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

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

MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements, the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, other information contained in this document, as well as with Truist’s Annual Report on Form 10-K for the year ended December 31, 2023.

A description of certain factors that may affect our future results and risk factors is set forth in Part I, Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023.

Regulatory and Supervisory Considerations

We are subject to significant regulatory frameworks that affect the products and services that we may offer and the manner in which we may offer them, the risks that we may take, the ways in which we may operate, and the corporate and financial actions that we may take. We are also subject to direct supervision and periodic examinations by various governmental agencies and self-regulatory organizations that are charged with overseeing the kinds of business activities in which we engage. The regulatory and supervisory framework applicable to banking organizations is intended primarily for the protection of depositors and other customers, the DIF, the broader economy, and the stability of the U.S. financial system, rather than for the protection of shareholders and non-deposit creditors. In addition to banking laws and regulations, Truist is subject to various other laws and regulations, all of which directly or indirectly affect the operations and management of Truist and its ability to make distributions to shareholders. The descriptions below summarize certain updates to significant federal and state laws to which Truist is subject since the filing of the Annual Report on Form 10-K for the year ended December 31, 2023. These descriptions do not summarize all possible or proposed changes in laws or regulations and are not intended to be a substitute for the related statutes or regulatory provisions. Refer to “Regulatory and Supervisory Considerations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2023 for additional disclosures.

In November 2023, the FDIC issued a final rule to implement a special assessment to recoup losses to the DIF associated with bank failures in the first half of 2023. Under the rule, the assessment base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion of uninsured deposits. The special assessment for Truist is $582 million, with $507 million recognized in the fourth quarter of 2023 and an additional $75 million recognized in the first quarter of 2024 due to an increase in the estimated relevant losses to the DIF reported by the FDIC in February 2024. The ultimate amount of expenses associated with the special assessment will also be impacted by the finalization of the losses incurred by the FDIC in the resolutions of Silicon Valley Bank and Signature Bank, which could result in additional expense.

In March 2024, the FDIC released proposed revisions to its statement of policy on bank merger transactions. The proposal reflects regulatory, legislative, and industry changes since the statement of policy was last published for comment and amended, makes the statement more principles-based, communicates the FDIC Board’s expectations regarding the evaluation of merger applications filed under the Bank Merger Act, and describes the types of merger applications for which the FDIC is the responsible agency. We continue to evaluate the proposal and the potential impacts, if adopted as proposed, on the Company and Truist Bank.

The FRB’s capital plan rule provides that a BHC must update and resubmit its capital plan if the BHC determines there has been or will be a material change in its risk profile, financial condition, or corporate structure since it last submitted the capital plan. Truist determined that the sale of our remaining equity interests in TIH constitutes such a material change and, therefore, addressed the material change in our capital plan submitted in April 2024. The capital plan rule further provides that, upon the occurrence of an event requiring resubmission, a BHC may not make any capital distribution unless it has received prior approval of the FRB. Accordingly, Truist’s capital distributions are now subject to the prior approval of the FRB, pending the FRB's consideration of our capital plan and stress capital buffer requirement. Truist’s Board of Directors declared common and preferred stock dividends payable in June 2024, which have been approved by the FRB.

Executive Overview

We are pleased with the progress and momentum of our business in the first quarter of 2024. Our expense discipline was evident and reflects important decisions we made last year. Investments we have made in our investment banking business resulted in strong performance in improving markets. Loan demand was muted and deposit costs continue to be under pressure.

Asset quality metrics are normalizing but remain manageable as our nonperforming loans remained relatively stable on a linked-quarter basis and loan losses were within our expectations.

46 Truist Financial Corporation

Following the departure of our CIO in April 2024, we have appointed an interim CIO while our search for a permanent CIO continues. Our Interim CIO has 20 years of banking experience across risk management, commercial, consumer, operations, technology, and vertically integrated businesses. He oversees the provision of comprehensive technology, data, security, and information related platforms.

On May 6, 2024, we completed the sale of TIH previously announced on February 20, which strengthened our relative capital position, facilitated a balance sheet repositioning, and will allow Truist to provide even greater support to our core banking clients and evaluate a return of capital to shareholders via share buybacks later in 2024 depending upon market conditions and other factors. Financial information attributed to TIH has been reflected in discontinued operations for the periods presented within and, unless otherwise stated, the following discussion excludes amounts reported as discontinued operations. Refer to “Note 2. Discontinued Operations” for additional information.

Our strengthening capital position allows us to better weather any economic environment, and importantly, will enable us to be in a more offensive position with our core banking franchise. We are optimistic about our future as we operate Truist from this increased position of financial strength in some of the best markets in the country.

Financial Results

Net income available to common shareholders for the first quarter of 2024 of $1.1 billion was down 23% compared with the first quarter of 2023. On a diluted per common share basis, earnings for the first quarter of 2024 were $0.81, a decrease of $0.24, or 23%, compared to the first quarter of 2023. Truist’s results of operations for the first quarter of 2024 produced an annualized return on average assets of 0.91% and an annualized return on average common shareholders’ equity of 8.4% compared to prior year returns of 1.10% and 10.3%, respectively.

Net income from continuing operations was $1.1 billion for the first quarter of 2024, compared to $1.4 billion for the first quarter of 2023.

Results from continuing operations for the first quarter of 2024 included restructuring charges of $51 million ($39 million after-tax, or $0.03 per share) and the FDIC special assessment of $75 million ($57 million after-tax, or $0.04 per share).
Results from continuing operations for the first quarter of 2023 included restructuring charges of $56 million ($43 million after-tax, or $0.03 per share).

Net income from discontinued operations was $67 million for the first quarter of 2024, compared to $105 million for the first quarter of 2023.

Results from discontinued operations for the first quarter of 2024 included the accelerated recognition of TIH equity compensation expense for certain event-driven awards of $89 million ($68 million after tax, or $0.05 per share), and restructuring charges of $19 million ($14 million after-tax, or $0.01 per share).

Taxable-equivalent net interest income for the first quarter of 2024 was down $493 million, or 13%, compared to the first quarter of 2023 primarily due to higher funding costs and lower earning assets. Net interest margin was 2.89%, down 28 basis points.

The yield on the average total loan portfolio was 6.38%, up 57 basis points, primarily reflecting higher market interest rates. The yield on the average securities portfolio was 2.46%, up 32 basis points.
The average cost of total deposits was 2.03%, up 91 basis points. The average cost of short-term borrowings was 5.62%, up 93 basis points. The average cost of long-term debt was 4.74%, up 69 basis points. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

Noninterest income was up $25 million, or 1.8%, compared to the first quarter of 2023 due to higher investment banking and trading income and higher other income, partially offset by lower mortgage banking income and service charges on deposits.

Noninterest expense was down $62 million, or 2.1%, compared to the first quarter of 2023 due to lower other expense and personnel expense, partially offset by the FDIC special assessment (regulatory costs) of $75 million. Adjusted noninterest expenses, which exclude the FDIC special assessment, restructuring charges, and the amortization of intangibles, decreased $120 million, or 4.2%, compared to the earlier quarter.

The effective tax rate for the first quarter of 2024 decreased compared to the first quarter of 2023 primarily due to a decrease in the full year forecasted pre-tax earnings.

Truist Financial Corporation 47

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

Nonperforming loans and leases held for investment were 0.45% of loans and leases held for investment at March 31, 2024, up one basis point compared to December 31, 2023.
The allowance for credit losses was $5.1 billion and includes $4.8 billion for the allowance for loan and lease losses and $297 million for the reserve for unfunded commitments. The ALLL ratio was 1.56%, up two basis points compared with December 31, 2023.
The provision for credit losses was $500 million compared to $502 million for the first quarter of 2023.
The net charge-off ratio was 64 basis points, up 27 basis points compared to the first quarter of 2023 due to higher net charge-offs in the CRE, other consumer, credit card, and indirect auto portfolios.

Capital remained strong during the first quarter of 2024.

Truist’s CET1 ratio was 10.1% as of March 31, 2024, flat compared to December 31, 2023 as organic capital generation and RWA optimization were partially offset by the CECL phase-in.
Truist declared common dividends of $0.52 per share during the first quarter of 2024. The dividend payout ratio for the first quarter of 2024 was 64%. Truist did not repurchase any shares in the first quarter of 2024.
Truist’s average consolidated LCR was 115% for the three months ended March 31, 2024, compared to the regulatory minimum of 100%.

