Glossary of Defined Terms

The following terms may be used throughout this ~~Report,~~report, including the consolidated financial statements and related notes.



Term		Definition
ACL		Allowance for credit losses
AFS		Available-for-sale
Agency MBS		Mortgage-backed securities issued by a U.S. government agency or GSE
ALLL		Allowance for loan and lease losses
ALM		Asset/Liability management
ARRC		Alternative Reference Rates Committee of the FRB and the Federal Reserve Bank of New York
AOCI		Accumulated other comprehensive income (loss)
Basel III Rules		~~Global regulatory standards~~Rules issued by the FRB, OCC and FDIC on ~~bank~~ capital adequacy and liquidity ~~published by~~requirements in the ~~BCBS~~U.S for banking organizations.
BB&T		BB&T Corporation and subsidiaries (changed to "Truist Financial Corporation" effective with the Merger)
~~BCBS~~		~~Basel Committee on Banking Supervision~~
BHC		Bank holding company
~~Branch Bank~~		~~Branch Banking and Trust Company~~
BU		~~Business Unit~~
~~CB-Commercial~~		~~Community~~
Board		Truist's Board of Directors

C&CB		Corporate and Commercial Banking, ~~Commercial,~~ an operating segment
~~CB-Retail~~CARES Act		~~Community~~The Coronavirus Aid, Relief, and Economic Security Act
CB&W		Consumer Banking ~~Retail~~ and ~~Consumer Finance,~~Wealth, an operating segment
CCAR		Comprehensive Capital Analysis and Review
~~CCRC~~		~~Culture and Conduct Risk Committee~~
CD	Certificate of deposit
CDI		Core deposit intangible ~~assets~~
CECL		Current expected credit loss model
CEO		Chief Executive Officer

CFO		Chief Financial Officer
CET1		Common equity ~~Tier~~tier 1
~~CMO~~CIB		~~Collateralized mortgage obligation~~Corporate and Investment Banking


Company		~~BB&T~~Truist Financial Corporation and its subsidiaries (interchangeable with ~~"BB&T" above)~~"Truist" below), formerly BB&T Corporation
COVID-19		Coronavirus disease 2019

CRE		Commercial real estate
~~DIF~~CRO		~~Deposit Insurance Fund administered by the FDIC~~Chief Risk Officer
~~EGRRCPA~~		~~Economic Growth, Regulatory Relief, and Consumer Protection Act~~









EPS		Earnings per common share
EVE		Economic value of equity
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
~~FHA~~		~~Federal Housing Administration~~
~~FHC~~		~~Financial Holding Company~~
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Corporation

FNMA		Federal National Mortgage Association
FRB		Board of Governors of the Federal Reserve System
~~FS&CF~~		~~Financial Services and Commercial Finance, an operating segment~~
~~FTE~~		~~Full-time equivalent employee~~
GAAP		Accounting principles generally accepted in the United States of America

GNMA		Government National Mortgage Association
Grandbridge		Grandbridge Real Estate Capital, LLC
GSE		U.S. government-sponsored enterprise
HFI		Held for investment
~~HQLA~~		~~High-quality liquid assets~~


HTM		Held-to-maturity
~~IDI~~		~~Insured depository institution~~
IH		Insurance Holdings, an operating segment
IPV		Independent price verification

IRS		Internal Revenue Service

LCR		Liquidity Coverage Ratio
LHFS		Loans held for sale
LIBOR		London Interbank Offered Rate
LOCOM		Lower of cost or market
Market Risk Rule		Market risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBS		Mortgage-backed securities
MD&A		Management's Discussion and Analysis of Financial Condition and Results of Operations
Merger		Merger of BB&T and SunTrust effective December 6, 2019
MRLCC		Market Risk, Liquidity and Capital Committee



~~Term~~	~~Definition~~
MRM		Model Risk Management

Truist Financial Corporation 1


Term		Definition
MSR		Mortgage servicing right
~~MSRB~~		~~Municipal Securities Rulemaking Board~~
N/A		Not applicable
~~NCCOB~~		~~North Carolina Office of the Commissioner of Banks~~
NIM		Net interest margin, computed on a TE basis
NM		Not meaningful
NPA		Nonperforming asset
NPL		Nonperforming loan

NYSE		~~NYSE Euronext, Inc.~~New York Stock Exchange
OAS		Option adjusted spread
OCC		Office of the Comptroller of the Currency
OCI		Other comprehensive income (loss)

OPEB		Other post-employment benefit
OREO		Other real estate owned
~~ORMC~~		~~Operational Risk Management Committee~~
OT&C	Other, Treasury and Corporate
~~OTTI~~OTC		~~Other-than-temporary impairment~~Over-the-counter
Parent Company		~~BB&T~~Truist Financial Corporation, the parent company of ~~Branch~~Truist Bank and other subsidiaries

PCD		Purchased credit deteriorated loans
PCI		Purchased credit impaired loans
~~Peer Group~~		~~Financial holding companies included in the industry peer group index~~
PSU		Performance share units
Re-REMICs		Re-securitizations of Real Estate Mortgage Investment Conduits
~~Regions Insurance~~		~~Regions Insurance Group, acquired by BB&T effective July 2, 2018~~

ROU ~~Assets~~assets		Right-of-use assets
RSA		Restricted Stock Award
RSU		Restricted stock unit
RUFC		Reserve for unfunded lending commitments

SBIC		Small Business Investment Company
SEC		Securities and Exchange Commission
Short-Term Borrowings		Federal funds purchased, securities sold under repurchase agreements and other short-term borrowed funds with original maturities of less than one year
~~Simulation~~		~~Interest sensitivity simulation analysis~~
SunTrust		SunTrust Banks, Inc.
~~TBA~~		~~To be announced~~
TDR		Troubled debt restructuring
TE		Taxable-equivalent

TRS		Total Return Swap
Truist		Truist Financial Corporation and its subsidiaries (interchangeable with the "Company" above), formerly BB&T Corporation
Truist Bank		Truist Bank, formerly Branch Banking and Trust Company
U.S.		United States of America
U.S. Treasury		United States Department of the Treasury
UPB		Unpaid principal balance

VaR		Value-at-risk

VIE		Variable interest entity

2 Truist Financial Corporation

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of ~~BB&T that are based on the beliefs and assumptions of the management of BB&T and the information available to management at the time that these disclosures were prepared.~~Truist. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," ~~"could,~~“would," "could" and other similar expressions are intended to identify these forward-looking statements.

Forward-looking statements are not based on historical facts but instead represent management's expectations and assumptions regarding Truist's business, the economy and other future conditions. Such statements involve inherent uncertainties, risks and changes in circumstances that are ~~subject~~difficult to predict. As such, Truist’s actual results may differ materially from those contemplated by forward-looking statements. While there can be no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from ~~anticipated results. Such factors~~those contemplated by forward-looking statements include ~~but are not limited to,~~ the ~~following:~~

following, without limitation, as well as the risks and uncertainties more fully discussed under Part II, Item 1A-Risk Factors and in Truist’s Form 10-K for the year ended December 31, 2019:



l •		the COVID-19 pandemic has disrupted the global economy, and continuation of current conditions could adversely affect Truist’s capital and liquidity position, impair the ability of borrowers to repay outstanding loans and increase Truist's allowance for credit losses, impair the collateral values, cause an outflow of deposits, result in lost revenue or additional expenses, result in goodwill impairment charges, the impairment of other financial and nonfinancial assets, and increase Truist’s cost of capital;
•		risks ~~uncertainties~~ and ~~other factors~~uncertainties relating to the ~~merger of SunTrust with and into BB&T,~~Merger, including the ability to ~~obtain regulatory approvals and meet other closing conditions~~successfully integrate the companies or to realize the anticipated benefits of the Merger;
•		expenses relating to the ~~merger,~~Merger and ~~delay in closing the merger;~~integration of heritage BB&T and heritage SunTrust;
l •		deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;
•		changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark, which could adversely affect Truist’s revenue and expenses, the value of assets and obligations, and the availability and cost of capital, cash flows, and liquidity;
•		volatility in mortgage production and servicing revenues, and changes in carrying values of Truist’s servicing assets and mortgages held for sale due to changes in interest rates;
•		management’s ability to effectively manage credit risk;
•		inability to access short-term funding or liquidity;
•		loss of client deposits, which could increase Truist’s funding costs;
•		changes in Truist’s credit ratings, which could increase the cost of funding or limit access to capital markets;
•		additional capital and liquidity requirements that will result from the Merger;
•		regulatory matters, litigation or other legal actions, which may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, or other adverse consequences;
•		risks related to originating and selling mortgages, including repurchase and indemnity demands from purchasers related to representations and warranties on loans sold, which could result in an increase in the amount of losses for loan repurchases;
•		failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions;
•		risks relating to Truist’s role as a servicer of loans, including an increase in the scope or costs of the services Truist is required to perform without any corresponding increase in Truist’s servicing fee, or a breach of Truist’s obligations as servicer;
•		negative public opinion, which could damage Truist’s reputation;
•		increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design and governance;
•		competition from new or existing competitors, including increased competition from products and services offered by non-bank financial technology companies, may reduce Truist’s client base, cause Truist to lower prices for its products and services in order to maintain market share or otherwise adversely impact Truist’s businesses or results of operations;
•		Truist’s ability to introduce new products and services in response to industry trends or developments in technology that achieve market acceptance and regulatory approval;
•		Truist’s success depends on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements Truist's operations and integration activities could be adversely impacted. This could be exacerbated as Truist continues to integrate the management teams of heritage BB&T and heritage SunTrust, or if the organization is unable to hire and retain qualified personnel;
•		legislative, regulatory or accounting changes may adversely affect the businesses in which Truist is engaged;
•		evolving regulatory standards, including with respect to capital and liquidity requirements, and results of regulatory examinations, may adversely affect Truist's financial condition and results of operations;
•		accounting policies and processes require management to make estimates about matters that are uncertain;
•		general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, slower deposit ~~and/~~or asset growth, ~~and~~ a deterioration in credit quality ~~and/~~or a reduced demand for credit, insurance or other services;
l •		~~disruptions to the national~~risk management measures and management oversight functions may not identify or ~~global financial markets, including the impact of a downgrade of U.S. government obligations by one of the credit ratings agencies, the economic instability and recessionary conditions in Europe;~~address risks adequately;
l •		~~changes~~unfavorable resolution of legal proceedings or other claims or regulatory or other governmental investigations or inquiries could result in ~~the interest rate environment, including interest rate changes made by the Federal Reserve, the discontinuation~~negative publicity, protests, fines, penalties, restrictions on Truist's operations or ability to expand its business or other negative consequences, all of ~~LIBOR as an interest rate benchmark, as well as cash flow reassessments may reduce net interest margin and/or the volumes~~which could cause reputational damage and ~~values~~adversely impact Truist's financial condition and results of ~~loans and deposits as well as the value of other financial assets and liabilities;~~operations;
l •		~~competitive pressures among depository and other financial institutions may increase significantly;~~
l	~~legislative, regulatory or accounting changes may adversely affect the businesses in which BB&T is engaged;~~
l	~~local, state or federal taxing authorities may take tax positions that are adverse to BB&T;~~
l	~~a reduction may occur in BB&T's credit ratings;~~
l	~~adverse changes may occur in the securities markets;~~
l	competitors of ~~BB&T~~Truist may have greater financial resources or develop products that enable them to compete more successfully than ~~BB&T~~Truist and may be subject to different regulatory standards than ~~BB&T;~~Truist;
l •		~~cyber security risks could adversely affect BB&T's business and financial performance~~failure to maintain or ~~reputation, and BB&T could be liable~~enhance Truist’s competitive position with respect to technology, whether it fails to anticipate client expectations or because its technological developments fail to perform as desired or are not rolled out in a timely manner or for ~~financial losses incurred by third parties due~~other reasons, may cause Truist to ~~breaches of data shared between financial institutions;~~lose market share or incur additional expense;
l •		higher-than-expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T;
l	natural or other disasters, including acts of terrorism, could have an adverse effect on BB&T, materially disrupting BB&T's operations or the ability or willingness of customers to access BB&T's products and services;
l	~~costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;~~
l	failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
l	~~significant litigation and regulatory proceedings could have a material adverse effect on BB&T;~~
l	unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
l	~~risks resulting from the extensive use of models;~~
l	~~risk management measures may not be fully effective;~~
l	fraud or misconduct by internal or external parties, which ~~BB&T~~Truist may not be able to prevent, detect or mitigate;
l •		~~deposit attrition, customer loss and/~~operational or ~~revenue loss following completed mergers/acquisitions~~communications systems, including systems used by vendors or other external parties, may ~~exceed expectations;~~fail or may be the subject of a breach or cyber-attack that, if successful, could adversely impact Truist's financial condition and results of operations;
l •		security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s employees and clients, malware intrusion or data corruption attempts, and identity theft could result in the disclosure of confidential information, adversely affect Truist’s business or reputation or create significant legal or financial exposure;
•		natural or other disasters, including acts of terrorism and pandemics, could have an adverse effect on Truist, including a material disruption of Truist's operations or the ability or willingness of clients to access Truist's products and services;
•		widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties could adversely impact ~~BB&T's~~Truist's financial condition and results of ~~operations.~~operations; and
•		depressed market values for Truist’s stock and adverse economic conditions sustained over a period of time may require a write down to goodwill.

These and other risk factors are more fully described in this report and in BB&T's Annual Report on Form 10-K for the year ended December 31, 2018 under the sections entitled "Item 1A. Risk Factors" and from time to time, in other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed in or implied by any forward-looking statement. Except to the extent required by applicable law or regulation, BB&T undertakes no obligation to revise or update publicly any forward-looking statements for any reason. Readers should, however, consult any further disclosures of a forward-looking nature BB&T may make in any subsequent Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, or Current Reports on Form 8‑K.

Truist Financial Corporation 3

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

~~BB&T~~TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited (Dollars in millions, except per share data, shares in thousands)	September 30, 2019			December 31, 2018			Unaudited (Dollars in millions, except per share data, shares in thousands)	March 31, 2020		December 31, 2019

Assets							Assets
Cash and due from banks	$	2,027		$	2,753		Cash and due from banks	$	5,312	$	4,084
Interest-bearing deposits with banks	866			984			Interest-bearing deposits with banks	31,036		14,981
Cash equivalents	114			143
Restricted cash	11			107
Securities borrowed or purchased under resale agreements							Securities borrowed or purchased under resale agreements	1,796		1,417
Trading assets at fair value							Trading assets at fair value	3,863		5,733
AFS securities at fair value	35,997			25,038			AFS securities at fair value	78,398		74,727
HTM securities (fair value of $18,970 and $20,047 at September 30, 2019 and December 31, 2018, respectively)	18,768			20,552
LHFS at fair value	1,442			988

LHFS (including $3,655 and $5,673 at fair value, respectively)							LHFS (including $3,655 and $5,673 at fair value, respectively)	4,810		8,373
Loans and leases	149,413			149,013			Loans and leases	319,229		299,842
ALLL	(1,573		)	(1,558		)	ALLL	(5,211)		(1,549)
Loans and leases, net of ALLL	147,840			147,455			Loans and leases, net of ALLL	314,018		298,293
Premises and equipment	2,022			2,118			Premises and equipment	3,999		3,712
Goodwill	9,832			9,818			Goodwill	23,927		24,154
CDI and other intangible assets	678			758			CDI and other intangible assets	3,168		3,142
MSRs at fair value	919			1,108
Other assets	16,234			13,875
MSRs (including $2,150 and $2,618 at fair value, respectively)							MSRs (including $2,150 and $2,618 at fair value, respectively)	2,150		2,630
Other assets (including $5,129 and $3,310 at fair value, respectively)							Other assets (including $5,129 and $3,310 at fair value, respectively)	33,752		31,832
Total assets	$	236,750		$	225,697		Total assets	$	506,229	$	473,078
Liabilities							Liabilities
Deposits	$	162,280		$	161,199
Noninterest-bearing deposits							Noninterest-bearing deposits	$	97,618	$	92,405
Interest-bearing deposits							Interest-bearing deposits	252,561		242,322
Short-term borrowings	10,405			5,178			Short-term borrowings	12,696		18,218
Long-term debt	25,520			23,709			Long-term debt	65,662		41,339
Accounts payable and other liabilities	6,242			5,433
Other liabilities (including $1,849 and $1,440 at fair value, respectively)							Other liabilities (including $1,849 and $1,440 at fair value, respectively)	11,631		12,236
Total liabilities	204,447			195,519			Total liabilities	440,168		406,520
Commitments and contingencies (Note 14)

Shareholders' Equity							Shareholders' Equity
Preferred stock, $5 par, liquidation preference of $25,000 per share	3,057			3,053
Common stock, $5 par	3,832			3,817
Preferred stock, $5 par value, liquidation preference of $25,000 per share							Preferred stock, $5 par value, liquidation preference of $25,000 per share	4,599		5,102
Common stock, $5 par value							Common stock, $5 par value	6,737		6,711
Additional paid-in capital	6,931			6,849			Additional paid-in capital	35,584		35,609
Retained earnings	19,440			18,118			Retained earnings	18,076		19,806
AOCI, net of deferred income taxes	(1,026		)	(1,715		)	AOCI, net of deferred income taxes	898		(844)
Noncontrolling interests	69			56			Noncontrolling interests	167		174
Total shareholders' equity	32,303			30,178			Total shareholders' equity	66,061		66,558
Total liabilities and shareholders' equity	$	236,750		$	225,697		Total liabilities and shareholders' equity	$	506,229	$	473,078
Common shares outstanding	766,303			763,326			Common shares outstanding	1,347,461		1,342,166
Common shares authorized	2,000,000			2,000,000			Common shares authorized	2,000,000		2,000,000
Preferred shares outstanding	125			126			Preferred shares outstanding	140		145
Preferred shares authorized	5,000			5,000			Preferred shares authorized	5,000		5,000

CB-Retail net income was $1.3 billion for the nine months ended September 30, 2019, an increase of $157 million, or 14.1%, compared to the same period of the prior year. Segment net interest income increased $176 million primarily due to average loan growth and higher funding spreads, partially offset by lower credit spreads on loans. Noninterest income increased $39 million primarily due to an increase in mortgage banking income, service charges on deposits, and bankcard fees and merchant discounts. The allocated provision for credit losses increased $14 million primarily due to higher net charge-offs, partially offset by declines in average loan balances resulting from the residential mortgage portfolio sale. The allocated provision for income taxes increased $41 million due to higher pre-tax income.

CB-Retail average loans and leases HFI increased $2.5 billion, or 3.9%, compared to the earlier period. Average residential mortgage loans increased $1.1 billion, or 3.6%, average indirect retail loans increased $869 million, or 5.1%, average mortgage warehouse lending increased $424 million, or 31.2%, and average revolving credit increased $302 million, or 10.6%.

CB-Retail average total deposits increased $256 million, or 0.3%, compared to the earlier period. Average money market and savings increased $889 million, or 2.5%, and average noninterest-bearing deposits increased $455 million, or 2.7%, while average interest checking decreased $1.2 billion, or 7.6%.

~~Community Banking Commercial~~

CB-Commercial net income was $985 million for the nine months ended September 30, 2019, an increase of $126 million, or 14.7%, compared to the same period of the prior year. Segment net interest income increased $107 million driven primarily by higher funding spreads. Noninterest income increased $14 million primarily due to higher net referral fees. The allocated provision for credit losses decreased $27 million primarily due to a decrease in incurred loss estimates.

CB-Commercial average loans and leases HFI were essentially flat compared with the earlier period. Average commercial real estate loans decreased $648 million or 3.3%, while average commercial and industrial loans increased $622 million, or 1.9%.

CB-Commercial average total deposits increased $139 million, or 0.2%, compared to the earlier period. Average interest checking increased $805 million, or 9.4% and average money market and savings increased $758 million, or 4.9%, while average noninterest-bearing deposits declined $1.5 billion, or 4.4%.

~~Financial Services and Commercial Finance~~

FS&CF net income was $510 million for the nine months ended September 30, 2019, an increase of $72 million, or 16.4%, compared to the same period of the prior year. Segment net interest income increased $71 million primarily due to higher average loan growth. Noninterest income increased $52 million primarily due to higher revenue from client derivatives and managed account fees, investment commissions, and investment banking transactions, partially offset by declines in commercial mortgage banking income primarily due to a decline in revenue from net commercial mortgage servicing rights. The allocated provision for

credit losses increased $21 million primarily due to reserve rate changes driven by overall credit improvement in the earlier period. Noninterest expense increased $11 million primarily due to higher personnel expense, partially offset by lower allocated corporate expenses.

FS&CF average loans and leases HFI increased $2.4 billion, or 9.0%, compared to the earlier period. Average loans and leases HFI for Corporate Banking and Equipment Finance increased $2.0 billion, or 13.2%, and $531 million, or 18.8%, respectively. FS&CF average total deposits increased $376 million, or 1.3%, compared to the earlier period primarily driven by growth in average total deposits for Wealth and Retirement Services of $469 million, or 2.9%.

~~Client invested assets totaled $173.1 billion as of September 30, 2019, an increase of $5.3 billion, or 3.2%, compared to the earlier period.~~

~~Insurance Holdings~~

IH net income was $260 million for the nine months ended September 30, 2019, an increase of $83 million, or 46.9%, compared to the same period of the prior year. Noninterest income increased $201 million due to organic growth and the acquisition of Regions Insurance, which contributed $78 million. Noninterest expense increased $97 million primarily due to the acquisition of Regions Insurance and commissions on higher production.

