UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~_____________________________~~

FORM 10-Q

~~_____________________________~~

☒ Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended: March 31, ~~2020~~2021

Commission File Number: 1-10853

_____________________________

TRUIST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

~~_____________________________~~

North Carolina

56-0939887

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

214 North Tryon Street

Charlotte,

North Carolina

28202

(Address of principal executive offices)

(Zip Code)

~~Registrant's~~Registrant’s telephone number, including area code:

(336)

733-2000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $5 par value

TFC

~~New York Stock Exchange~~

~~Depositary Shares each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock~~

~~TFC.PF~~

~~New York Stock Exchange~~

~~Depositary Shares each representing 1/1,000th interest in a share of Series G Non-Cumulative Perpetual Preferred Stock~~

~~TFC.PG~~

New York Stock Exchange

Depositary Shares each representing 1/1,000th interest in a share of Series H Non-Cumulative Perpetual Preferred Stock

TFC.PH

New York Stock Exchange

Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred Stock

TFC.PI

New York Stock Exchange

5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred Stock

TFC.PJ

New York Stock Exchange

Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock

TFC.PO

New York Stock Exchange

Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred Stock

TFC.PR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~"large~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting ~~company"~~company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At ~~April 30, 2020, 1,347,468,353~~March 31, 2021, 1,344,845,174 shares of the ~~registrant's~~registrant’s common stock, $5 par value, were outstanding.

TABLE OF CONTENTS

TRUIST FINANCIAL CORPORATION

FORM 10-Q

March 31, ~~2020~~2021

Page No.

PART I - Financial Information

Glossary of Defined Terms

Forward-Looking Statements

Item 1.

Financial Statements

Consolidated Balance Sheets (Unaudited)

Consolidated Statements of Income (Unaudited)

Consolidated Statements of Comprehensive Income (Unaudited)

Consolidated Statements of Changes in ~~Shareholders'~~Shareholders’ Equity (Unaudited)

Consolidated Statements of Cash Flows (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Basis of Presentation

~~Note 2. Business Combinations~~

Note 3.2. Securities Financing Activities

1710

Note 3. Investment Securities

Note 4. ~~Investment Securities~~Loans and ACL

1712

Note 5. ~~Loans~~Goodwill and ~~ACL~~Other Intangible Assets

Note 6. Loan Servicing

Note ~~6. Goodwill~~7. Other Assets and ~~Other Intangible Assets~~Liabilities

2520

Note ~~7. Loan Servicing~~8. Borrowings

~~Note 8. Other Assets and Liabilities~~

2721

Note 9. ~~Shareholders'~~Shareholders’ Equity

2822

Note 10. AOCI

2822

Note 11. Income Taxes

2923

Note 12. Benefit Plans

2923

Note 13. Commitments and Contingencies

2923

Note 14. Fair Value Disclosures

3226

Note 15. Derivative Financial Instruments

3630

Note 16. Computation of EPS

4034

Note 17. Operating Segments

4034

Item 2.

~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

4236

Item 3.

Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management in MD&A)

6153

Item 4.

Controls and Procedures

PART II - Other Information

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities - (none)

Item 4.

Mine Safety Disclosures - (not applicable)

Item 5.

Other Information - (none to be reported)

Item 6.

Exhibits

7263

Glossary of Defined Terms

The following terms may be used throughout this 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~~			~~Rules issued by the FRB, OCC and FDIC on capital adequacy and liquidity requirements in the U.S for banking organizations.~~
BB&T			BB&T Corporation and subsidiaries (changed to ~~"Truist~~“Truist Financial ~~Corporation"~~Corporation” effective with the Merger)

~~BHC~~			~~Bank holding company~~



Board			~~Truist's~~Truist’s Board of Directors

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

CFO			Chief Financial Officer
CET1			Common equity tier 1
~~CIB~~			~~Corporate and Investment Banking~~


Company			Truist Financial Corporation and its subsidiaries (interchangeable with ~~"Truist"~~“Truist” below), formerly BB&T Corporation
COVID-19			Coronavirus disease 2019
CRA			Community Reinvestment Act of 1977
CRE			Commercial real estate
CRO			Chief Risk Officer
CVA			Credit valuation adjustment











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


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


GAAP			Accounting principles generally accepted in the United States of America
GDP			Gross Domestic Product

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



~~HTM~~			~~Held-to-maturity~~

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~~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~~
MRM			Model Risk Management

~~Truist Financial Corporation 1~~


~~Term~~			~~Definition~~
MSR			Mortgage servicing right

~~N/A~~NA			Not applicable

NIM			Net interest margin, computed on a TE basis
NM			Not meaningful
NPA			Nonperforming asset
NPL			Nonperforming loan

~~NYSE~~			~~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

Truist Financial Corporation 1


Term			Definition
OREO			Other real estate owned
OT&C			Other, Treasury and Corporate
~~OTC~~			~~Over-the-counter~~

Parent Company			Truist Financial Corporation, the parent company of Truist Bank and other subsidiaries

PCD			Purchased credit deteriorated loans
PCI			Purchased credit impaired loans

~~PSU~~PPP			~~Performance share units~~Paycheck Protection Program, established by the CARES Act
Re-REMICs			Re-securitizations of Real Estate Mortgage Investment Conduits


ROU 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~~SCB			~~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~~Stress Capital Buffer

SOFR			Secured Overnight Financing Rate
SunTrust			SunTrust Banks, Inc.

TDR			Troubled debt restructuring
TE			Taxable-equivalent

TRS			Total Return Swap
Truist			Truist Financial Corporation and its subsidiaries (interchangeable with the ~~"Company"~~“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"~~“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 Truist. Words such as ~~"anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should,"~~“anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,~~" "could"~~” “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~~management’s expectations and assumptions regarding ~~Truist's~~Truist’s business, the economy, and other future conditions. Such statements involve inherent uncertainties, risks, and changes in circumstances that are 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 those contemplated by forward-looking statements include the following, without limitation, as well as the risks and uncertainties more fully discussed ~~under~~in Part II, Item 1A-Risk Factors in this report and Part I, Item 1A-Risk Factors in Truist’s Form 10-K for the year ended December 31, ~~2019:~~2020:


•			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 and uncertainties relating to the Merger, including the ability to successfully integrate the companies or to realize the anticipated benefits of the Merger;~~
•			~~expenses relating to the Merger and integration of heritage BB&T and heritage SunTrust;~~
•			~~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 or asset growth, a deterioration in credit quality or a reduced demand for credit, insurance or other services;
•			~~risk management measures and management oversight functions may not identify or address risks adequately;~~
•			unfavorable resolution of legal proceedings or other claims or regulatory or other governmental investigations or inquiries could result in negative publicity, protests, fines, penalties, restrictions on Truist's operations or ability to expand its business or other negative consequences, all of which could cause reputational damage and adversely impact Truist's financial condition and results of operations;
•			competitors of Truist may have greater financial resources or develop products that enable them to compete more successfully than Truist and may be subject to different regulatory standards than Truist;
•			failure to maintain or 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 other reasons, may cause Truist to lose market share or incur additional expense;
•			~~fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect or mitigate;~~
•			operational or communications systems, including systems used by vendors or other external parties, may 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;
•			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 Truist's financial condition and results of 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.~~

•risks and uncertainties relating to the Merger of heritage BB&T and heritage SunTrust, including the ability to successfully integrate the companies or to realize the anticipated benefits of the Merger;

•expenses relating to the Merger and integration of heritage BB&T and heritage SunTrust;

•deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;

•the COVID-19 pandemic has disrupted the global economy, adversely impacted Truist’s financial condition, and results of operations, including through increased expenses, reduced fee income and net interest margin and increases in the allowance for credit losses, and continuation of current conditions could worsen these impacts and also adversely affect Truist’s capital and liquidity position or cost of capital, impair the ability of borrowers to repay outstanding loans, cause an outflow of deposits, and impair goodwill or other assets;

•Truist is subject to credit risk by lending or committing to lend money, and may have more credit risk and higher credit losses to the extent that loans are concentrated by loan type, industry segment, borrower type or location of the borrower or collateral;

•changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark and potentially negative interest rates, 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;

•inability to access short-term funding or liquidity, loss of client deposits or changes in Truist’s credit ratings, which could increase the cost of funding or limit access to capital markets;

•risk management oversight functions may not identify or address risks adequately, and management may not be able to effectively manage credit risk;

•risks resulting from the extensive use of models in Truist’s business, which may impact decisions made by management and regulators;

•failure to execute on strategic or operational plans, including the ability to successfully complete or integrate mergers and acquisitions;

•increased competition, including from (i) new or existing competitors that could have greater financial resources or be subject to different regulatory standards, and (ii) 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;

•failure to maintain or enhance Truist’s competitive position with respect to new products, services and technology, whether it fails to anticipate client expectations or because its technological developments fail to perform as desired or do not achieve market acceptance or regulatory approval or for other reasons, may cause Truist to lose market share or incur additional expense;

•negative public opinion, which could damage Truist’s reputation;

•increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance;

•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, negative publicity, or other adverse consequences;

•evolving legislative, accounting and 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;

•the monetary and fiscal policies of the federal government and its agencies could have a material adverse effect on profitability;

•accounting policies and processes require management to make estimates about matters that are uncertain, including the potential write down to goodwill if there is an elongated period of decline in market value for Truist’s stock and adverse economic conditions are sustained over a period of time;

•general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, and instability in global geopolitical matters or volatility in financial markets could result in, among other things, slower deposit or asset growth, a deterioration in credit quality, or a reduced demand for credit, insurance, or other services;

•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;

•risks relating to Truist’s role as a loan servicer, including an increase in the scope or costs of the services Truist is required to perform, without any corresponding increase in servicing fees or a breach of Truist’s obligations as servicer;

•Truist’s success depends on hiring and retaining key personnel, and if these individuals leave or change roles without effective replacements, Truist’s operations and integration activities could be adversely impacted, which could be exacerbated as Truist continues to integrate the management teams of heritage BB&T and heritage SunTrust;

•fraud or misconduct by internal or external parties, which Truist may not be able to prevent, detect, or mitigate;

•security risks, including denial of service attacks, hacking, social engineering attacks targeting Truist’s teammates and clients, malware intrusion, data corruption attempts, system breaches, cyber attacks, 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; and

•widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism and pandemics), and the effects of climate change could have an adverse effect on Truist’s financial condition and results of operations, lead to material disruption of Truist’s operations or the ability or willingness of clients to access Truist’s products and services.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by applicable law or regulation, Truist undertakes no obligation to revise or update any forward-looking statements.

Truist Financial Corporation 3

ITEM 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited (Dollars in millions, except per share data, shares in thousands)	Unaudited (Dollars in millions, except per share data, shares in thousands)	March 31, 2020		December 31, 2019		Unaudited (Dollars in millions, except per share data, shares in thousands)	March 31, 2021		December 31, 2020

Assets	Assets					Assets
Cash and due from banks	Cash and due from banks	$	5,312	$	4,084	Cash and due from banks	$	5,097	$	5,029
Interest-bearing deposits with banks	Interest-bearing deposits with banks	31,036		14,981		Interest-bearing deposits with banks	27,035		13,839
Securities borrowed or purchased under resale agreements	Securities borrowed or purchased under resale agreements	1,796		1,417		Securities borrowed or purchased under resale agreements	1,349		1,745
Trading assets at fair value	Trading assets at fair value	3,863		5,733		Trading assets at fair value	5,094		3,872
AFS securities at fair value	AFS securities at fair value	78,398		74,727		AFS securities at fair value	123,807		120,788

LHFS (including $3,655 and $5,673 at fair value, respectively)		4,810		8,373
LHFS (including $5,465 and $4,955 at fair value, respectively)						LHFS (including $5,465 and $4,955 at fair value, respectively)	5,668		6,059
Loans and leases	Loans and leases	319,229		299,842		Loans and leases	291,511		299,734
ALLL	ALLL	(5,211)		(1,549)		ALLL	(5,662)		(5,835)
Loans and leases, net of ALLL	Loans and leases, net of ALLL	314,018		298,293		Loans and leases, net of ALLL	285,849		293,899
Premises and equipment	Premises and equipment	3,999		3,712		Premises and equipment	3,787		3,870
Goodwill	Goodwill	23,927		24,154		Goodwill	24,356		24,447
CDI and other intangible assets	CDI and other intangible assets	3,168		3,142		CDI and other intangible assets	2,825		2,984
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)		33,752		31,832
MSRs at fair value						MSRs at fair value	2,365		2,023
Other assets (including $3,801 and $4,891 at fair value, respectively)						Other assets (including $3,801 and $4,891 at fair value, respectively)	30,305		30,673
Total assets	Total assets	$	506,229	$	473,078	Total assets	$	517,537	$	509,228
Liabilities	Liabilities					Liabilities
Noninterest-bearing deposits	Noninterest-bearing deposits	$	97,618	$	92,405	Noninterest-bearing deposits	$	136,555	$	127,629
Interest-bearing deposits	Interest-bearing deposits	252,561		242,322		Interest-bearing deposits	259,007		253,448
Short-term borrowings		12,696		18,218
Short-term borrowings (including $1,313 and $1,115 at fair value, respectively)						Short-term borrowings (including $1,313 and $1,115 at fair value, respectively)	5,889		6,092
Long-term debt	Long-term debt	65,662		41,339		Long-term debt	37,753		39,597
Other liabilities (including $1,849 and $1,440 at fair value, respectively)		11,631		12,236
Other liabilities (including $704 and $555 at fair value, respectively)						Other liabilities (including $704 and $555 at fair value, respectively)	10,457		11,550
Total liabilities	Total liabilities	440,168		406,520		Total liabilities	449,661		438,316

Shareholders' Equity
Shareholders’ Equity						Shareholders’ Equity
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		Preferred stock, $5 par value, liquidation preference of $25,000 per share	7,124		8,048
Common stock, $5 par value	Common stock, $5 par value	6,737		6,711		Common stock, $5 par value	6,724		6,745
Additional paid-in capital	Additional paid-in capital	35,584		35,609		Additional paid-in capital	35,360		35,843
Retained earnings	Retained earnings	18,076		19,806		Retained earnings	20,184		19,455
AOCI, net of deferred income taxes	AOCI, net of deferred income taxes	898		(844)		AOCI, net of deferred income taxes	(1,516)		716
Noncontrolling interests	Noncontrolling interests	167		174		Noncontrolling interests	0		105
Total shareholders' equity		66,061		66,558
Total liabilities and shareholders' equity		$	506,229	$	473,078
Total shareholders’ equity						Total shareholders’ equity	67,876		70,912
Total liabilities and shareholders’ equity						Total liabilities and shareholders’ equity	$	517,537	$	509,228
Common shares outstanding	Common shares outstanding	1,347,461		1,342,166		Common shares outstanding	1,344,845		1,348,961
Common shares authorized	Common shares authorized	2,000,000		2,000,000		Common shares authorized	2,000,000		2,000,000
Preferred shares outstanding	Preferred shares outstanding	140		145		Preferred shares outstanding	107		280
Preferred shares authorized	Preferred shares authorized	5,000		5,000		Preferred shares authorized	5,000		5,000

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

4 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited 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		Unaudited Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)	2021		2020

Interest Income	Interest Income					Interest Income
Interest and fees on loans and leases	Interest and fees on loans and leases	$	3,776	$	1,839	Interest and fees on loans and leases	$	3,002	$	3,776
Interest on securities	Interest on securities	494		302		Interest on securities	443		494
Interest on other earning assets	Interest on other earning assets	156		32		Interest on other earning assets	49		156
Total interest income	Total interest income	4,426		2,173		Total interest income	3,494		4,426
Interest Expense	Interest Expense					Interest Expense
Interest on deposits	Interest on deposits	421		253		Interest on deposits	47		421
Interest on long-term debt	Interest on long-term debt	272		192		Interest on long-term debt	148		272
Interest on other borrowings	Interest on other borrowings	83		32		Interest on other borrowings	14		83
Total interest expense	Total interest expense	776		477		Total interest expense	209		776
Net Interest Income	Net Interest Income	3,650		1,696		Net Interest Income	3,285		3,650
Provision for credit losses	Provision for credit losses	893		155		Provision for credit losses	48		893
Net Interest Income After Provision for Credit Losses	Net Interest Income After Provision for Credit Losses	2,757		1,541		Net Interest Income After Provision for Credit Losses	3,237		2,757
Noninterest Income	Noninterest Income					Noninterest Income
Insurance income	Insurance income	549		510		Insurance income	626		549
Wealth management income						Wealth management income	341		332
Service charges on deposits	Service charges on deposits	305		171		Service charges on deposits	258		305
Wealth management income		332		162
Card and payment related fees		187		128
Residential mortgage income	Residential mortgage income	245		49		Residential mortgage income	100		245
Investment banking and trading income	Investment banking and trading income	118		27		Investment banking and trading income	340		118
Card and payment related fees						Card and payment related fees	200		187
Lending related fees						Lending related fees	100		67
Operating lease income	Operating lease income	77		35		Operating lease income	68		77
Commercial real estate related income						Commercial real estate related income	43		44
Income from bank-owned life insurance	Income from bank-owned life insurance	44		28		Income from bank-owned life insurance	50		44
Lending related fees		67		25
Commercial real estate related income		44		14
Securities gains (losses)	Securities gains (losses)	(2)		—		Securities gains (losses)	0		(2)
Other income (loss)	Other income (loss)	(5)		53		Other income (loss)	71		(5)
Total noninterest income	Total noninterest income	1,961		1,202		Total noninterest income	2,197		1,961
Noninterest Expense	Noninterest Expense					Noninterest Expense
Personnel expense	Personnel expense	1,972		1,087		Personnel expense	2,142		1,972
Professional fees and outside processing						Professional fees and outside processing	350		247
Net occupancy expense	Net occupancy expense	221		122		Net occupancy expense	209		221
Professional fees and outside processing		247		86
Software expense	Software expense	210		72		Software expense	210		210
Amortization of intangibles						Amortization of intangibles	144		165
Equipment expense	Equipment expense	116		65		Equipment expense	113		116
Marketing and customer development	Marketing and customer development	84		27		Marketing and customer development	66		84
Operating lease depreciation	Operating lease depreciation	71		29		Operating lease depreciation	50		71
Loan-related expense	Loan-related expense	62		25		Loan-related expense	54		62
Amortization of intangibles		165		32
Regulatory costs	Regulatory costs	29		18		Regulatory costs	25		29
Merger-related and restructuring charges	Merger-related and restructuring charges	107		80		Merger-related and restructuring charges	141		107

Loss (gain) on early extinguishment of debt						Loss (gain) on early extinguishment of debt	(3)		0
Other expense	Other expense	147		125		Other expense	109		147
Total noninterest expense	Total noninterest expense	3,431		1,768		Total noninterest expense	3,610		3,431
Earnings	Earnings					Earnings
Income before income taxes	Income before income taxes	1,287		975		Income before income taxes	1,824		1,287
Provision for income taxes	Provision for income taxes	224		177		Provision for income taxes	351		224
Net income	Net income	1,063		798		Net income	1,473		1,063
Noncontrolling interests	Noncontrolling interests	3		6		Noncontrolling interests	(4)		3
Dividends on preferred stock		74		43
Net income available to the bank holding company						Net income available to the bank holding company	1,477		1,060
Preferred stock dividends and other						Preferred stock dividends and other	143		74
Net income available to common shareholders	Net income available to common shareholders	$	986	$	749	Net income available to common shareholders	$	1,334	$	986
Basic EPS	Basic EPS	$	0.73	$	0.98	Basic EPS	$	0.99	$	0.73
Diluted EPS	Diluted EPS	0.73		0.97		Diluted EPS	0.98		0.73
Basic weighted average shares outstanding	Basic weighted average shares outstanding	1,344,372		764,135		Basic weighted average shares outstanding	1,345,666		1,344,372
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	1,357,545		774,071		Diluted weighted average shares outstanding	1,358,932		1,357,545

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

Truist Financial Corporation 5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited Three Months Ended March 31, (Dollars in millions)	Unaudited Three Months Ended March 31, (Dollars in millions)	2020		2019		Unaudited Three Months Ended March 31, (Dollars in millions)	2021		2020

Net income	Net income	$	1,063	$	798	Net income	$	1,473	$	1,063
OCI, net of tax:	OCI, net of tax:					OCI, net of tax:
Change in unrecognized net pension and postretirement costs		15		17
Change in unrealized net gains (losses) on cash flow hedges		11		(34)
Change in unrealized net gains (losses) on AFS securities		1,721		309
Net change in net pension and postretirement costs						Net change in net pension and postretirement costs	35		15
Net change in cash flow hedges						Net change in cash flow hedges	36		11
Net change in AFS securities						Net change in AFS securities	(2,304)		1,721
Other, net	Other, net	(5)		2		Other, net	1		(5)
Total OCI, net of tax	Total OCI, net of tax	1,742		294		Total OCI, net of tax	(2,232)		1,742
Total comprehensive income	Total comprehensive income	$	2,805	$	1,092	Total comprehensive income	$	(759)	$	2,805
Income Tax Effect of Items Included in OCI:	Income Tax Effect of Items Included in OCI:					Income Tax Effect of Items Included in OCI:
Change in unrecognized net pension and postretirement costs		$	5	$	6
Change in unrealized net gains (losses) on cash flow hedges		3		(11)
Change in unrealized net gains (losses) on AFS securities		527		95
Other, net		—		—
Net change in net pension and postretirement costs						Net change in net pension and postretirement costs	$	11	$	5
Net change in cash flow hedges						Net change in cash flow hedges	11		3
Net change in AFS securities						Net change in AFS securities	(707)		527

Total income taxes related to OCI						Total income taxes related to OCI	$	(685)	$	535

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

6 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF CHANGES IN ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited (Dollars in millions, shares in thousands)	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, January 1, 2019		763,326	$	3,053	$	3,817	$	6,849	$	18,118	$	(1,715)	$	56	$	30,178
Add (Deduct):
Net income		—	$	—	$	—	$	—	$	792	$	—	$	6	$	798
OCI		—	—		—		—		—		294		—		294

Issued in connection with equity awards, net		2,594	—		13		(41)		—		—		—		(28)

Cash dividends declared on common stock		—	—		—		—		(309)		—		—		(309)
Cash dividends declared on preferred stock		—	—		—		—		(43)		—		—		(43)
Equity-based compensation expense		—	—		—		32		—		—		—		32

Other, net		—	—		—		3		(40)		—		(2)		(39)
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	Balance, January 1, 2020	1,342,166	$	5,102	$	6,711	$	35,609	$	19,806	$	(844)	$	174	$	66,558
Add (Deduct):
Net income	Net income	—	$	—	$	—	$	—	$	1,060	$	—	$	3	$	1,063	Net income	—	—		—		—		1,060		—		3		1,063
OCI	OCI	—	—		—		—		—		1,742		—		1,742		OCI	—	—		—		—		—		1,742		—		1,742

Issued in connection with equity awards, net	Issued in connection with equity awards, net	5,295	—		26		(104)		(2)		—		—		(80)		Issued in connection with equity awards, net	5,295	—		26		(104)		(2)		—		—		(80)

Redemption of preferred stock	Redemption of preferred stock	—	(503)		—		—		—		—		—		(503)		Redemption of preferred stock	—	(503)		—		—		3		—		—		(500)
Cash dividends declared on common stock	Cash dividends declared on common stock	—	—		—		—		(605)		—		—		(605)		Cash dividends declared on common stock	—	—		—		—		(605)		—		—		(605)
Cash dividends declared on preferred stock	Cash dividends declared on preferred stock	—	—		—		—		(74)		—		—		(74)		Cash dividends declared on preferred stock	—	—		—		—		(77)		—		—		(77)
Equity-based compensation expense	Equity-based compensation expense	—	—		—		79		—		—		—		79		Equity-based compensation expense	—	—		—		79		—		—		—		79
Cumulative effect adjustment for new accounting standards	Cumulative effect adjustment for new accounting standards	—	—		—		—		(2,109)		—		—		(2,109)		Cumulative effect adjustment for new accounting standards	—	—		—		—		(2,109)		—		—		(2,109)
Other, net	Other, net	—	—		—		—		—		—		(10)		(10)		Other, net	—	—		—		0		0		—		(10)		(10)
Balance, March 31, 2020	Balance, March 31, 2020	1,347,461	$	4,599	$	6,737	$	35,584	$	18,076	$	898	$	167	$	66,061	Balance, March 31, 2020	1,347,461	$	4,599	$	6,737	$	35,584	$	18,076	$	898	$	167	$	66,061
Balance, January 1, 2021																	Balance, January 1, 2021	1,348,961	$	8,048	$	6,745	$	35,843	$	19,455	$	716	$	105	$	70,912
Net income																	Net income	—	—		—		—		1,477		—		(4)		1,473
OCI																	OCI	—	—		—		—		—		(2,232)		—		(2,232)

Issued in connection with equity awards, net																	Issued in connection with equity awards, net	5,388	—		27		(111)		—		—		—		(84)

Repurchase of common stock																	Repurchase of common stock	(9,504)	—		(48)		(458)		—		—		—		(506)
Redemption of preferred stock																	Redemption of preferred stock	—	(924)		—		—		(26)		—		—		(950)
Cash dividends declared on common stock																	Cash dividends declared on common stock	—	—		—		—		(605)		—		—		(605)
Cash dividends declared on preferred stock																	Cash dividends declared on preferred stock	—	—		—		—		(117)		—		—		(117)
Equity-based compensation expense																	Equity-based compensation expense	—	—		—		86		—		—		—		86

Other, net																	Other, net	—	—		—		—		—		—		(101)		(101)
Balance, March 31, 2021																	Balance, March 31, 2021	1,344,845	$	7,124	$	6,724	$	35,360	$	20,184	$	(1,516)	$	0	$	67,876

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

Truist Financial Corporation 7

CONSOLIDATED STATEMENTS OF CASH FLOWS

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES


Unaudited Three Months Ended March 31, (Dollars in millions)	Unaudited Three Months Ended March 31, (Dollars in millions)	2020		2019		Unaudited Three Months Ended March 31, (Dollars in millions)	2021		2020

Cash Flows From Operating Activities:	Cash Flows From Operating Activities:					Cash Flows From Operating Activities:
Net income	Net income	$	1,063	$	798	Net income	$	1,473	$	1,063
Adjustments to reconcile net income to net cash from operating activities:	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	Provision for credit losses	893		155		Provision for credit losses	48		893

Depreciation	Depreciation	234		105		Depreciation	201		234

Amortization of intangibles	Amortization of intangibles	165		32		Amortization of intangibles	144		165
Equity-based compensation expense	Equity-based compensation expense	79		32		Equity-based compensation expense	86		79
(Gain) loss on securities, net		2		—
Securities (gains) losses						Securities (gains) losses	0		2
Net change in operating assets and liabilities:	Net change in operating assets and liabilities:					Net change in operating assets and liabilities:
LHFS	LHFS	2,898		77		LHFS	(510)		2,898
MSRs	MSRs	480		73		MSRs	(342)		480
Pension asset	Pension asset	(336)		(561)		Pension asset	(452)		(336)

Derivative assets and liabilities						Derivative assets and liabilities	1,060		(1,728)
Trading assets	Trading assets	1,870		(1,133)		Trading assets	(1,222)		1,870
Other assets and other liabilities	Other assets and other liabilities	(3,318)		(445)		Other assets and other liabilities	(915)		(1,590)

Other, net	Other, net	598		122		Other, net	396		598
Net cash from operating activities	Net cash from operating activities	4,628		(745)		Net cash from operating activities	(33)		4,628
Cash Flows From Investing Activities:	Cash Flows From Investing Activities:					Cash Flows From Investing Activities:
Proceeds from sales of AFS securities	Proceeds from sales of AFS securities	1,506		1,797		Proceeds from sales of AFS securities	60		1,506
Proceeds from maturities, calls and paydowns of AFS securities	Proceeds from maturities, calls and paydowns of AFS securities	2,513		861		Proceeds from maturities, calls and paydowns of AFS securities	8,862		2,513
Purchases of AFS securities	Purchases of AFS securities	(4,029)		(3,525)		Purchases of AFS securities	(15,601)		(4,029)
Proceeds from maturities, calls and paydowns of HTM securities		—		450

Originations and purchases of loans and leases, net of sales and principal collected	Originations and purchases of loans and leases, net of sales and principal collected	(18,024)		(193)		Originations and purchases of loans and leases, net of sales and principal collected	8,249		(18,024)
Net cash received (paid) for FHLB stock	Net cash received (paid) for FHLB stock	(651)		76		Net cash received (paid) for FHLB stock	40		(651)
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 paid for premises and equipment	(99)		(464)
Net cash received (paid) for mergers, acquisitions and divestitures	Net cash received (paid) for mergers, acquisitions and divestitures	(62)		—		Net cash received (paid) for mergers, acquisitions and divestitures	1,130		(62)
Other, net	Other, net	75		91		Other, net	478		(304)
Net cash from investing activities	Net cash from investing activities	(19,515)		(586)		Net cash from investing activities	3,119		(19,515)
Cash Flows From Financing Activities:	Cash Flows From Financing Activities:					Cash Flows From Financing Activities:
Net change in deposits	Net change in deposits	15,474		(1,432)		Net change in deposits	14,489		15,474
Net change in short-term borrowings	Net change in short-term borrowings	(5,522)		1,127		Net change in short-term borrowings	(203)		(5,522)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	24,288		2,015		Proceeds from issuance of long-term debt	1,299		24,288
Repayment of long-term debt	Repayment of long-term debt	(782)		(1,103)		Repayment of long-term debt	(3,032)		(782)

Repurchase of common stock						Repurchase of common stock	(506)		0

Redemption of preferred stock	Redemption of preferred stock	(503)		—		Redemption of preferred stock	(950)		(500)
Cash dividends paid on common stock	Cash dividends paid on common stock	(605)		(309)		Cash dividends paid on common stock	(605)		(605)
Cash dividends paid on preferred stock	Cash dividends paid on preferred stock	(74)		(43)		Cash dividends paid on preferred stock	(117)		(77)

Other, net	Other, net	(106)		(48)		Other, net	(197)		(106)
Net cash from financing activities	Net cash from financing activities	32,170		207		Net cash from financing activities	10,178		32,170
Net Change in Cash and Cash Equivalents	Net Change in Cash and Cash Equivalents	17,283		(1,124)		Net Change in Cash and Cash Equivalents	13,264		17,283
Cash and Cash Equivalents, January 1	Cash and Cash Equivalents, January 1	19,065		3,844		Cash and Cash Equivalents, January 1	18,868		19,065
Cash and Cash Equivalents, March 31	Cash and Cash Equivalents, March 31	$	36,348	$	2,720	Cash and Cash Equivalents, March 31	$	32,132	$	36,348
Supplemental Disclosure of Cash Flow Information:	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:					Net cash paid (received) during the period for:
Interest expense	Interest expense	$	758	$	419	Interest expense	$	248	$	758
Income taxes	Income taxes	11		62		Income taxes	28		11

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

8 Truist Financial Corporation

NOTE 1. Basis of Presentation

General

See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with GAAP. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. The year-end consolidated balance sheet data was derived from audited annual financial statements but does not ~~include~~contain all of the footnote disclosures ~~required by GAAP.~~from the annual financial statements. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 should be referred to in connection with these unaudited interim consolidated financial statements. ~~The Company updated its accounting policies in connection with the recently adopted accounting standards.~~ There were no ~~other~~ significant changes to the Company’s accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 that could have a material effect on the Company’s financial statements.