On May 6, 2024, the Company completed the sale of its remaining equity interests in TIH. The sale resulted in after-tax cash proceeds to Truist of approximately $10.1 billion, reflecting certain closing adjustments for cash, debt and debt-like items, including the settlement of certain previously granted TIH equity awards, working capital, transaction expenses and an investor return amount associated with the originally sold 20% stake. The transaction improves Truist’s relative capital position and allows Truist to maintain strategic flexibility. Upon closing, the transaction resulted in a full deconsolidation of the TIH subsidiary from Truist and resulted in an approximate after-tax gain of approximately $4.7 billion. Additionally, following the sale, Truist will retain the related postretirement benefit obligation for TIH employees, and will remeasure the postretirement benefit obligation of the plan in the second quarter of 2024. Refer to “Note 2. Discontinued Operations” for additional information related to discontinued operations.

Following the completion of the sale of TIH, Truist executed a strategic balance sheet repositioning of a portion of its AFS investment securities portfolio by selling $27.7 billion of lower-yielding investment securities, resulting in an after-tax loss of $5.1 billion in the second quarter of 2024. The investment securities that were sold had a book value of $34.4 billion and a weighted average book yield of 2.80% for the remainder of 2024 including the impact of hedges and based on the Federal Funds futures curve. Including the tax benefit, the repositioning generated $29.3 billion available for reinvestment.

Truist invested approximately $18.7 billion of the $39.4 billion available in shorter duration investment securities yielding 5.27%. The remaining $20.7 billion will be held in cash. The blended reinvestment rate on the new investment securities purchased and cash is 5.22% for the remainder of 2024 including the impact of hedges and based on the Federal Funds futures curve.

Analysis of Results of Operations

Net Interest Income and NIM

Average earning assets decreased $22.6 billion, or 4.5%, primarily due to declines in average total loans of $18.1 billion, or 5.5%, and a decrease in average securities of $9.3 billion, or 6.6%, partially offset by growth in other earning assets of $5.4 billion, or 21%, primarily due to an increase in balances held at the Federal Reserve to support liquidity.
The yield on the average total loan portfolio was 6.38%, up 57 basis points, primarily reflecting higher market interest rates. The yield on the average securities portfolio was 2.46%, up 32 basis points.
Average deposits decreased $19.4 billion, or 4.7%, average short-term borrowings increased $2.2 billion, or 9.0%, and average long-term debt decreased $10.3 billion, or 20%.
The average cost of total deposits was 2.03%, up 91 basis points. The average cost of short-term borrowings was 5.62%, up 93 basis points. The average cost of long-term debt was 4.74%, up 69 basis points. The increase in rates on deposits and other funding sources was largely attributable to the higher rate environment.

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

48 Truist Financial Corporation


Table 1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis
Three Months Ended March 31, (Dollars in millions)	Average Balances(1)						Annualized Yield/Rate(2)						Income/Expense					Incr. (Decr.)		Change due to
2024			2023			2024			2023			2024			2023			Rate		Volume
Assets
AFS and HTM securities at amortized cost:
U.S. Treasury	$	9,853		$	11,117		1.49	%		1.07	%		$	37		$	30	$	7	$	11	$	(4)
GSE	389			335			3.40			2.86			3			2		1		1		—
Agency MBS	116,946			124,746			2.51			2.23			735			694		41		85		(44)
States and political subdivisions	421			425			4.15			4.07			4			4		—		—		—
Non-agency MBS	3,645			3,907			2.98			2.34			27			23		4		6		(2)
Other	19			21			5.35			5.30			—			—		—		—		—

Total securities	131,273			140,551			2.46			2.14			806			753		53		103		(50)
Interest earning trading assets	4,845			5,462			6.50			6.09			79			83		(4)		5		(9)
Other earning assets(3)	30,567			25,166			5.74			4.73			436			294		142		71		71
Loans and leases, net of unearned income:

Commercial and industrial	158,385			165,095			6.53			5.98			2,572			2,436		136		233		(97)
CRE	22,400			22,689			6.95			6.32			389			355		34		39		(5)
Commercial Construction	7,134			5,863			7.83			7.14			137			101		36		11		25


Residential mortgage	55,070			56,422			3.84			3.73			528			526		2		15		(13)
Home equity	9,930			10,735			7.92			6.80			196			180		16		29		(13)
Indirect auto	22,374			27,743			6.69			5.82			372			398		(26)		56		(82)
Other consumer	28,285			27,559			7.98			6.76			561			459		102		89		13
Student	—			5,129			—			7.04			—			89		(89)		—		(89)
Credit card	4,923			4,785			11.96			11.43			146			136		10		6		4

Total loans and leases HFI	308,501			326,020			6.38			5.81			4,901			4,680		221		478		(257)
LHFS	925			1,527			6.38			6.71			15			25		(10)		(1)		(9)
Total loans and leases	309,426			327,547			6.38			5.81			4,916			4,705		211		477		(266)
Total earning assets	476,111			498,726			5.26			4.73			6,237			5,835		402		656		(254)
Nonearning assets	47,307			53,598
Assets of discontinued operations	7,584			7,303
Total assets	$	531,002		$	559,627
Liabilities and Shareholders’ Equity
Interest-bearing deposits:
Interest-checking	$	103,537		$	108,886		2.65			1.60			684			430		254		276		(22)
Money market and savings	134,696			139,802			2.49			1.38			832			476		356		374		(18)
Time deposits	41,937			28,671			4.30			3.10			448			219		229		104		125

Total interest-bearing deposits	280,170			277,359			2.82			1.64			1,964			1,125		839		754		85
Short-term borrowings	26,230			24,056			5.62			4.69			366			278		88		60		28
Long-term debt	40,721			51,057			4.74			4.05			482			514		(32)		80		(112)
Total interest-bearing liabilities	347,121			352,472			3.26			2.20			2,812			1,917		895		894		1
Noninterest-bearing deposits	108,888			131,099
Other liabilities	12,885			11,225
Liabilities of discontinued operations	3,097			2,754
Shareholders’ equity	59,011			62,077
Total liabilities and shareholders’ equity	$	531,002		$	559,627
Average interest-rate spread							2.00	%		2.53	%
NIM/net interest income - taxable equivalent							2.89	%		3.17	%		$	3,425		$	3,918	$	(493)	$	(238)	$	(255)
Taxable-equivalent adjustment													$	53		$	51
Memo: Total deposits	$	389,058		$	408,458		2.03	%		1.12	%		$	1,964		$	1,125	$	839

(1)Represents daily average balances. Excludes basis adjustments for fair value hedges.

(2)Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs, and dividends.

(3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock, and other earning assets.

Truist Financial Corporation 49

Provision for Credit Losses

The provision for credit losses was $500 million compared to $502 million for the first quarter of 2023.

The current quarter provision expense was relatively flat compared to the first quarter of 2023.
The net charge-off ratio was up compared to the first quarter of 2023 driven by higher net charge-offs in the CRE, other consumer, credit card, and indirect auto portfolios.

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

Noninterest Income

Noninterest income is a significant contributor to Truist’s financial results. Management focuses on diversifying its sources of revenue to reduce Truist’s reliance on traditional spread-based interest income, as certain fee-based activities are a relatively stable revenue source during periods of changing interest rates. The following table provides a breakdown of Truist’s noninterest income:


Table 2: Noninterest Income
	Three Months Ended March 31,				% Change
(Dollars in millions)	2024		2023		2024 vs. 2023
Wealth management income	$	356	$	339	5.0	%
Investment banking and trading income	323		261		23.8
Card and payment related fees	224		230		(2.6)
Service charges on deposits	225		250		(10.0)
Mortgage banking income	97		142		(31.7)
Lending related fees	96		106		(9.4)
Operating lease income	59		67		(11.9)

Other income	66		26		153.8
Total noninterest income	$	1,446	$	1,421	1.8

Investment banking and trading income increased due to higher merger and acquisition fees and higher equity and bond origination fees.
Other income increased due to higher income from investments held for certain post-retirement benefits (which is primarily offset by higher personnel expense), partially offset by lower income from certain equity investments.
Mortgage banking income decreased due to a gain on the sale of a servicing portfolio in the prior year, partially offset by mortgage servicing rights valuation adjustments in the prior year.
Service charges on deposits decreased primarily due to reduced overdraft fees as a result of continued growth of Truist One Banking.