~~Other, Treasury & Corporate~~

OT&C generated a net loss of $513 million for the nine months ended September 30, 2019, compared to a net loss of $134 million for the earlier period. Segment net interest income decreased $257 million primarily due to an increase in the net credit for funds provided to other operating segments, an increased net cost for long-term debt and short-term borrowings, and a decline in volume for short-term borrowings, partially offset by increased spreads on securities. Noninterest income decreased $90 million primarily due to lower hedge and client derivative income, income related to assets for certain post-employment benefits and income from SBIC private equity investments. The allocated provision for credit losses increased $11 million primarily due to an increase in the provision for PCI loans as a result of an allowance release in the earlier period. Noninterest expense increased $104 million due to merger-related charges in the current period, as well as higher personnel expense resulting from capitalized employee costs allocated to the segments in the current period and other sundry items, which were partially offset by lower regulatory charges. The benefit for income taxes increased $83 million primarily due to an increase in pre-tax loss, partially offset by a lower tax benefit from discrete items compared to the earlier period.

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled ~~$54.8~~$78.4 billion at ~~September 30, 2019,~~March 31, 2020, compared to ~~$45.6~~$74.7 billion at December 31, ~~2018.~~2019. The increase ~~in the securities portfolio~~ was due primarily ~~due~~ to ~~investing the proceeds from the sale of $4.3~~a $3.7 billion ~~in residential mortgage loans and an investment totaling approximately $5 billion~~increase in Agency ~~MBS to increase HQLA securities in anticipation of the merger closing.~~MBS.

As of ~~September 30, 2019,~~March 31, 2020, approximately ~~5.2%~~3.5% of the securities portfolio was variable rate, compared to ~~6.5%~~3.6% as of December 31, ~~2018.~~2019. The effective duration of the securities portfolio excluding certain non-agency MBS was ~~4.1~~3.4 years at ~~September 30, 2019,~~March 31, 2020, compared to ~~4.8~~4.7 years at December 31, ~~2018. The duration of the securities portfolio excludes certain non-agency MBS.~~2019.

U.S. Treasury, GSE and Agency MBS represented ~~98.2%~~98.9% of the total securities portfolio as of ~~September 30, 2019,~~March 31, 2020, compared to ~~97.3%~~98.7% as of the prior year end.

In the fourth quarter of 2019, approximately $7.2 billion in Agency MBS was sold and reinvested in similar assets to improve the portfolio run rate and ensure the appropriate mix of HQLA to meet future LCR requirements in anticipation of the merger closing. The sale is expected to incur a pre-tax loss of approximately $95 million upon final settlement and the reinvested assets will have a payback period of approximately 2.6 years.

Lending Activities

~~Loans~~The following tables summarize the loans and leases HFI ~~totaled $149.4~~portfolio for each of the last five quarters:


Table 6: Loans and Leases as of Period End
(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Commercial:
Commercial and industrial	$	149,161	$	130,180	$	64,324	$	63,693	$	61,978
CRE	27,532		26,832		17,080		16,976		16,718
Commercial construction	6,630		6,205		3,804		3,746		4,111
Lease financing	5,984		6,122		2,356		2,203		2,098
Consumer:
Residential mortgage	53,096		52,071		28,297		32,607		31,572
Residential home equity and direct	27,629		27,044		11,646		11,675		11,646
Indirect auto	25,146		24,442		11,871		11,756		11,506
Indirect other	10,980		11,100		6,590		6,453		6,017
Student	7,771		6,743		—		—		—
Credit card	5,300		5,619		3,058		3,056		2,970
PCI	—		3,484		387		421		441
Total loans and leases HFI	$	319,229	$	299,842	$	149,413	$	152,586	$	149,057

Total loans and leases held for investment were $319.2 billion at ~~September 30, 2019,~~March 31, 2020, compared to ~~$149.0~~$299.8 billion at December 31, ~~2018. Management continuously evaluates~~2019. In connection with the ~~composition~~adoption of the loan portfolio taking into consideration the current and expected market conditions, interest rate environment and risk profiles to optimize profitability. Based upon this evaluation, management may decide to focus efforts on growing or decreasing exposures in certain portfolios through both organic changes and portfolio acquisitions or sales. In this regard, management made the strategic decision to sell $4.3 billion of residential mortgageCECL, all loans during the third quarter of 2019. The sale resulted in a pre-tax benefit of $20 million for the quarter, which was composed of a $4 million gain on sale and a $16 million release from the allowance for loan losses.

Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loanspreviously in the ~~interest-only phase~~PCI portfolio became PCD loans and were ~~approximately $50 million~~transferred to their respective portfolios. The significant growth in the commercial and $64 million at September 30, 2019 and December 31, 2018, respectively. At September 30, 2019, approximately 100.0% of the interest-only balances will begin amortizing within the next three years comparedindustrial portfolio was primarily due to ~~95.9% at December 31, 2018.~~

~~The direct retail portfolio includes variable rate home equity lines and other~~draws on lines of credit whose rate typically reset on a monthly basis. Home equity lines generally require interest-only payments during the first 15 years after origination. After this initial period, the outstanding balance begins amortizing and requires the payment of both interest and principal. The following table presents additional information over variable rate lines of credit:by clients building liquidity in response to COVID-19.

52 Truist Financial Corporation

Table 6: Variable Rate Lines of Credit
Home Equity Lines Other Lines of Credit
(Dollars in millions) Sep 30, 2019 Dec 31, 2018 Sep 30, 2019 Dec 31, 2018
Total variable rate lines $ 6,672
$ 7,201
$ 1,080
$ 1,067
Amount in interest-only phase 5,384
5,730
978
949
Percent in interest-only phase that will begin amortizing within 3 years 11.1 % 10.3 % 13.4 % 15.9 %

The following table presents the ~~most recent~~ composition of average loans and ~~leases:~~leases for each of the last five quarters:


Table 7: Average Loans and Leases
For the Three Months Ended (Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Commercial:
Commercial and industrial	$	131,743	$	81,853	$	63,768	$	62,563	$	61,370
CRE	27,046		19,896		17,042		16,854		16,786
Commercial construction	6,409		4,506		3,725		3,894		4,119
Lease financing	6,070		3,357		2,260		2,122		2,021
Consumer:
Residential mortgage	52,993		34,824		28,410		32,066		31,370
Residential home equity and direct	27,564		15,810		11,650		11,687		11,681
Indirect auto	24,975		15,390		11,810		11,633		11,308
Indirect other	10,950		7,772		6,552		6,246		6,029
Student	7,787		1,825		—		—		—
Credit card	5,534		3,788		3,036		2,970		2,922
PCI	—		1,220		411		432		455
Total average loans and leases HFI	$	301,071	$	190,241	$	148,664	$	150,467	$	148,061

Table 7: Composition of Average Loans and Leases
For the Three Months Ended
(Dollars in millions)
Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018
Commercial:
Commercial and industrial $ 63,768
$ 62,563
$ 61,370
$ 60,553
$ 59,900
CRE 20,767
20,748
20,905
21,301
21,496
Lease financing 2,260
2,122
2,021
1,990
1,941
Retail:
Residential mortgage 28,410
32,066
31,370
31,103
30,500
Direct 11,468
11,506
11,493
11,600
11,613
Indirect 18,362
17,879
17,337
17,436
17,282
Revolving credit 3,218
3,151
3,110
3,070
2,947
PCI 411
432
455
486
518
Total average loans and leases HFI $ 148,664
$ 150,467
$ 148,061
$ 147,539
$ 146,197

Average loans and leases held for investment for the ~~third~~first quarter of 2020 were $301.1 billion, up $110.8 billion compared to the fourth quarter of 2019, ~~were $148.7 billion, down $1.8 billion or 4.8% annualized compared~~primarily due to the ~~second~~merged loans and the line draws in response to COVID-19. Excluding the impact from these items, average loans were down slightly due to a decline in residential mortgage loans as a result of transferring loans to held for sale in the fourth quarter of ~~2019. Excluding~~2019, partially offset by increases in indirect automobile loans and student loans.

COVID-19 Lending Activities

The CARES Act includes provisions that were designed to encourage financial institutions to practice prudent efforts to work with borrowers impacted by COVID-19. These modifications are generally not considered a TDR as disclosed in “Note 1. Basis of Presentation.” Truist payment relief assistance includes forbearance, deferrals, extension and re-aging programs, along with certain other modification strategies. Through the ~~sale~~end of ~~$4.3~~April, Truist had the following client accomodation activity in response to COVID-19::

•Commercial - approximately 23,000 accommodations requests with an aggregate carrying value totaling $25.1 billion.

•Consumer - approximately 463,000 accommodations requests with an aggregate carrying value totaling $12.6 billion.

•Credit card - approximately 37,000 accommodations requests with an aggregate carrying value totaling $0.2 billion.

A significant portion of the borrowers that were provided payment relief were current as of the date that the relief was initially provided.

The CARES Act also created the Paycheck Protection Program, which temporarily expands the Small Business Administration’s business loan guarantee program. Truist has obtained SBA authorizations for clients of approximately $12.6 billion, of ~~residential mortgages~~which $9.1 billion was funded through the end of April.

The following table provides a summary of exposure to industries that management believes are most vulnerable in the ~~third quarter, average~~current environment. These selected industry exposures represent 8.9% of loans held for investment ~~increased 6.5% annualized compared~~at March 31, 2020. Truist is actively managing these portfolios and will continue to ~~the second quarter~~make underwriting or risk acceptance adjustments as appropriate. In addition, management is closely monitoring its leveraged lending portfolio which comprised 3.3% of ~~2019.~~

~~Average commercial and industrial loans increased $1.2 billion driven by strong growth in mortgage warehouse lending, premium finance, corporate banking and equipment finance.~~

~~Average residential mortgage~~ loans held for investment ~~decreased $3.7 billion primarily due to~~at March 31, 2020. Certain leveraged lending loans would also be included in the ~~sale of $4.3 billion of residential mortgage loans. Excluding the sale, average residential mortgage loans increased 7.4% annualized compared to the prior quarter.~~selected industry credit exposures.

~~Average indirect retail loans increased $483 million. The increase was across all categories of indirect lending. Growth was led by power sports, recreational and automobile lending.~~



Table 8: Selected Credit Exposures
March 31, 2020 (Dollars in billions)	Outstandings		Percentage of Loans HFI
Hotels, resorts and cruise lines	$	6.6	2.1	%
Oil and gas portfolio	5.9		1.8
Senior care	5.6		1.8
Acute care facilities	4.9		1.5
Sensitive retail	2.9		0.9
Restaurants	2.5		0.8
Total	$	28.4	8.9	%

Leveraged lending (inclusive of above industries)	$10.5		3.3	%

Truist Financial Corporation 53

Asset Quality

The following tables summarize asset quality information for each of the ~~past~~last five quarters:



Table 9: Asset Quality

(Dollars in millions)			Mar 31, 2020				Dec 31, 2019				Sep 30, 2019				Jun 30, 2019				Mar 31, 2019
NPAs:
NPLs:
Commercial and industrial			$	443			$	212			$	172			$	193			$	196
CRE			18				10				27				31				73
Commercial construction	2				—				2				2				2
Lease financing			27				8				2				2				1
Residential mortgage			248				55				106				104				121
Residential home equity and direct			170				67				56				54				53
Indirect auto			125				100				81				74				79
Indirect other	1				2				1				1				1

Total NPLs HFI			1,034				454				447				461				526
Loans held for sale			41				107				—				—				—
Total nonaccrual loans and leases			1,075				561				447				461				526
Foreclosed real estate			63				82				33				36				33
Other foreclosed property			39				41				29				26				25
Total nonperforming assets			$	1,177			$	684			$	509			$	523			$	584
TDRs:
Performing TDRs:
Commercial and industrial			$	65			$	47			$	69			$	84			$	63
CRE			7				6				6				7				8
Commercial construction	36				37				1				1				1
Lease financing	1				—				—				—				—
Residential mortgage			513				470				570				581				669
Residential home equity and direct			66				51				54				53				54
Indirect auto			350				333				324				311				302
Indirect other	5				5				4				4				4
Student	1				—				—				—				—
Credit card			35				31				29				29				29
Total performing TDRs			$	1,079			$	980			$	1,057			$	1,070			$	1,130
Nonperforming TDRs	121				82				115				135				178
Total TDRs	$	1,200			$	1,062			$	1,172			$	1,205			$	1,308
Loans 90 days or more past due and still accruing:
Commercial and industrial			$	5			$	1			$	—			$	—			$	—
CRE			1				—				—				—				—


Residential mortgage			610				543				347				350				377
Residential home equity and direct			10				9				8				11				8
Indirect auto			11				11				9				7				5
Indirect other	2				2				—				—				—
Student	1,068				188				—				—				—
Credit card			41				22				15				13				13
PCI			—				1,218				24				26				28
Total loans 90 days or more past due and still accruing			$	1,748			$	1,994			$	403			$	407			$	431
Loans 30-89 days past due and still accruing: (1)
Commercial and industrial			$	262			$	94			$	34			$	32			$	36
CRE			8				5				1				3				3
Commercial construction	16				1				—				—				—
Lease financing			8				2				1				5				3
Residential mortgage			679				498				432				480				478
Residential home equity and direct			156				122				56				60				69
Indirect auto			521				560				380				354				281
Indirect other	74				85				43				39				35
Student	593				650				—				—				—
Credit card			57				56				29				26				25
PCI			—				140				16				17				18
Total loans 30-89 days past due and still accruing			$	2,374			$	2,213			$	992			$	1,016			$	948

Table 8: Asset Quality
(Dollars in millions) Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018
NPAs:
NPLs:
Commercial and industrial $ 172
$ 193
$ 196
$ 200
$ 238
CRE 29
33
75
65
46
Lease financing 2
2
1
3
6
Residential mortgage 106
104
121
119
120
Direct 56
54
53
53
55
Indirect 82
75
80
82
72
Total NPLs HFI 447
461
526
522
537
Foreclosed real estate 33
36
33
35
39
Other foreclosed property 29
26
25
28
25
Total nonperforming assets (1) $ 509
$ 523
$ 584
$ 585
$ 601
Performing TDRs:
Commercial and industrial $ 69
$ 84
$ 63
$ 65
$ 56
CRE 7
8
9
10
12
Residential mortgage 570
581
669
656
643
Direct 52
53
54
55
56
Indirect 328
315
306
305
295
Revolving credit 31
29
29
28
28
Total performing TDRs (2)(3) $ 1,057
$ 1,070
$ 1,130
$ 1,119
$ 1,090
Loans 90 days or more past due and still accruing:
Residential mortgage $ 347
$ 350
$ 377
$ 405
$ 367
Direct 7
10
7
7
6
Indirect 9
7
5
6
6
Revolving credit 16
14
14
14
12
PCI 24
26
28
30
40
Total loans 90 days or more past due and still accruing $ 403
$ 407
$ 431
$ 462
$ 431
Loans 30-89 days past due:
Commercial and industrial $ 34
$ 32
$ 36
$ 34
$ 35
CRE 1
3
3
5
4
Lease financing 1
5
3
1
1
Residential mortgage 432
480
478
456
510
Direct 54
58
67
61
59
Indirect 423
393
316
436
418
Revolving credit 31
28
27
28
27
PCI 16
17
18
23
21
Total loans 30-89 days past due $ 992
$ 1,016
$ 948
$ 1,044
$ 1,075

(1) Excludes loans held for sale.


~~(1)~~	54 Truist Financial Corporation Sales of nonperforming loans totaled $42 million, $48 million, $30 million, $30 million and $20 million for the quarter ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively.


~~(2)~~	Excludes TDRs that are nonperforming totaling $115 million, $135 million, $178 million, $176 million and $176 million at September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively. These amounts are included in total nonperforming assets.


~~(3)~~	Sales of performing TDRs, which were primarily residential mortgage loans, totaled $39 million, $120 million, $33 million, $15 million and $34 million for the quarter ended September 30, 2019, June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018, respectively.

Nonperforming assets totaled ~~$509 million~~$1.2 billion at ~~September 30, 2019, down $14~~March 31, 2020, up $493 million compared to ~~June 30, 2019.~~December 31, 2019 due almost entirely to the adoption of CECL, which resulted in the discontinuation of the pool-level accounting for PCI loans and replaced that with a loan-level evaluation for nonaccrual status. As of December 31, 2019, there was approximately $500 million of PCI loans that would have been classified as nonperforming had we evaluated accrual status on a loan level basis. Nonperforming loans and leases held for investment represented ~~0.30%~~0.32% of loans and leases held for investment, ~~unchanged~~up 17 basis points compared to ~~June 30,~~December 31, 2019, but down three basis points from March 31, 2019.

Performing TDRs were ~~down $13~~up $99 million during the ~~third~~first quarter, primarily in residential mortgage loans, commercial and industrial loans and ~~residential mortgage loans, which was partially offset by an increase in~~ indirect automobile loans.

Loans 90 days or more past due and still accruing totaled ~~$403~~$1.7 billion at March 31, 2020, down $246 million ~~at September 30, 2019, down slightly~~ compared to the prior quarter. The decline was due to loans that transitioned into nonaccrual status as a result of the change in pool level accounting described above, partially offset by an increase in government guaranteed student loans. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was ~~0.27%~~0.55% at ~~September 30, 2019, unchanged compared to~~March 31, 2020, down 11 basis points from the prior quarter. Excluding government guaranteed and PCI 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 ~~September 30, 2019, also unchanged~~March 31, 2020, up one basis point from ~~the prior quarter.~~0.03% at December 31, 2019.

Loans 30-89 days past due and still accruing totaled ~~$992 million~~$2.4 billion at ~~September 30, 2019, down $24~~March 31, 2020, up $161 million compared to the prior ~~quarter, primarily due to a decline~~quarter. The increase was largely in commercial and industrial loans and residential mortgage loans, ~~which was~~ partially offset by ~~an expected seasonal increase~~a decrease in ~~indirect automobile lending.~~student loans. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases was 0.74% at March 31, 2020, unchanged from the prior quarter.

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 8.9. 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 4.~~"Note 5. Loans and ~~ACL herein~~ACL" for additional disclosures related to these potential problem loans.


Table 10: Asset Quality Ratios

As of / For the Three Months Ended	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.74	%	0.74	%	0.66	%	0.67	%	0.64	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.55		0.66		0.27		0.27		0.29
NPLs as a percentage of loans and leases HFI	0.32		0.15		0.30		0.30		0.35
Nonperforming loans and leases as a percentage of loans and leases (1)	0.33		0.18		0.30		0.30		0.35
NPAs as a percentage of:
Total assets (1)	0.23		0.14		0.22		0.23		0.26
Loans and leases HFI plus foreclosed property	0.36		0.19		0.34		0.34		0.39
Net charge-offs as a percentage of average loans and leases HFI	0.36		0.40		0.41		0.38		0.40
ALLL as a percentage of loans and leases HFI	1.63		0.52		1.05		1.05		1.05
Ratio of ALLL to:
Net charge-offs	4.76x		2.03x		2.59x		2.80x		2.62x
NPLs	5.04x		3.41x		3.52x		3.46x		2.97x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI (2)	0.04	%	0.03	%	0.04	%	0.04	%	0.04	%

Table 9: Asset Quality Ratios
As of / For the Three Months Ended Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI 0.66 % 0.67 % 0.64 % 0.70 % 0.73 %
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI 0.27
0.27
0.29
0.31
0.29
NPLs as a percentage of loans and leases HFI 0.30
0.30
0.35
0.35
0.37
NPAs as a percentage of:
Total assets 0.22
0.23
0.26
0.26
0.27
Loans and leases HFI plus foreclosed property 0.34
0.34
0.39
0.39
0.41
Net charge-offs as a percentage of average loans and leases HFI 0.41
0.38
0.40
0.38
0.35
ALLL as a percentage of loans and leases HFI 1.05
1.05
1.05
1.05
1.05
Ratio of ALLL to:
Net charge-offs 2.59x
2.80x
2.62x
2.76x
3.05x
NPLs 3.52x
3.46x
2.97x
2.99x
2.86x
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI (1) 0.04 % 0.04 % 0.04 % 0.04 % 0.04 %

Applicable ratios are annualized.

The following table provides further details regarding the payment status of TDRs outstanding at ~~September 30, 2019:~~March 31, 2020:


Table 13: Payment Status of TDRs (1)
March 31, 2020 (Dollars in millions)	Current						Past Due 30-89 Days						Past Due 90 Days Or More		Total
Performing TDRs:
Commercial:
Commercial and industrial	$	64	98.5	%	$	1	1.5	%	$	—	—	%	$	65
CRE	7		100.0		—		—		—		—		7
Commercial construction	36		100.0		—		—		—		—		36
Lease financing	1		100.0		—		—		—		—		1
Consumer:
Residential mortgage	272		53.0		87		17.0		154		30.0		513
Residential home equity and direct	64		97.0		2		3.0		—		—		66
Indirect auto	295		84.3		55		15.7		—		—		350
Indirect other	5		100.0		—		—		—		—		5
Student	1		100.0		—		—		—		—		1
Credit card	29		82.9		4		11.4		2		5.7		35
Total performing TDRs	774		71.7		149		13.8		156		14.5		1,079
Nonperforming TDRs	75		61.9		6		5.0		40		33.1		121
Total TDRs	$	849	70.8		$	155	12.9		$	196	16.3		$	1,200

(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.