Reclassifications

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

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for financial instruments; valuation of MSRs; goodwill, intangible assets and other purchase accounting related adjustments; benefit plan obligations and expenses; and tax assets, liabilities, and expense.

~~Investment Securities~~

The Company invests in various debt securities primarily as a store of liquidity and as part of the overall ALM process to optimize income and market performance over an entire interest rate cycle. Investments in debt securities that are not held for trading purposes are classified as HTM or AFS. Truist does not currently have securities classified as HTM.

Interest income on securities is recognized in income on an accrual basis. Premiums and discounts are amortized into interest income using the effective interest method over the contractual life of the security. As prepayments are received, a proportionate amount of the related premium or discount is recognized in income so that the effective interest rate on the remaining portion of the security continues unchanged.

Debt securities that may be sold to meet liquidity needs arising from unanticipated deposit and loan fluctuations, changes in regulatory capital requirements or unforeseen changes in market conditions are classified as AFS. AFS securities are reported at estimated fair value, with unrealized gains and losses reported in AOCI, net of deferred income taxes, in the Shareholders' equity section of the Consolidated Balance Sheets. Gains or losses realized from the sale of AFS securities are determined by specific identification and are included in noninterest income.

An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. AFS debt securities in an unrealized loss position are evaluated at the balance sheet date to determine whether such losses are credit-related. Credit losses are measured on an individual basis and recognized in an ACL. Changes in expected credit losses are recognized in the Provision for credit losses in the Consolidated Statements of Income. At March 31, 2020, no ACL was established for AFS securities.

Cash flow modeling is used to evaluate non-agency MBS in an unrealized loss position for potential credit impairment. These models give consideration to macroeconomic factors applied to current security default rates, prepayment rates, recovery rates and security-level performance. Municipal securities are evaluated for impairment using a municipal bond credit scoring tool that leverages historical municipal market data to estimate probability of default and loss given default at the issuer level. U.S. Treasury securities, government guaranteed securities, and other securities issued by GSEs are either explicitly or implicitly guaranteed by the US government, are highly rated by rating agencies and have a long history of no credit losses. No expected credit losses have been recorded for these securities.

~~Truist Financial Corporation 9~~

~~Loans and Leases~~

The Company's accounting methods for loans differ depending on whether the loans are originated or purchased, and if purchased, whether or not the loans reflect credit deterioration since the date of origination such that at the date of acquisition there is more than an insignificant deterioration in credit.

~~Originated Loans and Leases~~

Loans and leases that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances net of any unearned income, charge-offs, and unamortized fees and costs. The net amount of nonrefundable loan origination fees and certain direct costs associated with the lending process are deferred and amortized to interest income over the contractual lives of the loans using the effective interest method.

~~Purchased Loans~~

Purchased loans are recorded at their fair value at the acquisition date. The estimated fair values incorporate adjustments related to expected credit losses, prevailing market interest rates for comparable assets and liquidity-related adjustments.

Fair values for purchased loans are based on a discounted cash flow methodology that considers credit loss expectations, market interest rates and other market factors such as liquidity from the perspective of a market participant. Loans are grouped together according to similar characteristics and treated in the aggregate when applying various valuation techniques. The probability of default, loss given default and prepayment assumptions are the key factors driving credit losses which are embedded into the estimated cash flows. These assumptions are informed by internal data on loan characteristics, historical loss experience, and current and forecasted economic conditions. The interest and liquidity component of the estimate was determined by discounting interest and principal cash flows through the expected life of the underlying loans. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity. The discount rates do not include a factor for credit losses as that has been included as a reduction to the estimated cash flows.

Beginning January 1, 2020, purchased loans are evaluated upon acquisition and classified as either PCD, which indicates that the loan reflects more-than-insignificant deterioration in credit quality since origination, or non-PCD. Truist considers a variety of factors in connection with the identification of more-than-insignificant deterioration in credit quality, including but not limited to risk grades, delinquency, nonperforming status, previous troubled debt restructurings or bankruptcies and other qualitative factors that indicate deterioration in credit quality since origination.

~~For PCD loans, an initial ALLL is determined using the same methodology as other loans held for investment~~and recognized as an adjustment to the acquisition price of the asset; thus, the sum of the loans’ purchase price and initial ALLL estimate represents the initial amortized cost basis. The difference between the initial amortized cost basis and the par value is the non-credit discount or premium. For non-PCD loans, the difference between the fair value and the par value is considered the fair value mark. The ALLL for non-PCD loans is recorded with a corresponding charge to the provision for credit losses in the Consolidated Statements of Income. Subsequent changes in the ALLL related to PCD and non-PCD loans are recognized in the provision for credit losses.

The non-credit discount or premium related to PCD loans, and the fair value mark on non-PCD loans, is amortized or accreted to interest income over the contractual life of the loans using the effective interest method for amortizing loans, and using a straight-line approach for interest-only loans and loans with revolving privileges. In the event of prepayment, unamortized discounts or premiums are recognized in interest income.

~~TDRs~~

Modifications to a borrower's debt agreement are considered TDRs if a concession is granted for economic or legal reasons related to a borrower's financial difficulties that otherwise would not be considered. TDRs are undertaken in order to improve the likelihood of recovery on the loan and may take the form of modifications made with the stated interest rate lower than the current market rate for new debt with similar risk, other modifications to the structure of the loan that fall outside of normal underwriting policies and procedures, or in certain limited circumstances, forgiveness of principal or interest. A restructuring that results in only a delay in payments that is insignificant is not considered an economic concession. In accordance with the CARES Act, Truist implemented loan modification programs in response to the COVID-19 pandemic in order to provide borrowers with flexibility with respect to repayment terms. These loan modifications are not considered TDRs to the extent that the borrower was impacted by the COVID-19 pandemic and was less than 30 days past due at December 31, 2019, or in certain circumstances, at the time that the COVID-19 loan modification program was implemented, unless the loan was previously classified as a TDR.

~~10 Truist Financial Corporation~~

TDRs can remain nonperforming, move to nonperforming, or continue on performing status, depending on the individual facts and circumstances of the borrower and an evaluation as to whether the borrower will be able to repay the loan based on the modified terms. The evaluation of the borrower's ability to repay the loan is based on a current, well-documented credit analysis. In circumstances where the TDR involves charging off a portion of the loan balance, Truist classifies these TDRs as nonperforming.

The decision to maintain a commercial TDR on performing status is based on a current, well documented credit evaluation of the borrower's financial condition and prospects for repayment under the modified terms. This evaluation includes consideration of the borrower's current capacity to pay, which among other things may include a review of the borrower's current financial statements, an analysis of cash flow available to pay debt obligations, and an evaluation of secondary sources of payment from the borrower and any guarantors. This evaluation also includes an evaluation of the borrower's current willingness to pay, which may include a review of past payment history, an evaluation of the borrower's willingness to provide information on a timely basis, and consideration of offers from the borrower to provide additional collateral or guarantor support. The credit evaluation may also include review of cash flow projections, consideration of the adequacy of collateral to cover all principal and interest and trends indicating improving profitability and collectability of receivables.

The evaluation of mortgage and retail loans includes an evaluation of the client's debt-to-income ratio, credit report, property value, loan vintage, and certain other client-specific factors that impact their ability to make timely principal and interest payments on the loan.

TDR classification may be removed due to the passage of time if the loan: (1) did not include a forgiveness of principal or interest, (2) has performed in accordance with the modified terms (generally a minimum of six months), (3) was reported as a TDR over a year-end reporting period, and (4) reflected an interest rate on the modified loan that was no less than a market rate at the date of modification. TDR classification may also be removed for an accruing loan upon the occurrence of a subsequent non-concessionary modification granted at market terms and within current underwriting guidelines.

~~NPAs~~

~~NPAs include NPLs and foreclosed property. Foreclosed property consists of real estate and other assets acquired as a result of clients' loan defaults.~~

Truist's policies for placing loans on nonperforming status conform to guidelines prescribed by bank regulatory authorities. Truist classifies loans and leases as past due when the payment of principal and interest based upon contractual terms is greater than 30 days delinquent or if one payment is past due. Payment deferrals as a result of the COVID-19 pandemic do not result in a loan becoming past due. The following table summarizes the delinquency thresholds that are used in evaluating nonperforming classification and the timing of charge-offs:

(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

(1) Loans may be returned to performing status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest, generally indicated by 180 days of sustained payment performance.

~~(2) Or when it is probable that principal or interest is not fully collectible, whichever occurs first.~~

~~(3) Depends on product type, loss mitigation status, status of the government guaranty, if applicable, and certain other product-specific factors.~~

(4) Government guaranteed student loans are not placed on nonperforming status and are generally not charged-off regardless of delinquency status because collection of principal and interest is reasonably assured.

When commercial loans are placed on nonperforming status, a charge-off is recorded, as applicable, to decrease the carrying value of such loans to the estimated recoverable amount. Consumer and credit card loans are subject to charge-off at a specified delinquency date consistent with regulatory guidelines.

~~Truist Financial Corporation 11~~

Certain past due loans may remain on performing status if management determines that it does not have concern over the collectability of principal and interest. Generally, when loans are placed on nonperforming status, accrued interest receivable is reversed against interest income in the current period and amortization of deferred loan fees and expenses for originated loans, and fair value marks for purchased loans, is suspended. For commercial loans and certain consumer loans, payments received for interest and lending fees thereafter are applied as a reduction to the remaining principal balance as long as concern exists as to the ultimate collection of the principal. Interest income on nonperforming loans is recognized after the principal has been reduced to zero. If and when borrowers demonstrate the ability to repay a loan classified as nonperforming in accordance with its contractual terms, the loan may be returned to performing status upon meeting all regulatory, accounting and internal policy requirements.

Accrued interest is included in Other assets in the Consolidated Balance Sheets. Accrued interest receivable balances are not considered in connection with the ACL estimation process, as such amounts are generally reversed against interest income when the loan is placed in nonperforming status.

Assets acquired as a result of foreclosure are subsequently carried at the lower of cost or net realizable value. Net realizable value equals fair value less estimated selling costs. Any excess of cost over net realizable value at the time of foreclosure is charged to the ALLL. NPAs are subject to periodic revaluations of the collateral underlying impaired loans and foreclosed real estate. The periodic revaluations are generally based on the appraised value of the property and may include additional liquidity adjustments based upon the expected retention period. Truist's policies require that valuations be updated at least annually and that upon foreclosure, the valuation must not be more than six months old, otherwise an update is required. Any subsequent changes in value as well as gains or losses from the disposition on these assets are recognized in Other noninterest expense in the Consolidated Statements of Income. For additional information on the Company’s loan and lease activities, see "Note 5. Loans and ACL.”

~~ACL~~

The ACL includes the ALLL and RUFC. The ACL represents management's best estimate of expected future credit losses related to loan and lease portfolios and off-balance sheet lending commitments at the balance sheet date. The ALLL is a valuation account that is deducted from or added to the loans’ amortized cost basis to present the net amount expected to be collected on loans. The entire amount of the ACL is available to absorb losses on any loan category or lending-related commitment. Loan or lease balances deemed to be uncollectible are charged off against the ALLL. Expected recoveries of amounts previously charged off are incorporated into the ALLL estimate, with such amounts capped at the aggregate of amounts previously charged off. Changes to the ACL are made by charges to the Provision for credit losses, which is reflected in the Consolidated Statements of Income. The RUFC is recorded in Other liabilities on the Consolidated Balance Sheets.

Portfolio segments represent the level at which Truist develops and documents a systematic methodology to determine its ACL. Truist’s loan and lease portfolio consists of three portfolio segments; commercial, consumer and credit card. The expected credit loss models are generally developed one level below the portfolio segment level. In certain instances, loans are further disaggregated by similar risk characteristics, such as business sector, client type, funding type, type of collateral, whether loan payments are interest-only and whether interest rates are fixed or variable. 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. The commercial portfolio segment models use a risk rating approach to estimate the ALLL. The consumer and credit card models use a delinquency-based approach to estimate the ALLL. In addition to these quantitatively calculated components, the ALLL includes qualitatively calculated components.

Truist maintains a collectively calculated ALLL for loans with similar risk characteristics. The collectively calculated ALLL is estimated using relevant available information from internal and external sources relating to past events, current conditions, and reasonable and supportable forecasts. Truist maintains quantitative models to forecast expected credit losses. The credit loss forecasting models use portfolio balances, macroeconomic scenarios, portfolio composition and loan attributes as the primary inputs. Historical loss experience provides the basis for the estimation of the ACL and includes periods covering complete economic cycles. The historical loss data is adjusted for loan and lease specific risk characteristics such as differences in environmental conditions. Expected losses are estimated through contractual maturity 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.

~~12 Truist Financial Corporation~~

The Scenario Committee provides guidance, selection, and approval for enterprise-sanctioned macroeconomic scenarios, including the macroeconomic forecasts for use in the ACL process. Forecasted economic conditions are developed using third party macroeconomic scenarios adjusted based on management’s expectations over a reasonable and supportable forecast period of two years. Assumptions revert to long term historic averages gradually over a one year period. Macroeconomic factors used in estimating the expected losses vary by loan portfolio and include employment factors, estimated collateral values and market indicators as described by portfolio segment below. 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.

Expected credit losses for loans that do not share risk characteristics with other financial assets, or significant loans that are considered collateral-dependent, are calculated on an individual basis. Such estimates may be based on an evaluation of the fair value of the underlying collateral or in certain circumstances the present value of expected cash flows discounted at the loan's effective interest as described further below by portfolio segment.

The methodology for determining 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.

The ACL is monitored by the ACL Committee. The ACL Committee recommends adjustments where necessary based on portfolio performance and other items that may impact credit risk and approves the ACL estimate.

~~The following provides a description of accounting policies, methodologies and credit quality indicators related to each of the portfolio segments:~~

~~Commercial~~

The majority of loans in the commercial lending portfolio are assigned risk ratings based on an assessment of conditions that affect the borrower's ability to meet contractual obligations under the loan agreement. This process includes reviewing borrowers' financial information, historical payment experience, credit documentation, public information, and other information specific to each borrower. Risk ratings are reviewed on an annual basis, or more frequently for many relationships based on the policy requirements regarding various risk characteristics. While this review is largely focused on the borrower's ability to repay the loan, Truist also considers the capacity and willingness of a loan's guarantors to support the loan as a secondary source of repayment. When a guarantor exhibits the documented capacity and willingness to support the loan, Truist may consider extending the loan maturity and/or temporarily deferring principal payments if the ultimate collection of both principal and interest is not in question. In these cases, Truist may determine the loan is not impaired due to the documented capacity and willingness of the guarantor to repay the loan. Loans are considered impaired when the borrower (or guarantor in certain circumstances) does not have the cash flow capacity or willingness to service the debt according to contractual terms, or it does not appear reasonable to assume that the borrower will continue to pay according to the contractual agreement. The following table summarizes risk ratings that Truist uses to monitor credit quality in its commercial portfolio:


~~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~~

Loans are generally pooled one level below the portfolio segment for the collectively calculated ALLL based on factors such as business sector, project and property type, line of business, collateral, loan type, obligor exposure, and risk grade or score. Commercial loss forecasting models are expected loss frameworks that use macroeconomic scenarios and current portfolio attributes as inputs. The models forecast probability of default, exposure at default and loss given default. The primary macroeconomic drivers for the commercial portfolios include unemployment, U.S. real GDP, corporate credit spreads, rental rates and property values.

Truist's policy is to review and individually evaluate the reserve for all nonperforming lending relationships and TDRs with an outstanding balance of $5 million or more, as such lending relationships do not typically share similar risk characteristics with others. Truist has elected the collateral dependent practical expedient; therefore, individually evaluated reserves are based on current economic forecasts, the present value of expected cash flows discounted at the loan's effective interest rate or the value of collateral, which is generally based on appraisals, recent sales of foreclosed properties and/or relevant property-specific market information. Loans are considered collateral dependent where it is probable that Truist will be unable to collect principal and interest according to the contractual terms of the agreement and repayment is expected to be provided substantially by the sale or continued operation of the underlying collateral. Commercial loans are typically secured by real estate, business equipment, inventories and other types of collateral.

~~Truist Financial Corporation 13~~

~~Consumer and Credit Card~~

The majority of the ALLL related to the consumer and credit card lending portfolios is calculated on a collective basis. Loans are pooled one level below the portfolio segment for the collectively calculated ALLL based on factors such as collateral, loan type, line of business and sales channel. Consumer portfolio models are expected loss frameworks that use macroeconomic scenarios and current portfolio attributes as inputs. The models forecast probability of default, exposure at default and loss given default. The primary macroeconomic drivers for the consumer portfolios include unemployment trends, home price indices and used car prices.

Residential mortgages and revolving home equity lines of credit are generally collateralized by one-to-four-family residential real estate, typically have loan-to-collateral value ratios of 80% or less at origination, and are made to borrowers in good credit standing. The indirect auto and indirect other portfolios include secured indirect installment loans to consumers for the purchase of new and used automobiles, boats and recreational vehicles. The student loan portfolio is composed of securitized government-guaranteed student loans and certain private student loans originated by third parties. The government guarantee mitigates substantially all of the risk related to principal and interest repayment for this component of the portfolio. Private student loans are purchased from third-party originators with credit enhancements that partially mitigate the Company’s credit exposure. The credit card portfolio and other arrangements within the indirect other portfolio are generally unsecured and actively managed.

Truist uses performing status to monitor credit quality in its consumer and credit card portfolios. Delinquency status is the primary factor considered in determining whether a loan should be classified as nonperforming. The ALLL for loans classified as a TDR is based on a discounted expected cash flow analyses and a combination of historical experience for TDRs and management judgment.

Expected recoveries for consumer and credit card loans are included in the estimation of the ALLL based on historical experience, when a loan returns to accruing status, or when the fair market value of the collateral has increased.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

~~Standard~~

~~Description~~

~~Effects on the Financial Statements~~

~~Standards Adopted January 1, 2020~~

~~Credit Losses~~

Replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost are presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit deteriorated loans receive an allowance for expected credit losses. Any credit impairment on AFS debt securities for which the fair value is less than cost is recorded through an allowance for expected credit losses. The standard also requires expanded disclosures related to credit losses and asset quality.

Truist adopted this standard using the modified retrospective approach.

The adoption of this standard resulted in a $3.1 billion increase to the ALLL and a $2.1 billion decrease to Retained earnings adjusted for deferred taxes and other impacts.

A policy election was made to dissolve the existing PCI loan pools. The amortized cost basis of PCD assets was increased by $378 million at January 1, 2020, which reflects the initial CECL ACL reserve requirement on these assets. The remaining noncredit discount will be accreted to interest income over the contractual lives of the underlying assets using an effective interest method for amortizing loans and a straight-line approach for interest-only loans and loans with revolving privileges.

The adoption of this standard did not have a material impact on the AFS securities portfolio.

~~Simplifying the Test for Goodwill Impairment~~

Simplifies the subsequent measurement of goodwill, by eliminating the second step from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The standard requires an entity to recognize an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value, with the loss limited to the total amount of goodwill allocated to that reporting unit. The standard must be applied on a prospective basis.

The standard does not currently have an impact on the Company’s consolidated financial statements; however, if subsequent to adoption, the carrying amount of a reporting unit exceeds its respective fair value, the Company would be required to recognize an impairment charge for the amount that the carrying value exceeds the fair value up to the amount of the goodwill assigned to the reporting unit.

There were no standards adopted during the current year that had a material effect on the Company’s financial statements, and no standards not yet adopted by the Company that are expected to have a material effect on the Company’s financial statements.

14 Truist Financial Corporation 9

NOTE 2. ~~Business Combinations~~

Effective December 6, 2019, the Company completed its previously announced Merger with SunTrust. The Merger was accounted for as a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at their fair values as of the Merger date. The determination of fair value requires management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. Fair value estimates related to the acquired assets and liabilities are subject to adjustment until all necessary information related to the valuation process has been received. Adjustments must be finalized within one year of the closing date of the Merger. The Company’s purchase price allocation is considered preliminary as certain estimates related to the acquired operating lease portfolio, certain leveraged leases, structured real estate investments and certain other assets are subject to continuing refinement. Immaterial amounts of the intangible assets recognized are deductible for income tax purposes. For additional information, see “Note 2. Business Combinations” of the Annual Report on Form 10-K for the year ended December 31, 2019.

The following table sets forth a preliminary allocation of Merger consideration to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of SunTrust as of December 6, 2019:

(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

For a description of the methods used to determine the fair values of significant assets and liabilities, see “Note 2. Business Combinations” of the Annual Report on Form 10-K for the year ended December 31, 2019.

~~Truist Financial Corporation 15~~

~~Branch Divestitures~~

In connection with the Merger, on November 8, 2019, BB&T and SunTrust announced that, subject to closing and other customary closing conditions, First Horizon Bank, a wholly owned subsidiary of First Horizon National Corporation, entered into an agreement to acquire 30 branches located in North Carolina, Virginia and Georgia from SunTrust Bank, a wholly owned subsidiary of SunTrust, to satisfy regulatory requirements in connection with the Merger. There are approximately $400 million in loans and leases and $2.4 billion in deposits that will be divested as part of this transaction, which is expected to close in 2020.

~~NOTE 3.~~ Securities Financing Activities

Securities purchased under resale agreements are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently sold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. At March 31, 2021 and December 31, 2020, the total market value of collateral held was $1.3 billion and $1.7 billion, of which amounts repledged were immaterial at March 31, 2021 and $27 million at December 31, 2020. The following table presents securities borrowed or purchased under resale agreements:


(Dollars in millions)	(Dollars in millions)	March 31, 2020				December 31, 2019	(Dollars in millions)			Mar 31, 2021			Dec 31, 2020

Securities purchased under resale agreements	Securities purchased under resale agreements	$	1,295	$	986	Securities purchased under resale agreements		$	705		$	1,158
Securities borrowed	Securities borrowed	501		431		Securities borrowed		644			587
Total securities borrowed or purchased under resale agreements	Total securities borrowed or purchased under resale agreements	$	1,796	$	1,417	Total securities borrowed or purchased under resale agreements		$	1,349		$	1,745

For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to ~~"Note~~“Note 13. Commitments and ~~Contingencies"~~Contingencies” for additional information related to pledged securities. Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:


		March 31, 2020										December 31, 2019													March 31, 2021				December 31, 2020
(Dollars in millions)	(Dollars in millions)	Overnight and Continuous		Up to 30 days		Total		Overnight and Continuous		Up to 30 days		30-90 days		Total		(Dollars in millions)	Overnight and Continuous		Up to 30 days		Total		Overnight and Continuous		Up to 30 days		Total

U.S. Treasury	U.S. Treasury	$	230	$	—	$	230	$	115	$	35	$	—	$	150	U.S. Treasury	$	244	$	13	$	257	$	305	$	31	$	336
GSE	GSE	171		4		175		87		37		—		124		GSE	1		20		21		45		9		54
Agency MBS - residential	Agency MBS - residential	575		145		720		928		41		100		1,069		Agency MBS - residential	675		109		784		442		6		448
Corporate and other debt securities	Corporate and other debt securities	192		212		404		310		316		—		626		Corporate and other debt securities	218		213		431		204		179		383
Total securities sold under agreements to repurchase	Total securities sold under agreements to repurchase	$	1,168	$	361	$	1,529	$	1,440	$	429	$	100	$	1,969	Total securities sold under agreements to repurchase	$	1,138	$	355	$	1,493	$	996	$	225	$	1,221

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

~~16 Truist Financial Corporation~~

NOTE 4.3. Investment Securities

The following tables summarize the ~~Company's~~Company’s AFS securities:


March 31, 2020 (Dollars in millions)		Amortized Cost		Gross Unrealized						Fair Value
						Gains		Losses
March 31, 2021 (Dollars in millions)										March 31, 2021 (Dollars in millions)	Amortized Cost			Gross Unrealized					Fair Value
													Gains			Losses
AFS securities:	AFS securities:									AFS securities:
U.S. Treasury	U.S. Treasury	$	2,272	$	47	$	—	$	2,319	U.S. Treasury	$	1,763		$	19		$	14	$	1,768
GSE	GSE	1,846		87		—		1,933		GSE	1,839			64			0		1,903
Agency MBS - residential	Agency MBS - residential	69,307		2,468		22		71,753		Agency MBS - residential	117,401			1,273			2,223		116,451
Agency MBS - commercial	Agency MBS - commercial	1,489		31		1		1,519		Agency MBS - commercial	3,174			41			38		3,177
States and political subdivisions	States and political subdivisions	513		34		8		539		States and political subdivisions	440			38			2		476
Non-agency MBS		185		127		14		298

Other	Other	38		—		1		37		Other	31			1			0		32
Total AFS securities	Total AFS securities	$	75,650	$	2,794	$	46	$	78,398	Total AFS securities	$	124,648		$	1,436		$	2,277	$	123,807

December 31, 2019 (Dollars in millions)		Amortized Cost		Gross Unrealized						Fair Value
						Gains		Losses
December 31, 2020 (Dollars in millions)										December 31, 2020 (Dollars in millions)	Amortized Cost			Gross Unrealized					Fair Value
													Gains			Losses
AFS securities:	AFS securities:									AFS securities:
U.S. Treasury	U.S. Treasury	$	2,275	$	7	$	6	$	2,276	U.S. Treasury	$	1,721		$	25		$	0	$	1,746
GSE	GSE	1,847		34		—		1,881		GSE	1,840			77			0		1,917
Agency MBS - residential	Agency MBS - residential	67,983		411		158		68,236		Agency MBS - residential	111,589			1,975			23		113,541
Agency MBS - commercial	Agency MBS - commercial	1,335		13		7		1,341		Agency MBS - commercial	2,987			72			2		3,057
States and political subdivisions	States and political subdivisions	557		34		6		585		States and political subdivisions	447			47			1		493
Non-agency MBS		190		178		—		368

Other	Other	40		—		—		40		Other	34			0			0		34
Total AFS securities	Total AFS securities	$	74,227	$	677	$	177	$	74,727	Total AFS securities	$	118,618		$	2,196		$	26	$	120,788

10 Truist Financial Corporation

Certain securities issued by FNMA and FHLMC exceeded ~~10%~~10 percent of ~~shareholders'~~shareholders’ equity at March 31, ~~2020.~~2021. The FNMA investments had total amortized cost and fair value of ~~$15.4~~$33.6 billion and ~~$15.9~~$33.0 billion, respectively. The FHLMC investments had total amortized cost and fair value of ~~$11.3~~$33.7 billion and ~~$11.7~~$32.9 billion, respectively.