Noninterest Expense

The following table provides a breakdown of Truist’s noninterest expense:


Table 3: Noninterest Expense
	Three Months Ended March 31,			% Change
(Dollars in millions)		2024		2023		2024 vs. 2023
Personnel expense		$	1,630	$	1,668	(2.3)	%
Professional fees and outside processing		278		287		(3.1)
Software expense		224		200		12.0
Net occupancy expense		160		169		(5.3)
Amortization of intangibles		88		100		(12.0)
Equipment expense		88		102		(13.7)
Marketing and customer development		56		68		(17.6)
Operating lease depreciation		40		46		(13.0)
Regulatory costs		152		75		102.7
Restructuring charges		51		56		(8.9)

Other expense		186		244		(23.8)
Total noninterest expense		$	2,953	$	3,015	(2.1)

50 Truist Financial Corporation

Other expense decreased primarily due to lower pension expense and operating losses.
Personnel expense decreased due to lower headcount, partially offset by higher other post-retirement benefit expense (which is almost entirely offset by higher other income).

Restructuring Charges

The following table presents a summary of restructuring charges and the related accruals. The 2024 restructuring costs predominately reflect various initiatives, including costs for severance and other benefits and costs related to exiting facilities.



Table 4: Restructuring Accrual Activity

(Dollars in millions)	Accrual at Jan 1, 2024		Expense		Utilized		Accrual at Mar 31, 2024
Severance and personnel-related	$	8	$	30	$	(33)	$	5
Occupancy and equipment	—		21		(21)		—



Total	$	8	$	51	$	(54)	$	5

Provision for Income Taxes

For the three months ended March 31, 2024 and 2023, the provision for income taxes from continuing operations was $232 million and $361 million, respectively, representing effective tax rates of 17.0% and 20.4%, respectively. The effective tax rate for the first quarter of 2024 decreased compared to the first quarter of 2023 primarily due to a decrease in the full year forecasted pre-tax earnings.

Segment Results

Truist operates and measures business activity across two segments: CSBB and WB, 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.

On February 20, 2024, the Company entered into an agreement to sell the remaining stake of the common equity in TIH to an investor group, representing substantially all of the Company’s IH segment, which represented a material strategic shift for the Company, and as a result, the Company recast results for all periods presented under the discontinued operations basis of presentation. On May 6, 2024, the Company completed the sale of its remaining equity interests in TIH. TIH was the principal legal entity of the IH segment. As the operations of TIH are now included in discontinued operations, the Company no longer presents the IH segment as one of its reportable segments. Refer to “Note 2. Discontinued Operations” for additional information related to discontinued operations.


Table 5: Net Income from Continuing Operations by Reportable Segment
	Three Months Ended March 31,					% Change
(Dollars in millions)		2024		2023			2024 vs. 2023
Consumer and Small Business Banking		$	880	$	1,023		(14.0)	%
Wholesale Banking		876		987			(11.2)
Other, Treasury & Corporate		(623)		(600)			3.8
Truist Financial Corporation		$	1,133	$	1,410		(19.6)

Consumer and Small Business Banking

CSBB net income was $880 million for the first quarter of 2024, a decrease of $143 million compared to the first quarter of 2023.

Segment net interest income decreased $87 million primarily driven by lower deposit and loan balances, partially offset by higher funding credit on deposits and one extra day in the current period.

Truist Financial Corporation 51

The provision for credit losses increased $33 million reflecting higher charge offs in the other consumer and indirect auto portfolios, partially offset by an allowance release in the current quarter and an allowance build in the earlier quarter.
Noninterest income decreased $50 million compared to the earlier quarter primarily due to lower residential mortgage income and decreased service charges on deposits.
Noninterest expense increased $11 million compared to the earlier quarter driven by higher operations support expenses, corporate technology costs and the FDIC special assessment, partially offset by lower salaries expense and operating charge-offs.

CSBB average loans and leases held for investment decreased $12.6 billion, or 9.2%, for the first quarter of 2024 compared to the first quarter of 2023, primarily driven by a decrease in indirect auto balances, the sale of the student loan portfolio at the end of the second quarter of 2023, and decreases in residential mortgage as well as decreases in small business loans, partially offset by increases in the outdoor power sports, equipment, and home improvement balances.

CSBB average total deposits decreased $7.3 billion, or 3.3%, for the first quarter of 2024 compared to the first quarter of 2023, primarily driven by decreases in interest checking, noninterest-bearing deposits, and money market and savings, partially offset by an increase in time deposits.

Wholesale Banking

WB net income was $876 million for the first quarter of 2024, a decrease of $111 million compared to the first quarter of 2023.

Segment net interest income decreased $153 million primarily due to lower deposit and loan balances combined with higher cost of deposits, partially offset by favorable loan spreads.
The provision for credit losses decreased $37 million which reflects a lower allowance build in the current quarter compared to the earlier quarter, partially offset by higher commercial and industrial loan charge offs.
Noninterest income increased $25 million compared to the earlier quarter primarily due to higher income from merger and acquisition activity and higher equity and bond origination fees, partially offset by lower income from strategic investments and commercial mortgage lending.
Noninterest expense increased $75 million compared to the earlier quarter primarily due to the FDIC special assessment as well as higher corporate technology costs and operations support expenses, partially offset by lower personnel expense and restructuring charges.

WB average loans held for investment decreased $4.9 billion, or 2.6%, for the first quarter of 2024 compared to the first quarter of 2023, primarily due to decreases in commercial and industrial loans.

WB average total deposits decreased $17.7 billion, or 11%, for the first quarter of 2024 compared to the first quarter of 2023, primarily due to declines in average noninterest-bearing deposits, money market and savings, and interest checking.

Other, Treasury & Corporate

OT&C generated a net loss of $623 million in the first quarter of 2024, compared to a net loss of $600 million in the first quarter of 2023.

Segment net interest income decreased $255 million primarily due to funding credit on deposits to other segments and higher rates on Treasury funding, partially offset by funding charges primarily on loans to other segments.
Noninterest income increased $50 million primarily due to higher income from investments held for certain post-retirement benefits (which is more than offset by higher personnel expense).
Noninterest expense decreased $148 million compared to the earlier quarter primarily due to credit from other segments for operations support expenses and corporate technology project support, partially offset by higher other post-retirement benefit expense (which is almost entirely offset by higher other income).

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled $119.4 billion at March 31, 2024, compared to $121.5 billion at December 31, 2023. U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of March 31, 2024 and December 31, 2023. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company also holds AAA rated non-agency MBS as the risk adjusted returns for these securities are more attractive than agency MBS.

52 Truist Financial Corporation

The decrease in 2024 includes paydowns and maturities of $4.7 billion as well as a decrease in the fair value of AFS securities, partially offset by $3.8 billion in purchases.
As of March 31, 2024, 40% of the investment securities portfolio was classified as held-to-maturity based on amortized cost, excluding portfolio level basis adjustments.
As of March 31, 2024, approximately 5.6% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 5.7% as of December 31, 2023.
The effective duration of the AFS securities portfolio was 6.0 years at March 31, 2024 and 6.1 years at December 31, 2023, excluding the impact of swaps, or 3.9 years at March 31, 2024 and 4.0 years at December 31, 2023, including the impact of swaps. The effective duration of the HTM securities portfolio was 7.1 years at March 31, 2024 and 7.3 years at December 31, 2023.

Lending Activities

The following table presents the composition of average loans and leases:


Table 6: Average Loans and Leases
	Three Months Ended
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
Commercial:
Commercial and industrial	$	158,385	$	160,278	$	164,022	$	166,588	$	165,095
CRE	22,400		22,755		22,812		22,706		22,689
Commercial construction	7,134		6,515		6,194		5,921		5,863

Consumer:
Residential mortgage	55,070		55,658		56,135		56,320		56,422
Home equity	9,930		10,104		10,243		10,478		10,735
Indirect auto	22,374		23,368		24,872		26,558		27,743
Other consumer	28,285		28,913		28,963		28,189		27,559
Student	—		—		—		4,766		5,129
Credit card	4,923		4,996		4,875		4,846		4,785

Total average loans and leases HFI	$	308,501	$	312,587	$	318,116	$	326,372	$	326,020

Average loans held for investment decreased $4.1 billion, or 1.3%, compared to the prior quarter.

