential mortgage	327		(4)		3		50		—		376
Home equity	88		(3)		8		(10)		—		83
Indirect auto	952		(103)		21		96		—		966
Other Consumer	728		(109)		21		115		—		755
Student	100		(7)		—		—		—		93
Credit card	348		(42)		8		36		—		350

ALLL	4,187		(319)		106		231		—		4,205
RUFC	247		—		—		3		—		250
ACL	$	4,434	$	(319)	$	106	$	234	$	—	$	4,455

(Dollars in millions)	Balance at Jul 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2023
Commercial:
Commercial and industrial	$	1,536	$	(98)	$	28	$	(114)	$	(1)	$	1,351
CRE	402		(77)		2		278		—		605
Commercial construction	109		—		—		56		—		165

Consumer:
Residential mortgage	320		(8)		1		(12)		—		301
Home equity	85		(4)		7		(2)		—		86
Indirect auto	981		(135)		25		74		—		945
Other consumer	808		(120)		20		158		—		866

Credit card	365		(55)		9		55		—		374

ALLL	4,606		(497)		92		493		(1)		4,693
RUFC	273		—		—		4		—		277
ACL	$	4,879	$	(497)	$	92	$	497	$	(1)	$	4,970



















(Dollars in millions)	Balance at Jan 1, 2022		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2022
Commercial:
Commercial and industrial	$	1,426	$	(99)	$	73	$	(99)	$	—	$	1,301
CRE	350		(2)		7		(121)		—		234
Commercial construction	52		(1)		4		(8)		—		47

Consumer:
Residential mortgage	308		(8)		13		63		—		376
Home equity	96		(7)		19		(25)		—		83
Indirect auto	1,022		(282)		70		156		—		966
Other consumer	714		(285)		62		264		—		755
Student	117		(17)		—		(7)		—		93
Credit card	350		(123)		26		97		—		350

ALLL	4,435		(824)		274		320		—		4,205
RUFC	260		—		—		(10)		—		250
ACL	$	4,695	$	(824)	$	274	$	310	$	—	$	4,455

Truist Financial Corporation 17


(Dollars in millions)	Balance at Jan 1, 2023		Charge-Offs		Recoveries		Provision (Benefit)		Other(1)		Balance at Sep 30, 2023
Commercial:
Commercial and industrial	$	1,409	$	(280)	$	54	$	170	$	(2)	$	1,351
CRE	224		(118)		3		496		—		605
Commercial construction	46		—		1		118		—		165

Consumer:
Residential mortgage	399		(10)		5		(12)		(81)		301
Home equity	90		(8)		18		(14)		—		86
Indirect auto	981		(377)		82		246		13		945
Other consumer	770		(329)		57		369		(1)		866
Student(2)	98		(108)		—		10		—		—
Credit card	360		(159)		27		149		(3)		374

ALLL	4,377		(1,389)		247		1,532		(74)		4,693
RUFC	272		—		—		5		—		277
ACL	$	4,649	$	(1,389)	$	247	$	1,537	$	(74)	$	4,970

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

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

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

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

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

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

18 Truist Financial Corporation

NPAs

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


	September 30, 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	$	179	$	382	$	120	$	278
CRE	55		234		75		7
Commercial construction	—		29		—		—

Consumer:
Residential mortgage	2		130		4		236
Home equity	1		122		2		133
Indirect auto	23		243		3		286
Other consumer	—		52		—		44


Total	$	260	$	1,192	$	204	$	984

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Nonperforming loans and leases HFI	$	1,452	$	1,188
Nonperforming LHFS	75		—
Foreclosed real estate	3		4
Other foreclosed property	54		58
Total nonperforming assets	$	1,584	$	1,250

Residential mortgage loans in the process of foreclosure	$	233	$	248

Loan Modifications

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


Three Months Ended September 30, 2023 (Dollars in millions)	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	$	426	$	—	$	—	$	3	$	—	$	—	$	—	$	—	$	429	0.26	%
CRE	28		—		—		—		—		—		—		—		28		0.12
Commercial construction	21		—		—		—		—		—		—		—		21		0.33
Consumer:
Residential mortgage	—		30		27		23		—		79		15		1		175		0.31
Home equity	—		—		—		2		2		—		—		1		5		0.05
Indirect auto	—		7		—		388		4		—		—		2		401		1.67
Other consumer	—		6		—		—		1		—		—		—		7		0.02
Credit card	—		—		—		—		—		—		—		4		4		0.08
Total	$	475	$	43	$	27	$	416	$	7	$	79	$	15	$	8	$	1,070	0.34