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


		Amortized Cost																		Fair Value																			Amortized Cost				Fair Value
March 31, 2020 (Dollars in millions)		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total
March 31, 2021 (Dollars in millions)																						March 31, 2021 (Dollars in millions)	Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total		Due in one year or less		Due after one year through five years		Due after five years through ten years		Due after ten years		Total
AFS securities:	AFS securities:																					AFS securities:
U.S. Treasury	U.S. Treasury	$	1,381	$	876	$	15	$	—	$	2,272	$	1,399	$	903	$	17	$	—	$	2,319	U.S. Treasury	$	250	$	1,513	$	0	$	0	$	1,763	$	250	$	1,518	$	0	$	0	$	1,768
GSE	GSE	—		1,769		—		77		1,846		—		1,853		—		80		1,933		GSE	340		1,430		0		69		1,839		346		1,485		0		72		1,903
Agency MBS - residential	Agency MBS - residential	—		1		556		68,750		69,307		—		1		570		71,182		71,753		Agency MBS - residential	0		1		389		117,011		117,401		0		1		402		116,048		116,451
Agency MBS - commercial	Agency MBS - commercial	—		2		9		1,478		1,489		—		2		10		1,507		1,519		Agency MBS - commercial	0		1		12		3,161		3,174		0		2		12		3,163		3,177
States and political subdivisions	States and political subdivisions	39		114		151		209		513		39		116		163		221		539		States and political subdivisions	39		110		100		191		440		40		114		112		210		476
Non-agency MBS		—		—		—		185		185		—		—		—		298		298

Other	Other	2		6		1		29		38		2		6		1		28		37		Other	1		6		0		24		31		1		6		0		25		32
Total AFS securities	Total AFS securities	$	1,422	$	2,768	$	732	$	70,728	$	75,650	$	1,440	$	2,881	$	761	$	73,316	$	78,398	Total AFS securities	$	630	$	3,061	$	501	$	120,456	$	124,648	$	637	$	3,126	$	526	$	119,518	$	123,807

~~Truist Financial Corporation 17~~

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


		Less than 12 months						12 months or more								Total					Less than 12 months				12 months or more		Total
March 31, 2020 (Dollars in millions)		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2021 (Dollars in millions)														March 31, 2021 (Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

AFS securities:	AFS securities:													AFS securities:

U.S. Treasury														U.S. Treasury	$	704	$	14	$	0	$	0	$	704	$	14
GSE	GSE	$	3	$	—	$	—	$	—	$	3	$	—	GSE	3		0		0		0		3		0
Agency MBS - residential	Agency MBS - residential	1,147		13		262		9		1,409		22		Agency MBS - residential	71,675		2,221		165		2		71,840		2,223
Agency MBS - commercial	Agency MBS - commercial	66		—		35		1		101		1		Agency MBS - commercial	2,080		38		3		0		2,083		38
States and political subdivisions	States and political subdivisions	96		1		121		7		217		8		States and political subdivisions	42		1		32		1		74		2
Non-agency MBS		42		14		—		—		42		14

Total														Total	$	74,504	$	2,274	$	200	$	3	$	74,704	$	2,277

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

AFS securities:														AFS securities:
U.S. Treasury														U.S. Treasury	$	17	$	0	$	0	$	0	$	17	$	0

Agency MBS - residential														Agency MBS - residential	4,028		21		203		2		4,231		23
Agency MBS - commercial														Agency MBS - commercial	463		2		4		0		467		2
States and political subdivisions														States and political subdivisions	20		0		32		1		52		1
Other	Other	36		1		—		—		36		1		Other	6		0		0		0		6		0
Total	Total	$	1,390	$	29	$	418	$	17	$	1,808	$	46	Total	$	4,534	$	23	$	239	$	3	$	4,773	$	26

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

AFS securities:
U.S. Treasury		$	702	$	6	$	—	$	—	$	702	$	6
GSE		6		—		—		—		6		—
Agency MBS - residential		20,328		145		1,326		13		21,654		158
Agency MBS - commercial		545		5		124		2		669		7
States and political subdivisions		65		1		144		5		209		6
Total		$	21,646	$	157	$	1,594	$	20	$	23,240	$	177

At March 31, ~~2020, no~~2021, 0 ACL was established for AFS securities. Substantially all of the unrealized losses on the securities portfolio were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. The majority of the unrealized loss on states and political subdivisions securities was the result of fair value hedge basis adjustments that are a component of amortized cost. The unrealized loss on non-agency MBS was due to a wider discount relative to previous periods on the Re-REMIC tranches to the underlying securities rather than credit. At March 31, 2020, the Company did not intend to sell these securities nor was it more-likely-than-not that the Company would be required to sell these securities before their anticipated recovery or maturity.

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


Three Months Ended March 31, (Dollars in millions)	Three Months Ended March 31, (Dollars in millions)	2020		2019		Three Months Ended March 31, (Dollars in millions)	2021		2020
Gross realized gains	Gross realized gains	$	—	$	22	Gross realized gains	$	0	$	0
Gross realized losses	Gross realized losses	(2)		(22)		Gross realized losses	0		(2)

Securities gains (losses), net	Securities gains (losses), net	$	(2)	$	—	Securities gains (losses), net	$	0	$	(2)

18 Truist Financial Corporation 11

NOTE 5.4. Loans and ACL

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


		Accruing															Accruing
March 31, 2020 (Dollars in millions)		Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
March 31, 2021 (Dollars in millions)												March 31, 2021 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	148,451	$	262	$	5	$	443	$	149,161	Commercial and industrial	$	134,850	$	117	$	14	$	451	$	135,432
CRE	CRE	27,505		8		1		18		27,532		CRE	25,832		9		0		58		25,899
Commercial construction	Commercial construction	6,612		16		—		2		6,630		Commercial construction	6,542		4		0		13		6,559
Lease financing	Lease financing	5,949		8		—		27		5,984		Lease financing	4,825		35		0		23		4,883
Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	51,559		679		610		248		53,096		Residential mortgage	42,456		577		975		290		44,298
Residential home equity and direct	Residential home equity and direct	27,293		156		10		170		27,629		Residential home equity and direct	25,068		82		11		172		25,333
Indirect auto	Indirect auto	24,489		521		11		125		25,146		Indirect auto	25,950		328		2		158		26,438
Indirect other	Indirect other	10,903		74		2		1		10,980		Indirect other	10,579		45		1		6		10,631
Student	Student	6,110		593		1,068		—		7,771		Student	5,885		556		1,037		0		7,478
Credit card	Credit card	5,202		57		41		—		5,300		Credit card	4,493		35		32		0		4,560

Total	Total	$	314,073	$	2,374	$	1,748	$	1,034	$	319,229	Total	$	286,480	$	1,788	$	2,072	$	1,171	$	291,511

		Accruing															Accruing
December 31, 2019 (Dollars in millions)		Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
December 31, 2020 (Dollars in millions)												December 31, 2020 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	129,873	$	94	$	1	$	212	$	130,180	Commercial and industrial	$	137,726	$	83	$	13	$	532	$	138,354
CRE	CRE	26,817		5		—		10		26,832		CRE	26,506		14		0		75		26,595
Commercial construction	Commercial construction	6,204		1		—		—		6,205		Commercial construction	6,472		5		0		14		6,491
Lease financing	Lease financing	6,112		2		—		8		6,122		Lease financing	5,206		6		0		28		5,240
Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	50,975		498		543		55		52,071		Residential mortgage	45,333		782		841		316		47,272
Residential home equity and direct	Residential home equity and direct	26,846		122		9		67		27,044		Residential home equity and direct	25,751		98		10		205		26,064
Indirect auto	Indirect auto	23,771		560		11		100		24,442		Indirect auto	25,498		495		2		155		26,150
Indirect other	Indirect other	11,011		85		2		2		11,100		Indirect other	11,102		68		2		5		11,177
Student	Student	5,905		650		188		—		6,743		Student	5,823		618		1,111		0		7,552
Credit card	Credit card	5,541		56		22		—		5,619		Credit card	4,759		51		29		0		4,839
PCI		2,126		140		1,218		—		3,484

Total	Total	$	295,181	$	2,213	$	1,994	$	454	$	299,842	Total	$	294,176	$	2,220	$	2,008	$	1,330	$	299,734

12 Truist Financial Corporation 19

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


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		Revolving Credit		Loans Converted to Term
March 31, 2021 (Dollars in millions)																												March 31, 2021 (Dollars in millions)	Amortized Cost Basis by Origination Year																							Revolving Credit				Loans Converted to Term				Other (1)
																													2021								2020									2019					2018								2017					Prior								Total
Commercial:	Commercial:																											Commercial:
Commercial and industrial:	Commercial and industrial:																											Commercial and industrial:
Pass	Pass	$	7,366		$	25,371		$	15,536		$	9,849		$	6,598		$	14,904		$	66,420	$	11	$	(843)	$	145,212	Pass	$		9,085				$	28,582				$	17,269			$	11,717				$	6,896				$	12,834			$	42,694			$	0			$	(608)			$	128,469
Special mention	Special mention	93			170			161			66			143			101			1,010		—		—		1,744		Special mention	73				480					466				325					93						255				1,778				0				0				3,470
Substandard	Substandard	53			216			126			74			87			296			926		1		(17)		1,762		Substandard	132				364					444				331					119					364				1,289				0				(1)				3,042
Nonperforming	Nonperforming	3			52			94			34			48			85			97		1		29		443		Nonperforming	7				39					57				41					24					99				183				0				1				451
Total	Total	7,515			25,809			15,917			10,023			6,876			15,386			68,453		13		(831)		149,161		Total	9,297				29,465					18,236				12,414					7,132					13,552				45,944				0				(608)				135,432
CRE:	CRE:																											CRE:
Pass	Pass	2,013			8,252			6,166			3,479			2,262			4,066			713		—		(92)		26,859		Pass	987				4,110					6,311				4,138					2,582					3,267				561				0				(63)				21,893
Special mention	Special mention	1			44			102			12			65			115			—		—		—		339		Special mention	39				125					546				337					85					146				0				0				0				1,278
Substandard	Substandard	17			94			23			39			29			114			—		—		—		316		Substandard	84				418					843				606					304					410				5				0				0				2,670
Nonperforming	Nonperforming	—			2			4			3			—			8			1		—		—		18		Nonperforming	2				1					0				1					9					45				0				0				0				58
Total	Total	2,031			8,392			6,295			3,533			2,356			4,303			714		—		(92)		27,532		Total	1,112				4,654					7,700				5,082					2,980					3,868				566				0				(63)				25,899
Commercial construction:	Commercial construction:																											Commercial construction:
Pass	Pass	342			1,921			2,164			745			153			381			729		1		4		6,440		Pass	315				1,132					2,166				1,570					177					113				594				0				4				6,071
Special mention	Special mention	—			5			37			—			—			—			—		—		—		42		Special mention	0				0					187				50					1					0				2				0				0				240
Substandard	Substandard	3			5			35			56			40			4			3		—		—		146		Substandard	2				62					42				65					63					1				0				0				0				235
Nonperforming	Nonperforming	—			1			—			1			—			—			—		—		—		2		Nonperforming	0				1					2				0					7					0				2				0				1				13
Total	Total	345			1,932			2,236			802			193			385			732		1		4		6,630		Total	317				1,195					2,397				1,685					248					114				598				0				5				6,559
Lease financing:	Lease financing:																											Lease financing:
Pass	Pass	255			1,864			1,154			1,056			381			1,221			—		—		(44)		5,887		Pass	268				1,327					937				677					658					910				0				0				(66)				4,711
Special mention	Special mention	—			8			3			3			3			—			—		—		—		17		Special mention	0				0					34				16					3					8				0				0				0				61
Substandard	Substandard	—			3			—			15			2			33			—		—		—		53		Substandard	0				0					33				7					3					45				0				0				0				88
Nonperforming	Nonperforming	—			—			1			15			2			9			—		—		—		27		Nonperforming	0				2					4				2					10					5				0				0				0				23
Total	Total	255			1,875			1,158			1,089			388			1,263			—		—		(44)		5,984		Total	268				1,329					1,008				702					674					968				0				0				(66)				4,883
Consumer:	Consumer:																											Consumer:
Residential mortgage:	Residential mortgage:																											Residential mortgage:
Performing	Performing	1,800			8,480			5,595			6,168			6,985			23,587			—		—		233		52,848		Performing	2,055				8,040					5,729				3,137					3,687					21,240				0				0				120				44,008
Nonperforming	Nonperforming	—			4			8			7			8			221			—		—		—		248		Nonperforming	0				2					14				20					13					241				0				0				0				290
Total	Total	1,800			8,484			5,603			6,175			6,993			23,808			—		—		233		53,096		Total	2,055				8,042					5,743				3,157					3,700					21,481				0				0				120				44,298
Residential home equity and direct:	Residential home equity and direct:																											Residential home equity and direct:
Performing	Performing	1,296			4,436			2,164			834			420			789			15,553		1,874		93		27,459		Performing	1,375				3,944					2,721				1,190					387					653				11,448				3,413				30				25,161
Nonperforming	Nonperforming	—			4			4			1			1			8			63		94		(5)		170		Nonperforming	0				2					5				2					1					7				57				96				2				172
Total	Total	1,296			4,440			2,168			835			421			797			15,616		1,968		88		27,629		Total	1,375				3,946					2,726				1,192					388					660				11,505				3,509				32				25,333
Indirect auto:	Indirect auto:																											Indirect auto:
Performing	Performing	2,799			9,725			5,548			3,571			2,070			1,166			—		—		142		25,021		Performing	2,881				9,678					6,664				3,528					2,043					1,335				0				0				151				26,280
Nonperforming	Nonperforming	—			32			39			29			19			19			—		—		(13)		125		Nonperforming	0				22					52				40					26					24				0				0				(6)				158
Total	Total	2,799			9,757			5,587			3,600			2,089			1,185			—		—		129		25,146		Total	2,881				9,700					6,716				3,568					2,069					1,359				0				0				145				26,438
Indirect other:	Indirect other:																											Indirect other:
Performing	Performing	1,027			4,319			2,587			1,294			676			1,009			—		—		67		10,979		Performing	952				3,923					2,542				1,467					703					1,011				0				0				27				10,625
Nonperforming	Nonperforming	—			—			—			—			—			1			—		—		—		1		Nonperforming	0				2					1				1					0					2				0				0				0				6
Total	Total	1,027			4,319			2,587			1,294			676			1,010			—		—		67		10,980		Total	952				3,925					2,543				1,468					703					1,013				0				0				27				10,631
Student:
Performing		21			122			110			91			75			7,357			—		—		(5)		7,771
Nonperforming		—			—			—			—			—			—			—		—		—		—
Total		21			122			110			91			75			7,357			—		—		(5)		7,771

Student																												Student	0				24					104				89					75					7,200				0				0				(14)				7,478

Credit card	Credit card	—			—			—			—			—			—			5,268		35		(3)		5,300		Credit card	0				0					0				0					0					0				4,525				35				0				4,560
Total	Total	$	17,089		$	65,130		$	41,661		$	27,442		$	20,067		$	55,494		$	90,783	$	2,017	$	(454)	$	319,229	Total	$	18,257			$	62,280				$	47,173			$	29,357				$	17,969				$	50,215			$	63,138			$	3,544			$	(422)			$	291,511

Truist Financial Corporation 13


December 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	$	34,858	$	18,881	$	13,312	$	7,713	$	5,174	$	8,888	$	42,780	$	231	$	(579)	$	131,258
Special mention	471		434		343		98		120		157		1,808		5		(1)		3,435
Substandard	461		445		339		121		144		256		1,353		12		(2)		3,129
Nonperforming	38		92		48		29		25		61		233		4		2		532
Total	35,828		19,852		14,042		7,961		5,463		9,362		46,174		252		(580)		138,354
CRE:
Pass	4,563		6,600		4,427		2,752		1,473		2,096		617		0		(69)		22,459
Special mention	171		599		585		116		77		141		0		0		0		1,689
Substandard	410		776		438		281		182		280		5		0		0		2,372
Nonperforming	1		15		1		9		6		43		0		0		0		75
Total	5,145		7,990		5,451		3,158		1,738		2,560		622		0		(69)		26,595
Commercial construction:
Pass	1,052		2,141		1,889		232		27		110		534		0		2		5,987
Special mention	0		108		64		1		0		0		2		0		0		175
Substandard	70		106		73		59		6		1		0		0		0		315
Nonperforming	1		3		0		7		0		0		0		3		0		14
Total	1,123		2,358		2,026		299		33		111		536		3		2		6,491
Lease financing:
Pass	1,377		1,139		775		746		241		760		0		0		27		5,065
Special mention	1		39		20		5		0		7		0		0		0		72
Substandard	0		34		3		4		3		31		0		0		0		75
Nonperforming	2		5		3		9		4		5		0		0		0		28
Total	1,380		1,217		801		764		248		803		0		0		27		5,240
Consumer:
Residential mortgage:
Performing	8,197		6,729		3,735		4,374		5,424		18,333		0		0		164		46,956
Nonperforming	3		13		16		13		14		257		0		0		0		316
Total	8,200		6,742		3,751		4,387		5,438		18,590		0		0		164		47,272
Residential home equity and direct:
Performing	4,513		3,126		1,416		481		214		557		13,886		1,619		47		25,859
Nonperforming	1		4		2		1		1		7		87		101		1		205
Total	4,514		3,130		1,418		482		215		564		13,973		1,720		48		26,064
Indirect auto:
Performing	10,270		7,436		4,015		2,401		1,220		506		0		0		147		25,995
Nonperforming	13		50		44		27		15		12		0		0		(6)		155
Total	10,283		7,486		4,059		2,428		1,235		518		0		0		141		26,150
Indirect other:
Performing	4,433		3,019		1,706		826		431		718		0		0		39		11,172
Nonperforming	1		1		1		0		0		2		0		0		0		5
Total	4,434		3,020		1,707		826		431		720		0		0		39		11,177

Student	22		110		95		81		64		7,185		0		0		(5)		7,552


Credit card	0		0		0		0		0		0		4,802		37		0		4,839
Total	$	70,929	$	51,905	$	33,350	$	20,386	$	14,865	$	40,413	$	66,107	$	2,012	$	(233)	$	299,734

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

2014 Truist Financial Corporation

The following table presents the carrying amount of loans by risk rating and performing status. Student loans are excluded as there is nominal risk of credit loss due to government guarantees or other credit enhancements. PCI loans were excluded because their related ALLL is determined by loan pool performance, and credit card loans were excluded as these loans are charged-off rather than reclassifying these loans to nonperforming:

December 31, 2019
(Dollars in millions) Commercial & Industrial CRE Commercial Construction Lease Financing
Commercial:
Pass $ 127,229 $ 26,393 $ 6,037 $ 6,039
Special mention 1,264 145 37 19
Substandard 1,475 284 131 56
Nonperforming 212 10 — 8
Total $ 130,180 $ 26,832 $ 6,205 $ 6,122
December 31, 2019
Residential Mortgage Residential home equity and direct Indirect auto Indirect Other
Consumer:
Performing $ 52,016 $ 26,977 $ 24,342 $ 11,098
Nonperforming 55 67 100 2
Total $ 52,071 $ 27,044 $ 24,442 $ 11,100

ACL

The following tables present activity in the ACL:


(Dollars in millions)	(Dollars in millions)	Balance at Jan 1, 2019		Charge-Offs		Recoveries		Provision (Benefit)		Other		Balance at Mar 31, 2019		(Dollars in millions)	Balance at Jan 1, 2020 (1)		Charge-Offs		Recoveries		Provision (Benefit)		Other (2)		Balance at Mar 31, 2020
Commercial:	Commercial:													Commercial:
Commercial and industrial	Commercial and industrial	$	546	$	(17)	$	6	$	13	$	—	$	548	Commercial and industrial	$	560	$	(39)	$	17	$	371	$	904	$	1,813
CRE	CRE	142		(8)		—		18		—		152		CRE	150		(1)		0		68		82		299
Commercial construction	Commercial construction	48		—		1		(5)		—		44		Commercial construction	52		(3)		1		22		16		88
Lease financing	Lease financing	11		(1)		—		1		—		11		Lease financing	10		(2)		0		(23)		94		79
Consumer:	Consumer:													Consumer:
Residential mortgage	Residential mortgage	232		(5)		1		(3)		—		225		Residential mortgage	176		(11)		2		(4)		264		427
Residential home equity and direct	Residential home equity and direct	104		(20)		6		13		—		103		Residential home equity and direct	107		(68)		15		102		451		607
Indirect auto	Indirect auto	298		(92)		13		81		—		300		Indirect auto	304		(142)		23		189		818		1,192
Indirect other	Indirect other	58		(17)		4		13		—		58		Indirect other	60		(18)		7		12		152		213

Student														Student	0		(8)		0		34		120		146
Credit card	Credit card	110		(24)		6		20		—		112		Credit card	122		(53)		8		95		175		347
PCI	PCI	9		—		—		(1)		—		8		PCI	8		0		0		0		(8)		0
ALLL	ALLL	1,558		(184)		37		150		—		1,561		ALLL	1,549		(345)		73		866		3,068		5,211
RUFC	RUFC	93		—		—		5		—		98		RUFC	340		0		0		27		33		400
ACL	ACL	$	1,651	$	(184)	$	37	$	155	$	—	$	1,659	ACL	$	1,889	$	(345)	$	73	$	893	$	3,101	$	5,611

(Dollars in millions)														(Dollars in millions)	Balance at Jan 1, 2021		Charge-Offs		Recoveries		Provision (Benefit)		Other (2)		Balance at Mar 31, 2021
Commercial:														Commercial:
Commercial and industrial														Commercial and industrial	$	2,156	$	(73)	$	19	$	(11)	$	0	$	2,091
CRE														CRE	573		(4)		1		(26)		0		544
Commercial construction														Commercial construction	81		(2)		1		(3)		0		77
Lease financing														Lease financing	48		(6)		0		3		0		45
Consumer:														Consumer:
Residential mortgage														Residential mortgage	368		(11)		2		(16)		0		343
Residential home equity and direct														Residential home equity and direct	714		(55)		18		30		0		707
Indirect auto														Indirect auto	1,198		(105)		22		61		0		1,176
Indirect other														Indirect other	208		(17)		6		(10)		0		187
Student														Student	130		(3)		0		2		2		131
Credit card														Credit card	359		(40)		9		33		0		361

ALLL														ALLL	5,835		(316)		78		63		2		5,662
RUFC														RUFC	364		0		0		(15)		0		349
ACL														ACL	$	6,199	$	(316)	$	78	$	48	$	2	$	6,011

~~Truist Financial Corporation 21~~

(1)

(Dollars in millions) Balance at Jan 1, 2020 (1) Charge-Offs Recoveries Provision (Benefit) Other (2) Balance at Mar 31, 2020
Commercial:
Commercial and industrial $ 560 $ (39) $ 17 $ 371 $ 904 1,813
CRE 150 (1) — 68 82 299
Commercial construction 52 (3) 1 22 16 88
Lease financing 10 (2) — (23) 94 79
Consumer:
Residential mortgage 176 (11) 2 (4) 264 427
Residential home equity and direct 107 (68) 15 102 451 607
Indirect auto 304 (142) 23 189 818 1,192
Indirect other 60 (18) 7 12 152 213
Student — (8) — 34 120 146
Credit card 122 (53) 8 95 175 347
PCI 8 — — — (8) —
ALLL 1,549 (345) 73 866 3,068 5,211
RUFC 340 — — 27 33 400
ACL $ 1,889 $ (345) $ 73 $ 893 $ 3,101 $ 5,611

~~(1)~~ Balance is prior to the adoption of CECL.

(2) ~~Other activity includes~~Includes the adoption of CECL, the ALLL for PCD acquisitions, and other activity.

The adoption of CECL increased the ALLL $3.1 billion. The following discussion of the changes in the factors that influenced Truist’s ACL estimate and the reasons for those changes excludes the impact at adoption and other ACL activity.

The commercial ALLL ~~increased $411~~decreased $101 million ~~primarily driven by a more pessimistic outlook with respect~~as of March 31, 2021 compared to ~~future~~December 31, 2020 due to lower loan balances and improving economic conditions driven by the COVID-19 pandemic and specific consideration of the risks associated with exposures to certain industries, including oil and gas, hospitality, and airlines, as well as lending to small businesses. Loan growth, which was primarily driven by draws on existing credit facilities, was also a significant contributor to the increase in the allowance for the quarter.conditions.

The consumer ALLL ~~increased $130~~decreased $74 million ~~which~~as of March 31, 2021 compared to December 31, 2020. The decrease reflects ~~the impact of the more pessimistic outlook described above. The increase was also attributable to higher expected losses~~lower loan balances primarily in the ~~nonprime auto lending portfolio, in part the result of a decline in used auto pricing,~~mortgage and ~~certain unsecured lending portfolios.~~

~~The $50 million increase in ALLL for credit card reflected risks associated with COVID-19~~indirect other portfolios and ~~the deteriorating~~improved economic ~~outlook.~~conditions.

The RUFC decreased $9$15 million ~~after giving consideration~~as of March 31, 2021 compared to December 31, 2020. The decrease reflects a change in the ~~impact of CECL at adoption and certain other adjustments related to the sale~~composition of unfunded commitments ~~to third-parties. The net decrease in~~and the ~~RUFC reflects lower levels of unfunded commitments that resulted from draws on existing credit facilities that occurred during the quarter.~~improving economic forecast.

Truist’s ACL estimate represents management’s best estimate of expected credit losses related to the loan and lease portfolio, including unfunded commitments, at the balance sheet date. This estimate incorporates both ~~quantitatively modeled~~quantitatively-derived output, as well as qualitative components that represent expected losses not otherwise captured by the models.

The quantitative models have been designed to estimate losses using macro-economic forecasts over a reasonable and supportable forecast period, which management has determined to be two years, followed by a reversion to long-term historical loss conditions over a one-year period. These macro-economic forecasts include a number of key economic variables utilized in loss forecasting that include, but are not limited to, ~~the US~~ unemployment ~~rate, US unemployment claims rate,~~trends, US real GDP, ~~Home Price Index, US Central Bank Policy Interest Rate~~corporate credit spreads, rental rates, property values, the primary 30-year mortgage rate, home price indices and ~~Manheim Index.~~used car prices.