Average commercial loans decreased 0.9% due to a decline in the commercial and industrial portfolio.
Average consumer loans decreased 2.0% due to declines across all portfolios.

At March 31, 2024 and December 31, 2023, 54% and 53%, respectively, of loans and leases HFI were variable rate.

Truist Financial Corporation 53

Asset Quality

The following tables summarize asset quality information:


Table 7: Asset Quality
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
NPAs:
NPLs:
Commercial and industrial	$	512	$	470	$	561	$	562	$	394
CRE	261		284		289		275		117
Commercial construction	23		24		29		16		1

Residential mortgage	151		153		132		221		233
Home equity	130		122		123		129		132
Indirect auto	256		268		266		262		270
Other consumer	61		59		52		46		45

Total NPLs HFI	1,394		1,380		1,452		1,511		1,192
Loans held for sale	22		51		75		13		—
Total nonaccrual loans and leases	1,416		1,431		1,527		1,524		1,192
Foreclosed real estate	4		3		3		3		3
Other foreclosed property	56		54		54		56		66
Total nonperforming assets	$	1,476	$	1,488	$	1,584	$	1,583	$	1,261

















Loans 90 days or more past due and still accruing:
Commercial and industrial	$	12	$	7	$	15	$	36	$	35

Commercial construction	—		1		—		5		—

Residential mortgage – government guaranteed	408		418		456		541		649
Residential mortgage – nonguaranteed	33		21		30		23		25
Home equity	10		11		9		7		10
Indirect auto	1		2		1		—		—
Other consumer	18		21		16		12		10
Student – government guaranteed	—		—		—		—		590
Student – nonguaranteed	—		—		—		—		4
Credit card	56		53		47		38		38

Total loans 90 days or more past due and still accruing	$	538	$	534	$	574	$	662	$	1,361
Loans 30-89 days past due and still accruing:
Commercial and industrial	$	158	$	230	$	98	$	142	$	125
CRE	21		5		28		38		34
Commercial construction	—		—		1		6		3

Residential mortgage – government guaranteed	286		326		293		267		232
Residential mortgage – nonguaranteed	352		313		270		254		259
Home equity	59		70		61		56		65
Indirect auto	540		669		598		549		511
Other consumer	226		271		219		175		164
Student – government guaranteed	—		—		—		—		350
Student – nonguaranteed	—		—		—		—		6
Credit card	74		87		68		63		56

Total loans 30-89 days past due and still accruing	$	1,716	$	1,971	$	1,636	$	1,550	$	1,805

Nonperforming assets totaled $1.5 billion at March 31, 2024, down slightly compared to December 31, 2023, due to declines in LHFS and the CRE and indirect auto portfolios, partially offset by an increase in the commercial and industrial portfolio. Nonperforming loans and leases held for investment were 0.45% of loans and leases held for investment at March 31, 2024, up one basis point compared to December 31, 2023.

Loans 90 days or more past due and still accruing totaled $538 million at March 31, 2024, up one basis point as a percentage of loans and leases compared with the prior quarter. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at March 31, 2024, unchanged from December 31, 2023.

Loans 30-89 days past due and still accruing of $1.7 billion at March 31, 2024 were down $255 million, or seven basis points as a percentage of loans and leases, compared to the prior quarter due to decreases in the indirect auto, commercial and industrial, and other consumer portfolios.

54 Truist Financial Corporation

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 7. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to “Note 5. Loans and ACL” for the amortized cost basis of loans by origination year and credit quality indicator as well as additional disclosures related to NPLs.


Table 8: Asset Quality Ratios
	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.56	%	0.63	%	0.52	%	0.48	%	0.55	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.18		0.17		0.18		0.21		0.42
NPLs as a percentage of loans and leases HFI	0.45		0.44		0.46		0.47		0.36
NPLs as a percentage of total loans and leases(1)	0.46		0.46		0.48		0.47		0.36
NPAs as a percentage of:
Total assets(1)	0.28		0.28		0.29		0.29		0.22
Loans and leases HFI plus foreclosed property	0.47		0.46		0.48		0.49		0.38

ALLL as a percentage of loans and leases HFI	1.56		1.54		1.49		1.43		1.37


Ratio of ALLL to NPLs	3.4x		3.5x		3.2x		3.0x		3.8x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding government guaranteed(2)	0.04	%	0.04	%	0.04	%	0.04	%	0.04	%

(1)Includes LHFS.

(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio because collection of principal and interest is reasonably assured, or the ratio might not be comparable to other periods presented or to other portfolios that do not have government guarantees.


Table 9: Asset Quality Ratios (Continued)

	Three Months Ended
	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial	0.17	%	0.23	%	0.17	%	0.23	%	0.15	%
CRE	1.73		0.83		1.31		0.62		0.09
Commercial construction	(0.02)		0.22		(0.03)		(0.02)		(0.04)

Consumer:
Residential mortgage	—		(0.01)		0.05		(0.01)		—
Home equity	(0.08)		(0.12)		(0.10)		(0.12)		(0.15)
Indirect auto	2.26		2.19		1.75		1.28		1.47
Other consumer	1.96		1.74		1.37		1.20		1.29
Student	—		—		—		8.67		0.42
Credit card	5.54		4.38		3.78		3.66		3.54
Total	0.64		0.57		0.51		0.54		0.37

Ratio of ALLL to net charge-offs	2.4x		2.7x		2.9x		2.6x		3.7x

Ratios are annualized, as applicable.

The following table presents activity related to NPAs:


Table 10: Rollforward of NPAs
(Dollars in millions)	2024		2023
Balance, January 1	$	1,488	$	1,250
New NPAs	831		621
Advances and principal increases	190		214
Disposals of foreclosed assets(1)	(157)		(147)
Disposals of NPLs(2)	(91)		(3)
Charge-offs and losses	(367)		(204)
Payments	(337)		(306)
Transfers to performing status	(61)		(160)
Other, net	(20)		(4)
Ending balance, March 31	$	1,476	$	1,261

(1)Includes charge-offs and losses recorded upon sale of $66 million and $42 million for the three months ended March 31, 2024 and 2023, respectively.

(2)Includes gains, net of charge-offs and losses recorded upon sale of $4 million and $5 million for the three months ended March 31, 2024 and 2023, respectively.

Truist Financial Corporation 55

Commercial Credit Concentrations

Truist has established the following general practices to manage commercial credit risk:

limiting the amount of credit that Truist may extend to a borrower;
establishing a process for credit approval accountability;
initial underwriting and analysis of borrower, transaction, market, and collateral risks;
ongoing servicing and monitoring of individual loans and lending relationships;
continuous monitoring of the portfolio, market dynamics, and the economy; and
periodically reevaluating the Company’s strategy and overall exposure as economic, market, and other relevant conditions change.

Truist continuously monitors various segments of its credit portfolios to assess potential concentration risks. Management is actively involved in the credit approval and review process, and risk acceptance criteria are adjusted as needed to reflect the Company’s risk appetite. Consistent with established risk management objectives, the Company utilizes various risk mitigation techniques, including collecting collateral and security interests, obtaining guarantees, and, to a limited extent, through the purchase of credit loss protection via third party insurance and/or use of credit derivatives such as credit default swaps.

In the commercial portfolio, risk concentrations are evaluated regularly on both an aggregate portfolio level and on an individual client basis. The Company manages its commercial exposure through portfolio targets, limits, and transactional risk acceptance criteria as well as other techniques, including but not limited to, loan syndications/participations, loan sales, collateral, structure, covenants, and other risk reduction techniques.

The following tables provide industry distribution by major types of commercial credit exposure and the geographical distribution of commercial exposures. Industry classification for commercial and industrial loans is based on the North American Industry Classification System. Commercial real estate loans are classified based on type of property. For the geographic disclosures, amounts are generally assigned to a state based on the physical billing address of the client or physical property address.