Truist Financial Corporation 19


Nine Months Ended September 30, 2023 (Dollars in millions)	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	$	884	$	51	$	—	$	23	$	44	$	—	$	—	$	—	$	1,002	0.62	%
CRE	173		—		—		72		—		—		—		—		245		1.08
Commercial construction	24		—		—		—		—		—		—		—		24		0.38
Consumer:
Residential mortgage	—		82		95		62		2		254		52		4		551		0.98
Home equity	—		—		—		2		7		—		—		2		11		0.11
Indirect auto	—		19		—		483		13		—		—		5		520		2.16
Other consumer	—		15		—		1		4		—		—		1		21		0.07
Credit card	—		—		—		—		—		—		—		14		14		0.28
Total	$	1,081	$	167	$	95	$	643	$	70	$	254	$	52	$	26	$	2,388	0.76


Three Months Ended September 30, 2023
Loan Type						Financial Effect
Renewals
Commercial and industrial						Extended the term by 9 months and increased the interest rate by 0.7%
CRE						Extended the term by 15 months and increased the interest rate by 0.9%
Commercial construction						Extended the term by 2 months
Term Extensions
Residential mortgage						Extended the term by 117 months.
Indirect auto						Extended the term by 24 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 120 days of payment deferral.
Residential mortgage						Provided 214 days of payment deferral.
Home equity						Provided 177 days of payment deferral.
Indirect auto						Provided 135 days of payment deferral.
Combination - Interest Rate Adjustment and Term Extension
Home equity						Extended the term by 322 months and decreased the interest rate by 5%.
Indirect auto						Extended the term by 12 months and decreased the interest rate by 5%.
Other consumer						Extended the term by 56 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 101 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 144 months, and decreased the interest rate by 0.4%.

20 Truist Financial Corporation


Nine Months Ended September 30, 2023
Loan Type						Financial Effect
Renewals
Commercial and industrial						Extended the term by 8 months and increased the interest rate by 0.6%
CRE						Extended the term by 11 months and increased the interest rate by 0.2%
Commercial construction						Extended the term by 2 months
Term Extensions
Commercial and industrial						Extended the term by 3 months.
Residential mortgage						Extended the term by 139 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 183 days of payment deferral.
CRE						Provided 232 days of payment deferral.
Residential mortgage						Provided 212 days of payment deferral.
Home equity						Provided 167 days of payment deferral.
Indirect auto						Provided 133 days of payment deferral.
Other consumer						Provided 153 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 124 months and increased the interest rate by 0.5%.
Home equity						Extended the term by 258 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 61 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 105 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 130 months, and decreased the interest rate by 0.2%.

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

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

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

Truist Financial Corporation 21

Truist closely monitors the performance of the loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table summarizes the period-end delinquency status and amortized cost of loans that were modified since January 1, 2023. The period-end delinquency status of loans that were modified are disclosed at amortized cost and reflect the impact of any paydowns, payoffs, and/or charge-offs that occurred subsequent to modification.


	Payment Status (Amortized Cost Basis)
September 30, 2023 (Dollars in millions)	Current		30-89 Days Past Due		90 Days or More Past Due		Total
Commercial:
Commercial and industrial	$	743	$	2	$	32	$	777
CRE	120		—		21		141
Commercial construction	21		—		—		21
Consumer:
Residential mortgage	354		104		74		532
Home equity	9		—		—		9
Indirect auto	438		65		7		510
Other consumer	18		1		—		19
Credit card	9		1		1		11
Total	$	1,712	$	173	$	135	$	2,020
Total nonaccrual loans included above	$	227	$	28	$	82	$	337

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


September 30, 2023 (Dollars in millions)	Renewals		Term Extensions		Capitalizations		Payment Delays		Combination - Capitalization and Term Extension		Combination - Capitalization, Interest Rate and Term Extension		Other		Total
Commercial:
Commercial and industrial	$	32	$	—	$	—	$	—	$	—	$	—	$	—	$	32
CRE	21		—		—		—		—		—		—		21

Consumer:
Residential mortgage	—		7		8		28		25		4		2		74

Indirect auto	—		—		—		5		—		—		2		7

Credit card	—		—		—		—		—		—		1		1
Total	$	53	$	7	$	8	$	33	$	25	$	4	$	5	$	135

TDRs

The following table presents a summary of TDRs:


(Dollars in millions)	Dec 31, 2022
Performing TDRs:
Commercial:
Commercial and industrial	$	136
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 September 30, 2022								As of / For the Nine Months Ended September 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	$	66	$	—	$	66	$	9	$	66	$	9	$	77	$	9




Consumer	123		117		236		12		368		505		858		41





Credit card	2		—		2		1		6		—		6		3
Re-modification of previously designated TDRs	43		50						73		90