Truist Financial Corporation 15

The primary economic forecast ~~incorporated into the quantitative model output is~~incorporates a ~~third-party consensus~~third -party baseline forecast that is adjusted to ~~incorporate~~reflect Truist’s interest rate outlook. Since this forecast reflects conditions prior to quarter end, management evaluates whether additional economic forecasts are necessary to appropriately estimate expected losses, with any resulting adjustments beingManagement also considered ~~in connection with the qualitative component of the ACL.~~

~~22 Truist Financial Corporation~~

~~The uncertainty related to the COVID-19 pandemic prompted frequent revisions to macro-economic forecasts through the end of the quarter. Management considered~~ multiple third-party macro-economic forecasts that reflected a range of possible outcomes ~~including a third-party baseline estimate prepared close to quarter end,~~ in order to capture ~~the changing severity of the pandemic and expectations related to~~uncertainty in the economic ~~disruption associated with~~environment caused by the pandemic. The economic ~~assumptions~~forecast shaping the ACL estimate at March 31, ~~2020 generally consisted~~2021 included a GDP recovery to pre-pandemic levels in the third quarter of ~~a sharp economic decline, including a very sharp initial GDP contraction and sharp home price decline,~~2021 with an improving unemployment rate to the mid-single-digits through the end of 2021 followed by a slow recovery through 2021. The forecast also includes a sharp and generally sustained decline in used car values and a significant spike in unemployment followed by a sustained high-single-digit level of unemploymentcontinued improvement through the ~~two-year~~remainder of the reasonable and supportable period.

Quantitative models have certain limitations with respect to estimating expected losses in times of rapidly changing macro-economic forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to represent a significant portion of the ACL for the foreseeable future. The March 31, 2021 ACL estimate includes qualitative adjustments to address limitations in modeled results with respect to forecasted economic conditions that are well outside of historic economic ranges used to develop the models. These adjustments give consideration to other risks in the portfolio, including the impact of government relief programs, stimulus and client accommodations, that are not directly considered in the quantitative models.

PCD Loan Activity

For PCD loans, the initial estimate of expected credit losses is recognized in the ALLL on the date of acquisition using the same methodology as other loans held for investment. The following table provides a summary of purchased student loans with credit deterioration at acquisition:


Three Months Ended March 31, ~~2020~~2021 (Dollars in millions)
Par value	$	~~242~~122
ALLL at acquisition		~~(3)~~(2)
Non-credit premium (discount)		10
Purchase price	$	~~240~~120

NPAs

The following table provides a summary of nonperforming loans, excluding LHFS. Interest income recognized on nonperforming loans HFI was $10 million and $8 million for the three months ended March 31, ~~2020.~~2021 and 2020, respectively.


		Recorded Investment							March 31, 2021				December 31, 2020
Three Months Ended March 31, 2020 (Dollars in millions)		Without an ALLL		With an ALLL
							Recorded Investment				Recorded Investment
(Dollars in millions)						(Dollars in millions)	Without an ALLL		With an ALLL		Without an ALLL		With an ALLL
Commercial:	Commercial:					Commercial:
Commercial and industrial	Commercial and industrial	$	136	$	307	Commercial and industrial	$	104	$	347	$	82	$	450
CRE	CRE	1		17		CRE	36		22		63		12
Commercial construction	Commercial construction	—		2		Commercial construction	0		13		0		14
Lease financing	Lease financing	15		12		Lease financing	0		23		0		28
Consumer:	Consumer:					Consumer:
Residential mortgage	Residential mortgage	3		245		Residential mortgage	3		287		4		312
Residential home equity and direct	Residential home equity and direct	1		169		Residential home equity and direct	2		170		2		203
Indirect auto	Indirect auto	—		125		Indirect auto	1		157		1		154
Indirect other	Indirect other	—		1		Indirect other	0		6		0		5

Total	Total	$	156	$	878	Total	$	146	$	1,025	$	152	$	1,178

The following table ~~sets forth certain information regarding impaired~~presents a summary of nonperforming assets and residential mortgage loans ~~excluding PCI and LHFS, that were individually evaluated for impairment. This table excludes guaranteed student loans and guaranteed residential mortgages for which there was nominal risk~~in the process of ~~principal loss due to the government guarantee or other credit enhancements.~~foreclosure.

UPB Recorded Investment Related ALLL Average Recorded Investment Interest Income Recognized
As of / For The Year Ended December 31, 2019
(Dollars in millions) Without an ALLL With an ALLL
Commercial:
Commercial and industrial $ 339 $ 124 $ 167 $ 20 $ 298 $ 6
CRE 29 3 26 2 71 1
Commercial construction 39 — 38 7 5 —
Lease financing 18 7 2 — 2 —
Consumer:
Residential mortgage 650 92 527 42 799 34
Residential home equity and direct 76 24 37 5 65 3
Indirect auto 367 9 349 64 334 53
Indirect other 5 — 5 1 4 —
Credit card 31 — 31 12 28 1
Total $ 1,554 $ 259 $ 1,182 $ 153 $ 1,606 $ 98


(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Nonperforming loans and leases HFI	$	1,171	$	1,330
Nonperforming LHFS	72		5
Foreclosed real estate	18		20
Other foreclosed property	38		32
Total nonperforming assets	$	1,299	$	1,387

Residential mortgage loans in the process of foreclosure	$	128	$	140

16 Truist Financial Corporation 23

TDRs

The following table presents a summary of TDRs:


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Performing TDRs:	Performing TDRs:					Performing TDRs:
Commercial:	Commercial:					Commercial:
Commercial and industrial	Commercial and industrial	$	65	$	47	Commercial and industrial	$	142	$	78
CRE	CRE	7		6		CRE	47		47
Commercial construction		36		37

Lease financing	Lease financing	1		—		Lease financing	59		60
Consumer:	Consumer:					Consumer:
Residential mortgage	Residential mortgage	513		470		Residential mortgage	733		648
Residential home equity and direct	Residential home equity and direct	66		51		Residential home equity and direct	109		88
Indirect auto	Indirect auto	350		333		Indirect auto	399		392
Indirect other	Indirect other	5		5		Indirect other	7		6
Student	Student	1		—		Student	8		5
Credit card	Credit card	35		31		Credit card	35		37
Total performing TDRs	Total performing TDRs	1,079		980		Total performing TDRs	1,539		1,361
Nonperforming TDRs	Nonperforming TDRs	121		82		Nonperforming TDRs	207		164
Total TDRs	Total TDRs	$	1,200	$	1,062	Total TDRs	$	1,746	$	1,525
ALLL attributable to TDRs	ALLL attributable to TDRs	$	159	$	132	ALLL attributable to TDRs	$	278	$	260

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


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
March 31, 2021 (Dollars in millions)												March 31, 2021 (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												Commercial and industrial			$	27		$	93		$	135		$	12
CRE												CRE			0		10			12			1

Consumer:												Consumer:
Residential mortgage												Residential mortgage			53		93			145			4
Residential home equity and direct												Residential home equity and direct			2		25			28			1
Indirect auto												Indirect auto			19		33			56			8
Indirect other												Indirect other			1		1			1			0
Student												Student			0		3			3			0
Credit card												Credit card			4		0			4			2
Re-modification of previously designated TDRs												Re-modification of previously designated TDRs			14		14

March 31, 2020 (Dollars in millions)												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:											Newly designated TDRs:
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	28		$	3		$	36	$	2	Commercial and industrial			$	28		$	3		$	36		$	2
CRE	CRE	1			—			1		—		CRE			1		0			1			0

Lease financing	Lease financing	1			—			1		—		Lease financing			1		0			1			0
Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	77			15			94		5		Residential mortgage			77		15			94			5
Residential home equity and direct	Residential home equity and direct	17			5			23		1		Residential home equity and direct			17		5			23			1
Indirect auto	Indirect auto	56			14			73		5		Indirect auto			56		14			73			5
Indirect other	Indirect other	1			—			1		—		Indirect other			1		0			1			0
Student	Student	—			1			1		—		Student			0		1			1			0
Credit card		10			—			10		3
Re-modification of previously designated TDRs		18			1

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:
Commercial:
Commercial and industrial		$	26		$	3		$	19	$	3
CRE		1			—			3		—

Consumer:
Residential mortgage		73			8			75		6
Residential home equity and direct		3			1			3		1
Indirect auto		47			1			51		11
Indirect other		1			—			1		—

Credit card	Credit card	6			—			6		3		Credit card			10		0			10			3
Re-modification of previously designated TDRs	Re-modification of previously designated TDRs	23			5							Re-modification of previously designated TDRs			18		1

Charge-offs and forgiveness of principal and interest for TDRs were immaterial for all periods presented.

Truist Financial Corporation 17

The re-default balance for modifications that had been classified as TDRs during the previous 12 months that experienced a payment default was ~~$21~~$14 million and ~~$18~~$21 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Payment default is defined as movement of the TDR to nonperforming status, foreclosure, or charge-off, whichever occurs first.

~~NPLs and Foreclosed Property~~

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

(Dollars in millions) Mar 31, 2020 Dec 31, 2019
Nonperforming loans and leases HFI (1) $ 1,034 $ 454
Nonperforming LHFS 41 107
Foreclosed real estate 63 82
Other foreclosed property 39 41
Total nonperforming assets $ 1,177 $ 684
Residential mortgage loans in the process of foreclosure $ 300 $ 409

~~(1) Beginning January 1, 2020, nonperforming loans and leases include certain assets previously classified as PCI.~~

Unearned Income, Discounts and Net Deferred Loan Fees and Costs

The following table presents additional information about loans and leases:


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Unearned income, discounts and net deferred loan fees and costs, excluding PCI		$	3,140	$	4,069
Unearned income, discounts and net deferred loan fees and costs						Unearned income, discounts and net deferred loan fees and costs	$	1,926	$	2,219

NOTE 6.5. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. The adjustments for 2020 include measurement period adjustments to the fair value of acquired assets and liabilities and the reallocation net assets to the underlying reporting units. Adjustments to the fair value of acquired assets include a $193 million reduction in the fair value mark for loans and leases, and a $165 million increase in CDI and other intangibles, each recorded to goodwill net of deferred taxes. Adjustments to the reallocation of net assets to Truist's reporting units include updates to the estimated operating results, and the finalization of corporate expense allocations based on the various drivers that Truist applies in allocating such costs. Refer to “Note 2. Business Combinations” and “Note 17. Operating Segments” for additional information.

(Dollars in millions) CB&W C&CB IH Total
Goodwill, January 1, 2019 $ 3,906 $ 3,938 $ 1,974 $ 9,818
Mergers and acquisitions 10,134 4,187 21 14,342
Adjustments — — (6) (6)
Goodwill, December 31, 2019 $ 14,040 $ 8,125 $ 1,989 $ 24,154
Mergers and acquisitions — — 31 31
Adjustments 1,483 (1,741) — (258)
Goodwill, March 31, 2020 $ 15,523 $ 6,384 $ 2,020 $ 23,927

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

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

~~Truist~~Company performed a qualitative assessment of current events and circumstances during the first quarter of 2021, including ~~the effects~~macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, and a comparison of ~~the COVID-19 pandemic,~~management’s forecast and assumptions to those used in its October 1, 2020 quantitative impairment test, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of March 31, ~~2020,~~2021, and therefore no triggering event occurred that required a quantitative goodwill impairment test. See “Note 1. Basis of Presentation” and “Note 7. Goodwill and Other Intangible Assets” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional information.

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. The adjustments for 2021 to CB&W reflect the divestiture of certain businesses. Refer to “Note 17. Operating Segments” for additional information on segments.



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



Goodwill, January 1, 2020	$	14,040	$	8,125	$	1,989	$	24,154
Mergers and acquisitions	0		0		450		450
Adjustments and other	1,801		(1,958)		0		(157)
Goodwill, December 31, 2020	15,841		6,167		2,439		24,447
Mergers and acquisitions	0		0		13		13
Adjustments and other	(124)		8		12		(104)
Goodwill, March 31, 2021	$	15,717	$	6,175	$	2,464	$	24,356

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


		March 31, 2021									December 31, 2020

(Dollars in millions)	Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount			Accumulated Amortization			Net Carrying Amount
CDI		$	2,600		$	(947)		$	1,653		$	2,600		$	(852)		$	1,748
Other, primarily client relationship intangibles		2,155			(983)			1,172			2,217			(981)			1,236
Total		$	4,755		$	(1,930)		$	2,825		$	4,817		$	(1,833)		$	2,984

18 Truist Financial Corporation 25

NOTE 7.6. Loan Servicing

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

Residential Mortgage Activities

The following tables summarize residential mortgage servicing activities:


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020			Dec 31, 2019			(Dollars in millions)	Mar 31, 2021			Dec 31, 2020
UPB of residential mortgage loan servicing portfolio	UPB of residential mortgage loan servicing portfolio	$	276,304		$	279,558		UPB of residential mortgage loan servicing portfolio	$	228,636		$	239,034
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	219,979			219,347			UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate	179,836			188,341
Mortgage loans sold with recourse	Mortgage loans sold with recourse	395			371			Mortgage loans sold with recourse	304			328
Maximum recourse exposure from mortgage loans sold with recourse liability	Maximum recourse exposure from mortgage loans sold with recourse liability	241			212			Maximum recourse exposure from mortgage loans sold with recourse liability	188			201
Indemnification, recourse and repurchase reserves	Indemnification, recourse and repurchase reserves	66			44			Indemnification, recourse and repurchase reserves	90			93

As of / For the Three Months Ended March 31, (Dollars in millions)	As of / For the Three Months Ended March 31, (Dollars in millions)	2020			2019			As of / For the Three Months Ended March 31, (Dollars in millions)	2021			2020
UPB of residential mortgage loans sold from LHFS	UPB of residential mortgage loans sold from LHFS	$	12,669		$	1,300		UPB of residential mortgage loans sold from LHFS	$	9,489		$	12,669
Pre-tax gains recognized on mortgage loans sold and held for sale	Pre-tax gains recognized on mortgage loans sold and held for sale	188			17			Pre-tax gains recognized on mortgage loans sold and held for sale	119			188
Servicing fees recognized from mortgage loans serviced for others	Servicing fees recognized from mortgage loans serviced for others	169			61			Servicing fees recognized from mortgage loans serviced for others	141			169
Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.31		%	0.28		%	Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others	0.31		%	0.31		%
Weighted average interest rate on mortgage loans serviced for others	Weighted average interest rate on mortgage loans serviced for others	4.02			4.06			Weighted average interest rate on mortgage loans serviced for others	3.76			4.02

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


Three Months Ended March 31, (Dollars in millions)	Three Months Ended March 31, (Dollars in millions)	2020		2019		Three Months Ended March 31, (Dollars in millions)	2021		2020
Residential MSRs, carrying value, January 1	Residential MSRs, carrying value, January 1	$	2,371	$	957	Residential MSRs, carrying value, January 1	$	1,778	$	2,371

Other additions		178		15
Additions						Additions	174		178
Change in fair value due to changes in valuation inputs or assumptions:	Change in fair value due to changes in valuation inputs or assumptions:					Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds	Prepayment speeds	(522)		(55)		Prepayment speeds	219		(522)
OAS	OAS	45		4		OAS	141		45
Servicing costs	Servicing costs	—		—		Servicing costs	0		0
Realization of expected net servicing cash flows, passage of time and other	Realization of expected net servicing cash flows, passage of time and other	(148)		(33)		Realization of expected net servicing cash flows, passage of time and other	(209)		(148)
Residential MSRs, carrying value, March 31	Residential MSRs, carrying value, March 31	$	1,924	$	888	Residential MSRs, carrying value, March 31	$	2,103	$	1,924

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


		March 31, 2020													December 31, 2019																						March 31, 2021												December 31, 2020
		Range							Weighted Average			Range													Weighted Average			Range									Weighted Average					Range							Weighted Average
(Dollars in millions)	(Dollars in millions)	Min		Max							Min			Max						Weighted Average		(Dollars in millions)		Min				Max				Weighted Average										Max						Weighted Average

Prepayment speed	Prepayment speed	9.4	%	19.0	%	11.2		%	8.4	%		18.6	%		9.6		%	Prepayment speed	8.8			%				28.6	%			13.0	%			12.8		%			30.8		%				15.4		%
Effect on fair value of a 10% increase	Effect on fair value of a 10% increase					$	(104)								$	(102)		Effect on fair value of a 10% increase										$	(100)													$	(89)
Effect on fair value of a 20% increase	Effect on fair value of a 20% increase					(198)									(195)			Effect on fair value of a 20% increase										(191)														(171)
OAS	OAS	2.8	%	12.8	%	5.9		%	4.0	%		13.5	%		6.7		%	OAS	2.7		%			15.0		%		5.3		%			3.5		%			13.7		%				7.3		%
Effect on fair value of a 10% increase	Effect on fair value of a 10% increase					$	(39)								$	(54)		Effect on fair value of a 10% increase										$	(45)													$	(45)
Effect on fair value of a 20% increase	Effect on fair value of a 20% increase					(76)									(106)			Effect on fair value of a 20% increase										(87)														(88)
Composition of loans serviced for others:	Composition of loans serviced for others:																						Composition of loans serviced for others:
Fixed-rate residential mortgage loans	Fixed-rate residential mortgage loans					98.6		%							98.5		%	Fixed-rate residential mortgage loans										98.9		%												98.8		%
Adjustable-rate residential mortgage loans	Adjustable-rate residential mortgage loans					1.4									1.5			Adjustable-rate residential mortgage loans										1.1														1.2
Total	Total					100.0		%							100.0		%	Total										100.0		%												100.0		%
Weighted average life	Weighted average life					4.3 years									5.4 years			Weighted average life										5.4 years														4.8 years

26 Truist Financial Corporation 19

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in one assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change. See ~~"Note~~“Note 14. Fair Value ~~Disclosures"~~Disclosures” for additional information on the valuation techniques used.

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities for the periods presented:


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

UPB of CRE mortgages serviced for others	UPB of CRE mortgages serviced for others	$	71,391	$	70,404	UPB of CRE mortgages serviced for others	$	37,089	$	36,670
CRE mortgages serviced for others covered by recourse provisions	CRE mortgages serviced for others covered by recourse provisions	8,592		8,676		CRE mortgages serviced for others covered by recourse provisions	9,604		9,019
Maximum recourse exposure from CRE mortgages sold with recourse liability	Maximum recourse exposure from CRE mortgages sold with recourse liability	2,490		2,479		Maximum recourse exposure from CRE mortgages sold with recourse liability	2,754		2,624
Recorded reserves related to recourse exposure	Recorded reserves related to recourse exposure	18		13		Recorded reserves related to recourse exposure	18		18
CRE mortgages originated during the year-to-date period	CRE mortgages originated during the year-to-date period	1,271		8,062		CRE mortgages originated during the year-to-date period	1,305		6,739
Commercial MSRs at fair value	Commercial MSRs at fair value	226		247		Commercial MSRs at fair value	262		245

NOTE 8.7. Other Assets and Liabilities

Lessee Operating and Finance Leases

The Company leases certain assets, consisting primarily of real estate, and assesses at contract inception whether a contract is, or contains, a lease. ~~At March 31, 2020, the Company had an immaterial amount of operating leases that had not yet commenced.~~ The following ~~table presents~~tables present additional information on leases, ~~and excludes assets~~excluding leases related to the lease financing businesses:





	March 31, 2021						December 31, 2020
(Dollars in millions)	Operating Leases			Finance Leases			Operating Leases			Finance Leases
ROU assets	$	1,277		$	31		$	1,333		$	36
Lease liabilities	1,812			38			1,896			42
Weighted average remaining term	6.8 years			6.2 years			6.9 years			6.3 years
Weighted average discount rate	2.4		%	4.2		%	2.4		%	4.8		%

March 31, 2020
(Dollars in millions) Operating Leases Finance Leases
ROU assets $ 1,773 $ 43
Maturities of lease liabilities:
2020 $ 334 $ 10
2021 382 11
2022 337 11
2023 284 7
2024 237 5
2025 78 1
Thereafter 671 12
Total lease payments 2,323 57
Less: imputed interest 244 6
Total lease liabilities $ 2,079 $ 51
Weighted average remaining term 7.5 years 7.4 years
Weighted average discount rate 2.6 % 4.1 %
Three Months Ended March 31,
(Dollars in millions) 2020 2019
Operating lease costs $ 96 $ 49



Three Months Ended March 31, (Dollars in millions)	2021		2020

Operating lease costs	$	85	$	96

Lessor Operating Leases

The Company’s two primary lessor businesses are equipment financing and structured real estate with income recorded in Operating lease income on the Consolidated Statements of Income.

The following table presents a summary of assets under operating leases and activity related to assets under operating leases. This table excludes subleases on assets included in premises and equipment.

~~Truist Financial Corporation 27~~


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Assets held under operating leases (1)	Assets held under operating leases (1)	$	2,126	$	2,236	Assets held under operating leases (1)	$	1,976	$	2,144

Accumulated depreciation	Accumulated depreciation	(443)		(391)		Accumulated depreciation	(458)		(517)
Net	Net	$	1,683	$	1,845	Net	$	1,518	$	1,627

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

The ~~residual~~carrying value of assets ~~no longer~~previously under operating leases was immaterial.

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain ~~employees~~teammates for which the Company is the beneficiary. These policies provide the Company an efficient form of funding for retirement and other employee benefits costs. The carrying value of bank-owned life insurance was ~~$6.4~~$6.5 billion at March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

20 Truist Financial Corporation

NOTE 8. Borrowings

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


(Dollars in millions)	Mar 31, 2021		Dec 31, 2020


Federal funds purchased	$	130		$	79
Securities sold under agreements to repurchase	1,493			1,221
FHLB advances	2,000			2,649
Collateral in excess of derivative exposures	367			385
Master notes	578			621
Other short-term borrowings	1,321			1,137
Total short-term borrowings	$	5,889		$	6,092

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


(Dollars in millions)	Mar 31, 2021		Dec 31, 2020





Truist Financial Corporation:
Fixed rate senior notes	$	15,191	$	15,984
Floating rate senior notes	600		900
Fixed rate subordinated notes	1,277		1,283
Capital notes	617		615
Structured notes (1)	109		108
Truist Bank:
Fixed rate senior notes	11,170		11,907
Floating rate senior notes	1,451		1,567
Fixed rate subordinated notes	5,128		5,142

FHLB advances	874		878

Other long-term debt (2)	1,139		1,014
Nonbank subsidiaries:
Other long-term debt (3)	197		199
Total long-term debt	$	37,753	$	39,597

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

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

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

The Company does not consolidate certain wholly-owned trusts which were formed for the sole purpose of issuing trust preferred securities. The proceeds from the trust preferred securities issuances were invested in capital notes of the Parent Company. The Parent Company’s obligations constitute a full and unconditional guarantee of the trust preferred securities.

Truist Financial Corporation 21

NOTE 9. ~~Shareholders'~~Shareholders’ Equity

Common Stock ~~Dividends~~

The following table presents the dividends declared ~~related to~~per share of common ~~stock. For information related to preferred stock dividends, see Note12. Shareholders’ Equity of the Annual Report on Form 10-K for the year ended December 31, 2019.~~stock:







Three Months Ended March 31,	2021		2020

Cash dividends declared per share	$	0.45	$	0.45

Three Months Ended March 31, 2020 2019
Cash dividends declared per share $ 0.450 $ 0.405
Share Repurchase Activity

In December 2020, Truist announced the Board of Directors had authorized the repurchase of up to $2.0 billion of common stock beginning in the first quarter of 2021 to optimize Truist’s capital position. During the first quarter of 2021, the Company repurchased $506 million of common stock, which represented 9.5 million shares, through a combination of open market and accelerated share repurchases. Repurchased shares revert to the status of authorized and unissued shares upon repurchase. At March 31, 2021, Truist had remaining authorization to repurchase up to $1.5 billion of common stock under the Board approved repurchase plan.

Preferred Stock

~~On March 16, 2020,~~During the first quarter of 2021, the Company redeemed all 18,000 outstanding ~~5,000~~ shares of its perpetual preferred stock series KF and the corresponding depositary shares representing fractional interests in ~~each~~such series for $450 million, and all 20,000 outstanding shares of its perpetual preferred stock series G and the corresponding depositary shares representing fractional interests in such series for $500 ~~million plus any unpaid dividends. The~~million.

In April 2021, the Company announced the redemption of all 18,600 outstanding shares of its perpetual preferred stock ~~redemption was~~series H and the corresponding depositary shares representing fractional interests in ~~accordance with the terms of the Company’s Articles of Amendment to its Articles of Incorporation, effective as of December 6, 2019.~~such series for $465 million.

NOTE 10. AOCI

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


Three Months Ended March 31, 2021 and 2020 (Dollars in millions)											Three Months Ended March 31, 2021 and 2020 (Dollars in millions)	Pension and OPEB Costs		Cash Flow Hedges		AFS Securities		Other, net		Total
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	0		0		1,690		(5)		1,685
Amounts reclassified from AOCI:											Amounts reclassified from AOCI:
Before tax											Before tax	20		15		41		0		76
Tax effect											Tax effect	5		4		10		0		19
Amounts reclassified, net of tax											Amounts reclassified, net of tax	15		11		31		0		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
AOCI balance, January 1, 2021											AOCI balance, January 1, 2021	$	(875)	$	(64)	$	1,654	$	1	$	716
OCI before reclassifications, net of tax											OCI before reclassifications, net of tax	28		0		(2,408)		1		(2,379)
Amounts reclassified from AOCI:											Amounts reclassified from AOCI:
Before tax											Before tax	9		47		136		0		192
Tax effect											Tax effect	2		11		32		0		45
Amounts reclassified, net of tax											Amounts reclassified, net of tax	7		36		104		0		147
Total OCI, net of tax											Total OCI, net of tax	35		36		(2,304)		1		(2,232)
AOCI balance, March 31, 2021											AOCI balance, March 31, 2021	$	(840)	$	(28)	$	(650)	$	2	$	(1,516)

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

Primary income statement location of amounts reclassified from AOCI											Primary income statement location of amounts reclassified from AOCI	Other expense		Net interest income and Other expense		Securities gains (losses) and Net interest income		Net interest income

AOCI balance, January 1, 2019	$	(1,164)	$	(31)	$	(500)	$	(20)	$	(1,715)
OCI before reclassifications, net of tax	—		(30)		314		2		286
Amounts reclassified from AOCI:
Before tax	23		(5)		(6)		—		12
Tax effect	6		(1)		(1)		—		4
Amounts reclassified, net of tax	17		(4)		(5)		—		8
Total OCI, net of tax	17		(34)		309		2		294

AOCI balance, March 31, 2019	$	(1,147)	$	(65)	$	(191)	$	(18)	$	(1,421)
AOCI balance, January 1, 2020	$	(1,122)	$	(101)	$	380	$	(1)	$	(844)
OCI before reclassifications, net of tax	—		—		1,690		(5)		1,685
Amounts reclassified from AOCI:
Before tax	20		15		41		—		76
Tax effect	5		4		10		—		19
Amounts reclassified, net of tax	15		11		31		—		57
Total OCI, net of tax	15		11		1,721		(5)		1,742
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

2822 Truist Financial Corporation

NOTE 11. Income Taxes

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the provision for income taxes was ~~$224~~$351 million and ~~$177~~$224 million, respectively, representing effective tax rates of ~~17.4%~~19.2 percent and ~~18.2%,~~17.4 percent, respectively. The ~~lower~~higher effective tax rate for the three months ended March 31, ~~2020~~2021 was primarily due to higher pre-tax income and discrete tax ~~credits earned~~expenses due to the divestiture of certain businesses in the current year. The Company calculated the provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period.

NOTE 12. Benefit Plans

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


Three Months Ended March 31, (Dollars in millions)	Three Months Ended March 31, (Dollars in millions)	Location	2020		2019		Three Months Ended March 31, (Dollars in millions)	Income Statement Location	2021		2020
Service cost	Service cost	Personnel expense	$	118	$	54	Service cost	Personnel expense	$	158	$	118
Interest cost	Interest cost	Other expense	78		57		Interest cost	Other expense	79		78
Estimated return on plan assets	Estimated return on plan assets	Other expense	(216)		(113)		Estimated return on plan assets	Other expense	(249)		(216)
Amortization and other	Amortization and other	Other expense	19		25		Amortization and other	Other expense	8		19
Net periodic benefit cost			$	(1)	$	23
Net periodic (benefit) cost							Net periodic (benefit) cost		$	(4)	$	(1)

Truist makes contributions to the qualified pension plans in amounts between the minimum required for funding and the maximum deductible for federal income tax purposes. Discretionary contributions totaling ~~$305~~$387 million were made to the Truist pension plan during the three months ended March 31, ~~2020.~~2021. There are no required contributions for the remainder of ~~2020, though Truist may elect to make additional discretionary contributions.~~2021.