Truist Financial Corporation 57

Table 12: Payment Status of TDRs (1)
September 30, 2019
(Dollars in millions) Current Past Due 30-89 Days Past Due 90 Days Or More Total
Performing TDRs:

Commercial:
Commercial and industrial $ 69
100.0 % $ —
— % $ —
— % $ 69
CRE 7
100.0
—
—
—
—
7
Retail:

Residential mortgage 313
54.9
105
18.4
152
26.7
570
Direct 49
94.2
3
5.8
—
—
52
Indirect 270
82.3
58
17.7
—
—
328
Revolving credit 27
87.1
3
9.7
1
3.2
31
Total performing TDRs 735
69.5
169
16.0
153
14.5
1,057
Nonperforming TDRs 49
42.6
10
8.7
56
48.7
115
Total TDRs $ 784
66.9
$ 179
15.3
$ 209
17.8
$ 1,172


~~(1)~~	~~Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.~~

ACL

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



Table 14: Activity in ACL

Quarters ended (Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Balance, beginning of period	$	1,889	$	1,653	$	1,689	$	1,659	$	1,651
CECL adoption - impact to retained earnings before tax	2,762		—		—		—		—
CECL adoption - reserves on PCD assets	378		—		—		—		—
Provision for credit losses	893		171		117		172		155

Charge-offs:
Commercial and industrial	(39)		(23)		(28)		(22)		(17)
CRE	(1)		(5)		(2)		(18)		(8)
Commercial construction	(3)		—		—		—		—
Lease financing	(2)		(9)		(1)		—		(1)
Residential mortgage	(11)		(8)		(3)		(5)		(5)
Residential home equity and direct	(68)		(25)		(24)		(24)		(20)
Indirect auto	(142)		(107)		(92)		(79)		(92)
Indirect other	(18)		(19)		(14)		(12)		(17)
Student	(8)		—		—		—		—
Credit card	(53)		(37)		(25)		(23)		(24)
PCI	—		—		—		—		—
Total charge-offs	(345)		(233)		(189)		(183)		(184)
Recoveries:
Commercial and industrial	17		6		5		8		6
CRE	—		—		3		2		—
Commercial construction	1		1		—		1		1
Lease financing	—		—		1		—		—
Residential mortgage	2		1		—		—		1
Residential home equity and direct	15		10		6		8		6
Indirect auto	23		13		12		14		13
Indirect other	7		5		3		5		4
Student	—		—		—		—		—
Credit card	8		5		6		3		6
Total recoveries	73		41		36		41		37
Net charge-offs	(272)		(192)		(153)		(142)		(147)
Other	(39)		257		—		—		—
Balance, end of period	$	5,611	$	1,889	$	1,653	$	1,689	$	1,659
ALLL (excluding PCD / PCI loans)	$	4,880	$	1,541	$	1,565	$	1,587	$	1,552
ALLL for PCD / PCI loans	331		8		8		8		9
RUFC	400		340		80		94		98
Total ACL	$	5,611	$	1,889	$	1,653	$	1,689	$	1,659

Table 13: Activity in ACL
For the Three Months Ended For the Nine Months Ended
(Dollars in millions) Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 2019 2018
Balance, beginning of period $ 1,689
$ 1,659
$ 1,651
$ 1,648
$ 1,640
$ 1,651
$ 1,609
Provision for credit losses (excluding PCI loans) 117
172
156
147
141
445
436
Provision (benefit) for PCI loans —
—
(1 ) (1 ) (6 ) (1 ) (16 )
Charge-offs:

Commercial and industrial (28 ) (22 ) (17 ) (18 ) (28 ) (67 ) (74 )
CRE (2 ) (18 ) (8 ) (5 ) —
(28 ) (8 )
Lease financing (1 ) —
(1 ) (1 ) (1 ) (2 ) (3 )
Residential mortgage (3 ) (5 ) (5 ) (8 ) (4 ) (13 ) (13 )
Direct (22 ) (22 ) (18 ) (18 ) (17 ) (62 ) (53 )
Indirect (106 ) (91 ) (109 ) (108 ) (94 ) (306 ) (283 )
Revolving credit (27 ) (25 ) (26 ) (22 ) (20 ) (78 ) (62 )
PCI —
—
—
—
(2 ) —
(2 )
Total charge-offs (189 ) (183 ) (184 ) (180 ) (166 ) (556 ) (498 )
Recoveries:

Commercial and industrial 5
8
6
7
13
19
32
CRE 3
3
1
4
1
7
4
Lease financing 1
—
—
—
—
1
1
Residential mortgage —
—
1
1
—
1
1
Direct 6
7
6
5
6
19
18
Indirect 15
19
17
15
15
51
47
Revolving credit 6
4
6
5
4
16
14
Total recoveries 36
41
37
37
39
114
117
Net charge-offs (153 ) (142 ) (147 ) (143 ) (127 ) (442 ) (381 )
Balance, end of period $ 1,653
$ 1,689
$ 1,659
$ 1,651
$ 1,648
$ 1,653
$ 1,648
ALLL (excluding PCI loans) $ 1,565
$ 1,587
$ 1,553
$ 1,549
$ 1,528

ALLL for PCI loans 8
8
8
9
10

RUFC 80
94
98
93
110

Total ACL $ 1,653
$ 1,689
$ 1,659
$ 1,651
$ 1,648

The ACL consists of the ALLL, which is presented separately on the Consolidated Balance Sheets, and the RUFC, which is included in ~~other~~Other liabilities on the Consolidated Balance Sheets. The ACL totaled ~~$1.7~~$5.6 billion at ~~September 30, 2019,~~March 31, 2020, up ~~$2 million~~$3.7 billion compared to the prior quarter. The increase in the allowance for credit losses was primarily due the adoption of CECL. Upon adoption, the Company recorded a $3.1 billion increase in the allowance for credit losses, including $2.8 billion that was charged to retained earnings before tax, and $378 million related to the gross up for PCD loans. The remaining increase in the allowance for credit losses primarily reflects deteriorated economic conditions as well as significant loan growth from clients drawing down their lines of credit to build liquidity in response to COVID-19. The allowance for credit losses includes $5.2 billion for loans and leases and $400 million for the reserve for unfunded commitments. As of March 31, 2020, the allowance for loan and lease losses was 1.63% of loans and leases held for investment.

The allowance for loan and lease losses was 5.04 times nonperforming loans and leases held for investment, compared to 3.41 times at December 31, ~~2018.~~2019. At March 31, 2020, the allowance for loan and lease losses was 4.76 times annualized net charge-offs, compared to 2.03 times at December 31, 2019.

58 Truist Financial Corporation

Net charge-offs during the ~~third~~first quarter totaled ~~$153~~$272 million, up ~~$11~~$80 million compared to the prior quarter. The increase was largely due to the impact of a full quarter from the Merger. As a percentage of average loans and leases, annualized net charge-offs were ~~0.41%~~0.36%, ~~up three~~down four basis points compared to the prior quarter.

The allowance for loan and lease losses, excluding the allowance for PCI loans, was $1.6 billion, down $22 million compared to the prior quarter. The decrease in the allowance for loan and lease losses was primarily due to the sale of residential mortgage loans during the third quarter. As of September 30, 2019, the total allowance for loan and lease losses was 1.05% of loans and leases held for investment, unchanged compared to June 30, 2019.

The allowance for loan and lease losses was 3.52 times nonperforming loans and leases held for investment, compared to 3.46 times at June 30, 2019. At September 30, 2019, the allowance for loan and lease losses was 2.59 times annualized net charge-offs, compared to 2.80 times at June 30, 2019.

The following table presents an allocation of the ~~ALLL at the periods shown. This allocation of the ALLL is calculated on an approximate basis and is not necessarily indicative of future losses or allocations.~~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, 2020						December 31, 2019

(Dollars in millions)	Amount		% Loans in each category		Amount		% Loans in each category
Commercial and industrial	$	1,813	46.7	%	$	560	43.4	%
CRE	299		8.6		150		8.9
Commercial construction	88		2.1		52		2.1
Lease financing	79		1.9		10		2.0
Residential mortgage	427		16.6		176		17.4
Residential home equity and direct	607		8.7		107		9.0
Indirect auto	1,192		7.9		304		8.2
Indirect other	213		3.4		60		3.7
Student	146		2.4		—		2.2
Credit card	347		1.7		122		1.9
PCI	—		—		8		1.2
Total ALLL	5,211		100.0	%	1,549		100.0	%
RUFC	400				340
Total ACL	$	5,611			$	1,889

Table 14: Allocation of ALLL by Category
September 30, 2019 December 31, 2018
(Dollars in millions) Amount % Loans in each category Amount % Loans in each category
Commercial and industrial $ 576
42.9 % $ 546
41.5 %
CRE 196
14.0
190
14.1
Lease financing 10
1.6
11
1.4
Residential mortgage 199
18.9
232
21.1
Direct 100
7.7
97
7.8
Indirect 362
12.4
356
11.7
Revolving credit 122
2.2
117
2.1
PCI 8
0.3
9
0.3
Total ALLL 1,573
100.0 % 1,558
100.0 %
RUFC 80

93

Total ACL $ 1,653

$ 1,651

~~BB&T~~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. ~~BB&T~~Truist also receives notification when the first lien holder, whether ~~BB&T~~Truist or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, ~~BB&T~~Truist obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.

~~BB&T~~Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by ~~BB&T.~~Truist. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, ~~BB&T~~Truist estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, ~~BB&T~~Truist also provides additional reserves for second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of ~~September 30, 2019, BB&T~~March 31, 2020, Truist held or serviced the first lien on ~~29.4%~~30.9% of its second lien positions.

Truist Financial Corporation 59

Other Assets

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


Table 16: Other Assets as of Period End
(Dollars in millions)	March 31, 2020		December 31, 2019

Bank-owned life insurance	$	6,413	$	6,383
Tax credit and other private equity investments	5,617		5,448
Pension assets	3,915		3,579
Accounts receivable	3,168		2,418
Derivative assets	4,040		2,053
Lease assets - leased assets and related assets	1,726		1,897
ROU assets	1,773		1,823
Accrued income	1,879		1,807
Prepaid expenses	1,281		1,254
Structured real estate	813		987
Equity securities at fair value	641		817
FHLB stock	1,415		764
Other	1,071		2,602
Total other assets	$	33,752	$	31,832

Funding Activities

Deposits

~~Deposits totaled $162.3 billion at September 30, 2019, an increase of $1.1 billion from December 31, 2018, primarily due to an increase in foreign office deposits.~~

The following table presents deposits for each of the ~~most recent composition~~last five quarters:


Table 17: Deposits as of Period End
(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Noninterest-bearing deposits	$	97,618	$	92,405	$	52,667	$	52,458	$	53,021
Interest checking	92,950		85,492		27,723		28,021		28,028
Money market and savings	124,072		120,934		64,454		63,972		63,739
Time deposits	35,539		35,896		16,526		15,070		14,978
Foreign office deposits - interest-bearing	—		—		910		—		—
Total deposits	$	350,179	$	334,727	$	162,280	$	159,521	$	159,766

Deposits totaled $350.2 billion at March 31, 2020, an increase of $15.5 billion from December 31, 2019. Growth in deposits reflects clients retaining a portion of their credit line draws in the bank and solid growth in all non-time deposit products.

The following table presents average ~~deposits:~~deposits for each of the last five quarters:


Table 18: Average Deposits
Three Months Ended (Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
Noninterest-bearing deposits	$	93,135	$	64,485	$	52,500	$	52,680	$	52,283
Interest checking	85,008		43,246		27,664		27,708		27,622
Money market and savings	120,936		79,903		64,920		63,394		63,325
Time deposits	35,570		23,058		16,643		15,730		16,393
Foreign office deposits - interest-bearing	—		24		265		379		422
Total average deposits	$	334,649	$	210,716	$	161,992	$	159,891	$	160,045

Table 15: Composition of Average Deposits
Three Months Ended
(Dollars in millions)
Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018
Noninterest-bearing deposits $ 52,500
$ 52,680
$ 52,283
$ 53,732
$ 54,174
Interest checking 27,664
27,708
27,622
26,921
26,655
Money market and savings 64,920
63,394
63,325
62,261
62,957
Time deposits 16,643
15,730
16,393
14,682
13,353
Foreign office deposits - interest-bearing 265
379
422
246
132
Total average deposits $ 161,992
$ 159,891
$ 160,045
$ 157,842
$ 157,271

Average deposits for the ~~third~~first quarter of 2020 were ~~$162.0~~$334.6 billion, up ~~$2.1~~$123.9 billion compared to the prior ~~quarter. Average money market and savings deposits increased $1.5 billion and average time deposits increased $913 million~~quarter, primarily due to ~~increases in commercial balances.~~the merged deposits.

Noninterest-bearing deposits represented ~~32.4%~~27.8% of total average deposits for the ~~third~~first quarter of 2020, compared to ~~32.9%~~30.6% for the prior quarter and ~~34.4%~~32.7% for the ~~same quarter a~~prior year ~~ago.~~quarter. The cost of average total deposits was ~~0.67%~~0.51% for the ~~third~~first quarter, down ~~one~~six basis ~~point~~points compared to the prior quarter. The cost of average interest-bearing deposits was ~~0.99%~~0.70% for the ~~third~~first quarter, down ~~three~~12 basis points compared to the prior quarter.

60 Truist Financial Corporation

Borrowings

At ~~September 30, 2019,~~March 31, 2020, short-term borrowings totaled ~~$10.4~~$12.7 billion, ~~an increase~~a decrease of ~~$5.2~~$5.5 billion compared to December 31, ~~2018. Short-term borrowings fluctuate based on the Company's funding needs.~~2019, due largely to a decrease of $4.7 billion in short-term FHLB advances. Average short-term borrowings were ~~$8.3~~$18.9 billion, or ~~3.6%~~4.7% of total funding infor the ~~third~~first quarter ~~of 2019~~2020, as compared to ~~$6.0~~$5.6 billion, or ~~2.7% in~~3.0% for the ~~same period of 2018.~~prior year quarter.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by ~~BB&T~~Truist and ~~Branch~~Truist Bank. Long-term debt totaled ~~$25.5~~$65.7 billion at ~~September 30, 2019,~~March 31, 2020, an increase of ~~$1.8~~$24.3 billion compared to December 31, ~~2018. The~~2019, as management took actions to increase ~~is primarily due~~liquidity to ~~BB&T~~meet potential funding needs. These actions included an increase of $20.0 billion in long-term FHLB advances, and issuances of ~~$3.5~~$2.5 billion of senior notes with interest rates from 1.25% to 1.50% maturing in 2023 to 2025, $500 million in floating rate senior notes maturing in 2023 and ~~$650 million~~$1.3 billion of subordinated notes ~~and Branch Bank issuances~~with an interest rate of 2.25% maturing in 2030. These increases were partially offset by the redemption of $750 million of ~~subordinated notes; partially offset by the maturities of $1.8 billion of~~ senior notes ~~issued by Branch Bank and $1.6 billion~~during the first quarter of ~~senior notes issued by BB&T.~~2020. The average cost of long-term debt was ~~3.35%~~2.34% for the ~~nine~~three months ended ~~September 30, 2019, up 57~~March 31, 2020, down 96 basis points compared to the same period in ~~2018.~~

2019. FHLB advances represented ~~6.4%~~36.8% of total outstanding long-term debt at ~~September 30, 2019,~~March 31, 2020, compared to ~~7.4%~~10.0% at December 31, ~~2018. See Note 9. Long-Term Debt for additional disclosures.~~2019.

During the second quarter of 2020, Truist announced the redemption of $750 million of fixed rate and $300 million of floating rate medium term notes with a maturity date in June 2020.

Shareholders' Equity

Total shareholders' equity was ~~$32.3~~$66.1 billion at ~~September 30, 2019, an increase~~March 31, 2020, a decrease of ~~$2.1 billion~~$497 million from December 31, ~~2018. BB&T issued $1.7~~2019. The decrease in shareholders’ equity includes $2.1 billion related to the adoption of CECL and $679 million for common and preferred ~~stock during the quarter and redeemed a similar amount from two higher-cost issuances. In connection with the redemptions,~~dividends, which was partially offset by $1.1 billion in net income available to common shareholders ~~was reduced by $46 million to recognize the difference in the redemption price and the carrying value. Other significant changes include net income of $2.5 billion~~ and an increase of $1.7 billion in ~~AOCI~~AOCI. In addition, Truist redeemed $500 million of ~~$689 million, which was partially offset by a decrease~~its Series K preferred stock during the first quarter of ~~$1.1 billion for common and preferred dividends. BB&T's~~2020. Truist's book value per common share at ~~September 30, 2019~~March 31, 2020 was ~~$38.07,~~$45.49, compared to ~~$35.46~~$45.66 at December 31, ~~2018.~~2019.

Risk Management

~~BB&T has~~Truist maintains a strong and consistent risk culture, based on established risk values, which promotes predictable and consistent performance within an environment of open communication and effective challenge. The strong culture influences all associates in the organization daily and helps them evaluate whether risks are acceptable or unacceptable while making decisions that balance quality, profitability and growth appropriately. BB&T's effectivecomprehensive risk management framework ~~establishes an environment which enables it~~supported by people, processes and systems to ~~achieve superior performance relative~~identify, measure, monitor, manage and report significant risks arising from its exposures and business activities. Effective risk management involves appropriately managing risk to ~~peers, ensures~~optimize risk and return, and operate in a safe and sound manner while ensuring compliance with applicable laws and regulations. The Company’s risk management framework is designed to ensure that ~~BB&T~~business strategies and objectives are executed in alignment with its risk appetite.

Truist is ~~viewed among~~committed to fostering a culture that supports transparency and escalation of risks across the ~~safest~~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 ~~banks~~ethics guides the Company’s decision making and ~~assures the operational freedom~~informs teammates on how to act ~~on opportunities.~~in the absence of specific guidance.

~~BB&T ensures that there is~~Truist seeks an appropriate return for the ~~amount of~~ risk taken ~~and that the expected return is~~ in ~~line with~~ its ~~strategic objectives and~~ business ~~plan.~~operations. Risk-taking activities are evaluated and prioritized to identify those that present attractive risk-adjusted returns, while preserving asset ~~value. BB&T only undertakes risks that are understood~~value and ~~can be managed effectively. By managing risk well, BB&T ensures sufficient capital is available to maintain and grow core business operations in a safe and sound manner.~~capital.

~~Regardless of financial gain or loss to the Company, associates are held accountable if they do not follow the established risk management policies and procedures.~~ Compensation decisions take into account ~~an associate's~~a teammate's adherence to, and successful implementation of, ~~BB&T's~~Truist's risk ~~values.~~values and associated policies and procedures. The Company's compensation structure supports ~~the Company's~~its core values and sound risk management practices in an effort to promote judicious risk-taking behavior.

~~BB&T's risk culture encourages transparency and open dialogue between all levels in~~Truist employs a comprehensive change management program to manage the ~~performance of organizational functions, such as the development, marketing and implementation of a product or service.~~

~~For the merger of equals,~~risks associated with integrating heritage BB&T and ~~SunTrust are utilizing a comprehensive change risk management program to ensure appropriate management of the risks related to merging and integrating the two companies.~~heritage SunTrust. The Board ~~of Directors~~ and Executive ~~Management~~Leadership oversee the change ~~risk~~ management program, which is designed to ensure key decisions are reviewed and that there is appropriate oversight of integration ~~risks occurs. The~~activities.

Refer to Truist's Annual Report on Form 10-K for the year ended December 31, 2019 for additional disclosures under the section titled "Risk Management."

Market risk management ~~organizations~~

Market risk is the risk to current or anticipated earnings, capital or economic value arising from changes in the market value of ~~BB&T~~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 ~~SunTrust~~commodity prices.

Truist Financial Corporation 61

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 BUs. 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 ~~engaged~~to minimize adverse effects from changes in market risk ~~oversight~~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 (other than trading)

As a financial institution, Truist is exposed to interest rate risk both on its assets and on its liabilities. Since interest rate changes are out of the ~~merger integration planning.~~ control of any private sector institution, Truist actively manages its interest rate risk exposure through the strategic repricing of its assets and liabilities, taking into account the volumes, maturities and mix, with the goal of keeping net interest margin as stable as possible. Truist primarily uses three methods to measure and monitor its interest rate risk: (i) simulations of possible changes to net interest income over the next two years based on gradual changes in interest rates; (ii) analysis of interest rate shock scenarios; and (iii) analysis of economic value of equity based on changes in interest rates.

The Company’s simulation model takes into account assumptions related to prepayment trends, using a combination of market data and internal historical experiences for deposits and loans, as well as scheduled maturities and payments and the expected outlook for the economy and interest rates. These assumptions are reviewed and adjusted monthly to reflect changes in current interest rates compared to the rates applicable to Truist’s assets and liabilities. The model also considers Truist's current and prospective liquidity position, current balance sheet volumes and projected growth and/or contractions, accessibility of funds for short-term needs and capital maintenance.