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

The following table presents additional information about loans and leases:


(Dollars in millions)			Sep 30, 2023						Dec 31, 2022
Unearned income, discounts, and net deferred loan fees and costs			$	528					$	269

NOTE 6. Goodwill and Other Intangible Assets

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

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



(Dollars in millions)	CB&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	—		215		(249)		(34)
Goodwill, September 30, 2023	$	16,865	$	6,369	$	3,745	$	26,979

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


		September 30, 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		$	(1,589)		$	884		$	2,473		$	(1,403)		$	1,070
Other, primarily client relationship intangibles		3,807			(1,399)			2,408			3,812			(1,210)			2,602
Total		$	6,280		$	(2,988)		$	3,292		$	6,285		$	(2,613)		$	3,672

Truist Financial Corporation 23

NOTE 7. Loan Servicing

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

Residential Mortgage Activities

The following tables summarize residential mortgage servicing activities:



(Dollars in millions)	Sep 30, 2023			Dec 31, 2022
UPB of residential mortgage loan servicing portfolio	$	271,632		$	274,028
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	214,953			217,046
Mortgage loans sold with recourse	180			200
Maximum recourse exposure from mortgage loans sold with recourse liability	114			127
Indemnification, recourse and repurchase reserves	52			56

As of / For the Nine Months Ended September 30, (Dollars in millions)	2023			2022
UPB of residential mortgage loans sold from LHFS	$	10,643		$	22,971
Pre-tax gains recognized on mortgage loans sold and held for sale	49			62
Servicing fees recognized from mortgage loans serviced for others	517			462
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.27		%	0.30		%
Weighted average interest rate on mortgage loans serviced for others	3.51			3.45

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		321
Additions	199		372
Sales	(531)		—
Change in fair value due to changes in valuation inputs or assumptions(1)	207		771


Realization of expected net servicing cash flows, passage of time, and other	(204)		(306)
Residential MSRs, carrying value, September 30	$	3,222	$	3,463

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

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


	September 30, 2023								December 31, 2022
	Range				Weighted Average				Range					Weighted Average
(Dollars in millions)	Min		Max					Min			Max
Prepayment speed	6.6	%	11.3	%	7.1		%		8.6	%		12.5	%	9.0		%
Effect on fair value of a 10% increase					$	(83)								$	(110)
Effect on fair value of a 20% increase					(160)									(211)
OAS	2.3	%	12.3	%	4.8		%		1.2	%		11.4	%	4.0		%
Effect on fair value of a 10% increase					$	(63)								$	(55)
Effect on fair value of a 20% increase					(124)									(108)
Composition of loans serviced for others:
Fixed-rate residential mortgage loans					99.6		%							99.5		%
Adjustable-rate residential mortgage loans					0.4									0.5
Total					100.0		%							100.0		%
Weighted average life					7.7 years									6.8 years

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

24 Truist Financial Corporation

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:



(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
UPB of CRE mortgages serviced for others	$	34,179	$	36,622
CRE mortgages serviced for others covered by recourse provisions	9,718		9,955
Maximum recourse exposure from CRE mortgages sold with recourse liability	2,827		2,861
Recorded reserves related to recourse exposure	17		17
CRE mortgages originated during the year-to-date period	2,866		7,779
Commercial MSRs at fair value	295		301

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

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




	September 30, 2023						December 31, 2022






(Dollars in millions)	Operating Leases			Finance Leases			Operating Leases			Finance Leases
ROU assets	$	1,112		$	11		$	1,193		$	20









Total lease liabilities	1,436			12			1,545			23
Weighted average remaining term	6.2 years			5.6 years			6.6 years			5.6 years
Weighted average discount rate	3.0		%	4.8		%	2.7		%	3.4		%


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2023		2022		2023		2022
Operating lease costs	$	74	$	81	$	230	$	241

Lessor Operating Leases

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Assets held under operating leases(1)(2)	$	2,028	$	2,090


Accumulated depreciation	(575)		(550)
Net	$	1,453	$	1,540

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

(2)Excludes operating leases held-for-sale that totaled $421 million and $516 million at September 30, 2023 and December 31, 2022, respectively.