56 Truist Financial Corporation


Table 11: Commercial and Industrial Portfolio Industry and Geography
	March 31, 2024				December 31, 2023

(Dollars in millions)	LHFI		% of Total			NPL		LHFI		% of Total		NPL
Industry:
Manufacturing	$	14,598	9.3	%		$	104	$	14,418	9.0	%	$	65
Finance and insurance	13,927		8.8			35		15,526		9.7		40
Health care and social assistance	12,951		8.2			136		12,997		8.1		46
Real estate and rental and leasing	12,446		7.9			8		12,663		7.9		16
Retail trade	12,339		7.8			85		12,740		7.9		89
Public administration	9,721		6.2			—		9,802		6.1		—
Information	8,363		5.3			1		8,346		5.2		—
Wholesale trade	7,963		5.1			2		8,263		5.1		3
Transportation and warehousing	5,612		3.6			17		5,703		3.5		8
Educational services	4,844		3.1			30		5,151		3.2		31
Professional, scientific, and technical services	4,351		2.8			12		4,445		2.8		26
Utilities	4,172		2.6			—		4,555		2.8		—
Administrative and support and waste management and remediation services	3,476		2.2			14		3,716		2.3		49
Arts, entertainment, and recreation	3,384		2.1			—		3,227		2.0		—
Other services (except public administration)	3,138		2.0			1		3,305		2.1		1
Accommodation and food services	2,937		1.9			4		3,067		1.9		13
Other(1)	12,761		8.0			27		12,159		7.5		41
Subtotal	136,983		86.9			476		140,083		87.1		428
Business owner occupied	20,686		13.1			36		20,705		12.9		42
Total commercial and industrial	$	157,669	100.0	%		$	512	$	160,788	100.0	%	$	470

Geography:
Florida	$	18,842	12.0	%		$	261	$	18,947	11.8	%	$	228
Texas	14,666		9.3			8		15,374		9.6		24
North Carolina	12,528		7.9			12		12,959		8.1		11
Georgia	12,167		7.7			49		12,167		7.6		32
New York	10,527		6.7			3		10,336		6.4		3
Virginia	9,341		5.9			10		9,724		6.0		35
California	8,679		5.5			12		9,115		5.7		1
Pennsylvania	7,328		4.6			5		7,423		4.6		4
Maryland	6,740		4.3			4		6,668		4.1		6
Tennessee	5,375		3.4			85		5,852		3.6		43
South Carolina	3,991		2.5			2		4,134		2.6		1
Illinois	3,910		2.5			—		3,892		2.4		10
New Jersey	3,788		2.4			30		3,754		2.3		36
Ohio	2,904		1.8			—		3,220		2.0		6
Other(2)	36,883		23.5			31		37,223		23.2		30
Total commercial and industrial	$	157,669	100.0	%		$	512	$	160,788	100.0	%	$	470

(1)Represents other remaining industries that are deemed to be individually insignificant.

(2)Includes non-U.S. loans of $4.7 billion and $5.1 billion at March 31, 2024 and December 31, 2023, respectively. The remainder represents other remaining states that are deemed to be individually insignificant.

Truist has noted that the CRE and commercial construction portfolios have the potential for heightened risk in the current environment. Truist seeks to maintain a high-quality portfolio through disciplined risk management and prudent client selection.

Truist’s CRE and commercial construction portfolios totaled $29.6 billion as of March 31, 2024, which includes 35% related to multifamily residential, 17% related to industrial, 16% related to office, 14% related to retail, and the remainder composed of hotel and other commercial real estate.

Our combined CRE and commercial construction office portfolio is primarily composed of multi-tenant, non-gateway properties located within Truist Bank’s footprint. As of March 31, 2024, approximately 98% of these properties are multi-tenant. Additionally, as of March 31, 2024, 25% and 29% of these exposures are scheduled to mature in 2024 and 2025, respectively, with the remainder scheduled to mature in 2026 and beyond.

Truist Financial Corporation 57


Table 12: CRE Portfolio Property Type and Geography
	March 31, 2024				December 31, 2023

(Dollars in millions)	LHFI		% of Total			NPL		LHFI		% of Total		NPL
Industry:
Multifamily	$	5,825	26.3	%		$	1	$	5,731	25.4	%	$	3
Office	4,117		18.6			244		4,286		19.0		264
Retail	4,080		18.4			6		4,172		18.5		9
Industrial	3,976		18.0			3		4,054		18.0		3
Hotel	2,378		10.7			—		2,445		10.8		—
Other(1)	1,766		8.0			7		1,882		8.3		5
Total CRE	$	22,142	100.0	%		$	261	$	22,570	100.0	%	$	284

Geography:
North Carolina	$	2,607	11.8	%		$	4	$	2,726	12.1	%	$	1
Georgia	2,461		11.1			147		2,532		11.2		120
Florida	2,432		11.0			5		2,481		11.0		5
California	1,729		7.8			56		1,709		7.6		81
Texas	1,600		7.2			—		1,611		7.1		—
New York	1,567		7.1			3		1,574		7.0		3
Pennsylvania	1,353		6.1			—		1,403		6.2		—
Virginia	1,235		5.6			—		1,276		5.7		—
District of Columbia	1,020		4.6			10		1,043		4.6		—
Maryland	897		4.1			12		956		4.2		16
Other(2)	5,241		23.6			24		5,259		23.3		58
Total CRE	$	22,142	100.0	%		$	261	$	22,570	100.0	%	$	284

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Includes non-U.S. loans of $69 million and $73 million at March 31, 2024 and December 31, 2023, respectively. The remainder represents other remaining states that are deemed to be individually insignificant.


Table 13: Commercial Construction Portfolio Property Type and Geography
	March 31, 2024				December 31, 2023

(Dollars in millions)	LHFI		% of Total			NPL		LHFI		% of Total		NPL
Industry:
Multifamily	$	4,547	60.9	%		$	23	$	3,868	57.9	%	$	23
Industrial	1,050		14.1			—		877		13.1		—
Single Family - CP	801		10.7			—		819		12.3		—
Office	581		7.8			—		634		9.5		1
Single Family – AD and CL	172		2.3			—		196		2.9		—
Other(1)	321		4.2			—		289		4.3		—
Total commercial construction	$	7,472	100.0	%		$	23	$	6,683	100.0	%	$	24

Geography:
Georgia	$	1,147	15.4			$	—	$	1,059	15.8		$	—
Texas	1,046		14.0			23		956		14.3		23
North Carolina	871		11.7			—		777		11.6		—
Florida	867		11.6			—		741		11.1		—
California	501		6.7			—		512		7.7		—
Other(2)	3,040		40.6			—		2,638		39.5		1
Total commercial construction	$	7,472	100.0	%		$	23	$	6,683	100.0	%	$	24

(1)Represents other remaining property types that are deemed to be individually insignificant.

(2)Includes non-U.S. loans of $22 million and $16 million at March 31, 2024 and December 31, 2023, respectively. The remainder represents other remaining states that are deemed to be individually insignificant.

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

58 Truist Financial Corporation

ACL

Activity related to the ACL is presented in the following tables:


Table 14: Activity in ACL
	Three Months Ended
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
Balance, beginning of period(1)	$	5,093	$	4,970	$	4,879	$	4,761	$	4,649


Provision for credit losses	500		572		497		558		482

Charge-offs:
Commercial and industrial	(97)		(110)		(98)		(107)		(75)
CRE	(103)		(48)		(77)		(35)		(6)
Commercial construction	—		(5)		—		—		—

Residential mortgage	(1)		—		(8)		(1)		(1)
Home equity	(3)		(2)		(4)		(2)		(2)
Indirect auto	(154)		(154)		(135)		(115)		(127)
Other consumer	(165)		(148)		(120)		(104)		(105)
Student	—		—		—		(103)		(5)
Credit card	(77)		(64)		(55)		(53)		(51)

Total charge-offs	(600)		(531)		(497)		(520)		(372)
Recoveries:
Commercial and industrial	32		16		28		13		13
CRE	7		—		2		—		1
Commercial construction	—		2		—		—		1

Residential mortgage	1		1		1		2		2
Home equity	5		5		7		5		6
Indirect auto	28		25		25		31		26
Other consumer	28		21		20		20		17

Credit card	9		8		9		9		9
Total recoveries	110		78		92		80		75
Net charge-offs	(490)		(453)		(405)		(440)		(297)
Other(2)	(3)		4		(1)		—		(73)
Balance, end of period	$	5,100	$	5,093	$	4,970	$	4,879	$	4,761


ACL:(1)
ALLL	$	4,803	$	4,798	$	4,693	$	4,606	$	4,479
RUFC	297		295		277		273		282
Total ACL	$	5,100	$	5,093	$	4,970	$	4,879	$	4,761

(1)Excludes provision for credit losses and allowances related to other financial assets at amortized cost.