NOTE 13. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

~~Truist utilizes a variety of financial instruments to meet the financing needs of clients and to reduce exposure to fluctuations~~

The Company invests in ~~interest rates. These financial instruments include commitments to extend credit, letters of credit and financial guarantees and derivatives. Truist also has commitments to fund~~ certain affordable housing ~~investments and contingent liabilities~~projects throughout its market area as a means of supporting local communities. Truist receives tax credits related to ~~certain sold loans.~~

these investments, for which the Company typically acts as a limited partner and therefore does not exert control over the operating or financial policies of the partnerships. The following table summarizes certain tax credit ~~private equity,~~ and certain ~~other~~ equity ~~method investments.~~investments:

(Dollars in millions)

Balance Sheet Location

Mar 31, 2020

Dec 31, 2019

(Dollars in millions)

Balance Sheet Location

Mar 31, 2021

Dec 31, 2020

Investments in affordable housing projects:

Carrying amount

Other assets

3,776

3,684

Carrying amount

Other assets

3,753

3,823

Amount of future funding commitments included in carrying amount

Other liabilities

1,154

1,271

Amount of future funding commitments included in carrying amount

Other liabilities

983

1,057

Lending exposure

540

647

Lending exposure

544

546

Renewable energy investments:

Carrying amount

Other assets

107

Carrying amount

Other assets

160

167

Amount of future funding commitments not included in carrying amount

N/A

211

246

Amount of future funding commitments not included in carrying amount

Private equity and certain other equity method investments:

Carrying amount

Other assets

1,597

1,556

Carrying amount

Other assets

1,569

1,574

Amount of future funding commitments not included in carrying amount

N/A

378

331

Amount of future funding commitments not included in carrying amount

438

471

Truist Financial Corporation 23

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


									Three Months Ended March 31,
Three Months Ended March 31, (Dollars in millions)		Income Statement Location	2020		2019
(Dollars in millions)							(Dollars in millions)	Income Statement Location		2021		2020

Tax credits:	Tax credits:						Tax credits:
Investments in affordable housing projects	Investments in affordable housing projects	Provision for income taxes	$	117	$	79	Investments in affordable housing projects	Provision for income taxes		$	120	$	117
Other community development investments	Other community development investments	Provision for income taxes	22		—		Other community development investments	Provision for income taxes		23		22

Renewable energy investments							Renewable energy investments	NA (1)		39		0
Amortization and other changes in carrying amount:	Amortization and other changes in carrying amount:						Amortization and other changes in carrying amount:
Investments in affordable housing projects	Investments in affordable housing projects	Provision for income taxes	$	114	$	69	Investments in affordable housing projects	Provision for income taxes		$	119	$	114
Other community development investments	Other community development investments	Other noninterest income	20		—		Other community development investments	Other noninterest income		19		20
Renewable energy investments	Renewable energy investments	Other noninterest income	—		—		Renewable energy investments	Other noninterest income		0		0

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

~~Truist Financial Corporation 29~~

Letters of Credit and Financial Guarantees

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

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


(Dollars in millions)	(Dollars in millions)	March 31, 2020		December 31, 2019		(Dollars in millions)	March 31, 2021		December 31, 2020

Commitments to extend, originate or purchase credit		$	159,924	$	177,598
Commitments to extend, originate, or purchase credit						Commitments to extend, originate, or purchase credit	$	195,882	$	186,731
Residential mortgage loans sold with recourse	Residential mortgage loans sold with recourse	395		371		Residential mortgage loans sold with recourse	304		328
CRE mortgages serviced for others covered by recourse provisions	CRE mortgages serviced for others covered by recourse provisions	8,592		8,676		CRE mortgages serviced for others covered by recourse provisions	9,604		9,019
Letters of credit	Letters of credit	5,050		5,181		Letters of credit	5,077		5,066

Total Return Swaps

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

The Company concluded that the associated VIEs should be consolidated because the Company has (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses and the right to receive benefits, that could potentially be significant. At March 31, ~~2020,~~2021, the Company’s Consolidated Balance Sheet reflected ~~$2.1~~$1.5 billion of assets and ~~$153~~$66 million of other liabilities of the VIEs. At December 31, ~~2019,~~2020, the Company’s Consolidated Balance Sheet reflected ~~$2.7~~$1.3 billion of assets and ~~$116~~$41 million of other liabilities of the VIEs. Assets at March 31, ~~2020~~2021 and December 31, ~~2019~~2020 include ~~$1.4 billion and $2.6~~$1.3 billion in trading loans ~~respectively.~~and bonds. The activities of the VIEs are restricted to buying and selling the reference assets and the risks/benefits of any such assets owned by the VIEs are passed to the third party clients via the TRS contracts.

For additional information on ~~the Company’s~~ TRS contracts and ~~its involvement with these~~the related VIEs, see ~~"Note~~“Note 15. Derivative Financial Instruments.”

~~Other Commitments~~

24 Truist Financial Corporation

~~The Company entered into an agreement to purchase its new headquarters building in Charlotte, North Carolina for $456 million. The purchase closed in March 2020.~~

Pledged Assets

Certain assets were pledged to secure municipal deposits, securities sold under agreements to repurchase, certain derivative agreements, and borrowings or borrowing capacity, as well as for other purposes as required or permitted by law. Assets pledged to the FHLB and FRB are subject to applicable asset discounts when determining borrowing capacity. The Company obtains secured financing and letters of credit from the FRB and FHLB. The Company’s letters of credit from the FHLB ~~the latter of which is~~can be used to secure various client deposits, including public fund relationships. Excluding assets related to employee benefit plans, the majority of the agreements governing the pledged assets do not permit the other party to sell or repledge the collateral. ~~Additional assets were pledged to the FRB of Richmond in the first quarter of 2020.~~ The following table provides the total carrying amount of pledged assets by asset ~~type.~~type:

(Dollars in millions) Mar 31, 2020 Dec 31, 2019
Pledged securities $ 10,404 $ 11,283
Pledged loans:
FRB 71,786 30,238
FHLB 79,009 80,816
Unused borrowing capacity:
FRB 49,652 21,169
FHLB 21,677 37,303

~~30 Truist Financial Corporation~~


(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Pledged securities	$	24,174	$	24,974

Pledged loans:
FRB	76,006		75,615
FHLB	68,551		69,994
Unused borrowing capacity:
FRB	53,844		52,831
FHLB	51,921		52,274

Litigation and Regulatory Matters

Truist and/or its subsidiaries are routinely parties to numerous legal proceedings, including private, civil ~~litigations~~litigation, and regulatory investigations, arising from the ordinary conduct of its regular business activities. The matters range from individual actions involving a single plaintiff to class action lawsuits with multiple class members and can involve claims for substantial amounts. Investigations involve both formal and informal proceedings, by both governmental agencies and self-regulatory organizations. These legal proceedings are at varying stages of adjudication, arbitration, or investigation and may consist of a variety of claims, including common law tort and contract claims, ~~and~~as well as statutory antitrust, securities, and consumer protection ~~claims, and the~~claims. The ultimate resolution of any ~~proceedings~~proceeding is uncertain and inherently difficult to predict. It is possible that the ultimate resolution of these matters, if unfavorable, may be material to the consolidated financial position, consolidated results of operations, or consolidated cash flows of Truist.

~~In accordance with the provisions of U.S. GAAP for contingencies,~~ Truist establishes accruals for legal matters when potential losses associated with the actions become probable and the amount of loss can be reasonably estimated. There is no assurance that the ultimate resolution of these matters will not significantly exceed the amounts that Truist has ~~currently~~ accrued. ~~On a quarterly basis, Truist evaluates its outstanding~~Accruals for legal ~~proceedings to assess litigation accruals and adjust such accruals upwards or downward, as appropriate,~~matters are based on management’s best judgment after consultation with counsel and ~~others, as warranted.~~others.

The ~~Company’s estimate of~~Company estimates reasonably possible losses, in excess of amounts accrued, ~~ranges from 0~~of up to approximately $200 million as of March 31, ~~2020.~~2021. This ~~estimated range~~estimate is based upon currently available information and involves considerable judgment, given that claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete and material facts may be disputed or unsubstantiated, among other factors. In addition, the matters underlying this ~~estimated range~~estimate will change from time to time and actual losses may vary significantly from this estimate. ~~For~~As a result, the ~~same reasons stated above, we do~~Company does not believe that an estimate of reasonably possible losses can be made for certain ~~matters and therefore such~~matters. Such matters are not reflected in the ~~range~~estimate provided ~~here.~~herein.

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

Bickerstaff v. SunTrust Bank

This class action case was filed in the Fulton County State Court on July 12, 2010, and an amended complaint was filed on August 9, 2010. Plaintiff asserts that all overdraft fees charged to his account which related to debit card and ATM transactions are actually interest charges and therefore subject to the usury laws of Georgia. Plaintiff has brought claims for violations of civil and criminal usury laws, conversion, and money had and received. On October 6, 2017, the trial court granted ~~plaintiff's~~plaintiff’s motion for class certification and defined the class as “Every Georgia citizen who had or has one or more accounts with SunTrust Bank and who, from July 12, 2006, to October 6, 2017 (i) had at least one overdraft of $500.00 or less resulting from an ATM or debit card transaction (the “Transaction”); (ii) paid any Overdraft Fees as a result of the Transaction; and (iii) did not receive a refund of those ~~Fees”~~Fees,” and the granting of a certified class was affirmed on appeal. On April 8, 2020, the Company filed a motion seeking to narrow the scope of this ~~class. Discovery has commenced.~~class, and on May 29, 2020, it filed a renewed motion to compel arbitration of the claims of some of the class members. On February 9, 2021, the trial court denied both motions as premature but held that the issues could be raised again after the conclusion of discovery, which is currently underway. The Company believes that the claims are without merit.

Truist Financial Corporation 3125

NOTE 14. Fair Value Disclosures

Recurring Fair Value Measurements

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

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

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

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

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


March 31, 2020 (Dollars in millions)		Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
March 31, 2021 (Dollars in millions)												March 31, 2021 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:	Assets:											Assets:
Trading assets:	Trading assets:											Trading assets:
U.S. Treasury	U.S. Treasury	$	630	$	—	$	630	$	—	$	—	U.S. Treasury	$	767	$	0	$	767	$	0	$	—
GSE	GSE	343		—		343		—		—		GSE	191		0		191		0		—
Agency MBS - residential	Agency MBS - residential	601		—		601		—		—		Agency MBS - residential	1,220		0		1,220		0		—
Agency MBS - commercial	Agency MBS - commercial	58		—		58		—		—		Agency MBS - commercial	31		0		31		0		—
States and political subdivisions	States and political subdivisions	43		—		43		—		—		States and political subdivisions	77		0		77		0		—

Corporate and other debt securities	Corporate and other debt securities	536		—		536		—		—		Corporate and other debt securities	1,008		0		1,008		0		—
Loans	Loans	1,569		—		1,569		—		—		Loans	1,543		0		1,543		0		—
Other	Other	83		78		5		—		—		Other	257		226		31		0		—
Total trading assets	Total trading assets	3,863		78		3,785		—		—		Total trading assets	5,094		226		4,868		0		—
AFS securities:	AFS securities:											AFS securities:
U.S. Treasury	U.S. Treasury	2,319		—		2,319		—		—		U.S. Treasury	1,768		0		1,768		0		—
GSE	GSE	1,933		—		1,933		—		—		GSE	1,903		0		1,903		0		—
Agency MBS - residential	Agency MBS - residential	71,753		—		71,753		—		—		Agency MBS - residential	116,451		0		116,451		0		—
Agency MBS - commercial	Agency MBS - commercial	1,519		—		1,519		—		—		Agency MBS - commercial	3,177		0		3,177		0		—
States and political subdivisions	States and political subdivisions	539		—		539		—		—		States and political subdivisions	476		0		476		0		—
Non-agency MBS		298		—		—		298		—

Other	Other	37		—		37		—		—		Other	32		0		32		0		—
Total AFS securities	Total AFS securities	78,398		—		78,100		298		—		Total AFS securities	123,807		0		123,807		0		—
LHFS at fair value	LHFS at fair value	3,655		—		3,655		—		—		LHFS at fair value	5,465		0		5,465		0		—
MSRs at fair value	MSRs at fair value	2,150		—		—		2,150		—		MSRs at fair value	2,365		0		0		2,365		—
Other assets:	Other assets:											Other assets:
Derivative assets	Derivative assets	4,040		548		6,746		177		(3,431)		Derivative assets	2,926		666		4,068		47		(1,855)
Equity securities	Equity securities	641		603		38		—		—		Equity securities	875		807		68		0		—
Private equity investments		448		—		—		448		—

Total assets	Total assets	$	93,195	$	1,229	$	92,324	$	3,073	$	(3,431)	Total assets	$	140,532	$	1,699	$	138,276	$	2,412	$	(1,855)
Liabilities:	Liabilities:											Liabilities:
Derivative liabilities	Derivative liabilities	$	764	$	674	$	3,234	$	34	$	(3,178)	Derivative liabilities	$	704	$	283	$	3,184	$	57	$	(2,820)
Securities sold short	Securities sold short	1,085		—		1,085		—		—		Securities sold short	1,313		12		1,301		0		—
Total liabilities	Total liabilities	$	1,849	$	674	$	4,319	$	34	$	(3,178)	Total liabilities	$	2,017	$	295	$	4,485	$	57	$	(2,820)

3226 Truist Financial Corporation


December 31, 2019 (Dollars in millions)		Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
December 31, 2020 (Dollars in millions)												December 31, 2020 (Dollars in millions)	Total		Level 1		Level 2		Level 3		Netting Adjustments (1)
Assets:	Assets:											Assets:
Trading assets:	Trading assets:											Trading assets:
U.S. Treasury	U.S. Treasury	$	227	$	—	$	227	$	—	$	—	U.S. Treasury	$	793	$	0	$	793	$	0	$	—
GSE	GSE	296		—		296		—		—		GSE	164		0		164		0		—
Agency MBS - residential	Agency MBS - residential	497		—		497		—		—		Agency MBS - residential	599		0		599		0		—
Agency MBS - commercial	Agency MBS - commercial	68		—		68		—		—		Agency MBS - commercial	21		0		21		0		—
States and political subdivisions	States and political subdivisions	82		—		82		—		—		States and political subdivisions	34		0		34		0		—
Non-agency MBS		277		—		277		—		—

Corporate and other debt securities	Corporate and other debt securities	1,204		—		1,204		—		—		Corporate and other debt securities	545		0		545		0		—
Loans	Loans	2,948		—		2,948		—		—		Loans	1,586		0		1,586		0		—
Other	Other	134		90		44		—		—		Other	130		123		7		0		—
Total trading assets	Total trading assets	5,733		90		5,643		—		—		Total trading assets	3,872		123		3,749		0		—
AFS securities:	AFS securities:											AFS securities:
U.S. Treasury	U.S. Treasury	2,276		—		2,276		—		—		U.S. Treasury	1,746		0		1,746		0		—
GSE	GSE	1,881		—		1,881		—		—		GSE	1,917		0		1,917		0		—
Agency MBS - residential	Agency MBS - residential	68,236		—		68,236		—		—		Agency MBS - residential	113,541		0		113,541		0		—
Agency MBS - commercial	Agency MBS - commercial	1,341		—		1,341		—		—		Agency MBS - commercial	3,057		0		3,057		0		—
States and political subdivisions	States and political subdivisions	585		—		585		—		—		States and political subdivisions	493		0		493		0		—
Non-agency MBS		368		—		—		368		—

Other	Other	40		—		40		—		—		Other	34		0		34		0		—
Total AFS securities	Total AFS securities	74,727		—		74,359		368		—		Total AFS securities	120,788		0		120,788		0		—
LHFS		5,673		—		5,673		—		—
MSRs		2,618		—		—		2,618		—
LHFS at fair value												LHFS at fair value	4,955		0		4,955		0		—
MSRs at fair value												MSRs at fair value	2,023		0		0		2,023		—
Other assets:	Other assets:											Other assets:
Derivative assets	Derivative assets	2,053		606		3,620		34		(2,207)		Derivative assets	3,837		752		4,903		186		(2,004)
Equity securities	Equity securities	817		815		2		—		—		Equity securities	1,054		996		58		0		—
Private equity investments		440		—		—		440		—

Total assets	Total assets	$	92,061	$	1,511	$	89,297	$	3,460	$	(2,207)	Total assets	$	136,529	$	1,871	$	134,453	$	2,209	$	(2,004)
Liabilities:	Liabilities:											Liabilities:
Derivative liabilities	Derivative liabilities	$	366	$	204	$	3,117	$	15	$	(2,970)	Derivative liabilities	$	555	$	386	$	3,263	$	14	$	(3,108)
Securities sold short	Securities sold short	1,074		18		1,056		—		—		Securities sold short	1,115		3		1,112		0		—
Total liabilities	Total liabilities	$	1,440	$	222	$	4,173	$	15	$	(2,970)	Total liabilities	$	1,670	$	389	$	4,375	$	14	$	(3,108)

(1)Refer to ~~"Note~~“Note 15. Derivative Financial ~~Instruments"~~Instruments” for additional discussion on netting adjustments.

At March 31, 2021 and December 31, 2020, investments totaling $371 million and $387 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

For ~~a description of~~additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 18. Fair Value Disclosures” of the Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Truist Financial Corporation 3327

Activity for Level 3 assets and liabilities is summarized below:


Three Months Ended (Dollars in millions)	Three Months Ended (Dollars in millions)	Trading Securities		Non-agency MBS		MSRs		Net Derivatives		Private Equity Investments		Three Months Ended (Dollars in millions)	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	Balance at January 1, 2020	$	—	$	368	$	2,618	$	19	$	440	Balance at January 1, 2020	$	368	$	2,618	$	19	$	440
Total realized and unrealized gains (losses):	Total realized and unrealized gains (losses):											Total realized and unrealized gains (losses):
Included in earnings	Included in earnings	—		3		(526)		111		2		Included in earnings	3		(526)		111		2
Included in unrealized net holding gains (losses) in OCI	Included in unrealized net holding gains (losses) in OCI	—		(64)		—		—		—		Included in unrealized net holding gains (losses) in OCI	(64)		0		0		0
Purchases		—		—		—		—		27

Issuances	Issuances	—		—		187		155		—		Issuances	0		187		155		0
Sales		—		—		—		—		—

Settlements	Settlements	—		(9)		(129)		(142)		(21)		Settlements	(9)		(129)		(142)		(21)

Balance at March 31, 2020	Balance at March 31, 2020	$	—	$	298	$	2,150	$	143	$	448	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	$	—
Balance at January 1, 2021												Balance at January 1, 2021	$	0	$	2,023	$	172	$	0
Total realized and unrealized gains (losses):												Total realized and unrealized gains (losses):
Included in earnings												Included in earnings	0		374		(164)		0

Issuances												Issuances	0		192		96		0

Settlements												Settlements	0		(224)		(114)		0

Balance at March 31, 2021												Balance at March 31, 2021	$	0	$	2,365	$	(10)	$	0
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2021												Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2021	$	0	$	374	$	(45)	$	0

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

~~The~~During 2020, Truist sold non-agency MBS previously categorized as Level 3 ~~represent~~that represented ownership interests in various tranches of Re-REMIC trusts. ~~These securities are valued at~~Additionally during 2020, as a ~~discount, which is unobservable in the market, to the fair value~~result of the underlying securities owned by the trusts. The Re-REMIC tranches do not have an active market and therefore are categorized as Level 3. At March 31, 2020, the fair value of Re-REMIC non-agency MBS represented a discount of 38.7% to the fair value of the underlying securities owned by the Re-REMIC trusts due to market conditions at March 31, 2020 that reflected wider discounts relative to previous periods.

The majority of private equity investments are in SBIC qualified funds, which primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates on an approximately ratable basis through 2030, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes among others. As of March 31, 2020, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner approval for transfer of ownership. These investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in ~~fair value~~control of the funds’ manager, the Company deconsolidated certain SBIC funds for ~~any single investment is limited. The significant unobservable inputs for these investments are EBITDA multiples~~which it had previously concluded that ~~ranged from 6x to 14x, with a weighted average of 8x, at March 31, 2020.~~it was the primary beneficiary.

Refer to ~~"Note 7.~~“Note 6. Loan ~~Servicing"~~Servicing” for additional information on valuation techniques and inputs for MSRs.

~~34 Truist Financial Corporation~~

Fair Value Option

The following table details the fair value and UPB of LHFS that were elected to be measured at fair value. Trading loans, included in other trading assets, were also elected to be measured at fair value.


		March 31, 2020										December 31, 2019											March 31, 2021				December 31, 2020
(Dollars in millions)	(Dollars in millions)	Fair Value		UPB		Difference		Fair Value		UPB		Difference		(Dollars in millions)	Fair Value		UPB		Difference		Fair Value		UPB		Difference

Trading loans	Trading loans	$	1,569	$	1,891	$	(322)	$	2,948	$	2,982	$	(34)	Trading loans	$	1,543	$	1,532	$	11	$	1,586	$	1,619	$	(33)
LHFS at fair value	LHFS at fair value	3,655		3,485		170		5,673		5,563		110		LHFS at fair value	5,465		5,407		58		4,955		4,736		219

Nonrecurring Fair Value Measurements

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























(Dollars in millions)	Mar 31, 2021		Dec 31, 2020
Carrying value:
LHFS	$	160	$	979
Loans and leases	181		142
Other	129		92

28 Truist Financial Corporation

The following table provides information about valuation adjustments for certain assets measured at fair value on a nonrecurring basis. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end. ~~These assets are considered to be Level 3 assets (excludes PCI).~~


		2020						2019
As of / For The Three Months Ended March 31, (Dollars in millions)		Carrying Value		Valuation Adjustments		Carrying Value		Valuation Adjustments

Three Months Ended March 31, (Dollars in millions)										Three Months Ended March 31, (Dollars in millions)	2021		2020
Valuation adjustments:										Valuation adjustments:
LHFS	LHFS	$	427	$	(25)	$	—	$	—	LHFS	$	(16)	$	(25)
Loans and leases	Loans and leases	101		(7)		154		(18)		Loans and leases	(30)		(7)

Foreclosed real estate		63		(73)		33		(63)
Other										Other	(95)		(88)

~~At March 31, 2020,~~ LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at the lower of cost or market. LHFS as of December 31, 2020 includes the small ticket loan and lease portfolio that was sold during the first quarter of 2021. The table above excludes ~~$728~~$43 million and $125 million of LHFS carried at cost at March 31, ~~2020. Excluding government guaranteed loans,~~2021 and December 31, 2020, respectively, that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value. The Company held ~~$41~~$72 million in nonperforming LHFS at March 31, ~~2020~~2021 and ~~$107~~$5 million of nonperforming LHFS at December 31, ~~2019.~~2020. LHFS that were 90 days or more past due and still accruing interest were not material at March 31, ~~2020.~~2021.

Loans and leases consists of larger commercial loans and leases that do not share similar risk characteristics that are ~~primarily~~ collateral dependent and may be subject to liquidity adjustments. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional discussion of individually evaluated loans and leases. ~~Foreclosed~~

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

Financial Instruments Not Recorded at Fair Value

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

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


			March 31, 2020						December 31, 2019								March 31, 2021				December 31, 2020
(Dollars in millions)	(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value		(Dollars in millions)	Fair Value Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value

Financial assets:	Financial assets:										Financial assets:

Loans and leases HFI, net of ALLL	Loans and leases HFI, net of ALLL	Level 3	$	314,018	$	314,838	$	298,293	$	298,586	Loans and leases HFI, net of ALLL	Level 3	$	285,849	$	288,956	$	293,899	$	295,461
Financial liabilities:	Financial liabilities:										Financial liabilities:
Time deposits	Time deposits	Level 2	35,539		35,821		35,896		35,885		Time deposits	Level 2	19,192		19,314		21,941		22,095
Long-term debt	Long-term debt	Level 2	65,662		64,998		41,339		42,051		Long-term debt	Level 2	37,753		38,060		39,597		40,864

The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was ~~$400~~$349 million and ~~$373~~$364 million at March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Truist Financial Corporation 3529

NOTE 15. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

The following table presents the gross notional amounts and estimated fair value of derivative instruments employed by the Company. Truist held no0 cash flow hedges as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.