Bank-Owned Life Insurance

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

Truist Financial Corporation 25

NOTE 9. Borrowings

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022

FHLB advances	$	18,900		$	18,900
Securities sold under agreements to repurchase	2,130			2,128
Securities sold short	1,718			1,551
Collateral in excess of derivative exposures	451			403
Master notes	200			370
Other short-term borrowings	86			70
Total short-term borrowings	$	23,485		$	23,422

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022


Truist Financial Corporation:
Fixed rate senior notes	$	18,801	$	14,107
Floating rate senior notes	999		999
Fixed rate subordinated notes(1)	1,824		1,882
Capital notes(1)	628		625
Structured notes(2)	—		12
Truist Bank:
Fixed rate senior notes	4,142		6,982
Floating rate senior notes	1,250		1,749
Fixed rate subordinated notes(1)	4,740		4,767
Fixed rate FHLB advances	2		2
Floating rate FHLB advances	7,600		10,800
Other long-term debt(3)	1,246		1,278


Total long-term debt	$	41,232	$	43,203

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

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

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

26 Truist Financial Corporation

NOTE 10. Shareholders’ Equity

Common Stock

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cash dividends declared per share	$	0.52	$	0.52	$	1.56	$	1.48

NOTE 11. AOCI

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






(Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		HTM Securities		Other, net		Total
AOCI balance, July 1, 2022	$	(73)	$	45	$	(6,476)	$	(2,736)	$	—	$	(9,240)
OCI before reclassifications, net of tax	—		(140)		(3,047)		—		(6)		(3,193)

Amounts reclassified from AOCI:
Before tax	6		1		(6)		105		—		106
Tax effect	—		—		(2)		25		—		23
Amounts reclassified, net of tax	6		1		(4)		80		—		83
Total OCI, net of tax	6		(139)		(3,051)		80		(6)		(3,110)
AOCI balance, September 30, 2022	$	(67)	$	(94)	$	(9,527)	$	(2,656)	$	(6)	$	(12,350)
AOCI balance, July 1, 2023	$	(1,541)	$	(270)	$	(9,092)	$	(2,468)	$	(3)	$	(13,374)
OCI before reclassifications, net of tax	10		(268)		(1,938)		—		(1)		(2,197)

Amounts reclassified from AOCI:
Before tax	16		17		(100)		82		—		15
Tax effect	3		4		(23)		19		—		3
Amounts reclassified, net of tax	13		13		(77)		63		—		12
Total OCI, net of tax	23		(255)		(2,015)		63		(1)		(2,185)
AOCI balance, September 30, 2023	$	(1,518)	$	(525)	$	(11,107)	$	(2,405)	$	(4)	$	(15,559)

(Dollars in millions)	Pension and OPEB 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		(94)		(10,956)		—		(7)		(11,055)
AFS Securities transferred to HTM, net of tax	—		—		2,872		(2,872)		—		—
Amounts reclassified from AOCI:
Before tax	22		12		87		281		—		402
Tax effect	5		3		20		65		—		93
Amounts reclassified, net of tax	17		9		67		216		—		309
Total OCI, net of tax	19		(85)		(10,889)		216		(7)		(10,746)
AOCI balance, September 30, 2022	$	(67)	$	(94)	$	(9,527)	$	(2,656)	$	(6)	$	(12,350)
AOCI balance, January 1, 2023	$	(1,535)	$	(78)	$	(9,395)	$	(2,588)	$	(5)	$	(13,601)
OCI before reclassifications, net of tax	(21)		(464)		(1,531)		—		1		(2,015)

Amounts reclassified from AOCI:
Before tax	49		22		(236)		234		—		69
Tax effect	11		5		(55)		51		—		12
Amounts reclassified, net of tax	38		17		(181)		183		—		57
Total OCI, net of tax	17		(447)		(1,712)		183		1		(1,958)
AOCI balance, September 30, 2023	$	(1,518)	$	(525)	$	(11,107)	$	(2,405)	$	(4)	$	(15,559)
Primary income statement location of amounts reclassified from AOCI	Other 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 September 30, 2023 and 2022, the provision for income taxes was $245 million and $363 million, respectively, representing effective tax rates of 17.2% and 18.2%, respectively. The lower effective tax rate for the three months ended September 30, 2023 was primarily driven by decreases in the full year forecasted effective tax rate, partially offset by changes in discrete tax items. For the nine months ended September 30, 2023 and 2022, the provision for income taxes was $926 million and $1.1 billion, respectively, representing effective tax rates of 18.6% and 18.8%, respectively. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

NOTE 13. Benefit Plans

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


		Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	Income Statement Location	2023		2022		2023		2022
Service cost	Personnel expense	$	77	$	139	$	263	$	418
Interest cost	Other expense	112		87		334		263
Estimated return on plan assets	Other expense	(226)		(269)		(682)		(808)
Amortization and other	Other expense	19		10		59		27
Net periodic (benefit) cost		$	(18)	$	(33)	$	(26)	$	(100)