(2)2023 includes the impact from the adoption of the Troubled Debt Restructurings and Vintage Disclosures accounting standard.

The allowance for credit losses was $5.1 billion and includes $4.8 billion for the allowance for loan and lease losses and $297 million for the reserve for unfunded commitments. The ALLL ratio was 1.56%, up two basis points compared with December 31, 2023. The ALLL covered nonperforming loans and leases held for investment 3.4X compared to 3.5X at December 31, 2023. At March 31, 2024, the ALLL was 2.4X annualized net charge-offs, compared to 2.7X at December 31, 2023.

Truist Financial Corporation 59

The following table presents an allocation of the ALLL. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases.


Table 15: Allocation of ALLL by Category
	March 31, 2024						December 31, 2023
(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	1,360	28.3	%	51.4	%	$	1,404	29.4	%	51.6	%
CRE	663		13.8		7.2		616		12.8		7.2
Commercial construction	198		4.1		2.4		174		3.6		2.1

Residential mortgage	222		4.6		17.9		298		6.2		17.8
Home equity	90		1.9		3.2		89		1.9		3.2
Indirect auto	923		19.2		7.2		942		19.6		7.3
Other consumer	959		20.0		9.1		890		18.5		9.2

Credit card	388		8.1		1.6		385		8.0		1.6
Total ALLL	4,803		100.0	%	100.0	%	4,798		100.0	%	100.0	%
RUFC	297						295
Total ACL	$	5,100					$	5,093

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

Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. Truist estimates credit losses on second lien loans where the first lien is delinquent based on historical experience; the increased risk of loss on these credits is reflected in the ALLL. As of March 31, 2024, Truist held or serviced the first lien on 32% of its second lien positions.

Other Assets

The components of other assets are presented in the following table:


Table 16: Other Assets as of Period End
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023
Tax credit and other private equity investments	$	8,089	$	7,898
Bank-owned life insurance	7,738		7,716
Prepaid pension assets	6,620		6,563
DTAs, net	3,258		3,037
Accrued income	2,034		2,085
Leased assets and related assets	1,755		1,647
Accounts receivable	1,246		997
FHLB stock	1,199		1,198
Prepaid expenses	1,143		1,083
Derivative assets	1,088		951
ROU assets	1,033		1,057

Other	1,318		765
Total other assets	$	36,521	$	34,997

60 Truist Financial Corporation

Funding Activities

Deposits

The following table presents average deposits:


Table 17: Average Deposits
	Three Months Ended
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023		Sep 30, 2023		Jun 30, 2023		Mar 31, 2023
Noninterest-bearing deposits	$	108,888	$	114,555	$	118,905	$	123,728	$	131,099
Interest checking	103,537		101,722		101,252		102,105		108,886
Money market and savings	134,696		137,464		139,961		138,149		139,802
Time deposits	41,937		41,592		40,920		35,844		28,671

Total average deposits	$	389,058	$	395,333	$	401,038	$	399,826	$	408,458

Average deposits for the first quarter of 2024 were $389.1 billion, a decrease of $6.3 billion, or 1.6%, compared to the prior quarter.

Average noninterest-bearing deposits decreased 4.9% compared to the prior quarter and represented 28.0% of total deposits for the first quarter of 2024 compared to 29.0% for the fourth quarter of 2023 and 32.1% compared to the year ago quarter. Average money market and savings accounts decreased 2.0%. Average interest checking and time deposits increased 1.8% and 0.8%, respectively.

Borrowings

At March 31, 2024, short-term borrowings totaled $26.3 billion, an increase of $1.5 billion compared to December 31, 2023. Average short-term borrowings were $26.2 billion, or 5.8% of total funding, for the three months ended March 31, 2024, as compared to $24.1 billion, or 5.0%, for the prior year.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $39.1 billion at March 31, 2024, an increase of $153 million compared to December 31, 2023. During the three months ended March 31, 2024, the Company had:

Issued $3.5 billion fixed-to-floating rate senior notes with interest rates between 5.44% and 5.71% due from January 24, 2030 to January 24, 2035.
Maturities and redemptions of $1.3 billion of senior notes.
Net redemptions of $2.0 billion of floating rate FHLB advances.

Shareholders’ Equity

Truist’s book value per common share and TBVPS are presented in the following table:


Table 18: Book Value per Common Share
(Dollars in millions, except per share data, shares in thousands)	Mar 31, 2024		Dec 31, 2023
Common equity per common share	$	38.97	$	39.31
Non-GAAP capital measure:(1)
Tangible common equity per common share	$	21.64	$	21.83
Calculation of tangible common equity:(1)
Total shareholders’ equity	$	59,053	$	59,253
Less:
Preferred stock	6,673		6,673
Noncontrolling interests	232		152
Goodwill and intangible assets, net of deferred taxes	23,198		23,306
Tangible common equity	$	28,950	$	29,122

Common shares outstanding at end of period	1,338,096		1,333,743

(1)Tangible common equity is a non-GAAP measure that excludes the impact of intangible assets, net of deferred taxes. This measure is useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses this measure to assess balance sheet risk and shareholder value.

Total shareholders’ equity was $59.1 billion at March 31, 2024, a decrease of $200 million from December 31, 2023. This decrease was driven by $800 million in common and preferred dividends and $716 million in OCI, partially offset by net income of $1.2 billion. Truist’s book value per common share at March 31, 2024 was $38.97, compared to $39.31 at December 31, 2023. Truist’s TBVPS was $21.64 at March 31, 2024, compared to $21.83 at December 31, 2023.

Truist Financial Corporation 61

Risk Management

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

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

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

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

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

Market Risk

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

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

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

Interest Rate Market Risk

As a financial institution, Truist is exposed to interest rate risk from assets, liabilities, and off-balance sheet positions. Truist primarily monitors this risk through two measurement types, (i) NII at risk and (ii) economic value of equity, and manages this risk with securities, derivatives, and broader asset liability management activities.

IRR measurement is reported monthly through the ALCO. Monthly IRR reporting includes exposure and historical trends relative to risk limit scenarios, impacts to a wide range of rate scenarios, and sensitivity tests of key assumptions. IRR reporting is provided to the BRC monthly and reviews of varying IRR topics are performed quarterly.

IRR measurement is influenced by data, assumptions, and models. Due to their high sensitivity to market rates, mortgage (loan and security) prepayments leverage an industry model that results in varying prepayment speeds across rate scenarios. Prepayments for non-mortgage loans leverage a mix of dynamic models and static prepayment assumptions based on historical experience. Interest-bearing-deposit rate paid is projected to move at a ratio (deposit beta) of market rates, primarily the Federal Funds Rate, aligned to historical experience.

Truist uses derivatives to hedge interest income variability of floating rate loans and to hedge valuation changes of long-term debt and investment securities.

62 Truist Financial Corporation

NII at risk measures the change in NII under alternate interest rate scenarios relative to Truist’s baseline scenario, which incorporates Truist’s current balance sheet and off-balance sheet hedges as well as expectations for new business over the forecast horizon. Truist’s baseline scenario relies on assumptions including expectations of the economy and interest rates – which are influenced by market conditions, new business volume, pricing, and customer behavior. In measuring NII at risk, Truist assumes that changes in key factors, such as prepayments and deposit pricing (betas), largely move in line with those it has experienced in prior rate cycles. However, future behavior of key factors may vary from those used in this measurement. NII at risk measurement assumes, when applicable, that U.S. interest rates floor at zero and does not assume Truist takes any balance sheet or hedging actions in response to the rate scenarios.