		March 31, 2020												December 31, 2019												March 31, 2021									December 31, 2020
		Notional Amount		Fair Value								Notional Amount		Fair Value								Notional Amount		Fair Value						Notional Amount				Fair Value
(Dollars in millions)	(Dollars in millions)					Assets			Liabilities					Assets				Liabilities	(Dollars in millions)	Notional Amount				Liabilities		Notional Amount								Liabilities

Fair value hedges:	Fair value hedges:															Fair value hedges:
Interest rate contracts:	Interest rate contracts:															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)
Swaps hedging AFS securities																Swaps hedging AFS securities	$	19,809		$	0	$	0	$	17,765			$	0			$	0

Not designated as hedges:	Not designated as hedges:															Not designated as hedges:
Client-related and other risk management:	Client-related and other risk management:															Client-related and other risk management:
Interest rate contracts:	Interest rate contracts:															Interest rate contracts:
Swaps	Swaps	150,165		4,029			(1,026)			144,473		1,817		(673)		Swaps	154,617			2,394		(843)		156,338		3,399				(862)

Options	Options	24,997		59			(23)			25,938		28		(19)		Options	25,598			39		(15)		25,386		45				(18)
Forward commitments	Forward commitments	10,902		140			(147)			7,907		6		(7)		Forward commitments	4,033			17		(8)		4,847		9				(11)
Other	Other	2,483		—			—			1,807		—		—		Other	2,091			0		0		2,573		0				0
Equity contracts	Equity contracts	39,452		1,483			(1,781)			38,426		1,988		(2,307)		Equity contracts	28,298			1,702		(2,189)		31,152		1,856				(2,297)
Credit contracts:	Credit contracts:															Credit contracts:
Loans and leases	Loans and leases	1,179		18			(22)			894		—		(34)		Loans and leases	1,120			0		(4)		1,056		0				(5)
Risk participation agreements	Risk participation agreements	6,829		—			(9)			6,696		—		(2)		Risk participation agreements	7,743			1		(10)		7,802		1				(13)
Total return swaps	Total return swaps	1,924		318			(4)			2,531		27		(11)		Total return swaps	1,355			3		(30)		1,296		13				(33)
Trading		677		5			(5)			—		—		—

Foreign exchange contracts	Foreign exchange contracts	13,192		242			(259)			12,986		144		(164)		Foreign exchange contracts	12,185			131		(105)		12,066		189				(219)
Commodity	Commodity	2,800		346			(342)			2,659		67		(65)		Commodity	3,688			239		(232)		2,872		130				(124)

Total	Total	254,600		6,640			(3,618)			244,317		4,077		(3,282)		Total	240,728			4,526		(3,436)		245,388		5,642				(3,582)
Mortgage banking:	Mortgage banking:															Mortgage banking:
Interest rate contracts:	Interest rate contracts:															Interest rate contracts:
Swaps	Swaps	300		—			—			535		—		—		Swaps	686			0		0		687		0				0
Interest rate lock commitments	Interest rate lock commitments	7,605		177			(22)			4,427		34		(2)		Interest rate lock commitments	6,371			47		(47)		8,609		186				(3)
When issued securities, forward rate agreements and forward commitments	When issued securities, forward rate agreements and forward commitments	10,855		27			(224)			11,997		10		(18)		When issued securities, forward rate agreements and forward commitments	11,185			204		(17)		11,691		6				(73)
Other	Other	668		6			—			603		2		—		Other	530			2		0		466		0				0
Total	Total	19,428		210			(246)			17,562		46		(20)		Total	18,772			253		(64)		21,453		192				(76)
MSRs:	MSRs:															MSRs:
Interest rate contracts:	Interest rate contracts:															Interest rate contracts:
Swaps	Swaps	21,142		—			—			19,196		—		—		Swaps	26,510			0		0		36,161		0				(5)

Options	Options	1,684		15			(19)			1,519		22		(2)		Options	101			2		0		101		0				0
When issued securities, forward rate agreements and forward commitments	When issued securities, forward rate agreements and forward commitments	1,224		29			(54)			5,560		2		(5)		When issued securities, forward rate agreements and forward commitments	2,008			0		(24)		1,314		7				0
Other	Other	739		—			—			567		—		—		Other	3,683			0		0		760		0				0
Total	Total	24,789		44			(73)			26,842		24		(7)		Total	32,302			2		(24)		38,336		7				(5)
Total derivatives not designated as hedges	Total derivatives not designated as hedges	298,817		6,894			(3,937)			288,721		4,147		(3,309)		Total derivatives not designated as hedges	291,802			4,781		(3,524)		305,177		5,841				(3,663)
Total derivatives	Total derivatives	$	325,969	7,471			(3,942)			$	315,873	4,260		(3,336)		Total derivatives	$	311,611		4,781		(3,524)		$	322,942	5,841				(3,663)
Gross amounts in the Consolidated Balance Sheets:	Gross amounts in the Consolidated Balance Sheets:															Gross amounts in the Consolidated Balance Sheets:
Amounts subject to master netting arrangements	Amounts subject to master netting arrangements			(1,988)			1,988					(1,708)		1,708		Amounts subject to master netting arrangements				(1,471)		1,471				(1,561)				1,561
Cash collateral (received) posted for amounts subject to master netting arrangements	Cash collateral (received) posted for amounts subject to master netting arrangements			(1,443)			1,190					(499)		1,262		Cash collateral (received) posted for amounts subject to master netting arrangements				(384)		1,349				(443)				1,547

Net amount	Net amount			$	4,040		$	(764)				$	2,053	$	(366)	Net amount				$	2,926	$	(704)			$	3,837			$	(555)

3630 Truist Financial Corporation

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


March 31, 2020 (Dollars in millions)		Gross Amount		Amount Offset		Net Amount Presented in the Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
March 31, 2021 (Dollars in millions)												March 31, 2021 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:												Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement												Derivatives subject to master netting arrangement or similar arrangement	$	3,931	$	(1,855)	$	2,076	$	(2)	$	2,074
Derivatives not subject to master netting arrangement or similar arrangement												Derivatives not subject to master netting arrangement or similar arrangement	467		0		467		0		467
Exchange traded derivatives												Exchange traded derivatives	383		0		383		0		383
Total derivative assets												Total derivative assets	$	4,781	$	(1,855)	$	2,926	$	(2)	$	2,924
Derivative liabilities:												Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement												Derivatives subject to master netting arrangement or similar arrangement	$	(3,236)	$	2,815	$	(421)	$	43	$	(378)
Derivatives not subject to master netting arrangement or similar arrangement												Derivatives not subject to master netting arrangement or similar arrangement	(288)		5		(283)		0		(283)

Total derivative liabilities												Total derivative liabilities	$	(3,524)	$	2,820	$	(704)	$	43	$	(661)

December 31, 2020 (Dollars in millions)												December 31, 2020 (Dollars in millions)	Gross Amount		Amount Offset		Net Amount in Consolidated Balance Sheets		Held/Pledged Financial Instruments		Net Amount
Derivative assets:	Derivative assets:											Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	6,333	$	(2,897)	$	3,436	$	(24)	$	3,412	Derivatives subject to master netting arrangement or similar arrangement	$	4,383	$	(1,618)	$	2,765	$	(2)	$	2,763
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	590		—		590		(1)		589		Derivatives not subject to master netting arrangement or similar arrangement	705		0		705		(1)		704
Exchange traded derivatives	Exchange traded derivatives	548		(534)		14		—		14		Exchange traded derivatives	753		(386)		367		0		367
Total derivative assets	Total derivative assets	$	7,471	$	(3,431)	$	4,040	$	(25)	$	4,015	Total derivative assets	$	5,841	$	(2,004)	$	3,837	$	(3)	$	3,834
Derivative liabilities:	Derivative liabilities:											Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement	Derivatives subject to master netting arrangement or similar arrangement	$	(3,100)	$	2,644	$	(456)	$	3	$	(453)	Derivatives subject to master netting arrangement or similar arrangement	$	(3,103)	$	2,722	$	(381)	$	35	$	(346)
Derivatives not subject to master netting arrangement or similar arrangement	Derivatives not subject to master netting arrangement or similar arrangement	(168)		—		(168)		13		(155)		Derivatives not subject to master netting arrangement or similar arrangement	(174)		0		(174)		0		(174)
Exchange traded derivatives	Exchange traded derivatives	(674)		534		(140)		—		(140)		Exchange traded derivatives	(386)		386		0		0		0
Total derivative liabilities	Total derivative liabilities	$	(3,942)	$	3,178	$	(764)	$	16	$	(748)	Total derivative liabilities	$	(3,663)	$	3,108	$	(555)	$	35	$	(520)

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)

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


		March 31, 2020										December 31, 2019											March 31, 2021					December 31, 2020
				Hedge Basis Adjustment								Hedge Basis Adjustment									Hedge Basis Adjustment						Hedge Basis Adjustment
(Dollars in millions)	(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		(Dollars in millions)	Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges		Hedged Asset / Liability Basis		Items Currently Designated		Discontinued Hedges

AFS securities(1)	AFS securities(1)	$	433	$	—	$	56	$	473	$	—	$	65	AFS securities(1)	$	101,804	$	(557)	$	48	$	100,988	$	(33)	$	50
Loans and leases	Loans and leases	518		6		14		528		3		15		Loans and leases	463		0		17		470		0		18

Long-term debt	Long-term debt	29,980		1,098		22		28,557		174		23		Long-term debt	24,924		0		848		27,725		0		930

(1)The amortized cost of AFS securities was $103.2 billion at March 31, 2021 and $99.4 billion at December 31, 2020.

Truist Financial Corporation 3731

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

Derivatives Designated as Hedging Instruments under GAAP

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

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


		Three Months Ended March 31,					Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	2020		2019		(Dollars in millions)	2021		2020

Pre-tax gain (loss) recognized in OCI:	Pre-tax gain (loss) recognized in OCI:					Pre-tax gain (loss) recognized in OCI:

Deposits	Deposits	$	—	$	(10)	Deposits	$	0	$	0
Short-term borrowings	Short-term borrowings	—		(10)		Short-term borrowings	0		0
Long-term debt	Long-term debt	—		(20)		Long-term debt	0		0
Total	Total	$	—	$	(40)	Total	$	0	$	0
Pre-tax gain (loss) reclassified from AOCI into interest expense:	Pre-tax gain (loss) reclassified from AOCI into interest expense:					Pre-tax gain (loss) reclassified from AOCI into interest expense:

Deposits	Deposits	$	(2)	2		Deposits	$	(1)	$	(2)
Short-term borrowings	Short-term borrowings	(4)		1		Short-term borrowings	(5)		(4)
Long-term debt	Long-term debt	(8)		2		Long-term debt	(5)		(8)
Total	Total	$	(14)	$	5	Total	$	(11)	$	(14)
Pre-tax gain (loss) reclassified from AOCI into other expense: (1)						Pre-tax gain (loss) reclassified from AOCI into other expense: (1)
Deposits						Deposits	$	(12)	$	0
Short-term borrowings						Short-term borrowings	(20)		0
Long-term debt						Long-term debt	(4)		0
Total						Total	$	(36)	$	0

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

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


		Three Months Ended March 31,					Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	2020		2019		(Dollars in millions)	2021		2020

AFS securities:	AFS securities:					AFS securities:
Amounts related to interest settlements	Amounts related to interest settlements	$	—	$	—	Amounts related to interest settlements	$	(11)	$	0
Recognized on derivatives	Recognized on derivatives	—		(7)		Recognized on derivatives	524		0
Recognized on hedged items	Recognized on hedged items	(2)		5		Recognized on hedged items	(526)		(2)
Net income (expense) recognized	Net income (expense) recognized	(2)		(2)		Net income (expense) recognized	(13)		(2)
Loans and leases:	Loans and leases:					Loans and leases:
Amounts related to interest settlements		—		—

Recognized on derivatives	Recognized on derivatives	(3)		(8)		Recognized on derivatives	0		(3)
Recognized on hedged items	Recognized on hedged items	2		8		Recognized on hedged items	(1)		2
Net income (expense) recognized	Net income (expense) recognized	(1)		—		Net income (expense) recognized	(1)		(1)

Long-term debt:	Long-term debt:					Long-term debt:
Amounts related to interest settlements	Amounts related to interest settlements	16		(22)		Amounts related to interest settlements	0		16
Recognized on derivatives	Recognized on derivatives	922		116		Recognized on derivatives	0		922
Recognized on hedged items	Recognized on hedged items	(922)		(108)		Recognized on hedged items	79		(922)
Net income (expense) recognized	Net income (expense) recognized	16		(14)		Net income (expense) recognized	79		16
Net income (expense) recognized, total	Net income (expense) recognized, total	$	13	$	(16)	Net income (expense) recognized, total	$	65	$	13

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


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Cash flow hedges:	Cash flow hedges:					Cash flow hedges:
Net unrecognized after-tax gain (loss) on active hedges recorded in AOCI		$	—	$	—

Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)	Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)	(90)		(101)		Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)	$	(28)	$	(64)
Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(34)		(37)		Estimated portion of net after-tax gain (loss) on active and terminated hedges to be reclassified from AOCI into earnings during the next 12 months	(24)		(42)

Fair value hedges:	Fair value hedges:					Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2029)	Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2029)	$	(48)	$	(57)	Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2029)	$	783	$	862
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	(4)		(6)		Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months	271		292

3832 Truist Financial Corporation

Derivatives Not Designated as Hedging Instruments under GAAP

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

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


			Three Months Ended March 31,						Three Months Ended March 31,
(Dollars in millions)	(Dollars in millions)	Income Statement Location	2020		2019		(Dollars in millions)	Income Statement Location	2021		2020

Client-related and other risk management:	Client-related and other risk management:						Client-related and other risk management:
Interest rate contracts	Interest rate contracts	Investment banking and trading income and other income	$	(64)	$	10	Interest rate contracts	Investment banking and trading income and other income	$	102	$	(64)
Foreign exchange contracts	Foreign exchange contracts	Investment banking and trading income	107		2		Foreign exchange contracts	Investment banking and trading income and other income	26		107
Equity contracts	Equity contracts	Investment banking and trading income and other income	(10)		—		Equity contracts	Investment banking and trading income and other income	(8)		(10)
Credit contracts	Credit contracts	Investment banking and trading income and other income	459		—		Credit contracts	Investment banking and trading income and other income	(34)		459
Commodity contracts	Commodity contracts	Investment banking and trading income	3		—		Commodity contracts	Investment banking and trading income	2		3
Mortgage banking:	Mortgage banking:						Mortgage banking:
Interest rate contracts	Interest rate contracts	Residential mortgage income	(122)		(15)		Interest rate contracts	Residential mortgage income	91		(122)
Interest rate contracts	Interest rate contracts	Commercial real estate related income	2		—		Interest rate contracts	Commercial real estate related income	(1)		2
MSRs:	MSRs:						MSRs:
Interest rate contracts	Interest rate contracts	Residential mortgage income	495		54		Interest rate contracts	Residential mortgage income	(333)		495
Interest rate contracts	Interest rate contracts	Commercial real estate related income	20		—		Interest rate contracts	Commercial real estate related income	(12)		20
Total	Total		$	890	$	51	Total		$	(167)	$	890

Credit Derivative Instruments

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

The Company has entered into TRS contracts on loans. ~~The Company’s TRS business consists of matched trades, such that when the Company pays depreciation on one TRS, it receives the same amount on the matched TRS.~~ To mitigate its credit risk, the Company typically receives initial margin from the counterparty upon entering into the TRS and variation margin if the fair value of the underlying reference assets deteriorates. For additional information on the Company’s TRS contracts, see “Note 13. Commitments and Contingencies.”

Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the ~~dealer~~counterparty experiences a loss on the derivative ~~such as an interest rate swap,~~ due to a failure to pay by the ~~client, on that derivative.~~counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At March 31, ~~2020,~~2021, the remaining terms on these risk participations ranged from less than one year to 10 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming ~~100%~~100 percent default by all obligors on the maximum value.

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

(Dollars in millions)

Mar 31, 2020

Dec 31, 2019

(Dollars in millions)

Mar 31, 2021

Dec 31, 2020

Risk participation agreements:

Maximum potential amount of exposure

410

291

Maximum potential amount of exposure

503

530

Total return swaps:

Cash collateral held

783

653

Cash collateral held

345

374

Truist Financial Corporation 3933

The following table summarizes collateral positions with counterparties:


(Dollars in millions)	(Dollars in millions)	Mar 31, 2020		Dec 31, 2019		(Dollars in millions)	Mar 31, 2021		Dec 31, 2020

Dealer and other counterparties:	Dealer and other counterparties:					Dealer and other counterparties:
Cash and other collateral received from counterparties	Cash and other collateral received from counterparties	$	1,467	$	514	Cash and other collateral received from counterparties	$	387	$	446
Derivatives in a net gain position secured by collateral received	Derivatives in a net gain position secured by collateral received	1,581		615		Derivatives in a net gain position secured by collateral received	565		585
Unsecured positions in a net gain with counterparties after collateral postings	Unsecured positions in a net gain with counterparties after collateral postings	114		101		Unsecured positions in a net gain with counterparties after collateral postings	46		49
Cash collateral posted to dealer counterparties	Cash collateral posted to dealer counterparties	1,005		1,255		Cash collateral posted to dealer counterparties	1,392		1,524
Derivatives in a net loss position secured by collateral received		1,052		1,300
Additional collateral that would have been posted had the Company's credit ratings dropped below investment grade		13		12
Derivatives in a net loss position secured by collateral						Derivatives in a net loss position secured by collateral	1,484		1,604
Additional collateral that would have been posted had the Company’s credit ratings dropped below investment grade						Additional collateral that would have been posted had the Company’s credit ratings dropped below investment grade	3		3
Central counterparties clearing:	Central counterparties clearing:					Central counterparties clearing:
Cash collateral, including initial margin, posted to central clearing parties	Cash collateral, including initial margin, posted to central clearing parties	220		30		Cash collateral, including initial margin, posted to central clearing parties	52		172
Derivatives in a net loss position	Derivatives in a net loss position	199		31		Derivatives in a net loss position	10		90
Derivatives in a net gain position	Derivatives in a net gain position	5		—		Derivatives in a net gain position	2		5
Securities pledged to central counterparties clearing	Securities pledged to central counterparties clearing	663		513		Securities pledged to central counterparties clearing	1,223		1,281

NOTE 16. Computation of EPS

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


Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)	Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)	2020		2019		Three Months Ended March 31, (Dollars in millions, except per share data, shares in thousands)	2021		2020
Net income available to common shareholders	Net income available to common shareholders	$	986	$	749	Net income available to common shareholders	$	1,334	$	986
Weighted average number of common shares	Weighted average number of common shares	1,344,372		764,135		Weighted average number of common shares	1,345,666		1,344,372
Effect of dilutive outstanding equity-based awards	Effect of dilutive outstanding equity-based awards	13,173		9,936		Effect of dilutive outstanding equity-based awards	13,266		13,173
Weighted average number of diluted common shares	Weighted average number of diluted common shares	1,357,545		774,071		Weighted average number of diluted common shares	1,358,932		1,357,545
Basic EPS	Basic EPS	$	0.73	$	0.98	Basic EPS	$	0.99	$	0.73
Diluted EPS	Diluted EPS	$	0.73	$	0.97	Diluted EPS	$	0.98	$	0.73
Anti-dilutive awards	Anti-dilutive awards	1,725		—		Anti-dilutive awards	376		1,725

NOTE 17. Operating Segments

Truist operates and measures business activity across 3 segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury and Corporate. The ~~Company's~~Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see ~~Note~~“Note 21. Operating ~~Segments~~Segments” of the Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

4034 Truist Financial Corporation

The following table presents results by segment:


Three Months Ended March 31, (Dollars in millions)	Three Months Ended March 31, (Dollars in millions)	CB&W									C&CB												IH																Three Months Ended March 31, (Dollars in millions)		CB&W								C&CB						IH						OT&C (1)			Total
				2020			2019			2020			2019				2020				2019								Three Months Ended March 31, (Dollars in millions)	2021				2020				2021					2020				2021				2020			2021			2020			2021			2020
Net interest income (expense)	Net interest income (expense)	$	1,860		$	828		$	1,534		$	739		$	36				$	34						Net interest income (expense)		$				$	1,860			$	1,208				$	1,534			$	24			$	36		$	301		$	220		$	3,285		$	3,650
Net intersegment interest income (expense)	Net intersegment interest income (expense)	388			193			(194)			(105)			(11)					(11)							Net intersegment interest income (expense)		386				397				1					(211)				(4)				(11)			(383)			(175)			0			0
Segment net interest income	Segment net interest income	2,248			1,021			1,340			634			25					23							Segment net interest income		2,138				2,257				1,209					1,323				20				25			(82)			45			3,285			3,650
Allocated provision for credit losses	Allocated provision for credit losses	437			131			399			20			1					3							Allocated provision for credit losses		100				437				(35)					399				1				1			(18)			56			48			893
Segment net interest income after provision	Segment net interest income after provision	1,811			890			941			614			24					20							Segment net interest income after provision		2,038				1,820				1,244					924				19				24			(64)			(11)			3,237			2,757
Noninterest income	Noninterest income	1,072			507			460			244			557					515							Noninterest income		921				1,066				694					457				633				557			(51)			(119)			2,197			1,961
Noninterest expense		1,993			882			886			315			440					417
Income (loss) before income taxes		890			515			515			543			141					118
Provision (benefit) for income taxes		209			125			92			113			36					30
Segment net income (loss)		$	681		$	390		$	423		$	430		$	105				$	88

Identifiable assets (period end)		$	168,356		$	75,873		$	203,363		$	85,911		$	7,009				$	6,376

											OT&C (1)												Total
								2020			2019			2020					2019
Net interest income (expense)								$	220		$	95		$	3,650				$	1,696
Net intersegment interest income (expense)								(183)			(77)			—					—
Segment net interest income								37			18			3,650					1,696
Allocated provision for credit losses								56			1			893					155
Segment net interest income after provision								(19)			17			2,757					1,541
Noninterest income								(128)			(64)			1,961					1,202
Noninterest expense								112			154			3,431					1,768
Amortization of intangibles																Amortization of intangibles		79				100		38	42		26				18				1					5				144				165
Other noninterest expense																Other noninterest expense		1,831				1,904		744	827		453				422				438					113				3,466				3,266
Income (loss) before income taxes	Income (loss) before income taxes							(259)			(201)			1,287					975							Income (loss) before income taxes		1,049				882				1,156					512				173				141			(554)			(248)			1,824			1,287
Provision (benefit) for income taxes	Provision (benefit) for income taxes							(113)			(91)			224					177							Provision (benefit) for income taxes		246				207				248					91				42				36			(185)			(110)			351			224
Segment net income (loss)	Segment net income (loss)							$	(146)		$	(110)		$	1,063				$	798						Segment net income (loss)		$	803			$	675			$	908				$	421			$	131			$	105		$	(369)		$	(138)		$	1,473		$	1,063

Identifiable assets (period end)	Identifiable assets (period end)							$	127,501		$	59,523		$	506,229				$	227,683						Identifiable assets (period end)		$	159,352			$	169,896			$	182,459				$	202,214			$	8,062			$	7,009		$	167,664		$	127,110		$	517,537		$	506,229

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

Truist Financial Corporation 4135

ITEM 2. ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Introduction~~

~~This~~ MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements, ~~and~~the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, other information contained in this document, as well as ~~information contained in~~with Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019 Form 10-K.~~2020.

~~Government Response to COVID-19~~

Congress, the FRB and the other U.S. state and federal financial regulatory agencies have taken actions to mitigate disruptions to economic activity and financial stability resulting from COVID-19 and can be expected to continue to evolve such approaches and requirements in ways that further impact the business of the Company. The descriptions below summarize certain significant government actions taken in response to the COVID-19 pandemic. The descriptions are qualified in their entirety by reference to the particular statutory or regulatory provisions or government programs summarized.

~~The CARES Act~~

The CARES Act was signed into law on March 27, 2020. Among other provisions, the CARES Act includes funding for the Small Business Administration to expand lending, relief from certain U.S. GAAP requirements to allow COVID-19-related loan modifications to not be categorized as troubled debt restructurings and a range of incentives to encourage deferment, forbearance or modification of consumer credit and mortgage contracts. One of the key CARES Act programs is the Paycheck Protection Program, which temporarily expands the Small Business Administration’s business loan guarantee program through June 30, 2020. Paycheck Protection Program loans are available to a broader range of entities than ordinary Small Business Administration loans, require six-month deferral of principal and interest repayment, and the loan may be forgiven in an amount equal to payroll costs and certain other expenses during an eight-week covered period.

The CARES Act contains additional protections for homeowners and renters of properties with federally backed mortgages, including a 60-day moratorium on the initiation of foreclosure proceedings beginning on March 18, 2020 and a 120-day moratorium on initiating eviction proceedings effective March 27, 2020. Borrowers of federally backed mortgages have the right under the CARES Act to request up to 360 days of forbearance on their mortgage payments if they experience financial hardship directly or indirectly due to the coronavirus-related public health emergency.

Also pursuant to the CARES Act, the U.S. Treasury has the authority to provide loans, guarantees and other investments in support of eligible businesses, states and municipalities affected by the economic effects of COVID-19. Some of these funds have been used to support the several FRB programs and facilities described below or additional programs or facilities that are established by the FRB under its Section 13(3) authority and meeting certain criteria.

~~FRB Actions~~

The FRB has taken a range of actions to support the flow of credit to households and businesses. For example, on March 15, 2020, the FRB reduced the target range for the federal funds rate to 0 to 0.25% and announced that it would increase its holdings of U.S. Treasury securities and agency mortgage-backed securities and begin purchasing agency commercial mortgage-backed securities. The FRB has also encouraged depository institutions to borrow from the discount window and has lowered the primary credit rate for such borrowing by 150 basis points while extending the term of such loans up to 90 days. Reserve requirements have been reduced to zero as of March 26, 2020.

In addition, the FRB has established, or has taken steps to establish, a range of facilities and programs to support the U.S. economy and U.S. marketplace participants in response to economic disruptions associated with COVID-19. Through these facilities and programs, the FRB, relying on its authority under Section 13(3) of the Federal Reserve Act, has taken steps to directly or indirectly purchase assets from, or make loans to, U.S. companies, financial institutions, municipalities and other market participants.

~~FRB facilities and programs established, or in the process of being established, include:~~

•~~a Paycheck Protection Program Liquidity Facility to provide financing related to Paycheck Protection Program loans made by banks;~~

•~~a Main Street New Loan Facility and a Main Street Expanded Loan Facility to purchase loan participations, under specified conditions, from banks lending to small and medium sized U.S. businesses;~~

•~~a Primary Dealer Credit Facility to provide liquidity to primary dealers through a secured lending facility;~~

•~~a Commercial Paper Funding Facility to purchase the commercial paper of certain U.S. issuers;~~

~~42 Truist Financial Corporation~~

•~~a Primary Market Corporate Credit Facility to purchase corporate bonds directly from, or make loans directly to, eligible participants;~~

•~~a Secondary Market Corporate Credit Facility to purchase corporate bonds trading in secondary markets, including from exchange-traded funds, that were issued by eligible participants;~~

•~~a Term Asset-Backed Securities Loan Facility to make loans secured by asset-backed securities;~~

•~~a Municipal Liquidity Facility to purchase bonds directly from U.S. state, city and county issuers; and~~

•~~a Money Market Mutual Fund Liquidity Facility to purchase certain assets from, or make loans to, financial institutions providing financing to eligible money market mutual funds.~~

These facilities and programs are in various stages of development, and the Company and Truist Bank may participate in some or all of them, including as an agent or intermediary on behalf of clients or customers or in an advisory capacity.

Regulatory Considerations

The regulatory framework applicable to banking organizations is intended primarily for the protection of depositors and the stability of the financial system, rather than for the protection of shareholders and creditors. Truist is subject to banking laws and regulations, and various other laws and regulations, which affect the operations and management of Truist and its ability to make distributions to shareholders. Truist and its subsidiaries are also subject to supervision and examination by multiple regulators. Refer to ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for additional disclosures with respect to significant laws and regulations affecting Truist.

The descriptions below summarize ~~certain significant~~ updates since the filing of the Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 to state and federal laws to which Truist is subject. ~~The~~These descriptions ~~are qualified in their entirety by reference to the particular statutory or regulatory provisions summarized. They~~ do not summarize all possible or proposed changes in current laws or regulations, and are not intended to be a substitute for the related statues or regulatory provisions.

~~Final Stress Capital Buffer Rule~~

On March 19, 2021, the FRB announced the temporary exclusion of U.S. Treasury securities and deposits at the FRB from the calculation of the supplementary leverage ratio will expire as scheduled on March 31, 2021; this temporary relief added 24 basis points to the Company’s supplementary leverage ratio as of March 31, 2021. The FRB has adopted a final rule that integrates its annual capital planning and stress testing requirements with existing regulatory capital requirements. For risk-based capital requirements, the stress capital buffer replaces the existing capital conservation buffer, which is 2.5% as of January 1, 2019. Under the final rule, beginning in the 2020 CCAR cycle, Truist will be requiredalso announced plans to ~~calculate a stress capital buffer equal~~propose several potential modifications to the greater of (i) the difference between its starting and minimum projected CET1 capital ratios under the severely adverse scenario in the supervisory stress test, plus the sum of the dollar amount of Truist’s planned common stock dividends for each of the fourth through seventh quarters of the planning horizon as a percentage of risk-weighted assets, or (ii) 2.5%.

The final rule also makes related changes to the capital planning and stress testing process. Among other changes, the revised capital plan rule eliminates the assumption that Truist’s balance sheet assets would increase over the planning horizon. In addition, provided that Truist is otherwise in compliance with automatic restrictions on distributions under the FRB’s capital rules, Truist will no longer be required to seek prior approval to make capital distributions in excess of those included in its capital plan.

~~Revisions to Definition of Eligible Retained Income~~

The U.S. banking agencies have adopted an interim final rule altering the definition of eligible retained income in their respective capital rules. Under the new rule, eligible retained income is the greater of a firm’s (i) net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (ii) average net income over the preceding four quarters. This definition applies with respect to all of Truist’s capital requirements. The interim final rule became effective March 20, 2020.

~~Current Expected Credit Losses Methodology~~

The U.S. banking agencies have adopted an interim final rule that permits banking organizations that implement CECL before the end of 2020 to elect to follow the three-year transition available under the prior rule or a new five-year transition to phase in the effects of CECL on regulatory capital. Under the five-year transition, the banking organization would defer for two years 100% of the day-one effect of adopting CECL and 25% of the cumulative increase in the allowance for credit losses since adoption of CECL. Following the first two years, the electing organization will phase out the aggregate capital effects over the next three years consistent with the transition in the original three-year transition rule. The interim final rule became effective March 31, 2020. Truist has elected to use the five-year transition to phase in the impacts of CECL on regulatory capital.

~~Truist Financial Corporation 43~~

~~Supplementary Leverage Ratio~~

~~In response to the COVID-19 pandemic, the FRB has adopted an interim final rule that temporarily changes~~ the supplementary leverage ratio to exclude U.S. treasury securities and deposits at Federal Reserve Banks from the calculation of a firm’s leverage exposure. The interim final rule applies to BHCs and became effective April 1, 2020 and will remain in effect through March 31, 2021.

~~Loan modifications~~

In response to the COVID-19 pandemic, banking regulators have encouraged financial institutions to work with borrowers. Truist implemented loan modification programs in order to provide borrowers with flexibility with respect to repayment terms. These loan modifications are not considered TDRs to the extentensure that the ~~borrower was impacted by the COVID-19 pandemic and was less than 30 days past due at the time that the COVID-19 loan modification program was implemented, unless the loan was previously classified~~supplementary leverage ratio remains effective in an environment of higher reserves, though such proposal had not been published as ~~a TDR.~~

~~CARES Act~~

~~In addition to authorizing several programs to provide loans, guarantees and other investments in support of eligible organizations, states and municipalities affected by the economic effects~~ of the COVID-19 pandemic, the CARES Act also includes several measures that temporarily adjust existing laws or regulations. These include providing the FDIC with additional authority to guarantee the depositsdate of solvent insured depository institutions held in noninterest-bearing business transaction accounts to a maximum amount specified by the FDIC, reinstating the FDIC's Temporary Liquidity Guarantee Authority to guarantee debt obligations of solvent insured depository institutions or depository institution holding companies, and temporarily allowing the Treasury to fully guarantee money market mutual funds. The CARES Act also provides financial institutions with the option to suspend certain GAAP requirements for coronavirus-related loan modifications that would otherwise constitute troubled debt restructurings and further requires the federal banking agencies to defer to financial institutions’ determinations in making such suspensions. Refer to “Note 1. Basis of Presentation” for Truist’s policy related to COVID-19 loan modifications.this report.