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

28 Truist Financial Corporation

NOTE 14. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

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

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


(Dollars in millions)	Balance Sheet Location	Sep 30, 2023		Dec 31, 2022
Investments in affordable housing projects and other qualified tax credits:
Carrying amount	Other assets	$	6,368	$	5,869
Amount of future funding commitments included in carrying amount	Other liabilities	2,150		1,762
Lending exposure	Loans and leases for funded amounts	1,773		1,547

Renewable energy investments:
Carrying amount	Other assets	310		264
Amount of future funding commitments not included in carrying amount	NA	721		361
SBIC and certain other equity method investments:
Carrying amount	Other assets	670		596
Amount of future funding commitments not included in carrying amount	NA	603		532

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


		Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	Income Statement 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	$	163	$	163	$	480	$	465

Amortization and other changes in carrying amount:
Investments in affordable housing projects and other qualified tax credits(1)	Provision for income taxes	$	153	$	143	$	451	$	391
Other community development investments(1)	Other noninterest income	3		21		8		60

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

Truist Financial Corporation 29

Letters of Credit and Financial Guarantees

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

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Commitments to extend, originate, or purchase credit and other commitments	$	212,827	$	216,838
Residential mortgage loans sold with recourse	180		200
CRE mortgages serviced for others covered by recourse provisions	9,718		9,955
Other loans serviced for others covered by recourse provisions	819		723
Letters of credit	6,306		6,030

Total Return Swaps

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Total return swaps:
VIE assets	$	1,780	$	1,830
Trading loans and bonds	1,732		1,790
VIE liabilities	92		163

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

Pledged Assets

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Pledged securities	$	39,702	$	38,012

Pledged loans:
FRB	74,463		71,234
FHLB	68,488		68,988
Unused borrowing capacity:
FRB	54,633		49,250
FHLB	23,615		20,770

30 Truist Financial Corporation

Litigation and Regulatory Matters

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

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

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

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

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

Bickerstaff v. SunTrust Bank

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

United Services Automobile Association v. Truist Bank

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

Truist Financial Corporation 31

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

Recordkeeping Matters

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

FDIC Special Assessment

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

32 Truist Financial Corporation

NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

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

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

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


September 30, 2023 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments(1)
Assets:
Trading assets:
U.S. Treasury	$	117	$	—	$	117	$	—	$	—
GSE	47		—		47		—		—
Agency MBS - residential	—		—		—		—		—

States and political subdivisions	511		—		511		—		—

Corporate and other debt securities	1,480		—		1,480		—		—
Loans	1,775		—		1,775		—		—
Other	454		363		91		—		—
Total trading assets	4,384		363		4,021		—		—
AFS securities:
U.S. Treasury	10,361		—		10,361		—		—
GSE	324		—		324		—		—
Agency MBS - residential	49,076		—		49,076		—		—
Agency MBS - commercial	2,135		—		2,135		—		—
States and political subdivisions	394		—		394		—		—
Non-agency MBS	2,808		—		2,808		—		—
Other	19		—		19		—		—
Total AFS securities	65,117		—		65,117		—		—
LHFS at fair value	1,269		—		1,269		—		—
Loans and leases	16		—		—		16		—
Loan servicing rights at fair value	3,537		—		—		3,537		—
Other assets:
Derivative assets	749		685		2,090		1		(2,027)
Equity securities	330		227		103		—		—

Total assets	$	75,402	$	1,275	$	72,600	$	3,554	$	(2,027)
Liabilities:
Derivative liabilities	$	3,474	$	428	$	5,002	$	40	$	(1,996)
Securities sold short	1,718		214		1,504		—		—
Total liabilities	$	5,192	$	642	$	6,506	$	40	$	(1,996)

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

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

34 Truist Financial Corporation

Activity for Level 3 assets and liabilities is summarized below:




Three Months Ended September 30, 2023 and 2022 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives
Balance at July 1, 2022	$	20	$	3,466	$	(36)
Total realized and unrealized gains (losses):
Included in earnings	—		190		(61)

Purchases	—		126		—
Issuances	—		130		(30)
Sales	—		(6)		—
Settlements	—		(109)		56

Other	(1)		—		—
Balance at September 30, 2022	$	19	$	3,797	$	(71)
Balance at July 1, 2023	$	16	$	3,497	$	(31)
Total realized and unrealized gains (losses):
Included in earnings	—		151		(25)


Issuances	—		78		1
Sales	—		(102)		—
Settlements	—		(87)		16


Balance at September 30, 2023	$	16	$	3,537	$	(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023	$	—	$	150	$	(21)

Nine Months Ended September 30, 2023 and 2022 (Dollars in millions)	Loans and Leases		Loan Servicing Rights		Net Derivatives












Balance at January 1, 2022	$	23	$	2,633	$	(12)
Total realized and unrealized gains (losses):
Included in earnings	—		807		(324)