Deposit betas are an important assumption in the interest rate risk ~~oversight process provides comprehensive~~modeling process. Truist applies an average deposit beta (the sensitivity of deposit rate changes relative to market rate changes) of approximately 55% to its non-maturity interest-bearing deposit accounts for determining its interest rate sensitivity. Non-maturity, interest-bearing deposit accounts include interest checking accounts, savings accounts and money market accounts that do not have a contractual maturity. Truist also regularly conducts sensitivity analyses on other key variables, including noninterest-bearing deposits, to determine the impact they could have on the Company’s interest rate risk ~~management reporting and assessments~~position. The predictive value of the ~~activities underway by~~simulation model depends upon the ~~companies. The change risk teams, risk oversight teams and Executive Management collectively provide a comprehensive framework~~accuracy of the assumptions, but management believes that it provides helpful information for the management ~~control~~of interest rate risk.

The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next 12 months assuming a gradual change in interest rates as described below.




Table 19: Interest Sensitivity Simulation Analysis
Interest Rate Scenario													Annualized Hypothetical Percentage Change in Net Interest Income
Linear Change in Prime Rate (bps)	Prime Rate
			Mar 31, 2020			Mar 31, 2019			Mar 31, 2020			Mar 31, 2019
Up 100	4.25	%		6.50	%		2.56	%		1.04	%
Up 50	3.75			6.00			2.00			0.64
No Change	3.25			5.50			—			—
Down 25	3.00			5.25			(2.11)			N/A
Down 50 (1)	2.75			5.00			(3.86)			(1.58)

(1) The Down 50 rates are floored at one basis point and ~~oversight~~may not reflect Down 50 basis points for all rate indices.

Rate sensitivity increased compared to the prior periods, primarily driven by loan and deposit mix changes related to the Merger and recent activity, increased fixed rate funding, and increased noninterest-bearing deposits

Truist has established parameters related to interest rate sensitivity measures that prescribe a maximum impact on net interest income under different interest rate scenarios that would result in an escalation to the Board. The following parameters and interest rate scenarios are considered Truist's primary measures of interest rate risk:

•Maximum impact on net interest income of 7.5% for the next 12 months assuming a 25 basis point change in interest rates each quarter for four quarters; and a

•Maximum impact on net interest income of 10% for an immediate 100 basis point parallel change in rates.

62 Truist Financial Corporation

This interest rate shock analysis is designed to create an outer bound of acceptable interest rate risk.

Truist also uses an EVE analysis to focus on longer-term projected changes in asset and liability values given potential changes in interest rates. This measure allows Truist to analyze interest rate risk that falls outside the net interest income simulation period. The EVE model is a discounted cash flow of the ~~merger~~portfolio of assets, liabilities and derivative instruments. The difference in the present value of assets minus the present value of liabilities is defined as EVE.

The following table shows the effect that the indicated changes in interest rates would have on EVE:


Table 20: EVE Simulation Analysis
Change in Interest Rates (bps)	Hypothetical Percentage Change in EVE
			Mar 31, 2020			Mar 31, 2019

Up 100	4.8	%		1.1	%
No Change	—			—

Down 100	(10.7)			(11.0)

Truist uses financial instruments including derivatives to ~~prepare~~manage interest rate risk related to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. Truist also uses derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of March 31, 2020, Truist had derivative financial instruments outstanding with notional amounts totaling $326.0 billion, with an associated net fair value of $3.3 billion. See "Note 15. Derivative Financial Instruments" for ~~the integration.~~additional disclosures.

On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority announced that it will no longer persuade or compel banks to submit rates for the calculation of the LIBOR rates after 2021. LIBOR in its current form may no longer be available after ~~2021, which could impact the products listed below.~~2021. Truist has LIBOR-based contracts that extend beyond 2021. To prepare for the possible transition to an alternative reference rate, management has formed a cross-functional project team to address the LIBOR transition. The project team has performed an assessment to identify the potential risks related to the transition from LIBOR to a new index. The project provides regular reports to the ~~Board of Directors and Risk Management Committee.~~Board.

~~BB&T has LIBOR-based contracts that extend beyond 2021 included in loans and leases, securities, deposits, short-term borrowings, long-term debt and derivative financial instruments.~~ The project team is reviewing contract fallback language for loans and leases and noted that certain contracts will need updated provisions for the transition, and the team is coordinating with impacted lines of business to update LIBOR fallback language generally consistent with the ARRC recommendation. ~~BB&T~~Truist is continuing to evaluate the impact on these contracts and other financial instruments, systems implications, hedging strategies, and other related operational and market risks. Market risks associated with this change are dependent on the alternative reference rates available and market conditions at transition. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to ~~BB&T's Annual Report on~~the section titled "Item 1A. Risk Factors" in the Form 10-K for the year ended December 31, ~~2018 under the section titled "Item 1A. Risk Factors."~~2019.

The principal types of inherent risk include compliance, credit, liquidity, market, operational, cyber security, model, reputation and strategic risks. Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2018 for disclosures related to each of these risks under the section titled "Risk Management."

Market ~~Risk Management~~risk from trading activities

The effective management of market risk is essential to achieving BB&T's strategic financial objectives. As a financial institution, BB&T's most significant market risk exposure is interest rate risk in its balance sheet; however, market riskTruist also includes product liquidity risk, price risk and volatility risk in BB&T's BUs. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income, net income and capital and to offset the risk of price changes for certain assets recorded at fair value. At BB&T, market risk management also includes the enterprise-wide IPV function.

~~Interest Rate Market Risk (Other than Trading)~~

~~BB&T actively~~ manages market risk associated with asset and liability portfolios with a focus on the strategic pricing of asset and liability accounts and management of appropriate maturity mixes of assets and liabilities. The goal of these activities is the development of appropriate maturity and repricing opportunities in BB&T's portfolios of assets and liabilities that will produce reasonably consistent net interest income during periods of changing interest rates. These portfolios are analyzed for proper fixed-rate and variable-rate mixes under various interest rate scenarios.

The asset/liability management process is designed to achieve relatively stable NIM and assure liquidity by coordinating the volumes, maturities or repricing opportunities of earning assets, deposits and borrowed funds. Among other things, this process gives consideration to prepayment trends related to securities, loans and leases and certain deposits that have no stated maturity. Prepayment assumptions are developed using a combination of market data and internal historical prepayment experience for residential mortgage-related loans and securities, and internal historical prepayment experience for client deposits with no stated maturity and loans that are not residential mortgage related. These assumptions are subject to monthly review and adjustment, and are modified as deemed necessary to reflect changes in interest rates relative to the reference rate of the underlying assets or liabilities. On a monthly basis, BB&T evaluates the accuracy of its Simulation model, which includes an evaluation of its prepayment assumptions, to ensure that all significant assumptions inherent in the model appropriately reflect changes in the interest rate environment and related trends in prepayment activity. It is the responsibility of the MRLCC to determine and achieve the most appropriate volume and mix of earning assets and interest-bearing liabilities, as well as to ensure an adequate level of liquidity and capital, within the context of corporate performance goals. The MRLCC also sets policy guidelines and establishes long-term strategies with respect to interest rate risk exposure and liquidity. The MRLCC meets regularly to review BB&T's interest rate risk and liquidity positions in relation to present and prospective market and business conditions, and adopts funding and balance sheet management strategies that are intended to ensure that the potential impacts on earnings and liquidity as a result of fluctuations in interest rates are within acceptable tolerance guidelines.

BB&T uses derivatives primarily to manage economic risk related to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. BB&T also uses derivatives to facilitate transactions on behalf of its clients.trading activities. As ~~of September 30, 2019, BB&T had derivative financial instruments outstanding with notional amounts totaling $72.1 billion, with a net fair valueof $641 million. See Note 16. Derivative Financial Instruments for additional disclosures.~~

The majority of BB&T's assets and liabilities are monetary in nature and, therefore, differ from most commercial and industrial companies that have significant investments in fixed assets or inventories. Fluctuations in interest rates and actions of the FRB to regulate the availability and cost of credit have a greater effect on a financial institution's profitability than do the effects of higher costs for goods and services. Through its balance sheet management function, which is monitored by the MRLCC, management believes that BB&T is positioned to respond to changing needs for liquidity, changes in interest rates and inflationary trends.

Management uses the Simulation to measure the sensitivity of projected earnings to changes in interest rates. The Simulation projects net interest income and interest rate risk for a rolling two-year period of time. The Simulation takes into account the current contractual agreements that BB&T has made with its customers on deposits, borrowings, loans, investments and commitments to enter into those transactions. Furthermore, the Simulation considers the impact of expected customer behavior. Management monitors BB&T's interest sensitivity by means of a model that incorporates the current volumes, average rates earned and paid, and scheduled maturities and payments of asset and liability portfolios, together with multiple scenarios that include projected prepayments, repricing opportunities and anticipated volume growth. Using this information, the model projects earnings based on projected portfolio balances under multiple interest rate scenarios. This level of detail is needed to simulate the effect that changes in interest rates and portfolio balances may have on the earnings of BB&T. This method is subject to the accuracy of the assumptions that underlie the process, but management believes that it provides a better illustration of the sensitivity of earnings to changes in interest rates than other analyses such as static or dynamic gap. In addition to the Simulation, BB&T uses EVE analysis to focus on projected changes in asset and liability values given potential changes in interest rates. This measure also allows BB&T to analyze interest rate risk that falls outside the analysis window contained in the Simulation. The EVE model is a discounted cash flow of the portfolio of assets, liabilities, and derivative instruments. The difference in the present value of assets minus the present value of liabilities is defined as the economic value of equity.

The asset/liability management process requires a number of key assumptions. Management determines the most likely outlook for the economy and interest rates by analyzing external factors, including published economic projections and data, the effects of likely monetary and fiscal policies, as well as any enacted or prospective regulatory changes. BB&T's current and prospective liquidity position, current balance sheet volumes and projected growth, accessibility of funds for short-term needs and capital maintenance are also considered. This data is combined with various interest rate scenarios to provide management with the information necessary to analyze interest sensitivity and to aid in the development of strategies to reach performance goals.

The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next twelve months assuming a gradual change in interest rates as described below. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related and other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing, deposit beta, customer preferences and capital plans. The resulting change in net interest income reflects the level of interest rate sensitivity that income has in relation to the investment, loan and deposit portfolios.

Table 16: Interest Sensitivity Simulation Analysis
Interest Rate Scenario Annualized Hypothetical Percentage Change in Net Interest Income
Linear Change in Prime Rate Prime Rate
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
Up 200 7.00 % 7.25 % (1.49 )% 2.06 %
Up 100 6.00
6.25
(0.56 ) 1.24
No Change 5.00
5.25
—
—
Down 25 4.75
5.00
(0.22 ) N/A
Down 100 4.00
4.25
(1.58 ) (3.13 )

Rate sensitivity decreased from September 30, 2018, primarily driven by loan, deposit mix changes and the increase in HQLA securities. Rate sensitivity was more neutral at September 30, 2019 as the Consolidated Balance Sheet is in process of being repositioned in anticipation of the merger closing.

Management considers how the balance sheet and interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during the current economic cycle. Much of this liquidity increase has been due to a significant increase in noninterest-bearing demand deposits. Consistent with the industry, Branch Bank has seen a significant increase in this funding source. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of BB&T. A loss of these deposits in the future would reduce the asset sensitivity of BB&T's balance sheet as the Company increases interest-bearing funds to offset the loss of this advantageous funding source.

Beta represents the correlation between overall market interest rates and the rates paid by BB&T on interest-bearing deposits. BB&T applies an average deposit beta of approximately 60% to its non-maturity interest-bearing deposit accounts for determining its interest rate sensitivity. Non-maturity interest-bearing deposit accounts include interest checking accounts, savings accounts and money market accounts that do not have a contractual maturity. BB&T regularly conducts sensitivity on other key variables to determine the impact they could have on the interest rate risk position. This allows BB&T to evaluate the likely impact on its balance sheet management strategies due to a more extreme variation in a key assumption than expected.

The following table shows the results of BB&T's interest-rate sensitivity position assuming the loss of demand deposits and an associated increase in managed rate deposits under various scenarios. For purposes of this analysis, BB&T modeled the incremental beta for the replacement of the lost demand deposits at 100%.

Table 17: Deposit Mix Sensitivity Analysis
Linear Change in Rates Base Scenario at September 30, 2019 (1) Results Assuming a Decrease in Noninterest-Bearing Demand Deposits

$1 Billion $5 Billion
Up 200 bps (1.49 )% (1.70 )% (2.53 )%
Up 100 (0.56 ) (0.69 ) (1.21 )

~~(1) The base scenario is equal to the annualized hypothetical percentage change in net interest income at September 30, 2019 as presented in the preceding table.~~

The following table shows the effect that the indicated changes in interest rates would have on EVE. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related and other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing and deposit sensitivity.

Table 18: EVE Simulation Analysis
Change in Interest Rates EVE/Assets Hypothetical Percentage Change in EVE
Sep 30, 2019 Sep 30, 2018 Sep 30, 2019 Sep 30, 2018
Up 100 11.1 % 12.3 % 3.2 % (2.6 )%
No Change 10.7
12.6
—
—
Down 25 10.5
N/A
(2.2 ) N/A
Down 100 9.3
12.3
(13.2 ) (2.6 )

~~Market Risk from Trading Activities~~

~~BB&T also manages market risk from trading activities which consists of acting as~~ a financial intermediary, ~~to provide~~Truist provides its ~~customers~~clients access to derivatives, foreign exchange and securities markets. Trading market risk is managed ~~through~~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 trading desks and at the ~~use~~aggregate portfolio level to ensure exposures are in line with Truist's risk appetite.

Truist is subject to risk-based capital guidelines for market risk under the Market Risk Rule, issued jointly by the OCC, U.S. Treasury, FRB and FDIC.

Covered trading positions

Covered positions subject to the Market Risk Rule include trading assets and liabilities, specifically those held for the purpose of ~~statistical~~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 ~~non-statistical~~underwriting services for our 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, procedures, and methodologies exist for all covered positions. Additionally, trading positions are subject to independent price verification. See "Note 15. Derivative Financial Instruments,” "Note 14. Fair Value Disclosures,” and “Critical Accounting Policies” herein for discussion of valuation policies, procedures and methodologies.

Truist Financial Corporation 63

Securitizations

As of March 31, 2020, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $4 million, all of which were non-agency asset backed securities positions. 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, 2020.

VaR-based measures

VaR measures the estimated potential loss at a specified confidence level and ~~limits. BB&T~~time horizon. Truist utilizes a historical VaR methodology to measure and aggregate risks across its covered trading ~~BUs. This methodology uses two years of historical data~~positions. Following the Merger, Truist elected to ~~estimate economic outcomes~~migrate all covered positions to the heritage SunTrust VaR system and methodology. For an interim period, however, VaR for a subset of heritage BB&T positions, specifically those covered positions held in BB&T Securities, will be calculated using the heritage BB&T VaR system and methodology. As such, pending full integration, Truist will operate two historical VaR models and aggregate company-wide VaR will be determined additively with no benefit of diversification. For risk management purposes, the VaR calculation is based on a historical simulation approach and measures the potential trading losses using a one-day ~~time horizon~~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, profit and loss attribution, and stop loss limits.

The ~~average 99% one-day~~trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility and the ~~maximum daily VaR~~correlation between different positions. A portfolio of trading positions is typically less risky than the sum of risk from each of the individual sub-portfolios. As such, risk within each category partially offsets the exposure to other risk categories thereby creating portfolio diversification benefit. The following table summarizes certain VaR-based measures for the three months ended ~~September 30, 2019~~March 31, 2020 and ~~2018, respectively,~~2019. The increase from the prior year was mainly due to the integration of the heritage SunTrust trading business and the market volatility due to COVID-19 pandemic in March.


Table 21: VaR-based Measures
	2020						2019
Three Months Ended March 31, (Dollars in millions)	10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum	$	30	$	10	$	1	$	1
Average	10		3		1		—
Minimum	3		1		—		—
Period-end	19		8		1		1
VaR by Risk Class:
Interest Rate Risk			5				1
Credit Spread Risk			4				—
Equity Price Risk			8				—
Foreign Exchange Risk			—				—
Portfolio Diversification			(9)				—
Period-end			8				1

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 our trading portfolio. The following table summarizes Stressed VaR-based measures:

64 Truist Financial Corporation


Table 22: Stressed VaR-based Measures - 10 Day Holding Period
Three Months Ended March 31, (Dollars in millions)	2020		2019
Maximum	$	65	$	6
Average	33		5
Minimum	16		4
Period-end	19		6

The increase from the prior year in stressed VaR-based measures was due to the integration of heritage SunTrust trading business after the Merger.

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, 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 and comprehensive risk measure 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.

There were ~~each less than $1 million. Market risk disclosures under Basel II.5~~seven company-wide VaR backtesting exceptions during the twelve months ended March 31, 2020, primarily driven by the COVID-19 pandemic which led to a sudden and significant repricing of financial markets, amid an increase in market volatility and deterioration in overall market liquidity. In accordance with established policy and procedure, all company-wide VaR backtesting exceptions are ~~available~~thoroughly reviewed in the ~~Additional Disclosures~~context of VaR model use and performance. Following such reviews, it was determined that the VaR model performed in line with expectations. However, the extreme moves in underlying market risk factors caused by the COVID-19 pandemic would not typically have been captured within the 1-day VaR measure.

Truist Financial Corporation 65

Model risk management

MRM 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 MRM policy and standards, which includes 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 are reviewed regularly to preemptively address emerging developments in financial markets, assess evolving modeling approaches, and to 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 historical repeats and hypothetical risk factor shocks. 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 ensure that both current and emerging risks are captured appropriately. Management also utilizes stress analyses to support the Company’s capital adequacy assessment standards. See the “Capital” section of ~~the Investor Relations site on~~ this MD&A for additional discussion of capital adequacy.

~~BBT.com~~.

Liquidity

Liquidity represents the continuing ability to meet funding needs, including deposit withdrawals, ~~timely~~ 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, ~~many~~ other factors affect the ability to meet liquidity needs, including access to a variety of funding sources, maintaining borrowing capacity, ~~in national money markets,~~ growing core deposits, ~~the~~loan repayment ~~of loans~~ and the ability to securitize or package loans for sale. ~~BB&T also has the ability to utilize sources such as FHLB letters of credit to reduce the securities we have pledged.~~

~~BB&T~~Truist monitors the ability to meet ~~customer~~client demand for funds under both normal and stressed market conditions. In considering its liquidity position, management evaluates ~~BB&T's~~Truist's funding mix based on client core funding, client rate-sensitive funding and national markets funding. In addition, management ~~also~~ 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 ~~Branch Bank~~Truist and ~~BB&T.~~Truist Bank. To ensure a strong liquidity position, and compliance with regulatory requirements, management maintains a liquid asset buffer of cash on hand and highly liquid ~~unpledged~~unencumbered securities. ~~BB&T follows the FRB's enhanced prudential standards for purposes~~As of ~~determining the~~March 31, 2020 and December 31, 2019, Truist's liquid asset ~~buffer. BB&T's policy is to use the greater of either 5%~~buffer, as a percent of total assets, ~~or a range of~~was 19.6% and 16.5%, respectively.

The LCR rule directs large U.S. banking organizations to hold unencumbered high-quality liquid assets sufficient to withstand projected 30-day total net cash outflows, ~~over a 30 day period.~~each as defined under the LCR rule. As of ~~September 30, 2019 and December 31, 2018, BB&T's liquid asset buffer was 18.2% and 14.7%, respectively, of total assets.~~

~~BB&T~~January 1, 2020, Truist is ~~considered to be a "modified LCR" holding company. BB&T would be~~ subject to ~~full~~the Category III reduced LCR requirements if its assets were to increase above $250 billion or if it were to be considered internationally active. As previously mentioned, in October 2019, the federal banking agencies adopted final rules for liquidity requirements that would amend(85% of the full LCR such that BHC's with assets between $250 billion and $700 billion, and less than $75 billion in certain other risk related exposures, would be subject to a reduced LCR. See additional disclosures in the "Regulatory Considerations" section.

~~BB&T produces LCR calculations to effectively manage the position of high-quality liquid assets and the balance sheet deposit mix to optimize BB&T's liquidity position. BB&T's preliminary modified~~requirements). Truist's average LCR was ~~approximately 139%~~117% for the three months ended ~~September 30, 2019, compared to~~March 31, 2020, well above the regulatory ~~minimum for such entities~~minimum.

The ability to raise funding at competitive prices is affected by the rating agencies' views of ~~100%, which puts BB&T in full compliance~~the Parent Company's and Truist Bank's credit quality, liquidity, capital and earnings. Management meets with the ~~rule. The LCR can experience volatility due~~rating agencies on a regular basis to ~~issues like maturing~~discuss current outlooks. In April 2020, DBRS revised its outlook for Truist and Truist Bank from “positive” to “stable,” citing economic deterioration related to COVID-19. DBRS affirmed all other ratings for Truist and Truist Bank. Additionally, Fitch revised its outlook for Truist and Truist Bank from “stable” to “negative,” also citing pandemic-related economic deterioration. Fitch downgraded Truist’s subordinated debt ~~rolling into~~to A-, and upgraded Truist’s preferred stock to BBB, in order to align these ratings to its recently revised bank rating methodology. Fitch affirmed all other Truist ratings. See "Liquidity" section of the ~~30 day measurement period, or client inflows and outflows. The daily change in BB&T's modified LCR averaged less than 2%~~MD&A of the Annual Report on Form 10-K for the ~~three months~~year ended ~~September 30,~~December 31, 2019 ~~with a maximum daily change of 17% as the Consolidated Balance Sheet is in process of being repositioned in anticipation of the merger closing.~~for

additional information regarding credit ratings.