Executive Overview

~~Overview~~Truist had a strong financial performance in the first quarter of ~~Significant Events~~2021 and ~~Financial Results~~several significant milestones that are reflective of its purpose in action. Truist continues to closely monitor the COVID-19 pandemic and its effects on stakeholders and the financial markets and is actively supporting teammates, clients, and communities. Truist also continues to make significant progress on Merger integration and conversion efforts.

Integration Efforts

Recent ~~Events~~

Effective December 6, 2019, the Company completed the Merger. Reported results for Truist reflect heritage BB&T prior to the completion of the Merger and results from both BB&T and SunTrust from the Merger closing date forward. As such, comparative income statement data in

~~this MD&A for the first quarter of 2019 is only for heritage BB&T. Significant Merger updates~~highlights include:

•~~In January 2020,~~ Truist ~~officially launched the Truist brand and visual identity, and Truist’s purpose: “Inspire and build better lives and communities,” along with~~reaffirmed its ~~mission and values.~~

•~~In March 2020, the purchase of the new Charlotte, NC headquarters building was completed and the building was renamed Truist Center.~~

•Purchase accounting valuations for loans and intangibles were updated during the first quarter resulting in a $193 million reduction in the fair value mark for loans, a $165 million increase in CDI and other intangibles and a $258 million reduction in goodwill.

•~~Truist remains committed~~commitment to achieving $1.6 billion in net cost ~~saves.~~saves on a run rate basis by the fourth quarter of 2022.

◦•~~The realization~~Completed the Wealth brokerage and trust transitions.

•Continued the mortgage transition, enabling clients to get the best of ~~net cost savings~~both heritage SunTrust and heritage BB&T to meet their homeownership needs.

•Activated the Integrated Relationship Management approach. Truist’s Integrated Relationship Management approach is ~~conditioned on~~designed to deepen client relationships that brings the ~~duration~~full breadth and depth of ~~the pandemic~~products and ~~post-crisis economic conditions, including the normalization of interest rates.~~services to meet clients’ financial needs.

•Completed testing protocols for core bank transition events.

•Launched teammate pilot program for digital experience.

The Company is closely monitoring the COVID-19 pandemic and its effects on clients, counterparties and the financial markets in which the Company conducts business. The Company expects the effects of this widespread health crisis, which include disruptions or restrictions in clients’ supply chains, closures of clients’ facilities or decreases in demand for clients’ products and services, to adversely impact economic conditions. Also related to the health crisis, the U.S. has been operating under a presidential declared emergency since March 13, 2020, with various actions by the U.S. Congress and regulatory agencies.Supporting Clients

Truist ~~acted swiftly~~is continuing to ~~support our~~work closely with clients ~~teammates and communities during~~as they experience challenges from the COVID-19 pandemic. Truist supported clients by being the sixth largest commercial bank in the second round of PPP funding and through the forgiveness process, and continues to support clients as they transition from payment relief programs. The ~~following are some~~carrying value of ~~the more significant actions related to our crisis response.~~PPP loans was $10.1 billion as of March 31, 2021.

Supporting Teammates

•
~~Provided support~~

This quarter, Truist signed the Hispanic Promise, a first-of-its-kind national pledge to prepare, hire, promote, retain, and celebrate Hispanics in the workplace. Truist was also recognized for ~~clients through payment relief assistance, waiving certain fees~~its commitment to stand for better by the Human Rights Campaign’s Corporate Equality Index with a perfect 100 score, by ‘FORTUNE ’ as one of the world’s most admired companies, and ~~offering additional incentives, including:~~as a top 50 employer by both ‘Equal Opportunity’ and ‘CAREERS & the disABLED’ magazines.

◦Commercial - clients may elect to defer their loan payments for up to 90 days without late fees being incurred but with finance charges continuing to accrue. Similar payment deferrals were offered to commercial leasing clients upon request.

◦~~Consumer - clients may elect to defer loan payments for time periods that range from 30 to 90 days without late fees being incurred but with finance charges generally continuing to accrue.~~

4436 Truist Financial Corporation

Supporting Communities

◦
~~Credit card - clients may elect~~

In February 2021, Truist issued its first social bond for $1.3 billion, becoming the first U.S. regional bank to ~~defer payments~~issue a social bond. Truist also became the lead investor for ~~up to 90 days without late fees being incurred but with financing charges accruing.~~Greenwood, an innovative digital banking platform designed for Black and Latinx consumers and business owners. In addition, Truist ~~is providing credit card clients with 5% cash back on qualifying card purchases~~received an ‘Outstanding’ CRA rating for ~~certain important basic needs.~~

•~~Truist implemented multiple strategies~~its community development efforts and continued to ~~keep our branches operational and clients safe, including lobby access by appointment and~~make great progress towards the ~~extensive use of drive-thrus. Truist created an online, automated process for the Paycheck Protection Program and began to accept applications during the first weekend~~Company’s $60 billion Community Benefits Plan, after ending 2020 at 114 percent of the ~~program. Additionally, Truist funded extensive line draws for commercial clients to help them fund liquidity and working capital needs.~~

•Provided support for teammates including additional paid time off, flexibility and family care benefits. Provided teammates who have base pay below $100,000 annually a one-time pre-tax bonus of $1,200 in March to recognize their ongoing commitment to our clients and help alleviate some of the financial pressures caused by the pandemic. Enabled alternative work strategies that allowed more than half of our teammates to work remotely. Offered an additional onsite special pay rate of $6.25 per hour or $50 per day for teammates required to work in offices.

•Launched the Truist Cares initiative, a pledge of $25 million in philanthropic support that is providing aid for basic needs, medical supplies, and financial hardship across the nation. The remaining charitable funds will be given as grants to Truist’s community partners to support and expand technology initiatives and programs for youth, seniors, small businesses and people to rebuild, restore and create thriving communities.annual target.

~~See Part II, Item 1A, “Risk Factors,” in this Form 10-Q for additional information regarding risks related to the effects of COVID-19.~~

Financial Results

Net income available to common shareholders for the first quarter of ~~2020~~2021 totaled ~~$986 million.~~$1.3 billion, up 35.3 percent, compared with the first quarter last year. On a diluted per common share basis, earnings for the first quarter of ~~2020~~2021 were ~~$0.73, a decrease~~$0.98, an increase of ~~$0.24~~$0.25 compared to the first quarter of ~~2019. Truist's~~2020. Truist’s results of operations for the first quarter of ~~2020~~2021 produced an annualized return on average assets of ~~0.90%~~1.17 percent and an annualized return on average common ~~shareholders'~~shareholders’ equity of ~~6.58%~~8.69 percent compared to prior year ~~ratios~~returns of ~~1.43%~~0.90 percent and ~~11.08%~~6.58 percent, respectively. Results for the first quarter of 2021 included merger-related and restructuring charges of $141 million ($108 million after-tax), ~~respectively.~~incremental operating expenses related to the Merger of $175 million ($134 million after-tax), and an acceleration of loss recognition related to certain terminated cash flow hedges of $36 million ($28 million after-tax). Results for the first quarter of 2020 included ~~merger-related and restructuring charges of~~ $107 million ($82 million after-tax), incremental operating expenses related to the merger of $74 million ($57 million after-tax), and impacts associated with certain discretionary actions undertaken by management related to COVID-19 of $71 million ($54 million after-tax). Results for the first quarter of 2019 included $80 million ($64 million after-tax) of merger-related and restructuring charges and $2$74 million ($157 million after-tax) of incremental operating expenses related to the Merger.

Truist’s revenue for the first quarter of ~~2020~~2021 was ~~$5.6~~$5.5 billion. On a TE basis, revenue was also ~~$5.6~~$5.5 billion for the first quarter of ~~2020, an increase~~2021, a decrease of ~~$2.7 billion~~$138 million compared to the same period in ~~2019, which reflects an increase~~2020, reflecting a decrease of ~~$2.0 billion~~$374 million in TE net interest income, and an increase of ~~$759~~$236 million in noninterest income.

The increase in net interest income was primarily due to the Merger, as average loans and leases increased $159.0 billion and average securities increased $29.0 billion. In addition, average interest earning trading assets and other earning assets increased $27.9 billion due to higher trading assets from the Merger and higher interest bearing balances at the Federal Reserve as Truist increased liquidity to support clients.

NIM was ~~3.58%~~3.01 percent for the first quarter of ~~2020, up 7~~2021, down 57 basis points compared to the prior year. Average earning assets increased ~~$215.8~~$30.4 billion, ~~while~~as average securities increased $46.5 billion, partially offset by a decline in average loans and leases of $8.2 billion, and average other earning assets of $6.3 billion. Average interest-bearing liabilities ~~increased $170.3~~decreased $7.8 billion and noninterest-bearing deposits increased ~~$40.9~~$35.4 billion. The annualized TE yield on the total loan portfolio for the first quarter of ~~2020~~2021 was ~~4.98%,~~4.09 percent, down 889 basis points compared to the prior year. The annualized TE yield on the average securities portfolio was ~~2.62%, up 2~~1.45 percent, down 117 basis points compared to the prior year. The average costs of interest-bearing liabilities was 0.28 percent, down 74 basis points compared to the prior year.

The provision for credit losses was ~~$893~~$48 million compared to ~~$155~~$893 million for the first quarter of ~~2019.~~2020. The earlier quarter included an increase ~~in the provision for credit losses was primarily due~~ to the ~~recognition of an economic downturn and significant growth in loans related to COVID-19, including the impact of reserving~~ACL for the ~~expected losses under CECL. Higher net charge-offs also contributed to the increase in the provision for credit losses and primarily reflect increases as a result~~significant uncertainty of the ~~Merger.~~economic impacts resulting from the onset of the pandemic. Net charge-offs ~~were 0.36% of average loans and leases on an annualized basis~~ for the first quarter of ~~2020,~~2021 totaled $238 million compared to $272 million in the earlier quarter. The net charge-off rate for the current quarter of 0.33 percent was down ~~four~~three basis points compared to the first quarter of ~~2019.~~2020.

Noninterest income for the first quarter of ~~2020~~2021 increased ~~$759~~$236 million compared to the earlier ~~quarter. Nearly all categories of noninterest income were impacted~~quarter, driven by ~~the Merger. In addition to impacts from the Merger,~~increases in insurance income ~~increased due to higher production~~of $77 million, and ~~residential mortgage banking income was up due to strong production and refinance activity driven by the declining rate environment. Investment~~investment banking and trading income ~~was negatively impacted by credit valuation adjustments on the derivatives portfolio~~of $222 million. Other income increased $76 million primarily due to income from assets held for certain post-retirement benefits, which is primarily offset by higher personnel expense. Other income also includes a $37 million gain from the divestiture of certain businesses, which was mostly offset by gains from credit default swaps recorded in the earlier quarter. Lending related fees increased $33 million. These increases were partially offset by a decline in ~~interest rates and widening~~residential mortgage income of ~~credit spreads.~~$145 million, as well as a decline in service charges on deposits of $47 million.

Noninterest expense for the first quarter of ~~2020~~2021 was up ~~$1.7 billion~~$179 million compared to the earlier quarter. ~~Excluding merger-related~~Merger-related and restructuring charges increased $34 million and other incremental operating expenses related to the Merger ~~and certain discretionary expenses~~increased $101 million. The current quarter also includes $36 million of expense associated with an acceleration of loss recognition related to ~~COVID-19,~~certain terminated cash flow hedges. Excluding the items mentioned above, changes in amortization of intangibles, and a small gain from debt extinguishment, adjusted noninterest expense was up ~~$1.5 billion, primarily reflecting~~$32 million compared to the ~~impact~~earlier quarter. Additionally, increases in personnel expense of ~~the Merger.~~

~~Truist Financial Corporation 45~~

$170 million were partially offset by declines in net occupancy expense, marketing and customer development, and operating lease depreciation.

The provision for income taxes was ~~$224~~$351 million for the first quarter of ~~2020,~~2021, compared to ~~$177~~$224 million for the earlier quarter. This produced an effective tax rate for the first quarter of ~~2020~~2021 of ~~17.4%,~~19.2 percent, compared to ~~18.2%~~17.4 percent for the earlier quarter. The ~~lower~~higher effective tax rate isin the first quarter of 2021 was primarily due to higher pre-tax income and discrete tax ~~credits~~expenses resulting from the divestiture of certain businesses in the current year.

~~Truist's~~Truist’s total assets at March 31, ~~2020~~2021 were ~~$506.2~~$517.5 billion, an increase of ~~$33.1~~$8.3 billion compared to December 31, ~~2019.~~2020. The increase in total assets was primarily ~~driven by~~a result of an increase of ~~$15.8 billion in total loans and leases as many commercial clients drew on lines of credit to build liquidity in response to COVID-19 and an increase of $16.1~~$13.2 billion in interest-bearing deposits ~~with banks, which primarily reflects~~driving higher balances held at the Federal ~~Reserve.~~Reserve and an increase of $3.0 billion in AFS securities. These increases were partially offset by an $8.6 billion decline in total loans and leases.

Truist Financial Corporation 37

Total deposits at March 31, ~~2020~~2021 were ~~$350.2~~$395.6 billion, an increase of ~~$15.5~~$14.5 billion compared to December 31, ~~2019. The~~2020. Deposit growth was strong for the first quarter of 2021 driven by growth resulting from additional government stimulus programs and pandemic-related client behavior, partially offset by a decrease in time deposits ~~reflects clients retaining a portion~~primarily due to the maturity of ~~their credit line draws in the bank~~wholesale negotiable certificates of deposit and ~~solid growth in all non-time deposit products.~~higher-cost personal accounts.

Asset quality ~~remained strong, although significant uncertainties exist related to COVID-19.~~ratios were stable at March 31, 2021. As of March 31, ~~2020,~~2021, nonperforming assets were ~~0.23%~~0.25 percent of total assets. The allowance for loan and lease loss coverage ratio was ~~5.04X~~4.84x nonperforming loans and leases held for investment, compared to ~~3.41X~~4.39x at December 31, 2019. The higher coverage ratio reflects the CECL adoption build of $3.1 billion, as well as $582 million of reserve build in the first quarter of 2020 in connection with COVID-19 and the economic downturn.2020.

Truist maintained strong capital and liquidity. As of March 31, ~~2020,~~2021, the CET1 ratio was ~~9.3%~~10.1 percent and the average LCR was ~~117%.~~111 percent. During the first quarter of ~~2020, the company redeemed $500~~2021, Truist completed $506 million of ~~Series K~~share repurchases and also redeemed $950 million of preferred stock. ~~Additionally, the~~The Company issued ~~$4.3~~$1.3 billion of senior ~~and subordinated~~ long-term debt. In connection with the redemptions of preferred stock, net income available to common shareholders was reduced by $26 million to recognize the difference between the redemption price and the carrying value. Truist declared common dividends of ~~$0.450~~$0.45 per share during the first quarter of ~~2020. The~~2021, resulting in dividend and total payout ratios for the first quarter of ~~2020 were 61.4 percent. As previously communicated at the time~~2021 of ~~the Merger announcement, Truist suspended its share repurchase program until capital ratios return to higher levels.~~45.4 percent and 83.3 percent, respectively. In April ~~2020,~~2021, Truist declared common dividends of ~~$0.450~~$0.45 per share for the second quarter of ~~2020.~~2021. Additionally in April 2021, the Company announced the redemption of $465 million in preferred stock for Series H.

Analysis of Results of Operations

Net Interest Income and NIM

First Quarter ~~2020~~2021 compared to First Quarter ~~2019~~2020

Net interest income on a TE basis was $3.7 billion for the first quarter of 2020, an increase of $2.0 billion compared to the same period in 2019. Interest income increased $2.3 billion. Interest expense increased $299 million. Net interest margin was ~~3.58%, up seven~~3.01 percent, down 57 basis points compared to the earlier quarter. Average earning assets increased $215.8 billion. The increase in average earning assets reflects a $159.0 billion increase in average total loans and leases and a $29.0 billion increase in average securities. Average interest earning trading assets and other earning assets increased $27.9 billion due to higher trading securities and interest-bearing balances at the Federal Reserve. Average interest-bearing liabilities increased $170.3 billion compared to the earlier quarter. Average interest-bearing deposits increased $133.8 billion, average long-term debt increased $23.3 billion and average short-term borrowings increased $13.3 billion.

The yield on the total loan portfolio for the first quarter of ~~2020~~2021 was ~~4.98%,~~4.09 percent, down ~~eight~~89 basis points compared to the earlier quarter, reflecting the impact of rate decreases ~~partially offset by~~and lower purchase accounting accretion from merged loans. The yield on the average securities portfolio was ~~2.62%, up two~~1.45 percent, down 117 basis points compared to the earlier ~~period.~~quarter primarily due to lower yields on new purchases.

The average cost of total deposits was ~~0.51%,~~0.05 percent, down 1346 basis points compared to the earlier ~~quarter. The~~quarter and the average cost of interest-bearing deposits was ~~0.70%,~~0.07 percent, down 2563 basis points compared to the earlier quarter. The average rate on short-term borrowings was ~~1.76%,~~0.82 percent, down 5694 basis points compared to the earlier quarter. The average rate on long-term debt was ~~2.34%,~~1.57 percent, down 9677 basis points compared to the earlier quarter. The lower rates on interest-bearing liabilities reflect ~~declines in fed funds and LIBOR rates. The~~the lower ~~rates on long-term debt also reflect the amortization of the fair value mark on the assumed debt and the recent issuance of new senior and subordinated notes and long-term FHLB advances.~~rate environment.

As of March 31, ~~2020,~~2021, the remaining unamortized fair value marks on the loan and lease portfolio, deposits, and long-term debt were ~~$3.5~~$2.1 billion, ~~$54~~$15 million, and ~~$285~~$196 million, respectively. The remaining unamortized fair value mark on loans and leases consists of $1.1 billion for consumer loans and leases, and $978 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as ~~prepayments~~paydowns occur.

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

4638 Truist Financial Corporation


Table 1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)	Table 1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)																																														Table 1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)

Three Months Ended March 31, (Dollars in millions)	Three Months Ended March 31, (Dollars in millions)	Average Balances (5)									Annualized Yield/Rate									Income/Expense									Incr. (Decr.)			Change due to					Three Months Ended March 31, (Dollars in millions)	Average Balances (5)				Annualized Yield/Rate				Income/Expense			Incr. (Decr.)	Change due to
				2020			2019			2020			2019			2020			2019					Rate			Volume			Three Months Ended March 31, (Dollars in millions)	2021		2020		2021			2020		2021		2020		Incr. (Decr.)		Rate		Volume
Assets	Assets																										Assets
Total securities, at amortized cost: (2)	Total securities, at amortized cost: (2)																										Total securities, at amortized cost: (2)
U.S. Treasury	U.S. Treasury	$	2,274		$	3,302		1.93	%		2.01	%		$	11		$	16		$	(5)	$	(1)		$	(4)	U.S. Treasury	$	1,759		$	2,274	0.89	%	1.93	%		$	4	$	11	$	(7)	$	(5)	$	(2)
GSE	GSE	1,856			2,418			2.33			2.24			10			14			(4)		1			(5)		GSE	1,839			1,856		2.33		2.33			11		10		1		—		1
Agency MBS	Agency MBS	70,816			40,044			2.60			2.58			461			258			203		2			201		Agency MBS	118,171			70,816		1.44		2.60			426		461		(35)		(257)		222
States and political subdivisions	States and political subdivisions	530			620			3.56			3.73			5			6			(1)		—			(1)		States and political subdivisions	444			530		3.52		3.56			4		5		(1)		—		(1)
Non-agency MBS	Non-agency MBS	185			315			16.72			12.51			8			10			(2)		3			(5)		Non-agency MBS	—			185		—		16.72			—		8		(8)		(4)		(4)
Other	Other	40			35			3.01			3.96			—			—			—		—			—		Other	33			40		1.92		3.01			—		—		—		—		—

Total securities	Total securities	75,701			46,734			2.62			2.60			495			304			191		5			186		Total securities	122,246			75,701		1.45		2.62			445		495		(50)		(266)		216
Interest earning trading assets	Interest earning trading assets	6,334			602			4.04			2.27			64			4			60		5			55		Interest earning trading assets	4,742			6,334		2.79		4.04			32		64		(32)		(18)		(14)
Other earning assets (3)	Other earning assets (3)	23,750			1,595			1.55			7.43			92			29			63		(41)			104		Other earning assets (3)	17,417			23,750		0.37		1.55			16		92		(76)		(56)		(20)
Loans and leases, net of unearned income: (4)	Loans and leases, net of unearned income: (4)																										Loans and leases, net of unearned income: (4)

Commercial and industrial	Commercial and industrial	131,743			61,370			4.33			4.33			1,419			656			763		—			763		Commercial and industrial	136,051			131,743		3.10		4.33			1,040		1,419		(379)		(423)		44
CRE	CRE	27,046			16,786			4.25			4.99			287			207			80		(34)			114		CRE	26,211			27,046		2.90		4.25			189		287		(98)		(89)		(9)
Commercial Construction	Commercial Construction	6,409			4,119			4.87			5.33			76			54			22		(5)			27		Commercial Construction	6,557			6,409		3.04		4.87			48		76		(28)		(30)		2
Lease financing	Lease financing	6,070			2,021			4.27			3.33			65			17			48		6			42		Lease financing	4,975			6,070		4.28		4.27			53		65		(12)		—		(12)

Residential mortgage	Residential mortgage	52,993			31,370			4.48			4.13			594			324			270		29			241		Residential mortgage	45,823			52,993		4.42		4.48			507		594		(87)		(8)		(79)
Residential home equity and direct	Residential home equity and direct	27,564			11,681			6.60			5.92			452			171			281		22			259		Residential home equity and direct	25,658			27,564		5.81		6.60			368		452		(84)		(53)		(31)
Indirect auto	Indirect auto	24,975			11,308			6.89			8.62			428			240			188		(56)			244		Indirect auto	26,363			24,975		6.56		6.89			426		428		(2)		(23)		21
Indirect other	Indirect other	10,950			6,029			7.37			6.57			201			98			103		13			90		Indirect other	10,848			10,950		6.98		7.37			187		201		(14)		(12)		(2)
Student	Student	7,787			—			5.38			—			104			—			104		—			104		Student	7,519			7,787		3.96		5.38			73		104		(31)		(28)		(3)
Credit card	Credit card	5,534			2,922			9.68			9.03			133			65			68		5			63		Credit card	4,645			5,534		9.24		9.68			106		133		(27)		(6)		(21)
PCI		—			455			—			17.99			—			20			(20)		—			(20)

Total loans and leases HFI	Total loans and leases HFI	301,071			148,061			5.02			5.06			3,759			1,852			1,907		(20)			1,927		Total loans and leases HFI	294,650			301,071		4.11		5.02			2,997		3,759		(762)		(672)		(90)
LHFS	LHFS	6,677			729			3.14			4.38			53			8			45		(3)			48		LHFS	4,891			6,677		2.59		3.14			32		53		(21)		(8)		(13)
Total loans and leases	Total loans and leases	307,748			148,790			4.98			5.06			3,812			1,860			1,952		(23)			1,975		Total loans and leases	299,541			307,748		4.09		4.98			3,029		3,812		(783)		(680)		(103)
Total earning assets	Total earning assets	413,533			197,721			4.33			4.49			4,463			2,197			2,266		(54)			2,320		Total earning assets	443,946			413,533		3.20		4.33			3,522		4,463		(941)		(1,020)		79
Nonearning assets	Nonearning assets	64,017			27,852																						Nonearning assets	64,887			64,017
Total assets	Total assets	$	477,550		$	225,573																					Total assets	$	508,833		$	477,550
Liabilities and Shareholders' Equity
Liabilities and Shareholders’ Equity																											Liabilities and Shareholders’ Equity
Interest-bearing deposits:	Interest-bearing deposits:																										Interest-bearing deposits:
Interest-checking	Interest-checking	$	85,008		$	27,622		0.61			0.59			129			40			89		1			88		Interest-checking	$	104,744		$	85,008	0.06		0.61			15		129		(114)		(138)		24
Money market and savings	Money market and savings	120,936			63,325			0.59			0.96			178			150			28		(73)			101		Money market and savings	129,303			120,936		0.03		0.59			10		178		(168)		(179)		11
Time deposits	Time deposits	35,570			16,393			1.29			1.50			114			60			54		(10)			64		Time deposits	20,559			35,570		0.44		1.29			22		114		(92)		(56)		(36)
Foreign office deposits - interest-bearing		—			422			—			2.43			—			3			(3)		—			(3)

Total interest-bearing deposits (6)	Total interest-bearing deposits (6)	241,514			107,762			0.70			0.95			421			253			168		(82)			250		Total interest-bearing deposits (6)	254,606			241,514		0.07		0.70			47		421		(374)		(373)		(1)
Short-term borrowings	Short-term borrowings	18,900			5,624			1.76			2.32			83			32			51		(10)			61		Short-term borrowings	6,731			18,900		0.82		1.76			14		83		(69)		(31)		(38)
Long-term debt	Long-term debt	46,547			23,247			2.34			3.30			272			192			80		(68)			148		Long-term debt	37,820			46,547		1.57		2.34			148		272		(124)		(79)		(45)
Total interest-bearing liabilities	Total interest-bearing liabilities	306,961			136,633			1.02			1.41			776			477			299		(160)			459		Total interest-bearing liabilities	299,157			306,961		0.28		1.02			209		776		(567)		(483)		(84)
Noninterest-bearing deposits (6)	Noninterest-bearing deposits (6)	93,135			52,283																						Noninterest-bearing deposits (6)	128,579			93,135
Other liabilities	Other liabilities	12,042			6,116																						Other liabilities	11,050			12,042
Shareholders' equity		65,412			30,541
Total liabilities and shareholders' equity		$	477,550		$	225,573
Shareholders’ equity																											Shareholders’ equity	70,047			65,412
Total liabilities and shareholders’ equity																											Total liabilities and shareholders’ equity	$	508,833		$	477,550
Average interest-rate spread	Average interest-rate spread							3.31	%		3.08	%															Average interest-rate spread						2.92	%	3.31	%
NIM/net interest income	NIM/net interest income							3.58	%		3.51	%		$	3,687		$	1,720		$	1,967	$	106		$	1,861	NIM/net interest income						3.01	%	3.58	%		$	3,313	$	3,687	$	(374)	$	(537)	$	163
Taxable-equivalent adjustment	Taxable-equivalent adjustment													$	37		$	24									Taxable-equivalent adjustment											$	28	$	37

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

(2) Total securities include AFS ~~and HTM~~ securities.

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

(4) ~~Loan fees,~~Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances.

(5) Excludes basis adjustments for fair value hedges.

(6) Total deposit costs were ~~0.51%~~0.05 percent and ~~0.64%~~0.51 percent for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Truist Financial Corporation 4739

Provision for Credit Losses

First Quarter ~~2020~~2021 compared to First Quarter ~~2019~~2020

The provision for credit losses was ~~$893~~$48 million, compared to ~~$155~~$893 million for the earlier quarter. The ~~increase in~~earlier quarter included the ~~provision for credit losses was primarily due to~~significant uncertainty of the ~~recognition~~economic impacts resulting from the onset of ~~an economic downturn and significant growth in loans related to COVID-19, including~~ the ~~impact of reserving for the expected losses under CECL.~~pandemic. Net charge-offs for the first quarter of ~~2020~~2021 totaled ~~$272~~$238 million compared to ~~$147~~$272 million in the earlier quarter. ~~Higher net charge-offs also contributed to the increase in the provision for credit losses and primarily reflect increases as a result of the Merger.~~ The net charge-off rate for the current quarter of ~~0.36%~~0.33 percent was down ~~four~~three basis points compared to the first quarter of ~~2019.~~2020.