Truist evaluates a wide range of alternate scenarios including instantaneous and gradual as well as parallel and non-parallel changes in interest rates. The table below presents the estimated change to NII over the following 12 months for select parallel alternate scenarios, expressed as a percentage change relative to baseline NII.




Table 19: Interest Sensitivity Simulation Analysis
	Mar 31, 2024		Dec 31, 2023
Up 200bps gradual change in interest rates	(2.35)	%	(1.46)	%
Up 50bps instantaneous change in interest rates	(0.77)		(0.36)
Down 50bps instantaneous change in interest rates	0.31		(0.10)
Down 200bps gradual change in interest rates	0.45		(0.30)

Estimated changes to NII in the table above assume no change in deposit balances or mix relative to the baseline scenario. In increasing interest rate scenarios, rotation from non-interest-bearing into interest bearing deposits would reduce NII. Conversely, in decreasing interest rate scenarios, rotation from higher yielding to lower yielding deposits would benefit net interest income. Truist performs and monitors sensitivity tests of deposit and other key assumptions used in NII risk including:

Asset prepayment speeds
New loan volume pricing spreads
Interest-bearing deposit betas
Non-interest-bearing demand deposit balance runoff, replaced by market funding

EVE measures changes in the economic value of Truist’s current balance sheet and off-balance sheet hedges under alternate rate scenarios relative to starting economic value. Truist uses EVE as a longer-term measure of interest rate risk. Truist performs and monitors sensitivity tests of key assumptions used in EVE including:

Asset prepayment speeds
Mortgage spreads (mortgage loan and security valuations)
Interest-bearing deposit beta
Deposit runoff / decay

Key assumption tests are generally performed by increasing and decreasing the assumption, whether static or dynamically modeled, relative to their respective starting values and then measuring the resulting impact to NII and EVE under baseline and alternate rate scenarios.

The identification and testing of key assumptions are influenced by market conditions and management views of key risks. The results of key assumption sensitivity tests are reported to ALCO and BRC monthly. The inventory of key assumptions and their associated sensitivity tests are reviewed with ALCO and BRC at least annually.

Market Risk from Trading Activities

As a financial intermediary, Truist provides its clients access to derivatives, foreign exchange and securities markets, which generate market risks. Trading market risk is managed using a comprehensive risk management approach, which includes measuring risk using VaR, stress testing, and sensitivity analysis. Risk metrics are monitored against a suite of limits on a daily basis at both the trading desk level and at the aggregate portfolio level.

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

Truist Financial Corporation 63

Covered Trading Positions

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

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

Securitizations

As of March 31, 2024, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule, which were non-agency asset backed securities positions, was $71 million. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics including, but not limited to, deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s comprehensive risk management framework, which includes daily monitoring against a suite of limits. There were no off-balance sheet securitization positions during the reporting period.

Correlation Trading Positions

The trading portfolio of covered positions did not contain any correlation trading positions as of March 31, 2024.

VaR-Based Measures

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

The trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, and the correlation between different positions. A portfolio of trading positions is typically less risky than the sum of the risk from each of the individual sub-portfolios, because, under normal market conditions, risk within each category partially offsets the exposure to other risk categories. The following table summarizes certain VaR-based measures for the three months ended March 31, 2024 and 2023.


Table 20: VaR-based Measures
	Three Months Ended March 31,
		2024	2023
(Dollars in millions)			10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum			$	27	$	12	$	22	$	9
Average			22		10		15		6
Minimum			15		8		10		4
Period-end			21		9		22		9
VaR by Risk Class:
Interest Rate Risk					4				8
Credit Spread Risk					3				7
Equity Price Risk					5				1
Foreign Exchange Risk					1				—
Portfolio Diversification					(4)				(9)
Period-end					9				8

64 Truist Financial Corporation

Stressed VaR-based measures

Stressed VaR, another component of market risk capital, is calculated using the same internal models as used for the VaR-based measure. Stressed VaR is calculated over a ten-day holding period at a one-tail, 99% confidence level and employs a historical simulation approach based on a continuous twelve-month historical window selected to reflect a period of significant financial stress for the Company’s trading portfolio. The following table summarizes Stressed VaR-based measures:


Table 21: Stressed VaR-based Measures - 10 Day Holding Period
	Three Months Ended March 31,
(Dollars in millions)		2024		2023
Maximum		$	171	$	77
Average		113		44
Minimum		69		25
Period-end		107		31

Compared to the same period of prior year, both VaR and Stressed VaR measures were generally higher, primarily due to higher market making inventory in 2024.

Specific Risk Measures

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

VaR Model Backtesting

In accordance with the Market Risk Rule, the Company evaluates the accuracy of its VaR model through daily backtesting by comparing aggregate daily trading gains and losses (excluding fees, commissions, reserves, net interest income, and intraday trading) from covered positions with the corresponding daily VaR-based measures generated by the model. As illustrated in the following graph, there were no Company-wide VaR backtesting exceptions during the twelve months ended March 31, 2024. The total number of Company-wide VaR backtesting exceptions over the preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.

12789

Truist Financial Corporation 65

Model Risk Oversight

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

Stress Testing

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

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

Interest rate scenarios in table 19 assume no change in deposit mix. Further rotation from non-interest bearing into interest bearing deposits would increase the liability sensitivity of Truist’s balance sheet.

Liquidity

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

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

Internal Liquidity Stress Testing

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

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

Contingency Funding Plan

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

66 Truist Financial Corporation

LCR and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of stress. Eligible HQLA, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy operational requirements of the LCR rule. Truist and Truist Bank are subject to the Category III reduced LCR requirements. Truist held average weighted eligible HQLA of $85.0 billion and Truist’s average LCR was 115% for the three months ended March 31, 2024.

Effective July 2021, Truist became subject to final rules implementing the NSFR, which require banking organizations to maintain a stable, long-term funding profile in relation to their asset composition and off-balance sheet activities. At March 31, 2024, Truist was compliant with this requirement.

Sources of Funds

Management believes current sources of liquidity are sufficient to meet Truist’s on- and off-balance sheet obligations. Truist funds its balance sheet through diverse sources of funding including client deposits, secured and unsecured capital markets funding, and shareholders’ equity. Truist Bank’s primary source of funding is client deposits. Continued access to client deposits is highly dependent on public confidence in the stability of Truist Bank and its ability to return funds to clients when requested.

Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and term Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to secured borrowing sources including FHLB advances, repurchase agreements, and the FRB discount window. Available investment securities could be pledged to create additional secured borrowing capacity. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the FRB:


Table 22: Selected Liquidity Sources
(Dollars in millions)	Mar 31, 2024		Dec 31, 2023
Unused borrowing capacity:
FRB	$	53,548	$	55,252
FHLB	25,031		24,712
Available investment securities (after haircuts)	73,520		74,717
Available secured borrowing capacity	152,099		154,681
Eligible cash at the FRB	29,353		25,085
Total	$	181,452	$	179,766

At March 31, 2024, Truist Bank’s available secured borrowing capacity represented approximately 3.6 times the amount of wholesale funding maturities in one-year or less.

Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, repurchases of common stock, and payments on and, from time-to-time, potential repurchases or redemptions of a portion of an outstanding tranche of the long-term debt of the Parent Company (as may be permitted by the terms of each respective series). See “Note 22. Parent Company Financial Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding dividends from subsidiaries and debt transactions.

Access to funding at the Parent Company is more sensitive to market disruptions. Therefore, Truist prudently manages cash levels at the Parent Company to cover a minimum of one year of projected cash outflows which includes unfunded external commitments, debt service, common and preferred dividends and scheduled debt maturities, without the benefit of any new cash inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, serving as a source of strength to Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At March 31, 2024 and December 31, 2023, the Parent Company had 57 months and 48 months, respectively, of cash on hand to satisfy projected cash outflows, and 34 months and 30 months, respectively, when including the payment of common stock dividends.