Purchases	—		321		—
Issuances	—		411		10
Sales	—		(7)		—
Settlements	—		(368)		255



Other	(4)		—		—
Balance at September 30, 2022	$	19	$	3,797	$	(71)
Balance at January 1, 2023	$	18	$	3,758	$	(36)
Total realized and unrealized gains (losses):
Included in earnings	—		216		(47)

Purchases	—		123		—
Issuances	—		218		17
Sales	—		(531)		—
Settlements	(2)		(247)		27



Balance at September 30, 2023	$	16	$	3,537	$	(39)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at September 30, 2023	$	—	$	166	$	(39)
Primary income statement location of realized gains (losses) included in earnings	Other income		Mortgage banking income		Mortgage banking income

Truist Financial Corporation 35

Fair Value Option

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


	September 30, 2023						December 31, 2022
(Dollars in millions)	Fair Value		UPB		Difference		Fair Value		UPB		Difference
Trading loans	$	1,775	$	1,864	$	(89)	$	1,960	$	2,101	$	(141)
Loans and leases	16		17		(1)		18		20		(2)
LHFS at fair value	1,269		1,288		(19)		1,065		1,056		9

Nonrecurring Fair Value Measurements

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Carrying value:
LHFS	$	119	$	271
Loans and leases	679		500
Other	506		120

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


	Nine Months Ended September 30,
(Dollars in millions)	2023		2022
Valuation adjustments:
LHFS	$	(40)	$	(9)
Loans and leases	(428)		(280)
Other(1)	(198)		(87)

(1)Prior period amounts were revised.

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

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

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

36 Truist Financial Corporation

Financial Instruments Not Recorded at Fair Value

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

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


		September 30, 2023				December 31, 2022
(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
HTM securities	Level 2	$	54,942	$	42,501	$	57,713	$	47,791
Loans and leases HFI, net of ALLL	Level 3	310,990		299,829		321,596		308,738
Financial liabilities:
Time deposits	Level 2	42,148		41,900		23,474		23,383
Long-term debt	Level 2	41,232		39,705		43,203		40,951

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

Truist Financial Corporation 37

NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

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


	September 30, 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	$	20,900		$	—		$	—	$	16,650	$	—	$	—
Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt	19,268			—			(56)		16,393		—		(68)


Swaps hedging AFS securities	20,052			—			—		7,097		—		—


Total	39,320			—			(56)		23,490		—		(68)
Not designated as hedges:
Client-related and other risk management:
Interest rate contracts:
Swaps	158,550			618			(3,026)		155,670		579		(2,665)

Options	38,430			145			(168)		29,840		172		(192)
Forward commitments	372			4			(2)		1,495		8		(2)
Other	3,239			—			—		3,823		1		—
Equity contracts	40,653			824			(1,331)		33,185		644		(901)
Credit contracts:
Trading assets	600			—			—		140		—		—
Loans and leases	465			—			—		394		—		—
Risk participation agreements	7,638			—			(2)		6,824		—		(3)
Total return swaps	1,693			41			(10)		1,729		81		(2)

Foreign exchange contracts	21,679			346			(298)		19,022		364		(380)
Commodity	9,156			476			(465)		4,881		444		(447)

Total	282,475			2,454			(5,302)		257,003		2,293		(4,592)
Mortgage banking:
Interest rate contracts:
Swaps	148			—			—		115		—		—
Options(1)	400			3			—		400		1		—
Interest rate lock commitments	1,259			1			(23)		999		1		(17)
When issued securities, forward rate agreements and forward commitments(1)	2,013			56			—		1,728		24		(6)
Other	68			—			—		140		1		—

Total	3,888			60			(23)		3,382		27		(23)
MSRs:
Interest rate contracts:
Swaps	13,355			1			—		14,566		—		—

Options(1)	17,112			261			(77)		15,505		125		(48)
When issued securities, forward rate agreements and forward commitments(1)	712			—			(10)		884		8		(15)
Other	2,009			—			(2)		1,532		—		(3)
Total	33,188			262			(89)		32,487		133		(66)
Total derivatives not designated as hedges	319,551			2,776			(5,414)		292,872		2,453		(4,681)
Total derivatives	$	379,771		2,776			(5,470)		$	333,012	2,453		(4,749)
Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements and exchange traded derivatives				(1,325)			1,325				(1,223)		1,223
Cash collateral (received) posted for amounts subject to master netting arrangements				(702)			671				(546)		555

Net amount				$	749		$	(3,474)			$	684	$	(2,971)