BB&T routinely evaluates the impact of becoming subject to the full LCR requirement. This includes an evaluation of the changes to the balance sheet and investment strategy that would be necessary to comply with the requirement. Management does not currently expect the required changes to have a material impact on BB&T's financial condition or results of operations.

Parent Company

The ~~purpose of the~~ Parent Company ~~is to serve~~serves as the primary source of capital for the operating subsidiaries. The Parent Company's assets consist primarily ~~consist~~ of cash on deposit with ~~Branch~~Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and accounts receivable from ~~subsidiaries, and other miscellaneous assets.~~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 ~~subsidiary,~~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 ~~for~~ investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, retirement of common stock, and payments on long-term debt.

~~The primary source of funds used for Parent Company cash requirements was dividends received from subsidiaries.~~ See ~~Note 15.~~"Note 22. Parent Company Financial ~~Information~~Information" of the Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for

additional information regarding dividends from subsidiaries and debt transactions.

66 Truist Financial Corporation

~~Liquidity~~Access to funding at the Parent Company is more ~~susceptible~~sensitive to market disruptions. ~~BB&T~~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 ~~infusions. Generally, BB&T~~inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, ~~BB&T~~Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, ~~being~~serving as a source of strength to ~~its banking subsidiary~~Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, the Parent Company had 3226 months and 2829 months, respectively, of cash on hand to satisfy projected ~~contractual~~ cash outflows, and 2817 months and 1920 months, respectively, ~~taking into account~~when including the payment of common stock dividends.

~~Branch~~Truist Bank

~~BB&T~~Truist carefully manages liquidity risk at ~~Branch~~Truist Bank. ~~Branch~~Truist Bank's primary source of funding is ~~customer~~client deposits. Continued access to ~~customer~~client deposits is highly dependent on ~~the~~public confidence ~~the public has~~ in the stability of ~~Branch~~Truist Bank and its ability to return funds to ~~the client~~clients when requested. ~~BB&T~~

Truist Bank maintains a strong focus on its reputation in the market to ensure continued access to client deposits. BB&T integrates its risk appetite into its overall risk management framework to ensure Branch Bank does not exceed its risk tolerance through its lending and other risk taking functions and thus risk becoming undercapitalized. BB&T believes that sufficient capital is paramount to maintaining the confidencenumber of its depositors and other funds providers. BB&T has extensive capital management processes in place to ensure it maintains sufficient capital to absorb losses and maintain a highly capitalized position that will instill confidence in Branch Bank and allow continued access to deposits and otherdiverse funding sources. Branch Bank monitors many liquidity metrics including funding concentrations, diversification, maturity distribution, contingent funding needs and ability to meet liquidity requirements under times of stress.

~~Branch Bank has several major~~ sources ~~of funding~~ to meet its liquidity ~~requirements, including access to~~requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, ~~and~~ institutional CDs, ~~access to the FHLB system, dealer repurchase agreements and repurchase agreements with commercial clients, access to the~~ overnight and term Federal funds markets, ~~use of a Cayman branch facility,~~and retail brokered CDs. Truist Bank also maintains access to ~~retail brokered CDs~~secured borrowing sources including FHLB advances, repurchase agreements, and ~~a borrower in custody program with~~ the FRB ~~for the~~ discount window. At ~~September 30, 2019, Branch~~March 31, 2020, Truist Bank has approximately ~~$89.1~~$137.8 billion of available secured borrowing capacity, which represents approximately ~~4.0~~3.5 times the amount of one year wholesale funding maturities.

Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements

Refer to ~~BB&T's~~Truist's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 for discussion with respect to ~~BB&T's~~Truist's quantitative and qualitative disclosures about its fixed and determinable contractual obligations. ~~Additional disclosures about BB&T's contractual obligations,~~Truist's commitments ~~and~~include investments in affordable housing projects throughout its market area, renewable energy credits, private equity funds, derivative contracts to manage various financial ~~instruments are included in Note 14.~~risks, as well as other commitments. Refer to "Note 13. Commitments and Contingencies, ~~Note 15.~~” “Note 14. Fair Value ~~Disclosures~~Disclosures” and ~~Note 16.~~“Note 15. Derivative Financial ~~Instruments.~~Instruments” in this Form 10-Q, and “Note 16. Commitments and Contingencies" of the Annual Report on Form 10-K for further discussion of these commitments.

Capital

The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. ~~BB&T's~~Truist's principal goals related to the maintenance of capital are to provide adequate capital to support ~~BB&T's~~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 ~~BB&T~~Truist and 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.

~~BB&T~~Truist regularly performs stress testing on its capital levels and is required to periodically submit the ~~company's~~Company's capital plans and stress testing results to the banking regulators. ~~On February 5, 2019, the FRB notified banks with less than $250 billion in assets that they will not need to participate in the 2019 supervisory stress test.~~

Management regularly monitors the capital position of ~~BB&T~~Truist on both a consolidated and bank-level basis. In this regard, management's overriding policy is to maintain capital at levels that are in excess of internal capital targets, which are above the regulatory "well capitalized" ~~levels.~~minimums. Management has implemented stressed capital ratio minimum targets to evaluate whether capital ratios calculated ~~with planned~~after the effect of alternative capital actions are likely to remain above minimums specified by the FRB for the annual ~~CCAR.~~CCAR process. Breaches of stressed minimum targets prompt a review of the planned capital actions included in ~~BB&T's~~Truist's capital plan.


Table 23: Capital Requirements and Targets
	Minimum Capital		Well Capitalized						Minimum Capital Plus Capital Conservation Buffer			Truist Targets (1)
				Truist		Truist Bank							Interim Operating (2)		Stressed
CET1	4.5	%	NA	6.5	%		7.0	%		8.0	%		7.0	%
Tier 1 capital	6.0		6.0	8.0			8.5			9.3			8.5
Total capital	8.0		10.0	10.0			10.5			11.3			10.5
Leverage ratio	4.0		NA	5.0			N/A			7.5			7.0
Supplementary leverage ratio	3.0		NA	NA			NA			6.5			6.0

(1)The Truist targets are subject to revision based on finalization of pending regulatory guidance and other strategic factors.

(2)Truist's goal is to maintain capital levels above all regulatory minimums.

Truist Financial Corporation 67

Table 19: Capital Requirements Under Basel III
Minimum Capital Well-Capitalized Minimum Capital Plus Capital Conservation Buffer BB&T Targets
Operating (1) Stressed
CET1 capital to risk-weighted assets 4.5 % 6.5 % 7.0 % 8.5 % 6.0 %
Tier 1 capital to risk-weighted assets 6.0
8.0
8.5
10.0
7.5
Total capital to risk-weighted assets 8.0
10.0
10.5
12.0
9.5
Leverage ratio 4.0
5.0
N/A 8.0
5.5
During the first quarter of 2020, as market conditions evolved, Truist received Board approval to establish new interim operating targets that provide for sufficient capital levels while allowing the company to support clients through the economic downturn. These interim operating targets will be evaluated as economic conditions evolve.


~~(1)~~	~~BB&T's goal is to maintain capital levels above all regulatory minimums.~~

While nonrecurring events or management decisions may result in the Company temporarily falling below its operating minimum guidelines for one or more of these ratios, it is management's intent to return to these targeted operating minimums within a reasonable period of time through capital planning. Such temporary decreases below the operating minimums shown above are not considered an infringement of ~~BB&T's~~Truist's overall capital policy, provided a return above the minimums is forecasted to occur within a reasonable time period.

~~BB&T's~~Truist's capital ratios are presented in the following table:




Table 24: Capital Ratios - Truist Financial Corporation

(Dollars in millions, except per share data, shares in thousands)	Mar 31, 2020			Dec 31, 2019
Risk-based:	(preliminary)
CET1 capital to risk-weighted assets	9.3		%	9.5		%
Tier 1 capital to risk-weighted assets	10.5			10.8
Total capital to risk-weighted assets	12.6			12.6
Leverage ratio	9.0			14.7
Supplementary leverage ratio	7.8			NA
Non-GAAP capital measure (1):
Tangible common equity per common share	$	26.00		$	25.93
Calculation of tangible common equity (1):
Total shareholders' equity	$	66,061		$	66,558
Less:
Preferred stock	4,599			5,102
Noncontrolling interests	167			174
Goodwill and intangible assets, net of deferred taxes	26,263			26,482
Tangible common equity	$	35,032		$	34,800
Risk-weighted assets	$	391,387		$	376,056
Common shares outstanding at end of period	1,347,461			1,342,166

Table 20: Capital Ratios - BB&T Corporation
(Dollars in millions, except per share data, shares in thousands) Sep 30, 2019 Dec 31, 2018
Risk-based: (preliminary)
CET1 capital to risk-weighted assets 10.6 % 10.2 %
Tier 1 capital to risk-weighted assets 12.2
11.8
Total capital to risk-weighted assets 14.7
13.8
Leverage ratio 10.3
9.9
Non-GAAP capital measure (1):

Tangible common equity per common share $ 24.66
$ 21.89
Calculation of tangible common equity (1):
Total shareholders' equity $ 32,303
$ 30,178
Less:
Preferred stock 3,057
3,053
Noncontrolling interests 69
56
Intangible assets, net of deferred taxes 10,281
10,360
Tangible common equity $ 18,896
$ 16,709
Risk-weighted assets $ 187,623
$ 181,260
Common shares outstanding at end of period 766,303
763,326

~~(1)~~

Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. BB&T's(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist's management uses these measures to assess the quality of capital and returns relative to balance sheet risk and believes investors may find them useful in their analysis of the Corporation. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.

Capital ratios declined slightly primarily due to the significant balance sheet growth related to commercial clients drawing on lines of credit in response to COVID-19. The leverage and supplementary leverage ratios were also impacted by higher balances held at the Federal Reserve. As noted previously, the FRB issued an interim rule that is effective beginning with the second quarter of 2020 and ending March 31, 2021 that will remove U.S. treasuries and FRB balances from the calculation of the supplementary leverage ratio for BHCs. In March 2020, the company redeemed $500 million of Series K preferred stock and issued $1.3 billion of subordinated debt. Truist's capital levels ~~remained~~remain strong compared to the regulatory levels for well capitalized banks at ~~September 30, 2019. BB&T~~March 31, 2020. Truist declared common dividends of $0.450 per share during the ~~third~~first quarter of ~~2019, which resulted in~~2020. The dividend and total payout ratios for the first quarter of ~~46.9%~~2020 were 61.4%. ~~The Board of Directors approved an increase in the quarterly dividend of 11.1% at their July meeting.~~ As previously communicated ~~BB&T has~~at the time of the Merger announcement, Truist suspended its share ~~repurchases~~repurchase program until capital ratios return to higher levels.

68 Truist Financial Corporation

Share Repurchase Activity


Table 25: Share Repurchase Activity
(Dollars in millions, except per share data, shares in thousands)	Total Shares Repurchased (1)	Average Price Paid Per Share (2)		Total Shares Repurchased Pursuant to Publicly-Announced Plan	Maximum Remaining Dollar Value of Shares Available for Repurchase Pursuant to Publicly-Announced Plan
January 2020	—	$	—	—	$	—
February 2020	2	54.86		—	—
March 2020	60	33.83		—	—
Total	62	34.65		—

(1)Includes shares exchanged or surrendered in connection with the exercise of equity-based awards under ~~the 2018 Repurchase Plan due to the merger-of-equals.~~equity-based compensation plans.

(2)Excludes commissions.

Critical Accounting Policies

The accounting and reporting policies of ~~BB&T~~Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. ~~BB&T's~~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. The more critical policies include accounting for the ACL, determining fair value of financial instruments, intangible assets, income taxes and costs and benefit obligations associated with pension and postretirement benefit plans. Understanding ~~BB&T's~~Truist's accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. The critical accounting policies are discussed in ~~"Management's Discussion and Analysis of Financial Condition and Results of Operations"~~MD&A in ~~BB&T's~~Truist's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in ~~Note~~“Note 1. Basis of ~~Presentation~~Presentation” in Form 10-K for the year ended December 31, ~~2018.~~2019. Additional disclosures regarding the effects of new accounting pronouncements are included in the ~~Note~~“Note 1. Basis of ~~Presentation~~Presentation” included herein. ~~There~~Except for the items noted below, there have been no ~~other~~ changes to the significant accounting policies during ~~2019.~~2020.

Intangible Assets

The severe economic disruption and related financial effects of the COVID-19 pandemic have impacted Truist’s businesses. Truist’s commercial clients have experienced varying levels of disruptions to business activity, supply chains and demand for products and services. Additionally, many consumer clients have experienced interrupted income or unemployment. The pandemic also resulted in significant volatility to the global and U.S. financial markets, negatively impacting equity prices and corporate credit spreads, including for the banking sector and Truist. In response to the pandemic’s adverse effects, intensive relief actions by the U.S. Congress and regulatory agencies are intended to mitigate the extent of adverse economic effects, while also stabilizing financial markets and liquidity.

As a result of these considerations, Truist performed a qualitative assessment of the goodwill carried by the CB&W, C&CB and IH reporting units for impairment in the first quarter of 2020. In performing this assessment, Truist considered whether macroeconomic and market factors, industry and banking sector events, a sensitivity analysis on management’s forecast and assumptions, and Truist specific performance indicators, including any changes from when the merger closed in December 2019, would more-likely-than-not reduce the fair value of one or more of its reporting units below its respective carrying amount as of period-end. Despite the adverse economic and highly uncertain environment caused by the pandemic, Trust’s first quarter 2020 results reflected profitable performance across each of its reporting units; strong capital and liquidity levels that have facilitated swift actions in support of clients, teammates and communities and Truist’s affirmation that it remains committed to achieving its merger value proposition, including targeted net cost saves.

Based on the qualitative assessment performed, 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, 2020, and therefore no triggering event occurred that required a quantitative goodwill impairment test. If economic conditions deteriorate, or the pandemic’s effects prolong or worsen, it may be more-likely-than-not that the fair value of one or more of Truist’s reporting units falls below its respective carrying amount, which would require a quantitative goodwill impairment test.

69 Truist Financial Corporation

ACL

Truist's policy is to maintain an ACL, which includes the ALLL and the RUFC, which represents management's best estimate of expected future credit losses related to the loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. Estimates of expected future loan and lease losses are determined by using statistical models and management’s judgement. The models are designed to forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic variables to historical experience. The models are generally applied at the portfolio level to pools of loans with similar risk characteristics. The macroeconomic data used in the models is based on forecasted variables for the reasonable and supportable period of two years. Beyond this forecast period the models gradually revert to an historical average over a one year period. Expected losses are estimated through contractual maturity estimated through contractual maturity, giving appropriate consideration to expected prepayments unless the borrower has a right to renew that is not cancellable or it is reasonably expected that the loan will be modified as a TDR.

A qualitative allowance which incorporates management’s judgement is also included in the estimation of expected future loan and lease losses. This allowance is used to capture risks in the portfolio such as considerations with respect to the impact of current economic events, the outcomes of which are uncertain. These events may include, but are not limited to, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which Truist conducts business.

Loans and leases that do not share similar risk characteristics and significant loans that are considered collateral-dependent are individually evaluated. For these loans, the ALLL is determined through review of data specific to the borrower and related collateral, if any. For TDRs, default expectations and estimated prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL.

The methodology used to determine an estimate for the RUFC is inherently similar to that used to determine the funded component of the ALLL and is measured over the period there is a contractual obligation to extend credit that is not unconditionally cancellable. The RUFC is adjusted for factors specific to binding commitments, including the probability of funding and exposure at default. A detailed discussion of the methodology used in determining the ACL is included in "Note 1. Basis of Presentation."

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the management of the Company, under the supervision and with the participation of the Company's CEO and CFO, carried out an evaluation of the effectiveness of the Company's disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures ~~are~~were effective.

Changes in Internal Control over Financial Reporting

Management of Truist is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act. The Company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

The Company continues to integrate SunTrust into its overall internal control over financial reporting processes. In addition, on January 1, 2020, the Company adopted the Current Expected Credit Losses accounting standard. In connection with the adoption of CECL, the Company implemented relevant changes and enhancements to its internal control environment and processes related to estimating credit losses in accordance with the standard. There were no other changes in the Company's internal control over financial reporting ~~(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)~~ that occurred during the quarter ended ~~September 30, 2019~~March 31, 2020 that ~~have~~ materially affected, or are reasonably likely to materially affect, the ~~Company's~~Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the Legal Proceeding section in ~~Note 14.~~“Note 13. Commitments and Contingencies,” which is incorporated by reference into this item.

70 Truist Financial Corporation

ITEM 1A. RISK FACTORS

~~There have been no material changes to~~The following risk factor supplements the risk factors disclosed in ~~BB&T's~~Truist's Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019. Additional risks and uncertainties not currently known to ~~BB&T~~Truist or that management has deemed to be immaterial also may materially adversely affect ~~BB&T's~~Truist's business, financial condition, ~~and/~~or operating results.

The effects of COVID-19 have adversely impacted, and will likely continue to adversely impact, the Company’s financial condition and results of operations.

The COVID-19 pandemic has severely disrupted almost all economic activity in the U.S. It is unknown when shelter-in-place and other federal and state executive orders designed to mitigate the health crisis will permit a return to normal economic activity. Truist has temporarily closed offices and branches, and suspended some service and the majority of the Company’s workforce is working remotely. Commercial clients are experiencing varying levels of disruptions or restrictions on their business activity and supply chains, closures of facilities or decreases in demand for their products and services. Consumer clients are experiencing interrupted income or unemployment. In addition, in March 2020, Moody’s Investor Services downgraded its outlook on U.S. banks to “negative” from “stable” due in part to the concerns presented by the pandemic. The global financial markets have also experienced significant volatility. The duration of this severe economic disruption and its related financial impact cannot be reasonably estimated at this time. The effects of the pandemic have already resulted in an increase in the allowance for credit losses, a reduction of fee income and an increase in expenses. Prolonged continuation of current conditions could worsen these impacts and also affect the Company’s capital and liquidity position, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause an outflow of deposits, cause significant property damage, in case of civil unrest or vandalism, influence the recognition of credit losses on loans and securities and further increase the allowance for credit losses, result in additional lost revenue, cause additional increases in expenses, result in goodwill impairment charges, result in the impairment of other financial and nonfinancial assets, and increase the Company’s cost of capital.

Intensive government actions to mitigate the economic suffering caused by the pandemic may not be successful or may result in increased pressure on the banking sector. Net interest margin is likely to be affected by the very low interest rate environment. The application of forbearance policies beyond any statutory requirements may impact Truist’s interest income. Truist participated in the SBA’s Paycheck Protection Program as an eligible lender with the benefit of a government guaranty of loans to small business clients, many of whom may face difficulties even if they are granted such a loan. The Company expects to participate in Federal Reserve supported lending programs for Main Street-eligible borrowers as well. The Company faces increased risks, in terms of credit, fraud risk and potential litigation, in light of participation in these programs.

It is possible that the pandemic and its aftermath will lead to a prolonged economic slowdown or recession in the U.S. economy or the world economy in general. The ultimate impact on the Company’s financial condition, results of operation, and liquidity and capital position will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the pandemic and the actions to contain or treat its impact. Moreover, the effects of the COVID-19 pandemic will heighten the other risks described in the section entitled “Risk Factors” in the most recent Annual Report on Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~Refer to the Share Repurchase Activity section in the MD&A, which is incorporated by reference into this item.

Truist Financial Corporation 71

ITEM 6. EXHIBITS

Exhibit No.

Description

Location

~~Exhibit No.~~

~~Description~~

~~Location~~

~~3(i)~~

~~Articles~~

10.1*

Form of ~~Incorporation of~~Restricted Stock Unit Agreement (Non-Employee Directors) for the ~~Registrant, as amended and restated April 30, 2014.~~Truist Financial Corporation 2012 Incentive Plan (effective 2020).

~~Incorporated herein by reference to Exhibit 3(i) of the Current Report on Form 8-K, filed May 2, 2014.~~Filed herewith.

~~3(ii)~~10.2*

~~Articles~~Form of ~~Amendment of~~Restricted Stock Unit Agreement (Executive Officers) for the ~~Registrant, dated as of March 4, 2016~~Truist Financial Corporation 2012 Incentive Plan (effective 2020).

~~Incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K, filed March 9, 2016.~~Filed herewith.

~~3(iii)~~10.3*

~~Articles~~Form of ~~Amendment of~~LTIP Award Agreement for the ~~Company with respect to 4.800% Series N Fixed Rate Reset Non-Cumulative Perpetual Preferred Stock filed July 24, 2019.~~Truist Financial Corporation 2012 Incentive Plan (effective 2020).

~~Incorporated herein by reference to Exhibit 4.1 of the Current Report on Form 8-K, filed July 29, 2019.~~Filed herewith.

~~4.1~~10.4*

~~Deposit~~Form of Performance Unit Award Agreement ~~dated as of July 29, 2019, between~~for the ~~Company and Computershare Inc. and Computershare Trust Company, N.A., jointly as depositary.~~Truist Financial Corporation 2012 Incentive Plan (effective 2020).