Truist Financial Corporation 67

Credit Ratings

Credit ratings are forward-looking opinions of rating agencies as to the Company’s ability to meet its financial commitments and repay its securities and obligations in accordance with their terms of issuance. Credit ratings influence both borrowing costs and access to the capital markets. The Company’s credit ratings are continuously monitored by the rating agencies and are subject to change at any time. As Truist seeks to maintain high-quality credit ratings, management meets with the major rating agencies on a regular basis to provide financial and business updates and to discuss current outlooks and trends. See Item 1A, “Risk Factors” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding factors that influence credit ratings and potential risks that could materialize in the event of downgrade in the Company’s credit ratings. Recent changes in the Company’s credit ratings and outlooks include:

On May 8, 2024, Moody’s Ratings downgraded Truist's long-term senior unsecured rating to Baa1 from A3 and Truist Bank’s baseline credit assessment to a3 from a2 and long-term deposits rating to A1 from Aa3. In addition, Truist Bank’s short-term deposit rating was affirmed at Prime-1. Ratings outlooks for both Truist and Truist Bank were changed to stable.

Capital

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

Truist regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plans and stress testing results to the banking regulators. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, management’s objective is to maintain capital at levels that are in excess of internal capital limits, which are above the regulatory “well-capitalized” minimums. Management has implemented internal stress capital ratio minimums to evaluate whether capital ratios calculated after the effect of alternative capital actions are likely to remain above internal minimums. Breaches of internal stressed minimums prompt a review of the planned capital actions included in Truist’s capital plan.


Table 23: Capital Requirements
	Minimum Capital			Well-Capitalized					Minimum Capital Plus Stress Capital Buffer(1)
			Truist			Truist Bank
CET1	4.5	%		NA			6.5	%	7.4	%
Tier 1 capital	6.0			6.0	%		8.0		8.9
Total capital	8.0			10.0			10.0		10.9
Leverage ratio	4.0			NA			5.0		NA
Supplementary leverage ratio	3.0			NA			NA		NA

(1)Reflects a SCB requirement of 2.9% applicable to Truist as of March 31, 2024. Truist’s SCB requirement, received in the 2023 CCAR process, is effective from October 1, 2023 to September 30, 2024. Truist will receive a new preliminary SCB requirement, to become effective October 1, 2024, following the release of CCAR 2024 results in late June 2024.

Truist’s capital ratios are presented in the following table:


Table 24: Capital Ratios - Truist Financial Corporation
(Dollars in millions)	Mar 31, 2024			Dec 31, 2023
Risk-based:	(preliminary)
CET1	10.1		%	10.1		%
Tier 1 capital	11.7			11.6
Total capital	13.9			13.7
Leverage ratio	9.4			9.3
Supplementary leverage ratio	8.0			7.9
Risk-weighted assets	$	420,985		$	423,705

68 Truist Financial Corporation

Capital ratios remained strong compared to the regulatory requirements for well capitalized banks. Truist declared common dividends of $0.52 per share during the first quarter of 2024. Truist did not repurchase any shares in the first quarter of 2024.

Truist’s CET1 ratio was 10.1% as of March 31, 2024, flat compared to December 31, 2023, as organic capital generation and RWA optimization were partially offset by the CECL phase-in.

Truist’s average consolidated LCR was 115% for the three months ended March 31, 2024, compared to the regulatory minimum of 100%.

Share Repurchase Activity


Table 25: Share Repurchase Activity
(Dollars in millions, except per share data, shares in thousands)	Total Number of Shares Purchased(1)	Average Price Paid Per Share(2)		Total Number of Shares Purchased as part of Publicly Announced Plans	Approximate Dollar Value of Shares that may yet be Purchased Under the Plans
January 1, 2024 to January 31, 2024	—	$	—	—	$	—
February 1, 2024 to February 29, 2024	—	—		—	—
March 1, 2024 to March 31, 2024	9	34.86		—	—
Total	9	$	34.86	—

(1)Includes shares exchanged or surrendered in connection with the exercise of equity-based awards under equity-based compensation plans.

(2)Excludes commissions.

Critical Accounting Policies

The accounting and reporting policies of Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Truist’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities, and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in the consolidated financial position and/or consolidated results of operations, and related disclosures. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets; income taxes; and pension and postretirement benefit obligations. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. The critical accounting policies are discussed in MD&A in Truist’s Annual Report on Form 10-K for the year ended December 31, 2023. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1. Basis of Presentation” in Form 10-K for the year ended December 31, 2023. Disclosures regarding the effects of new accounting pronouncements are included in “Note 1. Basis of Presentation” in this report. There have been no other changes to the critical accounting policies during 2024.

Goodwill and Other Intangible Assets

Effective January 1, 2024, several business activities were realigned reflecting updates to the Company’s operating structure. First, the CB&W segment was renamed CSBB and the C&CB segment was renamed WB. Second, the Wealth business was realigned into the WB segment from the CSBB segment, representing a separate reporting unit in that segment. Third, the small business banking client segmentation was realigned into the CSBB segment from the WB segment. Further, TIH was the principal legal entity of the IH segment. As the operations of TIH are now included in discontinued operations, the Company no longer presents the IH segment as one of its reportable segments. Following these realignments, the Company’s three reporting units with goodwill balances were CSBB, WB, and Wealth. Also in conjunction with these realignments, goodwill of $1.7 billion was realigned to WB from CSBB based on the relative fair value of CSBB and Wealth, and goodwill of $220 million was realigned to CSBB from WB based on the relative fair value of WB and the realigned small business banking client segmentation. In addition, the Company completed an assessment of any potential goodwill impairment for all impacted reporting units immediately prior and subsequent to the reassignments and determined that no impairment existed.

Truist Financial Corporation 69

The quantitative valuations of these reporting units for purposes of realigning goodwill use the income approach and a market-based approach, each weighted at 50%. The inputs and assumptions specific to each reporting unit are incorporated in the valuations, including projections of future cash flows, discount rates, and applicable valuation multiples based on the comparable public company information. The income approach utilizes a discounted cash flow analysis of multi-year financial forecasts developed for each reporting unit by considering several inputs and assumptions such as net interest margin, expected credit losses, noninterest income, noninterest expense, and required capital. The market-based approach utilizes comparable public company information, key valuation multiples, and considers a market control premium associated with cost synergies and other cash flow benefits that arise from obtaining control over a reporting unit, and guideline transactions, when applicable.

Truist also assesses the reasonableness of the aggregate estimated fair value of the reporting units by comparison to its market capitalization over a reasonable period of time, including consideration of expected acquirer expense synergies, historic bank control premiums, and the current market.

The projection of net interest margin and noninterest expense are the most significant inputs to the financial projections of the CSBB, WB, and Wealth reporting units. The long-term growth rate used in determining the terminal value of each reporting unit was 3% as of January 1, 2024, based on management’s assessment of the minimum expected terminal growth rate of each reporting unit. Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, and unsystematic risk adjustments specific to a particular reporting unit. The discount rates are also calibrated based on risks related to the projected cash flows of each reporting unit. The discount rates utilized for the CSBB, WB and Wealth reporting units as of January 1, 2024 were 13.0%, 11.5%, and 12.5%, respectively.

The quantitative valuation of WB performed in conjunction with the goodwill realignments indicated that as of January 1, 2024, the fair value of the WB reporting unit exceeded its carrying value by less than 10%, indicating that the goodwill of the WB reporting unit may be at risk of impairment. Circumstances that could negatively impact the fair value for the WB reporting unit in the future include a sustained decrease in Truist’s stock price, a decline in industry peer multiples, an increase in the applicable discount rate, and deterioration in the reporting unit’s forecast.

The estimated fair value of a reporting unit is highly sensitive to changes in management’s estimates and assumptions; therefore, in some instances, changes in these assumptions could impact whether the fair value of a reporting unit is greater than its carrying value. The valuation of the WB reporting unit as of January 1, 2024 indicated that if the discount rate were increased less than 50 basis points the reporting unit’s fair value would be less than its carrying value, resulting in a goodwill impairment. Ultimately, future potential changes in management’s assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying value. Additionally, a reporting unit’s carrying value could change based on market conditions, change in the underlying makeup of the reporting unit, or the risk profile of those reporting units, which could impact whether the fair value of a reporting unit is less than carrying value.

The Company monitored events and circumstances during the period from January 1, 2024 to March 31, 2024, 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 January 1, 2024 quantitative valuations associated with the realignments of goodwill, and the sensitivity of the January 1, 2024 quantitative results to changes in assumptions as of March 31, 2024. Based on these considerations, Truist concluded that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of March 31, 2024.

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