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

38 Truist Financial Corporation

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


September 30, 2023 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	$	2,014	$	(1,602)	$	412	$	—	$	412
Derivatives not subject to master netting arrangement or similar arrangement	77		—		77		—		77
Exchange traded derivatives	685		(425)		260		—		260
Total derivative assets	$	2,776	$	(2,027)	$	749	$	—	$	749
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	$	(4,207)	$	1,571	$	(2,636)	$	119	$	(2,517)
Derivatives not subject to master netting arrangement or similar arrangement	(835)		—		(835)		—		(835)
Exchange traded derivatives	(428)		425		(3)		—		(3)
Total derivative liabilities	$	(5,470)	$	1,996	$	(3,474)	$	119	$	(3,355)

December 31, 2022 (Dollars in millions)	Gross 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:


	September 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)	$	45,402	$	(926)	$	(4)	$	38,773	$	(630)	$	(4)
Loans and leases	331		—		8		353		—		10

Long-term debt	28,242		(855)		(192)		25,378		(780)		218

(1)The amortized cost of AFS securities was $57.2 billion at September 30, 2023 and $46.2 billion at December 31, 2022. Further, as of September 30, 2023, closed portfolios of securities hedged under the portfolio layer method have an amortized cost of $51.5 billion, of which $20.1 billion was designated as hedged. The remaining amount of amortized cost is from securities with terminated hedges where the basis adjustment is being amortized into earnings using the effective interest method over the contractual life of the security.

Truist Financial Corporation 39

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

Derivatives Designated as Hedging Instruments under GAAP

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

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2023		2022		2023		2022
Pre-tax gain (loss) recognized in OCI:
Commercial loans	$	(351)	$	(182)	$	(607)	$	(123)




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



Long-term debt	—		(1)		—		(12)
Commercial Loans	(17)		—		(22)		—

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	2023		2022		2023		2022
Investment securities:
Amounts related to interest settlements	$	119	$	36	$	282	$	40
Recognized on derivatives	326		157		273		631
Recognized on hedged items	(323)		(142)		(248)		(586)
Net income (expense) recognized(1)	122		51		307		85
Loans and leases:


Recognized on hedged items	(1)		(1)		(2)		(2)
Net income (expense) recognized	(1)		(1)		(2)		(2)





Long-term debt:
Amounts related to interest settlements	(56)		(23)		(149)		(4)
Recognized on derivatives	(319)		(445)		(454)		(912)
Recognized on hedged items	326		482		483		1,050
Net income (expense) recognized	(49)		14		(120)		134
Net income (expense) recognized, total	$	72	$	64	$	185	$	217

(1)Includes $12 million and $33 million of income recognized for the three and nine months ended September 30, 2023, respectively, and $15 million and $41 million for the three and nine months ended September 30, 2022, respectively, from securities with terminated hedges that were reclassified to HTM. The income recognized was offset by the amortization of the fair value mark.

40 Truist Financial Corporation

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI	$	(573)	$	(118)
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2029)	48		40
Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(201)		(31)
Maximum time period over which Truist is hedging a portion of the variability in future cash flows for forecasted transactions excluding those transactions relating to the payment of variable interest on existing instruments	5 years		6 years
Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges(1)	$	229	$	669
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	22		163

(1)Includes deferred gains that are recorded in AOCI as a result of the reclassification to HTM of previously hedged securities of $425 million at September 30, 2023 and $457 million at December 31, 2022.

Derivatives Not Designated as Hedging Instruments under GAAP

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

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


		Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions)	Income Statement Location	2023		2022		2023		2022
Client-related and other risk management:
Interest rate contracts	Investment banking and trading income and other income	$	37	$	59	$	123	$	187
Foreign exchange contracts	Investment banking and trading income and other income	118		202		89		381
Equity contracts	Investment banking and trading income and other income	(14)		(57)		(34)		(50)
Credit contracts	Investment banking and trading income and other income	(33)		(7)		(92)		84
Commodity contracts	Investment banking and trading income	3		9		20		9
Mortgage banking:
Interest rate contracts - residential	Mortgage banking income	39		94		61		572
Interest rate contracts - commercial	Mortgage banking income	—		6		(1)		5
MSRs:
Interest rate contracts - residential	Mortgage banking income	(162)		(175)		(244)		(789)
Interest rate contracts - commercial	Mortgage banking income	(9)		(9)		(13)		(23)
Total		$	(21)	$	122	$	(91)	$	376

Truist Financial Corporation 41

Credit Derivative Instruments

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

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

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

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

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


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Risk participation agreements:


Maximum potential amount of exposure	$	434	$	575
Total return swaps:

Cash collateral held	435		453

The following table summarizes collateral positions with counterparties:


(Dollars in millions)	Sep 30, 2023		Dec 31, 2022
Dealer and other counterparties:
Cash and other collateral received from counterparties	$	702	$	542
Derivatives in a net gain position secured by collateral received	787		618
Unsecured positions in a net gain with counterparties after collateral postings	83		76
Cash collateral posted to counterparties	789		590
Derivatives in a net loss position secured by collateral	855		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	12		45
Derivatives in a net loss position	—		13
Derivatives in a net gain position	16		12
Securities pledged to central counterparties clearing	1,112		639

42 Truist Financial Corporation

NOTE 17. Computation of EPS

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


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in millions, except per share data, shares in thousands)	2023		2022		2023		2022
Net income available to common shareholders	$	1,071	$	1,536	$	3,715	$	4,317
Weighted average number of common shares	1,333,522		1,326,539		1,331,377		1,328,569
Effect of dilutive outstanding equity-based awards	7,052		10,120		7,664		10,502
Weighted average number of diluted common shares	1,340,574		1,336,659		1,339,041		1,339,071
Basic EPS	$	0.80	$	1.16	$	2.79	$	3.25
Diluted EPS	$	0.80	$	1.15	$	2.77	$	3.22
Anti-dilutive awards	5,875		—		4,665		85

NOTE 18. Operating Segments

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

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

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

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

Truist Financial Corporation 43

The following table presents results by segment:


Three Months Ended September 30, (Dollars in millions)	CB&W						C&CB						IH						OT&C(1)						Total
2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
Net interest income (expense)	$	1,269		$	1,690		$	2,427		$	1,635		$	1		$	1		$	(133)		$	419		$	3,564		$	3,745
Net intersegment interest income (expense)	1,388			992			(776)			10			(81)			10			(531)			(1,012)			—			—
Segment net interest income	2,657			2,682			1,651			1,645			(80)			11			(664)			(593)			3,564			3,745
Allocated provision for credit losses	248			283			254			(48)			—			—			(5)			(1)			497			234
Segment net interest income after provision	2,409			2,399			1,397			1,693			(80)			11			(659)			(592)			3,067			3,511
Noninterest income	756			836			584			645			801			731			(33)			(110)			2,108			2,102
Amortization of intangibles	67			76			31			33			32			31			—			—			130			140
Other noninterest expense	1,998			1,854			843			795			669			597			107			227			3,617			3,473
Income (loss) before income taxes	1,100			1,305			1,107			1,510			20			114			(799)			(929)			1,428			2,000
Provision (benefit) for income taxes	266			309			215			324			3			29			(239)			(299)			245			363
Segment net income (loss)	$	834		$	996		$	892		$	1,186		$	17		$	85		$	(560)		$	(630)		$	1,183		$	1,637

Identifiable assets (period end)	$	161,881		$	170,196		$	205,163		$	198,522		$	8,766		$	7,459		$	166,897		$	172,261		$	542,707		$	548,438

Nine Months Ended September 30, (Dollars in millions)	CB&W						C&CB						IH						OT&C(1)						Total
2023			2022			2023			2022			2023			2022			2023			2022			2023			2022
Net interest income (expense)	$	4,335		$	4,794		$	7,144		$	4,050		$	3		$	2		$	(425)		$	1,489		$	11,057		$	10,335
Net intersegment interest income (expense)	3,773			2,395			(2,050)			225			(153)			17			(1,570)			(2,637)			—			—
Segment net interest income	8,108			7,189			5,094			4,275			(150)			19			(1,995)			(1,148)			11,057			10,335
Allocated provision for credit losses	746			556			797			(229)			—			—			(6)			(17)			1,537			310
Segment net interest income after provision	7,362			6,633			4,297			4,504			(150)			19			(1,989)			(1,131)			9,520			10,025
Noninterest income	2,457			2,578			1,790			1,988			2,562			2,295			(174)			(369)			6,635			6,492
Amortization of intangibles	204			229			93			100			100			91			—			—			397			420
Other noninterest expense	5,971			5,514			2,531			2,333			1,994			1,691			293			909			10,789			10,447
Income (loss) before income taxes	3,644			3,468			3,463			4,059			318			532			(2,456)			(2,409)			4,969			5,650
Provision (benefit) for income taxes	873			827			690			876			39			131			(676)			(769)			926			1,065
Segment net income (loss)	$	2,771		$	2,641		$	2,773		$	3,183		$	279		$	401		$	(1,780)		$	(1,640)		$	4,043		$	4,585

Identifiable assets (period end)	$	161,881		$	170,196		$	205,163		$	198,522		$	8,766		$	7,459		$	166,897		$	172,261		$	542,707		$	548,438

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

44 Truist Financial Corporation

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