~~Incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K, filed July 29, 2019.~~Filed herewith.

~~4.2~~11

~~Form of Depositary Receipt.~~

~~Incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K, filed July 29, 2019.~~

Statement re computation of earnings per share.

Filed herewith as Computation of EPS note to the consolidated financial statements.

~~31.1~~

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

101.INS

XBRL Instance Document – the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Filed herewith.

101.SCH

XBRL Taxonomy Extension Schema.

Filed herewith.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

Filed herewith.

101.LAB

XBRL Taxonomy Extension Label Linkbase.

Filed herewith.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.

Filed herewith.

101.DEF

XBRL Taxonomy Definition Linkbase.

Filed herewith.

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits101).

Filed herewith.

† Exhibit filed with the SEC and available upon request.

* Management compensatory plan or arrangement.

72 Truist Financial Corporation

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TRUIST FINANCIAL CORPORATION

(Registrant)

Date:

May 8, 2020

~~BB&T CORPORATION~~

~~(Registrant)~~

By:

~~Date:~~

~~October 25, 2019~~

~~By:~~

/s/ Daryl N. Bible

Daryl N. Bible

Senior Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date:

~~October 25, 2019~~May 8, 2020

By:

/s/ Cynthia B. Powell

Cynthia B. Powell

Executive Vice President and Corporate Controller

(Principal Accounting Officer)

~~BB&T~~

Truist Financial Corporation 6173


Unaudited (Dollars in millions, except per share data, shares in thousands)	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018

Unaudited Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)										Unaudited Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)	2020		2019

Interest Income										Interest Income
Interest and fees on loans and leases	$	1,886	$	1,772	$	5,611		$	5,064	Interest and fees on loans and leases	$	3,776	$	1,839
Interest and dividends on securities	315		283		917			868
Interest on securities										Interest on securities	494		302
Interest on other earning assets	17		14		69			52		Interest on other earning assets	156		32
Total interest income	2,218		2,069		6,597			5,984		Total interest income	4,426		2,173
Interest Expense										Interest Expense
Interest on deposits	271		172		797			438		Interest on deposits	421		253
Interest on short-term borrowings	54		29		136			72
Interest on long-term debt	193		181		578			497		Interest on long-term debt	272		192
Interest on other borrowings										Interest on other borrowings	83		32
Total interest expense	518		382		1,511			1,007		Total interest expense	776		477
Net Interest Income	1,700		1,687		5,086			4,977		Net Interest Income	3,650		1,696
Provision for credit losses	117		135		444			420		Provision for credit losses	893		155
Net Interest Income After Provision for Credit Losses	1,583		1,552		4,642			4,557		Net Interest Income After Provision for Credit Losses	2,757		1,541
Noninterest Income										Noninterest Income
Insurance income	487		448		1,563			1,365		Insurance income	549		510
Service charges on deposits	188		183		540			527		Service charges on deposits	305		171
Investment banking and brokerage fees and commissions	130		116		372			338
Mortgage banking income	112		79		288			272
Trust and investment advisory revenues	71		71		209			215
Bankcard fees and merchant discounts	72		72		219			213
Checkcard fees	57		56		171			165
Wealth management income										Wealth management income	332		162
Card and payment related fees										Card and payment related fees	187		128
Residential mortgage income										Residential mortgage income	245		49
Investment banking and trading income										Investment banking and trading income	118		27
Operating lease income	36		37		106			110		Operating lease income	77		35
Income from bank-owned life insurance	29		27		91			88		Income from bank-owned life insurance	44		28
Other income	121		150		298			347
Securities gains (losses), net
Gross realized gains	—		—		42			1
Gross realized losses	—		—		(42		)	—
Total securities gains (losses), net	—		—		—			1
Lending related fees										Lending related fees	67		25
Commercial real estate related income										Commercial real estate related income	44		14
Securities gains (losses)										Securities gains (losses)	(2)		—
Other income (loss)										Other income (loss)	(5)		53
Total noninterest income	1,303		1,239		3,857			3,641		Total noninterest income	1,961		1,202
Noninterest Expense										Noninterest Expense
Personnel expense	1,161		1,104		3,368			3,217		Personnel expense	1,972		1,087
Occupancy and equipment expense	186		189		557			570
Net occupancy expense										Net occupancy expense	221		122
Professional fees and outside processing										Professional fees and outside processing	247		86
Software expense	77		70		220			202		Software expense	210		72
Outside IT services	28		33		87			97
Regulatory charges	20		37		57			116
Equipment expense										Equipment expense	116		65
Marketing and customer development										Marketing and customer development	84		27
Operating lease depreciation										Operating lease depreciation	71		29
Loan-related expense										Loan-related expense	62		25
Amortization of intangibles	29		33		93			97		Amortization of intangibles	165		32
Loan-related expense	26		28		81			83
Professional services	47		33		109			95
Merger-related and restructuring charges, net	34		18		137			70
Regulatory costs										Regulatory costs	29		18
Merger-related and restructuring charges										Merger-related and restructuring charges	107		80

Other expense	232		197		650			601		Other expense	147		125
Total noninterest expense	1,840		1,742		5,359			5,148		Total noninterest expense	3,431		1,768
Earnings										Earnings
Income before income taxes	1,046		1,049		3,140			3,050		Income before income taxes	1,287		975
Provision for income taxes	218		210		629			598		Provision for income taxes	224		177
Net income	828		839		2,511			2,452		Net income	1,063		798
Noncontrolling interests	3		7		8			13		Noncontrolling interests	3		6
Dividends on preferred stock	90		43		177			130		Dividends on preferred stock	74		43
Net income available to common shareholders	$	735	$	789	$	2,326		$	2,309	Net income available to common shareholders	$	986	$	749
Basic EPS	$	0.96	$	1.02	$	3.04		$	2.98	Basic EPS	$	0.73	$	0.98
Diluted EPS	0.95		1.01		3.00			2.94		Diluted EPS	0.73		0.97
Basic weighted average shares outstanding	766,167		771,562		765,428			775,642		Basic weighted average shares outstanding	1,344,372		764,135
Diluted weighted average shares outstanding	775,791		781,867		774,907			786,140		Diluted weighted average shares outstanding	1,357,545		774,071


Unaudited (Dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018

Unaudited Three Months Ended March 31, (Dollars in millions)													Unaudited Three Months Ended March 31, (Dollars in millions)	2020		2019

Net income	$	828		$	839		$	2,511		$	2,452		Net income	$	1,063	$	798
OCI, net of tax:													OCI, net of tax:
Change in unrecognized net pension and postretirement costs	(38		)	(12		)	(2		)	15			Change in unrecognized net pension and postretirement costs	15		17
Change in unrealized net gains (losses) on cash flow hedges	13			20			(80		)	124			Change in unrealized net gains (losses) on cash flow hedges	11		(34)
Change in unrealized net gains (losses) on AFS securities	118			(155		)	769			(522		)	Change in unrealized net gains (losses) on AFS securities	1,721		309
Other, net	—			1			2			(2		)	Other, net	(5)		2
Total OCI	93			(146		)	689			(385		)
Total OCI, net of tax													Total OCI, net of tax	1,742		294
Total comprehensive income	$	921		$	693		$	3,200		$	2,067		Total comprehensive income	$	2,805	$	1,092
Income Tax Effect of Items Included in OCI:													Income Tax Effect of Items Included in OCI:
Change in unrecognized net pension and postretirement costs	$	(11	)	$	(5	)	$	—		$	4		Change in unrecognized net pension and postretirement costs	$	5	$	6
Change in unrealized net gains (losses) on cash flow hedges	4			6			(25		)	40			Change in unrealized net gains (losses) on cash flow hedges	3		(11)
Change in unrealized net gains (losses) on AFS securities	37			(48		)	237			(163		)	Change in unrealized net gains (losses) on AFS securities	527		95
Other, net	(1		)	—			—			1			Other, net	—		—


Unaudited Nine Months Ended September 30, (Dollars in millions)	2019			2018

Unaudited Three Months Ended March 31, (Dollars in millions)							Unaudited Three Months Ended March 31, (Dollars in millions)	2020		2019

Cash Flows From Operating Activities:							Cash Flows From Operating Activities:
Net income	$	2,511		$	2,452		Net income	$	1,063	$	798
Adjustments to reconcile net income to net cash from operating activities:							Adjustments to reconcile net income to net cash from operating activities:
Provision for credit losses	444			420			Provision for credit losses	893		155

Depreciation	324			316			Depreciation	234		105

Amortization of intangibles	93			97			Amortization of intangibles	165		32
Equity-based compensation expense	119			113			Equity-based compensation expense	79		32
(Gain) loss on securities, net	—			(1		)	(Gain) loss on securities, net	2		—
Net change in operating assets and liabilities:							Net change in operating assets and liabilities:
LHFS	(531		)	77			LHFS	2,898		77
Trading and equity securities	(104		)	(503		)
Other assets, accounts payable and other liabilities	(1,458		)	221
MSRs							MSRs	480		73
Pension asset							Pension asset	(336)		(561)

Trading assets							Trading assets	1,870		(1,133)
Other assets and other liabilities							Other assets and other liabilities	(3,318)		(445)

Other, net	566			(214		)	Other, net	598		122
Net cash from operating activities	1,964			2,978			Net cash from operating activities	4,628		(745)
Cash Flows From Investing Activities:							Cash Flows From Investing Activities:
Proceeds from sales of AFS securities	4,255			294			Proceeds from sales of AFS securities	1,506		1,797
Proceeds from maturities, calls and paydowns of AFS securities	3,051			2,919			Proceeds from maturities, calls and paydowns of AFS securities	2,513		861
Purchases of AFS securities	(17,220		)	(3,630		)	Purchases of AFS securities	(4,029)		(3,525)
Proceeds from maturities, calls and paydowns of HTM securities	1,762			1,919			Proceeds from maturities, calls and paydowns of HTM securities	—		450
Purchases of HTM securities	—			(39		)

Originations and purchases of loans and leases, net of sales and principal collected	(1,060		)	(3,657		)	Originations and purchases of loans and leases, net of sales and principal collected	(18,024)		(193)
Net cash received (paid) for FHLB stock							Net cash received (paid) for FHLB stock	(651)		76
Net cash received (paid) for securities borrowed or purchased under resale agreements							Net cash received (paid) for securities borrowed or purchased under resale agreements	(379)		(109)
Net cash paid for premises and equipment							Net cash paid for premises and equipment	(464)		(34)
Net cash received (paid) for mergers, acquisitions and divestitures							Net cash received (paid) for mergers, acquisitions and divestitures	(62)		—
Other, net	(188		)	(539		)	Other, net	75		91
Net cash from investing activities	(9,400		)	(2,733		)	Net cash from investing activities	(19,515)		(586)
Cash Flows From Financing Activities:							Cash Flows From Financing Activities:
Net change in deposits	1,096			(2,806		)	Net change in deposits	15,474		(1,432)
Net change in short-term borrowings	5,317			4,714			Net change in short-term borrowings	(5,522)		1,127
Proceeds from issuance of long-term debt	5,653			1,770			Proceeds from issuance of long-term debt	24,288		2,015
Repayment of long-term debt	(4,259		)	(1,845		)	Repayment of long-term debt	(782)		(1,103)
Repurchase of common stock	(3		)	(830		)
Net proceeds from preferred stock issued	1,683			—

Redemption of preferred stock	(1,725		)	—			Redemption of preferred stock	(503)		—
Cash dividends paid on common stock	(964		)	(895		)	Cash dividends paid on common stock	(605)		(309)
Cash dividends paid on preferred stock	(131		)	(130		)	Cash dividends paid on preferred stock	(74)		(43)
Other, net	(200		)	(153		)	Other, net	(106)		(48)
Net cash from financing activities	6,467			(175		)	Net cash from financing activities	32,170		207
Net Change in Cash, Cash Equivalents and Restricted Cash	(969		)	70
Cash, Cash Equivalents and Restricted Cash, January 1	3,987			3,083
Cash, Cash Equivalents and Restricted Cash, September 30	$	3,018		$	3,153
Net Change in Cash and Cash Equivalents							Net Change in Cash and Cash Equivalents	17,283		(1,124)
Cash and Cash Equivalents, January 1							Cash and Cash Equivalents, January 1	19,065		3,844
Cash and Cash Equivalents, March 31							Cash and Cash Equivalents, March 31	$	36,348	$	2,720
Supplemental Disclosure of Cash Flow Information:							Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:							Net cash paid (received) during the period for:
Interest expense	$	1,486		$	948		Interest expense	$	758	$	419
Income taxes	409			(34		)	Income taxes	11		62


Risk Rating			Description
Pass			Loans not considered to be problem credits
Special Mention			Loans that have a potential weakness deserving management's close attention
Substandard			Loans for which a well-defined weakness has been identified that may put full collection of contractual cash flows at risk
Nonperforming			Loans for which full collection of principal and interest is not considered probable


(Dollars in millions)	UPB		Fair Value
Fair value of Merger consideration			$	33,547
Assets
Cash and due from banks			1,621
Interest-bearing deposits with banks			4,668
Securities borrowed or purchased under resale agreements			1,191
Trading assets			5,710
AFS securities			30,986
LHFS			3,741
Loans and leases:
Commercial and industrial	$	68,687	67,101
CRE	9,509		9,357
Commercial Construction	2,136		2,096
Commercial Leases	3,967		3,882
Mortgage Loans	28,191		27,180
Home Equity and Direct Lending	15,917		15,628
Indirect Auto	12,373		12,203
Indirect Other	4,678		4,445
Student Lending	6,867		6,657
Credit Card	2,518		2,500
PCI	3,652		3,126
Total loans and leases	$	158,495	154,175
Premises and equipment			1,575
CDI and other intangible assets			2,700
MSRs			1,605
Other assets			13,771
Total assets			221,743
Liabilities and Equity
Deposits			(170,633)
Short-term borrowings			(6,837)
Long-term debt			(19,457)
Other liabilities			(5,224)
Total liabilities			(202,151)
Noncontrolling interest			(108)
Less: Net assets			19,484
Goodwill			$	14,063


Unaudited (Dollars in millions, shares in thousands)	Shares of Common Stock		Preferred Stock			Common Stock			Additional Paid-In Capital			Retained Earnings			AOCI			Noncontrolling Interests			Total Shareholders' Equity			Unaudited (Dollars in millions, shares in thousands)	Shares of Common Stock	Preferred Stock		Common Stock		Additional Paid-In Capital		Retained Earnings		AOCI		Noncontrolling Interests		Total Shareholders' Equity
Balance, July 1, 2018	774,447		$	3,053		$	3,872		$	7,364		$	17,197		$	(1,706	)	$	52		$	29,832

Balance, January 1, 2019																								Balance, January 1, 2019	763,326	$	3,053	$	3,817	$	6,849	$	18,118	$	(1,715)	$	56	$	30,178
Add (Deduct):																								Add (Deduct):
Net income	—		—			—			—			832			—			7			839			Net income	—	$	—	$	—	$	—	$	792	$	—	$	6	$	798
OCI	—		—			—			—			—			(146		)	—			(146		)	OCI	—	—		—		—		—		294		—		294

Issued in connection with equity awards, net	108		—			1			—			—			—			—			1			Issued in connection with equity awards, net	2,594	—		13		(41)		—		—		—		(28)
Repurchase of common stock	(3,935	)	—			(20		)	(180		)	—			—			—			(200		)

Cash dividends declared on common stock	—		—			—			—			(313		)	—			—			(313		)	Cash dividends declared on common stock	—	—		—		—		(309)		—		—		(309)
Cash dividends declared on preferred stock	—		—			—			—			(43		)	—			—			(43		)	Cash dividends declared on preferred stock	—	—		—		—		(43)		—		—		(43)
Equity-based compensation expense	—		—			—			37			—			—			—			37			Equity-based compensation expense	—	—		—		32		—		—		—		32
Balance, September 30, 2018	770,620		$	3,053		$	3,853		$	7,221		$	17,673		$	(1,852	)	$	59		$	30,007
Balance, July 1, 2019	766,010		$	3,053		$	3,830		$	6,889		$	19,050		$	(1,119	)	$	61		$	31,764

Other, net																								Other, net	—	—		—		3		(40)		—		(2)		(39)
Balance, March 31, 2019																								Balance, March 31, 2019	765,920	$	3,053	$	3,830	$	6,843	$	18,518	$	(1,421)	$	60	$	30,883
Balance, January 1, 2020																								Balance, January 1, 2020	1,342,166	$	5,102	$	6,711	$	35,609	$	19,806	$	(844)	$	174	$	66,558
Add (Deduct):																								Add (Deduct):
Net income	—		—			—			—			825			—			3			828			Net income	—	$	—	$	—	$	—	$	1,060	$	—	$	3	$	1,063
OCI	—		—			—			—			—			93			—			93			OCI	—	—		—		—		—		1,742		—		1,742

Issued in connection with equity awards, net	368		—			2			6			—			—			—			8			Issued in connection with equity awards, net	5,295	—		26		(104)		(2)		—		—		(80)
Issued in connection with preferred stock offerings	—		1,683			—			—			—			—			—			1,683
Repurchase of common stock	(75	)	—			—			(3		)	—			—			—			(3		)

Redemption of preferred stock	—		(1,679		)	—			—			(46		)	—			—			(1,725		)	Redemption of preferred stock	—	(503)		—		—		—		—		—		(503)
Cash dividends declared on common stock	—		—			—			—			(345		)	—			—			(345		)	Cash dividends declared on common stock	—	—		—		—		(605)		—		—		(605)
Cash dividends declared on preferred stock	—		—			—			—			(44		)	—			—			(44		)	Cash dividends declared on preferred stock	—	—		—		—		(74)		—		—		(74)
Equity-based compensation expense	—		—			—			39			—			—			—			39			Equity-based compensation expense	—	—		—		79		—		—		—		79
Cumulative effect adjustment for new accounting standards																								Cumulative effect adjustment for new accounting standards	—	—		—		—		(2,109)		—		—		(2,109)
Other, net	—		—			—			—			—			—			5			5			Other, net	—	—		—		—		—		—		(10)		(10)
Balance, September 30, 2019	766,303		$	3,057		$	3,832		$	6,931		$	19,440		$	(1,026	)	$	69		$	32,303
Balance, January 1, 2018	782,006		$	3,053		$	3,910		$	7,893		$	16,259		$	(1,467	)	$	47		$	29,695
Net income	—		—			—			—			2,439			—			13			2,452
OCI	—		—			—			—			—			(385		)	—			(385		)
Issued in connection with equity awards, net	4,163		—			21			(22		)	—			—			—			(1		)
Repurchase of common stock	(15,549	)	—			(78		)	(752		)	—			—			—			(830		)
Cash dividends declared on common stock	—		—			—			—			(895		)	—			—			(895		)
Cash dividends declared on preferred stock	—		—			—			—			(130		)	—			—			(130		)
Equity-based compensation expense	—		—			—			113			—			—			—			113
Other, net	—		—			—			(11		)	—			—			(1		)	(12		)
Balance, September 30, 2018	770,620		$	3,053		$	3,853		$	7,221		$	17,673		$	(1,852	)	$	59		$	30,007
Balance, January 1, 2019	763,326		$	3,053		$	3,817		$	6,849		$	18,118		$	(1,715	)	$	56		$	30,178
Net income	—		—			—			—			2,503			—			8			2,511
OCI	—		—			—			—			—			689			—			689
Issued in connection with equity awards, net	3,052		—			15			(37		)	—			—			—			(22		)
Issued in connection with preferred stock offerings	—		1,683			—			—			—			—			—			1,683
Repurchase of common stock	(75	)	—			—			(3		)	—			—			—			(3		)
Redemption of preferred stock	—		(1,679		)	—			—			(46		)	—			—			(1,725		)
Cash dividends declared on common stock	—		—			—			—			(964		)	—			—			(964		)
Cash dividends declared on preferred stock	—		—			—			—			(131		)	—			—			(131		)
Equity-based compensation expense	—		—			—			119			—			—			—			119
Other, net	—		—			—			3			(40		)	—			5			(32		)
Balance, September 30, 2019	766,303		$	3,057		$	3,832		$	6,931		$	19,440		$	(1,026	)	$	69		$	32,303
Balance, March 31, 2020																								Balance, March 31, 2020	1,347,461	$	4,599	$	6,737	$	35,584	$	18,076	$	898	$	167	$	66,061


(number of days)	Placed on Nonperforming (1)					Charged-off
Commercial:
Commercial and industrial	90	(2)		90	(2)
CRE	90	(2)		90	(2)
Commercial construction	90	(2)		90	(2)
Lease financing	90	(2)		90	(2)
Consumer:
Residential mortgage (3)	90	to	180	90	to	210
Residential home equity and direct (3)	90	to	120	90	to	180
Indirect auto (3)	90			120
Indirect other (3)	90	to	120	120	to	180
Student (4)	NA			120	to	180
Credit card	NA			90	to	180


September 30, 2019 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses
March 31, 2020 (Dollars in millions)									March 31, 2020 (Dollars in millions)	Amortized Cost		Gross Unrealized						Fair Value
														Gains		Losses
AFS securities:									AFS securities:
U.S. Treasury	$	1,142	$	1	$	5	$	1,138	U.S. Treasury	$	2,272	$	47	$	—	$	2,319
GSE	251		4		1		254		GSE	1,846		87		—		1,933
Agency MBS	33,457		283		133		33,607
Agency MBS - residential									Agency MBS - residential	69,307		2,468		22		71,753
Agency MBS - commercial									Agency MBS - commercial	1,489		31		1		1,519
States and political subdivisions	564		35		6		593		States and political subdivisions	513		34		8		539
Non-agency MBS	197		177		—		374		Non-agency MBS	185		127		14		298
Other	31		—		—		31		Other	38		—		1		37
Total AFS securities	$	35,642	$	500	$	145	$	35,997	Total AFS securities	$	75,650	$	2,794	$	46	$	78,398
HTM securities:
U.S. Treasury	$	1,100	$	5	$	—	$	1,105
GSE	2,200		36		—		2,236
Agency MBS	15,467		185		24		15,628
States and political subdivisions	1		—		—		1
Total HTM securities	$	18,768	$	226	$	24	$	18,970

December 31, 2018 (Dollars in millions)	Amortized Cost		Gross Unrealized				Fair Value
			Gains		Losses

December 31, 2019 (Dollars in millions)									December 31, 2019 (Dollars in millions)	Amortized Cost		Gross Unrealized						Fair Value
														Gains		Losses
AFS securities:									AFS securities:
U.S. Treasury	$	3,503	$	22	$	84	$	3,441	U.S. Treasury	$	2,275	$	7	$	6	$	2,276
GSE	209		—		9		200		GSE	1,847		34		—		1,881
Agency MBS	20,927		15		787		20,155
Agency MBS - residential									Agency MBS - residential	67,983		411		158		68,236
Agency MBS - commercial									Agency MBS - commercial	1,335		13		7		1,341
States and political subdivisions	694		25		18		701		States and political subdivisions	557		34		6		585
Non-agency MBS	321		184		—		505		Non-agency MBS	190		178		—		368
Other	35		1		—		36		Other	40		—		—		40
Total AFS securities	$	25,689	$	247	$	898	$	25,038	Total AFS securities	$	74,227	$	677	$	177	$	74,727
HTM securities:
U.S. Treasury	$	1,099	$	—	$	6	$	1,093
GSE	2,199		4		43		2,160
Agency MBS	17,248		27		487		16,788
States and political subdivisions	5		—		—		5
Other	1		—		—		1
Total HTM securities	$	20,552	$	31	$	536	$	20,047


														Less than 12 months						12 months or more						Total
March 31, 2020 (Dollars in millions)													March 31, 2020 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

AFS securities:													AFS securities:

GSE													GSE	$	3	$	—	$	—	$	—	$	3	$	—
Agency MBS - residential													Agency MBS - residential	1,147		13		262		9		1,409		22
Agency MBS - commercial													Agency MBS - commercial	66		—		35		1		101		1
States and political subdivisions													States and political subdivisions	96		1		121		7		217		8
Non-agency MBS													Non-agency MBS	42		14		—		—		42		14
Other													Other	36		1		—		—		36		1
Total													Total	$	1,390	$	29	$	418	$	17	$	1,808	$	46

	Less than 12 months				12 months or more				Total
September 30, 2019 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

														Less than 12 months						12 months or more						Total
December 31, 2019 (Dollars in millions)													December 31, 2019 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

AFS securities:													AFS securities:
U.S. Treasury	$	791	$	5	$	—	$	—	$	791	$	5	U.S. Treasury	$	702	$	6	$	—	$	—	$	702	$	6
GSE	46		—		78		1		124		1		GSE	6		—		—		—		6		—
Agency MBS	7,285		42		4,299		91		11,584		133
Agency MBS - residential													Agency MBS - residential	20,328		145		1,326		13		21,654		158
Agency MBS - commercial													Agency MBS - commercial	545		5		124		2		669		7
States and political subdivisions	79		1		144		5		223		6		States and political subdivisions	65		1		144		5		209		6
Total	$	8,201	$	48	$	4,521	$	97	$	12,722	$	145
HTM securities:
Agency MBS	$	1,622	$	9	$	1,274	$	15	$	2,896	$	24
Total	$	1,622	$	9	$	1,274	$	15	$	2,896	$	24	Total	$	21,646	$	157	$	1,594	$	20	$	23,240	$	177

	Less than 12 months				12 months or more				Total
December 31, 2018 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
AFS securities:
U.S. Treasury	$	111	$	—	$	2,121	$	84	$	2,232	$	84
GSE	3		—		176		9		179		9
Agency MBS	322		2		18,478		785		18,800		787
States and political subdivisions	100		1		288		17		388		18
Total	$	536	$	3	$	21,063	$	895	$	21,599	$	898
HTM securities:
U.S. Treasury	$	698	$	3	$	395	$	3	$	1,093	$	6
GSE	—		—		1,749		43		1,749		43
Agency MBS	264		3		14,976		484		15,240		487
Total	$	962	$	6	$	17,120	$	530	$	18,082	$	536


												Accruing
	Accruing
September 30, 2019 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
March 31, 2020 (Dollars in millions)											March 31, 2020 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:											Commercial:
Commercial and industrial	$	64,118	$	34	$	—	$	172	$	64,324	Commercial and industrial	$	148,451	$	262	$	5	$	443	$	149,161
CRE	20,854		1		—		29		20,884		CRE	27,505		8		1		18		27,532
Commercial construction											Commercial construction	6,612		16		—		2		6,630
Lease financing	2,353		1		—		2		2,356		Lease financing	5,949		8		—		27		5,984
Retail:
Consumer:											Consumer:
Residential mortgage	27,412		432		347		106		28,297		Residential mortgage	51,559		679		610		248		53,096
Direct	11,346		54		7		56		11,463
Indirect	17,947		423		9		82		18,461
Revolving credit	3,194		31		16		—		3,241
PCI	347		16		24		—		387
Residential home equity and direct											Residential home equity and direct	27,293		156		10		170		27,629
Indirect auto											Indirect auto	24,489		521		11		125		25,146
Indirect other											Indirect other	10,903		74		2		1		10,980
Student											Student	6,110		593		1,068		—		7,771
Credit card											Credit card	5,202		57		41		—		5,300

Total	$	147,571	$	992	$	403	$	447	$	149,413	Total	$	314,073	$	2,374	$	1,748	$	1,034	$	319,229

	Accruing											Accruing
December 31, 2018 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
December 31, 2019 (Dollars in millions)											December 31, 2019 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:											Commercial:
Commercial and industrial	$	61,701	$	34	$	—	$	200	$	61,935	Commercial and industrial	$	129,873	$	94	$	1	$	212	$	130,180
CRE	20,990		5		—		65		21,060		CRE	26,817		5		—		10		26,832
Commercial construction											Commercial construction	6,204		1		—		—		6,205
Lease financing	2,014		1		—		3		2,018		Lease financing	6,112		2		—		8		6,122
Retail:
Consumer:											Consumer:
Residential mortgage	30,413		456		405		119		31,393		Residential mortgage	50,975		498		543		55		52,071
Direct	11,463		61		7		53		11,584
Indirect	16,901		436		6		82		17,425
Revolving credit	3,090		28		14		—		3,132
Residential home equity and direct											Residential home equity and direct	26,846		122		9		67		27,044
Indirect auto											Indirect auto	23,771		560		11		100		24,442
Indirect other											Indirect other	11,011		85		2		2		11,100
Student											Student	5,905		650		188		—		6,743
Credit card											Credit card	5,541		56		22		—		5,619
PCI	413		23		30		—		466		PCI	2,126		140		1,218		—		3,484
Total	$	146,985	$	1,044	$	462	$	522	$	149,013	Total	$	295,181	$	2,213	$	1,994	$	454	$	299,842


March 31, 2020 (Dollars in millions)	Amortized Cost Basis by Origination Year																											Revolving Credit	Loans Converted to Term	Other (1)
			2020			2019			2018			2017			2016			Prior									Total
Commercial:
Commercial and industrial:
Pass	$	7,366		$	25,371		$	15,536		$	9,849		$	6,598		$	14,904		$	66,420	$	11	$	(843)	$	145,212
Special mention	93			170			161			66			143			101			1,010		—		—		1,744
Substandard	53			216			126			74			87			296			926		1		(17)		1,762
Nonperforming	3			52			94			34			48			85			97		1		29		443
Total	7,515			25,809			15,917			10,023			6,876			15,386			68,453		13		(831)		149,161
CRE:
Pass	2,013			8,252			6,166			3,479			2,262			4,066			713		—		(92)		26,859
Special mention	1			44			102			12			65			115			—		—		—		339
Substandard	17			94			23			39			29			114			—		—		—		316
Nonperforming	—			2			4			3			—			8			1		—		—		18
Total	2,031			8,392			6,295			3,533			2,356			4,303			714		—		(92)		27,532
Commercial construction:
Pass	342			1,921			2,164			745			153			381			729		1		4		6,440
Special mention	—			5			37			—			—			—			—		—		—		42
Substandard	3			5			35			56			40			4			3		—		—		146
Nonperforming	—			1			—			1			—			—			—		—		—		2
Total	345			1,932			2,236			802			193			385			732		1		4		6,630
Lease financing:
Pass	255			1,864			1,154			1,056			381			1,221			—		—		(44)		5,887
Special mention	—			8			3			3			3			—			—		—		—		17
Substandard	—			3			—			15			2			33			—		—		—		53
Nonperforming	—			—			1			15			2			9			—		—		—		27
Total	255			1,875			1,158			1,089			388			1,263			—		—		(44)		5,984
Consumer:
Residential mortgage:
Performing	1,800			8,480			5,595			6,168			6,985			23,587			—		—		233		52,848
Nonperforming	—			4			8			7			8			221			—		—		—		248
Total	1,800			8,484			5,603			6,175			6,993			23,808			—		—		233		53,096
Residential home equity and direct:
Performing	1,296			4,436			2,164			834			420			789			15,553		1,874		93		27,459
Nonperforming	—			4			4			1			1			8			63		94		(5)		170
Total	1,296			4,440			2,168			835			421			797			15,616		1,968		88		27,629
Indirect auto:
Performing	2,799			9,725			5,548			3,571			2,070			1,166			—		—		142		25,021
Nonperforming	—			32			39			29			19			19			—		—		(13)		125
Total	2,799			9,757			5,587			3,600			2,089			1,185			—		—		129		25,146
Indirect other:
Performing	1,027			4,319			2,587			1,294			676			1,009			—		—		67		10,979
Nonperforming	—			—			—			—			—			1			—		—		—		1
Total	1,027			4,319			2,587			1,294			676			1,010			—		—		67		10,980
Student:
Performing	21			122			110			91			75			7,357			—		—		(5)		7,771
Nonperforming	—			—			—			—			—			—			—		—		—		—
Total	21			122			110			91			75			7,357			—		—		(5)		7,771
Credit card	—			—			—			—			—			—			5,268		35		(3)		5,300
Total	$	17,089		$	65,130		$	41,661		$	27,442		$	20,067		$	55,494		$	90,783	$	2,017	$	(454)	$	319,229









(Dollars in millions)	Balance at Jan 1, 2019		Charge-Offs		Recoveries		Provision (Benefit)		Other		Balance at Mar 31, 2019
Commercial:
Commercial and industrial	$	546	$	(17)	$	6	$	13	$	—	$	548
CRE	142		(8)		—		18		—		152
Commercial construction	48		—		1		(5)		—		44
Lease financing	11		(1)		—		1		—		11
Consumer:
Residential mortgage	232		(5)		1		(3)		—		225
Residential home equity and direct	104		(20)		6		13		—		103
Indirect auto	298		(92)		13		81		—		300
Indirect other	58		(17)		4		13		—		58

Credit card	110		(24)		6		20		—		112
PCI	9		—		—		(1)		—		8
ALLL	1,558		(184)		37		150		—		1,561
RUFC	93		—		—		5		—		98
ACL	$	1,651	$	(184)	$	37	$	155	$	—	$	1,659


(Dollars in millions)	Balance at Jul 1, 2018		Charge-Offs			Recoveries		Provision (Benefit)			Balance at Sep 30, 2018		(Dollars in millions)	Balance at Jan 1, 2020 (1)		Charge-Offs		Recoveries		Provision (Benefit)		Other (2)		Balance at Mar 31, 2020
Commercial:													Commercial:
Commercial and industrial	$	535	$	(28	)	$	13	$	21		$	541	Commercial and industrial	$	560	$	(39)	$	17	$	371	$	904	1,813
CRE	191		—			1		(1		)	191		CRE	150		(1)		—		68		82		299
Commercial construction													Commercial construction	52		(3)		1		22		16		88
Lease financing	10		(1		)	—		1			10		Lease financing	10		(2)		—		(23)		94		79
Retail:
Consumer:													Consumer:
Residential mortgage	221		(4		)	—		8			225		Residential mortgage	176		(11)		2		(4)		264		427
Direct	97		(17		)	6		11			97
Indirect	353		(94		)	15		79			353
Revolving credit	105		(20		)	4		22			111
Residential home equity and direct													Residential home equity and direct	107		(68)		15		102		451		607
Indirect auto													Indirect auto	304		(142)		23		189		818		1,192
Indirect other													Indirect other	60		(18)		7		12		152		213
Student													Student	—		(8)		—		34		120		146
Credit card													Credit card	122		(53)		8		95		175		347
PCI	18		(2		)	—		(6		)	10		PCI	8		—		—		—		(8)		—
ALLL	1,530		(166		)	39		135			1,538		ALLL	1,549		(345)		73		866		3,068		5,211
RUFC	110		—			—		—			110		RUFC	340		—		—		27		33		400
ACL	$	1,640	$	(166	)	$	39	$	135		$	1,648	ACL	$	1,889	$	(345)	$	73	$	893	$	3,101	$	5,611

(Dollars in millions)	Balance at Jul 1, 2019		Charge-Offs			Recoveries		Provision (Benefit)			Balance at Sep 30, 2019
Commercial:
Commercial and industrial	$	574	$	(28	)	$	5	$	25		$	576
CRE	201		(2		)	3		(6		)	196
Lease financing	10		(1		)	1		—			10
Retail:
Residential mortgage	224		(3		)	—		(22		)	199
Direct	99		(22		)	6		17			100
Indirect	359		(106		)	15		94			362
Revolving credit	120		(27		)	6		23			122
PCI	8		—			—		—			8
ALLL	1,595		(189		)	36		131			1,573
RUFC	94		—			—		(14		)	80
ACL	$	1,689	$	(189	)	$	36	$	117		$	1,653

(Dollars in millions)	Balance at Jan 1, 2018		Charge-Offs			Recoveries		Provision (Benefit)			Balance at Sep 30, 2018
Commercial:
Commercial and industrial	$	522	$	(74	)	$	32	$	61		$	541
CRE	160		(8		)	4		35			191
Lease financing	9		(3		)	1		3			10
Retail:
Residential mortgage	209		(13		)	1		28			225
Direct	106		(53		)	18		26			97
Indirect	348		(283		)	47		241			353
Revolving credit	108		(62		)	14		51			111
PCI	28		(2		)	—		(16		)	10
ALLL	1,490		(498		)	117		429			1,538
RUFC	119		—			—		(9		)	110
ACL	$	1,609	$	(498	)	$	117	$	420		$	1,648


Three Months Ended March 31, 2020 (Dollars in millions)
Par value	$	242
ALLL at acquisition	(3)
Non-credit premium (discount)	1
Purchase price	$	240



	Recorded Investment
Three Months Ended March 31, 2020 (Dollars in millions)	Without an ALLL		With an ALLL
Commercial:
Commercial and industrial	$	136	$	307
CRE	1		17
Commercial construction	—		2
Lease financing	15		12
Consumer:
Residential mortgage	3		245
Residential home equity and direct	1		169
Indirect auto	—		125
Indirect other	—		1


Total	$	156	$	878


	UPB		Recorded Investment				Related ALLL		Average Recorded Investment			Interest Income Recognized
As of / For The Nine Months Ended September 30, 2019 (Dollars in millions)			Without an ALLL		With an ALLL

																	UPB				Recorded Investment											Related ALLL			Average Recorded Investment			Interest Income Recognized
As of / For The Year Ended December 31, 2019 (Dollars in millions)															As of / For The Year Ended December 31, 2019 (Dollars in millions)									Without an ALLL				With an ALLL
Commercial:																				Commercial:
Commercial and industrial	$	286	$	76	$	198	$	25		$	302		$	5		Commercial and industrial		$	339			$	124			$	167			$	20		$	298		$	6
CRE	51		8		42		4		85			1			CRE		29				3				26				2			71			1
Commercial construction															Commercial construction		39				—				38				7			5			—
Lease financing	2		—		2		—		2			—			Lease financing		18				7				2				—			2			—
Retail:
Consumer:															Consumer:
Residential mortgage	803		118		637		56		824			26			Residential mortgage		650				92				527				42			799			34
Direct	79		26		37		4		65			3
Indirect	361		5		346		63		333			39
Revolving credit	31		—		31		12		29			1
Residential home equity and direct															Residential home equity and direct		76				24				37				5			65			3
Indirect auto															Indirect auto		367				9				349				64			334			53
Indirect other															Indirect other		5				—				5				1			4			—

Credit card															Credit card		31				—				31				12			28			1
Total	$	1,613	$	233	$	1,293	$	164	$	1,640		$	75		Total		$	1,554			$	259			$	1,182			$	153		$	1,606		$	98

	UPB		Recorded Investment				Related ALLL		Average Recorded Investment			Interest Income Recognized
As of / For The Year Ended December 31, 2018 (Dollars in millions)			Without an ALLL		With an ALLL
Commercial:
Commercial and industrial	$	318	$	95	$	211	$	25		$	343		$	6
CRE	102		29		71		9		97			2
Lease financing	3		—		3		—		6			—
Retail:
Residential mortgage	904		122		732		68		841			34
Direct	86		26		41		5		72			4
Indirect	335		6		320		57		306			46
Revolving credit	28		—		28		11		29			1
Total	$	1,776	$	278	$	1,406	$	175	$	1,694		$	93


(Dollars in millions)	Sep 30, 2019		Dec 31, 2018		(Dollars in millions)	Mar 31, 2020		Dec 31, 2019

Performing TDRs:					Performing TDRs:
Commercial:					Commercial:
Commercial and industrial	$	69	$	65	Commercial and industrial	$	65	$	47
CRE	7		10		CRE	7		6
Retail:
Commercial construction					Commercial construction	36		37
Lease financing					Lease financing	1		—
Consumer:					Consumer:
Residential mortgage	570		656		Residential mortgage	513		470
Direct	52		55
Indirect	328		305
Revolving credit	31		28
Residential home equity and direct					Residential home equity and direct	66		51
Indirect auto					Indirect auto	350		333
Indirect other					Indirect other	5		5
Student					Student	1		—
Credit card					Credit card	35		31
Total performing TDRs	1,057		1,119		Total performing TDRs	1,079		980
Nonperforming TDRs (also included in NPL disclosures)	115		176
Nonperforming TDRs					Nonperforming TDRs	121		82
Total TDRs	$	1,172	$	1,295	Total TDRs	$	1,200	$	1,062
ALLL attributable to TDRs	$	138	$	146	ALLL attributable to TDRs	$	159	$	132


	2019							2018
Three Months Ended September 30, (Dollars in millions)	Type of Modification				ALLL Impact			Type of Modification					ALLL Impact
	Rate		Structure				Rate			Structure
As of / for the Three Months Ended March 31, 2020 (Dollars in millions)															As of / for the Three Months Ended March 31, 2020 (Dollars in millions)	Type of Modification									Prior Quarter Loan Balance		ALLL at Period End
																			Rate			Structure
Newly designated TDRs:																		Newly designated TDRs:
Commercial:															Commercial:
Commercial and industrial	$	2	$	5	$	—		$	39		$	3	$	—	Commercial and industrial	$	28			$	3		$	36	$	2
CRE	—		—		—			—			1		—		CRE	1				—			1		—
Retail:

Lease financing															Lease financing	1				—			1		—
Consumer:															Consumer:
Residential mortgage	51		7		3			53			7		3		Residential mortgage	77				15			94		5
Direct	2		1		—			2			1		—
Indirect	61		1		7			52			1		6
Revolving credit	6		—		1			4			—		1
Residential home equity and direct															Residential home equity and direct	17				5			23		1
Indirect auto															Indirect auto	56				14			73		5
Indirect other															Indirect other	1				—			1		—
Student															Student	—				1			1		—
Credit card															Credit card	10				—			10		3
Re-modification of previously designated TDRs	12		2		—			13			1		—		Re-modification of previously designated TDRs	18				1

	2019							2018
Nine Months Ended September 30, (Dollars in millions)	Type of Modification				ALLL Impact			Type of Modification					ALLL Impact
	Rate		Structure				Rate			Structure
As of / for the Three Months Ended March 31, 2019 (Dollars in millions)															As of / for the Three Months Ended March 31, 2019 (Dollars in millions)	Type of Modification									Prior Quarter Loan Balance		ALLL at Period End
																			Rate			Structure
Newly designated TDRs:																		Newly designated TDRs:
Commercial:															Commercial:
Commercial and industrial	$	52	$	11	$	2		$	69		$	46	$	—	Commercial and industrial	$	26			$	3		$	19	$	3
CRE	1		1		—			27			3		—		CRE	1				—			3		—
Retail:

Consumer:															Consumer:
Residential mortgage	173		21		10			193			22		12		Residential mortgage	73				8			75		6
Direct	7		3		—			6			2		—
Indirect	159		3		19			139			3		16
Revolving credit	17		—		3			13			—		3
Residential home equity and direct															Residential home equity and direct	3				1			3		1
Indirect auto															Indirect auto	47				1			51		11
Indirect other															Indirect other	1				—			1		—

Credit card															Credit card	6				—			6		3
Re-modification of previously designated TDRs	49		18		—			65			11		—		Re-modification of previously designated TDRs	23				5


	Weighted Average Remaining Amortization Period	March 31, 2020															December 31, 2019

(Dollars in millions)				Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
CDI	9.3 years	$	2,599		$	(485)		$	2,114		$	2,474		$	(365)		$	2,109
Other, primarily client relationship intangibles	11.2	1,873			(819)			1,054			1,808			(775)			1,033
Total		$	4,472		$	(1,304)		$	3,168		$	4,282		$	(1,140)		$	3,142


	March 31, 2020													December 31, 2019
	Range							Weighted Average			Range						Weighted Average
(Dollars in millions)	Min		Max							Min			Max



Prepayment speed	9.4	%	19.0	%	11.2		%	8.4	%		18.6	%		9.6		%
Effect on fair value of a 10% increase					$	(104)								$	(102)
Effect on fair value of a 20% increase					(198)									(195)
OAS	2.8	%	12.8	%	5.9		%	4.0	%		13.5	%		6.7		%
Effect on fair value of a 10% increase					$	(39)								$	(54)
Effect on fair value of a 20% increase					(76)									(106)
Composition of loans serviced for others:
Fixed-rate residential mortgage loans					98.6		%							98.5		%
Adjustable-rate residential mortgage loans					1.4									1.5
Total					100.0		%							100.0		%
Weighted average life					4.3 years									5.4 years



September 30, 2019 (Dollars in millions)	Operating Leases			Finance Leases
ROU assets	$	841		$	17
Maturities of lease liabilities:
2019	$	32		$	2
2020	209			7
2021	180			6
2022	154			5
2023	123			3
2024	97			2
Thereafter	312			3
Total lease payments	1,107			28
Less: imputed interest	139			5
Total lease liabilities	$	968		$	23
Weighted average remaining term	7.6 years			4.9 years
Weighted average discount rate	3.1		%	7.2		%







Three Months Ended March 31,	2020		2019

Cash dividends declared per share	$	0.450	$	0.405



	Sep 30, 2019											Dec 31, 2018
				Stated Rate				Effective Rate		Carrying Amount		Carrying Amount
(Dollars in millions)	Maturity			Min		Max		Effective Rate		Carrying Amount		Carrying Amount
BB&T Corporation:
Fixed rate senior notes	2020	to	2025	2.05	%	5.38	%	2.69	%	$	12,844	$	10,408
Floating rate senior notes	2020		2022	2.46		3.02		2.77		1,948		2,398
Fixed rate subordinated notes	2019		2029	3.88		5.25		2.32		1,603		903
Branch Bank:
Fixed rate senior notes	2020		2022	2.10		2.85		2.43		3,456		4,895
Floating rate senior notes	2020		2020	2.35		2.75		2.68		900		1,149
Fixed rate subordinated notes	2025		2029	2.64		3.80		2.78		2,961		2,075
FHLB advances (1)	2019		2034	—		5.50		1.65		1,640		1,749
Other long-term debt										168		132
Total long-term debt										$	25,520	$	23,709


~~(1)~~	~~FHLB advances had a weighted average maturity of 4.1 years at September 30, 2019.~~



(Shares in thousands)	Units/Shares		Wtd. Avg. Grant Date Fair Value
Nonvested at January 1, 2019	12,060		$	38.03
Granted	3,919		44.39
Vested	(3,394	)	35.27
Forfeited	(345	)	42.43
Nonvested at September 30, 2019	12,240		40.70


Three Months Ended (Dollars in millions)	Pension and OPEB Costs			Cash Flow Hedges			AFS Securities			Other, net			Total
AOCI balance, July 1, 2018	$	(977	)	$	12		$	(723	)	$	(18	)	$	(1,706	)
OCI before reclassifications, net of tax	(27		)	20			(162		)	1			(168		)
Amounts reclassified from AOCI:
Before tax	19			—			9			—			28
Tax effect	4			—			2			—			6
Amounts reclassified, net of tax	15			—			7			—			22
Total OCI, net of tax	(12		)	20			(155		)	1			(146		)
AOCI balance, September 30, 2018	$	(989	)	$	32		$	(878	)	$	(17	)	$	(1,852	)
AOCI balance, July 1, 2019	$	(1,128	)	$	(124	)	$	151		$	(18	)	$	(1,119	)
OCI before reclassifications, net of tax	(58		)	3			116			—			61
Amounts reclassified from AOCI:
Before tax	27			14			2			—			43
Tax effect	7			4			—			—			11
Amounts reclassified, net of tax	20			10			2			—			32
Total OCI, net of tax	(38		)	13			118			—			93
AOCI balance, September 30, 2019	$	(1,166	)	$	(111	)	$	269		$	(18	)	$	(1,026	)

Nine Months Ended September 30, 2019 and 2018 (Dollars in millions)	Pension and OPEB Costs			Cash Flow Hedges			AFS Securities			Other, net			Total
AOCI balance, January 1, 2018	$	(1,004	)	$	(92	)	$	(356	)	$	(15	)	$	(1,467	)
OCI before reclassifications, net of tax	(27		)	113			(544		)	(3		)	(461		)
Amounts reclassified from AOCI:
Before tax	55			14			29			1			99
Tax effect	13			3			7			—			23
Amounts reclassified, net of tax	42			11			22			1			76
Total OCI, net of tax	15			124			(522		)	(2		)	(385		)
AOCI balance, September 30, 2018	(989		)	32			(878		)	(17		)	(1,852		)

Three Months Ended March 31, 2020 and 2019 (Dollars in millions)																Three Months Ended March 31, 2020 and 2019 (Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		Other, net		Total

AOCI balance, January 1, 2019	$	(1,164	)	$	(31	)	$	(500	)	$	(20	)	$	(1,715	)	AOCI balance, January 1, 2019	$	(1,164)	$	(31)	$	(500)	$	(20)	$	(1,715)
OCI before reclassifications, net of tax	(58		)	(88		)	776			2			632			OCI before reclassifications, net of tax	—		(30)		314		2		286
Amounts reclassified from AOCI:																Amounts reclassified from AOCI:
Before tax	74			11			(10		)	—			75			Before tax	23		(5)		(6)		—		12
Tax effect	18			3			(3		)	—			18			Tax effect	6		(1)		(1)		—		4
Amounts reclassified, net of tax	56			8			(7		)	—			57			Amounts reclassified, net of tax	17		(4)		(5)		—		8
Total OCI, net of tax	(2		)	(80		)	769			2			689			Total OCI, net of tax	17		(34)		309		2		294
AOCI balance, September 30, 2019	$	(1,166	)	$	(111	)	$	269		$	(18	)	$	(1,026	)

AOCI balance, March 31, 2019																AOCI balance, March 31, 2019	$	(1,147)	$	(65)	$	(191)	$	(18)	$	(1,421)
AOCI balance, January 1, 2020																AOCI balance, January 1, 2020	$	(1,122)	$	(101)	$	380	$	(1)	$	(844)
OCI before reclassifications, net of tax																OCI before reclassifications, net of tax	—		—		1,690		(5)		1,685
Amounts reclassified from AOCI:																Amounts reclassified from AOCI:
Before tax																Before tax	20		15		41		—		76
Tax effect																Tax effect	5		4		10		—		19
Amounts reclassified, net of tax																Amounts reclassified, net of tax	15		11		31		—		57
Total OCI, net of tax																Total OCI, net of tax	15		11		1,721		(5)		1,742
AOCI balance, March 31, 2020																AOCI balance, March 31, 2020	$	(1,107)	$	(90)	$	2,101	$	(6)	$	898
Primary income statement location of amounts reclassified from AOCI	Other expense			Net interest income			Net interest income			Net interest income						Primary income statement location of amounts reclassified from AOCI	Other expense		Net interest income		Net interest income		Net interest income


(Dollars in millions)	Balance Sheet Location	Mar 31, 2020		Dec 31, 2019



Investments in affordable housing projects:
Carrying amount	Other assets	$	3,776	$	3,684
Amount of future funding commitments included in carrying amount	Other liabilities	1,154		1,271
Lending exposure		540		647

Renewable energy investments:
Carrying amount	Other assets	107		81
Amount of future funding commitments not included in carrying amount	N/A	211		246
Private equity and certain other equity method investments:
Carrying amount	Other assets	1,597		1,556
Amount of future funding commitments not included in carrying amount	N/A	378		331



Three Months Ended March 31, (Dollars in millions)	Income Statement Location	2020		2019
Tax credits:
Investments in affordable housing projects	Provision for income taxes	$	117	$	79
Other community development investments	Provision for income taxes	22		—

Amortization and other changes in carrying amount:
Investments in affordable housing projects	Provision for income taxes	$	114	$	69
Other community development investments	Other noninterest income	20		—
Renewable energy investments	Other noninterest income	—		—



September 30, 2019 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:
AFS securities:
U.S. Treasury	$	1,138	$	—	$	1,138	$	—	$	—
GSE	254		—		254		—		—
Agency MBS	33,607		—		33,607		—		—
States and political subdivisions	593		—		593		—		—
Non-agency MBS	374		—		—		374		—
Other	31		—		31		—		—
Total AFS securities	35,997		—		35,623		374		—
LHFS	1,442		—		1,442		—		—
MSRs	919		—		—		919		—
Other assets:
Trading and equity securities	871		464		407		—		—
Derivative assets	680		—		892		20		(232		)
Private equity investments	467		—		—		467		—
Total assets	$	40,376	$	464	$	38,364	$	1,780	$	(232	)
Liabilities:
Derivative liabilities	$	39	$	1	$	150	$	16	$	(128	)
Securities sold short	113		—		113		—		—
Total liabilities	$	152	$	1	$	263	$	16	$	(128	)

December 31, 2018 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:
AFS securities:
U.S. Treasury	$	3,441	$	—	$	3,441	$	—	$	—
GSE	200		—		200		—		—
Agency MBS	20,155		—		20,155		—		—
States and political subdivisions	701		—		701		—		—
Non-agency MBS	505		—		114		391		—
Other	36		—		36		—		—
Total AFS securities	25,038		—		24,647		391		—
LHFS	988		—		988		—		—
MSRs	1,108		—		—		1,108		—
Other assets:
Trading and equity securities	767		374		390		3		—
Derivative assets	246		—		234		12		—
Private equity investments	393		—		—		393		—
Total assets	$	28,540	$	374	$	26,259	$	1,907	$	—
Liabilities:
Derivative liabilities	$	247	$	1	$	246	$	—	$	—
Securities sold short	145		—		145		—		—
Total liabilities	$	392	$	1	$	391	$	—	$	—




Three Months Ended (Dollars in millions)	Trading Securities		Non-agency MBS		MSRs		Net Derivatives		Private Equity Investments
Balance at January 1, 2019	$	3	$	391	$	1,108	$	12	$	393
Total realized and unrealized gains (losses):
Included in earnings	—		2		(54)		8		23
Included in unrealized net holding gains (losses) in OCI	—		1		—		—		—
Purchases	15		—		—		—		7
Issuances	—		—		22		17		—
Sales	(7)		—		—		—		(33)
Settlements	—		(8)		(40)		(30)		(2)


Balance at March 31, 2019	$	11	$	386	$	1,036	$	7	$	388

Balance at January 1, 2020	$	—	$	368	$	2,618	$	19	$	440
Total realized and unrealized gains (losses):
Included in earnings	—		3		(526)		111		2
Included in unrealized net holding gains (losses) in OCI	—		(64)		—		—		—
Purchases	—		—		—		—		27
Issuances	—		—		187		155		—
Sales	—		—		—		—		—
Settlements	—		(9)		(129)		(142)		(21)


Balance at March 31, 2020	$	—	$	298	$	2,150	$	143	$	448
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2020	$	—	$	3	$	(526)	$	154	$	—






































Primary income statement location of realized gains (losses) included in earnings	Interest income		Interest income		Residential mortgage income and Commercial real estate related income		Residential mortgage income and Commercial real estate related income		Other income



	~~Cash Flow Hedges~~	~~Fair Value Hedges~~	~~Derivatives Not Designated as Hedges~~
~~Risk exposure~~	~~Variability in cash flows of interest payments on floating rate business loans, overnight funding and various LIBOR funding instruments.~~	~~Changes in value on fixed rate long-term debt, CDs, FHLB advances, loans and state and political subdivision securities due to changes in interest rates.~~	Risk associated with an asset or liability, including mortgage banking operations and MSRs, or for client needs. Includes exposure to changes in market rates and conditions subsequent to the interest rate lock and funding date for mortgage loans originated for sale.
~~Risk management objective~~	~~Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest.~~	~~Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps.~~	For interest rate lock commitment derivatives and LHFS, use mortgage-based derivatives such as forward commitments and options to mitigate market risk. For MSRs, mitigate the income statement effect of changes in the fair value of the MSRs. For client swaps, hedges are executed with dealer counterparties to offset market risk.
~~Treatment during the hedge period~~	~~Changes in value of the hedging instruments are recognized in AOCI until the related cash flows from the hedged item are recognized in earnings.~~	~~Changes in value of both the hedging instruments and the assets or liabilities being hedged are recognized in the income statement line item associated with the instrument being hedged.~~	~~Entire change in fair value recognized in current period income.~~
~~Treatment if hedge ceases to be highly effective or is terminated~~	~~Hedge is dedesignated. Changes in value recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings.~~	If hedged item remains outstanding, the basis adjustment that resulted from hedging is amortized into earnings over the lesser of the designated hedged period or the maturity date of the instrument, and cash flows from terminations are reported in the same category as the cash flows from the hedged item.	~~Not applicable~~
~~Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter~~	~~Hedge accounting ceases and any gain or loss in AOCI is reported in earnings immediately.~~	~~Not applicable~~	~~Not applicable~~


	March 31, 2020												December 31, 2019
	Notional Amount		Fair Value								Notional Amount		Fair Value
(Dollars in millions)					Assets			Liabilities					Assets		Liabilities






Fair value hedges:
Interest rate contracts:
Swaps hedging long-term debt	$	23,701	$	577		$	—		$	23,701	$	113	$	(25)
Options hedging long-term debt	3,407		—			(5)			3,407		—		(2)
Swaps hedging commercial loans	44		—			—			44		—		—



Total	27,152		577			(5)			27,152		113		(27)
Not designated as hedges:
Client-related and other risk management:
Interest rate contracts:
Swaps	150,165		4,029			(1,026)			144,473		1,817		(673)

Options	24,997		59			(23)			25,938		28		(19)
Forward commitments	10,902		140			(147)			7,907		6		(7)
Other	2,483		—			—			1,807		—		—
Equity contracts	39,452		1,483			(1,781)			38,426		1,988		(2,307)
Credit contracts:
Loans and leases	1,179		18			(22)			894		—		(34)
Risk participation agreements	6,829		—			(9)			6,696		—		(2)
Total return swaps	1,924		318			(4)			2,531		27		(11)
Trading	677		5			(5)			—		—		—
Foreign exchange contracts	13,192		242			(259)			12,986		144		(164)
Commodity	2,800		346			(342)			2,659		67		(65)

Total	254,600		6,640			(3,618)			244,317		4,077		(3,282)
Mortgage banking:
Interest rate contracts:
Swaps	300		—			—			535		—		—
Interest rate lock commitments	7,605		177			(22)			4,427		34		(2)
When issued securities, forward rate agreements and forward commitments	10,855		27			(224)			11,997		10		(18)
Other	668		6			—			603		2		—
Total	19,428		210			(246)			17,562		46		(20)
MSRs:
Interest rate contracts:
Swaps	21,142		—			—			19,196		—		—

Options	1,684		15			(19)			1,519		22		(2)
When issued securities, forward rate agreements and forward commitments	1,224		29			(54)			5,560		2		(5)
Other	739		—			—			567		—		—
Total	24,789		44			(73)			26,842		24		(7)
Total derivatives not designated as hedges	298,817		6,894			(3,937)			288,721		4,147		(3,309)
Total derivatives	$	325,969	7,471			(3,942)			$	315,873	4,260		(3,336)
Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements			(1,988)			1,988					(1,708)		1,708
Cash collateral (received) posted for amounts subject to master netting arrangements			(1,443)			1,190					(499)		1,262

Net amount			$	4,040		$	(764)				$	2,053	$	(366)



		September 30, 2019								December 31, 2018
	Hedged Item or Transaction	Notional Amount		Fair Value						Notional Amount		Fair Value
(Dollars in millions)	Hedged Item or Transaction	Notional Amount		Gain			Loss			Notional Amount		Gain			Loss
Cash flow hedges:
Interest rate contracts:
Pay fixed swaps	3 mo. LIBOR funding	$	—	$	—		$	—		$	6,500	$	—		$	—
Fair value hedges:
Interest rate contracts:
Receive fixed swaps	Long-term debt	17,934		195			(29		)	12,908		5			(74		)
Options	Long-term debt	4,785		—			(3		)	4,785		—			(2		)
Pay fixed swaps	Commercial loans	44		—			—			505		2			—
Pay fixed swaps	Municipal securities	—		—			—			259		—			—
Total		22,763		195			(32		)	18,457		7			(76		)
Not designated as hedges:
Client-related and other risk management:
Interest rate contracts:
Receive fixed swaps		14,210		657			(1		)	11,577		128			(98		)
Pay fixed swaps		13,512		—			(84		)	11,523		19			(32		)
Other		1,336		3			(3		)	1,143		2			(3		)
Forward commitments		6,171		7			(16		)	2,883		11			(13		)
Foreign exchange contracts		651		4			(2		)	529		5			(2		)
Total		35,880		671			(106		)	27,655		165			(148		)
Mortgage banking:
Interest rate contracts:
Interest rate lock commitments		2,376		20			(5		)	702		12			—
When issued securities, forward rate agreements and forward commitments		3,183		6			(16		)	1,753		2			(20		)
Other		75		—			(1		)	271		2			(1		)
Total		5,634		26			(22		)	2,726		16			(21		)
MSRs:
Interest rate contracts:
Receive fixed swaps		3,338		—			—			4,328		—			—
Pay fixed swaps		2,245		—			—			3,224		—			—
Options		884		17			—			3,155		48			(2		)
When issued securities, forward rate agreements and forward commitments		1,199		3			(7		)	1,590		10			—
Other		157		—			—			103		—			—
Total		7,823		20			(7		)	12,400		58			(2		)
Total derivatives not designated as hedges		49,337		717			(135		)	42,781		239			(171		)
Total derivatives		$	72,100	912			(167		)	$	67,738	246			(247		)
Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements				(49		)	49					(47		)	47
Cash collateral (received) posted for amounts subject to master netting arrangements				(183		)	79					(53		)	82
Net amount				$	680		$	(39	)			$	146		$	(118	)

Derivative instruments under master netting agreements				$	233		$	(137	)			$	102		$	(131	)
Derivative instruments not under master netting agreements				679			(30		)			144			(116		)
Total derivatives				$	912		$	(167	)			$	246		$	(247	)


March 31, 2020 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount Presented in the Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	$	6,333	$	(2,897)	$	3,436	$	(24)	$	3,412
Derivatives not subject to master netting arrangement or similar arrangement	590		—		590		(1)		589
Exchange traded derivatives	548		(534)		14		—		14
Total derivative assets	$	7,471	$	(3,431)	$	4,040	$	(25)	$	4,015
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	$	(3,100)	$	2,644	$	(456)	$	3	$	(453)
Derivatives not subject to master netting arrangement or similar arrangement	(168)		—		(168)		13		(155)
Exchange traded derivatives	(674)		534		(140)		—		(140)
Total derivative liabilities	$	(3,942)	$	3,178	$	(764)	$	16	$	(748)

December 31, 2019 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount Presented in the Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	$	3,516	$	(2,003)	$	1,513	$	(17)	$	1,496
Derivatives not subject to master netting arrangement or similar arrangement	138		—		138		(1)		137
Exchange traded derivatives	606		(204)		402		—		402
Total derivative assets	$	4,260	$	(2,207)	$	2,053	$	(18)	$	2,035
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	$	(2,939)	$	2,761	$	(178)	$	22	$	(156)
Derivatives not subject to master netting arrangement or similar arrangement	(193)		5		(188)		11		(177)
Exchange traded derivatives	(204)		204		—		—		—
Total derivative liabilities	$	(3,336)	$	2,970	$	(366)	$	33	$	(333)


	March 31, 2020										December 31, 2019
			Hedge Basis Adjustment								Hedge Basis Adjustment
(Dollars in millions)	Hedged Asset / Liability Basis		Items Currently Designated		Items No Longer Designated		Hedged Asset / Liability Basis		Items Currently Designated		Items No Longer Designated



AFS securities	$	433	$	—	$	56	$	473	$	—	$	65
Loans and leases	518		6		14		528		3		15

Long-term debt	29,980		1,098		22		28,557		174		23