Noninterest Income

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


Table 2: Noninterest Income	Table 2: Noninterest Income								Table 2: Noninterest Income

						% Change
Three Months Ended March 31, (Dollars in millions)								Three Months Ended March 31, (Dollars in millions)						% Change
	Three Months Ended March 31, (Dollars in millions)	2020		2019		2020 vs. 2019				2021		2020		2021 vs. 2020
Insurance income	Insurance income	$	549	$	510	7.6	%	Insurance income		$	626	$	549	14.0	%
Wealth management income								Wealth management income		341		332		2.7
Service charges on deposits	Service charges on deposits	305		171		78.4		Service charges on deposits		258		305		(15.4)
Wealth management income		332		162		104.9
Card and payment related fees		187		128		46.1
Residential mortgage income	Residential mortgage income	245		49		NM		Residential mortgage income		100		245		(59.2)
Investment banking and trading income	Investment banking and trading income	118		27		NM		Investment banking and trading income		340		118		188.1
Card and payment related fees								Card and payment related fees		200		187		7.0
Lending related fees								Lending related fees		100		67		49.3
Operating lease income	Operating lease income	77		35		120.0		Operating lease income		68		77		(11.7)
Commercial real estate related income								Commercial real estate related income		43		44		(2.3)
Income from bank-owned life insurance	Income from bank-owned life insurance	44		28		57.1		Income from bank-owned life insurance		50		44		13.6
Lending related fees		67		25		168.0
Commercial real estate related income		44		14		NM
Securities gains (losses)	Securities gains (losses)	(2)		—		NM		Securities gains (losses)		—		(2)		NM
Other income (loss)	Other income (loss)	(5)		53		(109.4)		Other income (loss)		71		(5)		NM
Total noninterest income	Total noninterest income	$	1,961	$	1,202	63.1		Total noninterest income		$	2,197	$	1,961	12.0

First Quarter ~~2020~~2021 compared to First Quarter ~~2019~~2020

Noninterest income for the first quarter of ~~2020~~2021 increased ~~$759~~$236 million compared to the earlier quarter. Nearly all categories of noninterest income were impacted by the Merger. Insurance income increased $39 million due to higher production. Residential mortgage banking income was up due to strong production and refinance activity driven by the declining rate environment. Investment banking and trading income ~~was up $91~~increased $222 million ~~but was negatively impacted by credit valuation adjustments of $92 million on the derivatives portfolio primarily related~~due to the ~~decline~~impact from CVA recoveries in ~~interest rates~~the current period compared to losses in the earlier quarter and ~~widening of credit spreads.~~strong investment banking income from equity originations, loan syndications, and asset securitization transactions. Insurance income increased $77 million due to new business and higher retention, as well as acquisitions. Other income ~~was worse by $58~~increased $76 million primarily ~~as a result of a $26 million change in the market value of~~due to income from assets held for certain post-retirement benefits, which was primarily offset by ~~lower~~higher personnel expense. Other income also includes a $37 million gain from the divestiture of certain businesses, which was mostly offset by gains from credit default swaps recorded in the earlier quarter. Lending related fees increased $33 million due to gains from the sale of finance leases. Residential mortgage banking income decreased $145 million primarily due to lower production related revenues as a result of lower gain on sale margins and volumes, as well as lower servicing income due to a reduction in the third-party servicing portfolio as a result of prepayments. Service charges on deposits decreased $47 million due to reduced overdraft incident rates.

4840 Truist Financial Corporation

Noninterest Expense

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


Table 3: Noninterest Expense	Table 3: Noninterest Expense								Table 3: Noninterest Expense

						% Change
Three Months Ended March 31, (Dollars in millions)								Three Months Ended March 31, (Dollars in millions)						% Change
	Three Months Ended March 31, (Dollars in millions)	2020		2019		2020 vs. 2019				2021		2020		2021 vs. 2020
Personnel expense	Personnel expense	$	1,972	$	1,087	81.4	%	Personnel expense		$	2,142	$	1,972	8.6	%
Professional fees and outside processing								Professional fees and outside processing		350		247		41.7
Net occupancy expense	Net occupancy expense	221		122		81.1		Net occupancy expense		209		221		(5.4)
Professional fees and outside processing		247		86		187.2
Software expense	Software expense	210		72		191.7		Software expense		210		210		—
Amortization of intangibles								Amortization of intangibles		144		165		(12.7)
Equipment expense	Equipment expense	116		65		78.5		Equipment expense		113		116		(2.6)
Marketing and customer development	Marketing and customer development	84		27		NM		Marketing and customer development		66		84		(21.4)
Operating lease depreciation	Operating lease depreciation	71		29		144.8		Operating lease depreciation		50		71		(29.6)
Loan-related expense	Loan-related expense	62		25		148.0		Loan-related expense		54		62		(12.9)
Amortization of intangibles		165		32		NM
Regulatory costs	Regulatory costs	29		18		61.1		Regulatory costs		25		29		(13.8)
Merger-related and restructuring charges	Merger-related and restructuring charges	107		80		33.8		Merger-related and restructuring charges		141		107		31.8

Loss (gain) on early extinguishment of debt								Loss (gain) on early extinguishment of debt		(3)		—		NM

Other expense	Other expense	147		125		17.6		Other expense		109		147		(25.9)
Total noninterest expense	Total noninterest expense	$	3,431	$	1,768	94.1		Total noninterest expense		$	3,610	$	3,431	5.2

First Quarter ~~2020~~2021 compared to First Quarter ~~2019~~2020

Noninterest expense for the first quarter of ~~2020~~2021 was up ~~$1.7 billion~~$179 million compared to the earlier quarter. ~~All categories of noninterest expense reflect the impact of the Merger.~~ Merger-related and restructuring charges increased $34 million and other incremental operating expenses related to the Merger increased ~~$27~~$101 million, primarily reflected in professional fees and ~~$72 million, respectively. In addition, the~~outside processing. The current quarter ~~was impacted by $65~~also includes $36 million of ~~discretionary expenses~~expense associated with an acceleration of loss recognition related to ~~COVID-19. On an~~certain terminated cash flow hedges. Excluding the items mentioned above and changes in amortization of intangibles and a small gain from debt extinguishment, adjusted ~~basis,~~ noninterest expense was up ~~$1.5 billion,~~$32 million compared to the earlier quarter. Personnel expense increased $170 million primarily ~~reflecting the impact~~due to higher incentive expenses due to improved performance, higher equity-based compensation expense, higher other employee benefits, partially offset by lower salaries due to fewer FTEs. Other expense also includes decreases of ~~the Merger. Marketing~~$42 million for non-service-related pension cost components and $20 million for teammate travel. There was also a decrease of $51 million from net occupancy expense, marketing and customer development ~~expense reflects higher spend related to the launch of the Truist brand. Amortization of intangibles increased $133 million due to the intangibles recognized in the Merger.~~and operating lease depreciation.

~~Truist Financial Corporation 49~~

Merger-Related and Restructuring Charges

The following table presents a summary of merger-related and restructuring charges and the related accruals:


Table 4: Merger-Related and Restructuring Accrual Activity	Table 4: Merger-Related and Restructuring Accrual Activity										Table 4: Merger-Related and Restructuring Accrual Activity

(Dollars in millions)	(Dollars in millions)		Accrual at Jan 1, 2020		Expense (1)		Utilized		Accrual at Mar 31, 2020 (1)		(Dollars in millions)	Accrual at Jan 1, 2021		Expense		Utilized		Accrual at Mar 31, 2021
Severance and personnel-related	Severance and personnel-related		$	46	$	44	$	(70)	$	20	Severance and personnel-related	$	36	$	26	$	(50)	$	12
Occupancy and equipment	Occupancy and equipment		—		19		(19)		—		Occupancy and equipment	—		54		(54)		—
Professional services	Professional services		42		14		(53)		3		Professional services	16		54		(41)		29

Other adjustments			1		30		(30)		1
Systems conversion and related costs		Systems conversion and related costs	—		7		(7)		—
Other		Other	11		—		—		11
Total(1)	Total(1)		$	89	$	107	$	(172)	$	24	Total(1)	$	63	$	141	$	(152)	$	52

(1) ~~In connection with~~The Company recognized $130 million of expenses for the ~~Merger,~~three months ended March 31, 2021 related to the Merger. At March 31, 2021, the Company ~~recognized $92 million of expense for the first quarter of 2020 and has a remaining~~had an accrual of ~~$15~~$42 million ~~at March 31, 2020.~~related to the Merger. The remaining expense and accrual relate to ~~activities~~ other ~~than the Merger.~~restructuring activities.

Truist Financial Corporation 41

Segment Results

See ~~"Note~~“Note 17. Operating ~~Segments"~~Segments” herein and ~~"Note~~“Note 21. Operating ~~Segments"~~Segments” in ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020 for additional disclosures related to ~~Truist's~~Truist’s reportable business segments, including additional details related to results of operations. Fluctuations in noninterest income and noninterest expense are more fully discussed in the Noninterest Income and Noninterest Expense sections above.

Table 5: Net Income by Reportable Segment
% Change
Three Months Ended March 31,
(Dollars in millions) 2020 2019 2020 vs. 2019
Consumer Banking and Wealth $ 681 $ 390 74.6 %
Corporate and Commercial Banking 423 430 (1.6)
Insurance Holdings 105 88 19.3
Other, Treasury & Corporate (146) (110) 32.7
Truist Financial Corporation $ 1,063 $ 798 33.2



Table 5: Net Income by Reportable Segment



Three Months Ended March 31, (Dollars in millions)	2021		2020		% Change


Consumer Banking and Wealth	$	803	$	675	19.0	%
Corporate and Commercial Banking	908		421		115.7
Insurance Holdings	131		105		24.8
Other, Treasury & Corporate	(369)		(138)		167.4
Truist Financial Corporation	$	1,473	$	1,063	38.6

First Quarter ~~2020~~2021 compared to First Quarter ~~2019~~2020

Consumer Banking and Wealth

CB&W serves individuals and small business clients by offering a variety of loan and deposit products, payment services, bankcard products, and other financial ~~services by connecting~~services. CB&W includes Retail Community Bank, which provides banking, borrowing, investing, insurance solutions, and advice through Premier Banking to individuals and small business clients ~~to a wide range~~through an extensive network of ~~financial~~branches and ATMs, digital channels, and contact centers. Financial products and ~~services.~~services offered include deposits and payments, credit cards, loans, mortgages, brokerage and investment advisory services, and insurance solutions. CB&W also includes Dealer Retail Services, which originates loans on an indirect basis to individuals for the purchase of automobiles, boats, and recreational vehicles. Additionally, CB&W includes National Consumer Finance &and Payments, which provides a comprehensive set of technology-enabled lending solutions to individuals and small businesses through several national channels, as well as merchant services and payment processing solutions to business clients. CB&W also includes Mortgage Banking, which offers residential mortgage products nationally through its retail and correspondent channels, the internet, and by telephone. These products are either sold in the secondary market, primarily with servicing rights retained or held in the Company’s loan portfolio. Mortgage Banking also services loans for other investors, in addition to loans held in the Company’s loan portfolio. Mortgage Banking also includes Mortgage Warehouse Lending, which provides short-term lending solutions to finance first-lien residential mortgage LHFS by independent mortgage companies. Wealth delivers investment management, financial planning, banking, fiduciary services, and related solutions to institutions, affluent and high net worth individuals, and families, with financial expertise and industry-specific insights in the medical, legal, sports, and entertainment industries.

CB&W net income was ~~$681~~$803 million for the first quarter of ~~2020,~~2021, an increase of ~~$291~~$128 million compared to the earlier quarter. Segment net interest income ~~increased $1.2 billion~~decreased $119 million primarily due to a decline in the ~~Merger.~~funding credit provided on liabilities and lower purchase accounting accretion. Noninterest income ~~increased $565~~decreased $145 million ~~due to the Merger and higher~~driven by lower residential mortgage income ~~as a result~~due to lower gain on sale margins and volumes, partially offset by gains from the divestiture of ~~the lower rate environment driving mortgage production through refinance activity.~~certain businesses. The allocated provision for credit losses ~~increased $306~~decreased $337 million reflecting an allowance build during the first quarter of 2020 resulting from the deteriorating economic outlook caused by the onset of the pandemic, as well as a benefit from lower charge offs in the auto portfolios compared to the prior year. Noninterest expense decreased $94 million primarily due to the recognition of an economic downturn related to COVID-19 and higher net charge-offs in the current quarter as there was a full quarter of activity from the Merger. Noninterest expense increased $1.1 billion primarily due to operating expenses andlower amortization of intangibles, ~~related to the Merger~~merger-related expenses, and ~~discretionary management impacts from COVID-19~~occupancy expenses in the current quarter.

~~50 Truist Financial Corporation~~

CB&W average loans held for investment decreased $6.4 billion for the first quarter of 2021 compared to the earlier quarter, primarily driven by lower residential mortgage lending due to elevated prepayments and ~~leases were up $74.7~~home equity lending, partially offset by increased mortgage warehouse lending and indirect auto lending. Average total deposits increased $30.6 billion ~~at March 31, 2020,~~for the first quarter of 2021 compared to the earlier quarter primarily due to the ~~merged loans. Total deposits were up $116.9 billion at March 31, 2020, compared to~~impact of the ~~earlier quarter, primarily due to the merged deposits~~government stimulus programs and ~~reduced~~lower consumer ~~spending late in the current quarter related to COVID-19.~~spending.

42 Truist Financial Corporation

Corporate and Commercial Banking

C&CB serves large, medium, and small business clients by offering a variety of loan and deposit products, and connecting clients to the combined organization’s broad array of financial services. C&CB includes Corporate and Investment Banking, which delivers a comprehensive range of strategic advisory, capital raising, risk management, financing, liquidity, and investment solutions to both public and private companies in the C&CB segment and Wealth. Additionally, C&CB includes Commercial Community Banking, which offers an array of traditional banking products, including lending, cash management and investment banking to commercial clients via ~~CIB.~~Corporate and Investment Banking. C&CB also includes Commercial Real Estate, which provides a range of credit and deposit services as well as fee-based product offerings to privately held developers, operators and investors in commercial real estate properties. C&CB also includes Grandbridge Real Estate Capital, which is a fully integrated commercial mortgage banking company that originates commercial and multi-family real estate loans, services loan portfolios, ~~and~~ provides asset and portfolio management, as well as real estate brokerage services. Treasury Solutions, within C&CB, provides business clients across the organization with services required to manage their payments and receipts, combined with the ability to manage and optimize their deposits across all aspects of their business.

C&CB net income was ~~$423~~$908 million for the first quarter of ~~2020, a decrease~~2021, an increase of $7$487 million compared to the earlier quarter. Segment net interest income ~~increased $706~~decreased $114 million primarily due to ~~the Merger.~~reduced funding credit on liabilities and lower purchase accounting accretion. Noninterest income increased ~~$216~~$237 million ~~due to the Merger, partially offset~~driven by investment banking, recovery of previously recorded CVA losses ~~in trading income primarily~~and lending related ~~to the decline in interest rates and widening of credit spreads.~~fees. The allocated provision for credit losses ~~increased $379~~decreased $434 million primarily reflecting the impact of a significant allowance build in the first quarter of 2020 resulting from the deteriorating economic outlook caused by the onset of the pandemic. Noninterest expense decreased $87 million primarily due to ~~the recognition of an economic downturn and significant growth in loans~~lower personnel related ~~to COVID-19. Noninterest expense increased $571 million primarily due to operating~~expenses, merger-related expenses, and ~~amortization of intangibles related to the Merger~~operating lease depreciation in the current quarter.

C&CB average loans ~~and leases were up $95.6 billion~~held for investment decreased $418 million for the first quarter of 2021 compared to the earlier quarter, primarily due to ~~the merged loans~~reduced dealer floor plan and ~~significant~~commercial real estate lending as well as lower utilization rates for corporate client lines offset by growth in commercial and industrial loans inthrough the ~~current~~PPP. Average total deposits increased $21.9 billion for the first quarter ~~related to COVID-19. Total deposits were up $64.6 billion at March 31, 2020,~~of 2021 compared to the earlier quarter, primarily due to ~~the merged deposits~~government stimulus programs and reduced spending from commercial ~~clients retaining a portion of their credit line draws in the bank.~~clients.

Insurance Holdings

Truist’s IH segment is one of the largest insurance ~~agency / brokerage networks~~brokers in the world, providing property and casualty, employee benefits and life insurance to businesses and individuals. It also provides small business and corporate services, such as workers compensation and professional liability, as well as surety coverage and title insurance. In addition, IH ~~includes commercial~~provides premium financing for property and ~~retail insurance premium finance.~~casualty insurance.

IH net income was ~~$105~~$131 million for the first quarter of ~~2020,~~2021, an increase of ~~$17~~$26 million compared to the earlier quarter. Noninterest income increased ~~$42~~$76 million primarily due to higher ~~production.~~property and casualty insurance production, as well as acquisitions. Noninterest expense increased ~~$23~~$39 million primarily due to ~~commissions on~~ higher ~~production in~~performance-based incentives and amortization of intangibles related to the ~~current quarter.~~acquisitions.

Other, Treasury & Corporate

Net income in OT&C can vary due to the changing needs of the Corporation, including the size of the investment portfolio, the need for wholesale funding and variability associated with derivatives used to hedge the balance sheet.

OT&C generated a net loss of ~~$146~~$369 million in the first quarter of ~~2020,~~2021, compared to a net loss of ~~$110~~$138 million in the earlier quarter. Segment net interest income ~~increased $19 million. Noninterest income~~ decreased ~~$64~~$127 million primarily due to lower net funding charges to other segments due to lower market rates, partially offset by lower interest expense on borrowings. Noninterest income ~~related~~increased $68 million primarily due to income from assets held for certain ~~post-employment benefits and higher tax credit equivalents allocated to the segments.~~post-retirement benefits. The allocated provision for credit losses decreased $74 million due to changes in the reserve for unfunded commitments and an allowance build in the earlier quarter resulting from the onset of the pandemic. Noninterest expense increased ~~$55~~$321 million primarily due to higher incremental operating expenses related to the ~~provision for unfunded commitments. Noninterest expense decreased $42 million primarily due to lower~~Merger and higher merger-related charges ~~and increased corporate expenses allocated to~~in the ~~segments.~~current quarter. The benefit for income taxes increased ~~$22~~$75 million primarily due to a higher pre-tax ~~loss.~~loss in the current quarter.

Truist Financial Corporation 5143

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled ~~$78.4~~$123.8 billion at March 31, ~~2020,~~2021, compared to ~~$74.7~~$120.8 billion at December 31, ~~2019.~~2020. The increase was due primarily to a ~~$3.7~~$3.0 billion increase in Agency ~~MBS.~~MBS, reflecting the redeployment of excess liquidity associated with deposit inflows during the quarter.

As of March 31, ~~2020,~~2021, approximately ~~3.5%~~1.6 percent of the securities portfolio was variable rate, compared to ~~3.6%~~1.9 percent as of December 31, ~~2019.~~2020. The effective duration of the securities portfolio ~~excluding certain non-agency MBS~~ was ~~3.4~~6.0 years at March 31, ~~2020,~~2021, compared to ~~4.7~~4.0 years at December 31, ~~2019.~~2020.

U.S. Treasury, GSE, and Agency MBS represented ~~98.9%~~99.6 percent of the total securities portfolio as of March 31, ~~2020,~~2021, unchanged compared to ~~98.7% as of~~ the prior year end.

Lending Activities

~~The following tables summarize the loans and leases HFI 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 March 31, 2020, compared to $299.8 billion at December 31, 2019. In connection with the adoption of CECL, all loans previously in the PCI portfolio became PCD loans and were transferred to their respective portfolios. The significant growth in the commercial and industrial portfolio was primarily due to draws on lines of credit by clients building liquidity in response to COVID-19.

~~52 Truist Financial Corporation~~

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


Table 7: Average Loans and Leases
Table 6: Average Loans and Leases												Table 6: Average Loans and Leases
For the Three Months Ended (Dollars in millions)	For the Three Months Ended (Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		For the Three Months Ended (Dollars in millions)	Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020
Commercial:	Commercial:											Commercial:
Commercial and industrial	Commercial and industrial	$	131,743	$	81,853	$	63,768	$	62,563	$	61,370	Commercial and industrial	$	136,051	$	139,223	$	143,452	$	152,991	$	131,743
CRE	CRE	27,046		19,896		17,042		16,854		16,786		CRE	26,211		27,030		27,761		27,804		27,046
Commercial construction	Commercial construction	6,409		4,506		3,725		3,894		4,119		Commercial construction	6,557		6,616		6,861		6,748		6,409
Lease financing	Lease financing	6,070		3,357		2,260		2,122		2,021		Lease financing	4,975		5,401		5,626		5,922		6,070
Consumer:	Consumer:											Consumer:
Residential mortgage	Residential mortgage	52,993		34,824		28,410		32,066		31,370		Residential mortgage	45,823		48,847		51,500		52,380		52,993
Residential home equity and direct	Residential home equity and direct	27,564		15,810		11,650		11,687		11,681		Residential home equity and direct	25,658		26,327		26,726		27,199		27,564
Indirect auto	Indirect auto	24,975		15,390		11,810		11,633		11,308		Indirect auto	26,363		25,788		24,732		24,721		24,975
Indirect other	Indirect other	10,950		7,772		6,552		6,246		6,029		Indirect other	10,848		11,291		11,530		11,282		10,950
Student	Student	7,787		1,825		—		—		—		Student	7,519		7,519		7,446		7,633		7,787
Credit card	Credit card	5,534		3,788		3,036		2,970		2,922		Credit card	4,645		4,818		4,810		4,949		5,534
PCI		—		1,220		411		432		455

Total average loans and leases HFI	Total average loans and leases HFI	$	301,071	$	190,241	$	148,664	$	150,467	$	148,061	Total average loans and leases HFI	$	294,650	$	302,860	$	310,444	$	321,629	$	301,071

Average loans and leases held for investment for the first quarter of ~~2020~~2021 were ~~$301.1~~$294.7 billion, ~~up $110.8~~down $8.2 billion compared to the fourth quarter of ~~2019,~~2020.

Average commercial loans decreased $4.5 billion primarily due to a $1.8 billion decrease in average PPP loans, an $819 million decrease in average CRE loans, a $647 million decrease due to the ~~merged~~transfer of $1.0 billion of certain 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~~leases to held for sale late in the fourth quarter of ~~2019,~~2020, and continued paydowns on revolving credit lines.

Average consumer loans decreased $3.6 billion primarily due to refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans. This was partially offset by ~~increases~~an increase in indirect ~~automobile loans and student~~auto loans.

44 Truist Financial Corporation

COVID-19 Lending Activities

The CARES Act created the PPP, which has temporarily expanded the Small Business Administration’s business loan guarantee program. The carrying value of PPP loans was $10.1 billion as of March 31, 2021. The CARES Act additionally includes provisions that were designed to encourage financial institutions to ~~practice prudent efforts to work with~~support borrowers impacted by COVID-19. These modifications are generally not considered a ~~TDR as disclosed in~~TDR. Refer to “Note 1. Basis of ~~Presentation.” Truist payment~~Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures related to modifications and TDRs. Payment relief assistance includes forbearance, deferrals, extension and re-aging programs, along with certain other modification strategies. ~~Through the end~~The following table provides a summary of ~~April, Truist had the following client accomodation activity in response~~accommodations as of March 31, 2021:




Table 7: Client Accommodations (1)
	Active Accommodations			Exited Accommodations
March 31, 2021 (Dollars in millions)	Total Count	Outstanding Balance		Outstanding Balance		% Paid-off or Current (2)		Types of Accommodations
Commercial	659	$	18	$	20,550	97.8	%	Clients may elect to defer loan or lease payments for up to 90 days without late fees being incurred but with finance charges continuing to accrue.
Consumer	48,339	1,721		9,266		90.8		Clients may elect to defer loan payments for time periods that generally range from 30 to 90 days without late fees being incurred but with finance charges generally continuing to accrue. The Company’s residential mortgage forbearance program generally provides up to 180 days of relief. Additional relief may be provided in certain circumstances.
Credit card	3,574	19		180		88.3		Clients may elect to defer payments for up to 90 days without late fees being incurred but with finance charges accruing. In addition, Truist provided credit card clients with 5 percent cash back on qualifying card purchases for certain important basic needs.
Total	52,572	$	1,758	$	29,996

(1)Excludes approximately 36,000 of active accommodations related to ~~COVID-19::~~

•~~Commercial -~~government guaranteed loans totaling approximately ~~23,000 accommodations requests with an aggregate carrying value totaling $25.1~~$2.3 billion.

•(2)~~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~~Calculated based on accommodation count; includes loans that ~~were provided payment relief were current as of the date that the relief was initially provided.~~are less than 30 days past due.

The ~~CARES Act also created~~following table provides a summary of 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 which $9.1 billion was funded through the end of April.Company’s exposure related to loans that have exited accommodations:



Table 8: Accommodations Exposure
March 31, 2021 (Dollars in millions)	Exposure
Current	$	28,971
Past due and still accruing	368
Nonperforming	657
Total	$	29,996

The following table provides a summary of exposure to industries that management believes are most vulnerable in the current COVID-19 environment. These selected industry exposures represent ~~8.9%~~9.2 percent of loans held for investment at March 31, ~~2020.~~2021. Truist is actively managing these portfolios and will continue to make underwriting or risk acceptance adjustments as appropriate. In addition, management is closely monitoring its leveraged lending portfolio which comprised 3.3% of loans held for investment at March 31, 2020. Certain leveraged lending loans would also be included in the selected industry credit exposures.

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 %



Table 9: Selected Credit Exposures
March 31, 2021 (Dollars in billions)	Outstanding Balance		Percentage of Loans HFI
Hotels, Resorts & Cruise Lines	$	6.2	2.1	%
Senior Care	6.1		2.1
Acute Care Facilities	5.3		1.8
Oil & Gas Portfolio	4.5		1.5
Restaurants	2.9		1.0
Sensitive Retail	2.0		0.7
Total	$	27.0	9.2	%

Truist Financial Corporation 5345

Asset Quality

The following tables summarize asset quality ~~information for each~~information:



Table 10: Asset Quality

(Dollars in millions)	Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020
NPAs:
NPLs:
Commercial and industrial	$	451	$	532	$	507	$	428	$	443
CRE	58		75		52		42		18
Commercial construction	13		14		7		13		2
Lease financing	23		28		32		56		27
Residential mortgage	290		316		205		198		248
Residential home equity and direct	172		205		180		192		170
Indirect auto	158		155		137		155		125
Indirect other	6		5		4		3		1

Total NPLs HFI	1,171		1,330		1,124		1,087		1,034
Loans held for sale	72		5		130		102		41
Total nonaccrual loans and leases	1,243		1,335		1,254		1,189		1,075
Foreclosed real estate	18		20		30		43		63
Other foreclosed property	38		32		30		20		39
Total nonperforming assets	$	1,299	$	1,387	$	1,314	$	1,252	$	1,177
TDRs:
Performing TDRs:
Commercial and industrial	$	142	$	78	$	84	$	57	$	65
CRE	47		47		36		22		7
Commercial construction	—		—		1		36		36
Lease financing	59		60		1		1		1
Residential mortgage	733		648		640		533		513
Residential home equity and direct	109		88		71		71		66
Indirect auto	399		392		336		342		350
Indirect other	7		6		5		4		5
Student	8		5		5		4		1
Credit card	35		37		38		37		35
Total performing TDRs	1,539		1,361		1,217		1,107		1,079
Nonperforming TDRs	207		164		140		111		121
Total TDRs	$	1,746	$	1,525	$	1,357	$	1,218	$	1,200
Loans 90 days or more past due and still accruing: (1)
Commercial and industrial	$	14	$	13	$	6	$	9	$	5
CRE	—		—		8		3		1

Lease financing	—		—		—		1		—
Residential mortgage	975		841		573		521		610
Residential home equity and direct	11		10		5		9		10
Indirect auto	2		2		8		10		11
Indirect other	1		2		3		3		2
Student	1,037		1,111		570		478		1,068
Credit card	32		29		24		38		41

Total loans 90 days or more past due and still accruing	$	2,072	$	2,008	$	1,197	$	1,072	$	1,748
Loans 30-89 days past due and still accruing: (1)
Commercial and industrial	$	117	$	83	$	155	$	282	$	262
CRE	9		14		7		6		8
Commercial construction	4		5		—		1		16
Lease financing	35		6		9		10		8
Residential mortgage	577		782		796		703		679
Residential home equity and direct	82		98		103		108		156
Indirect auto	328		495		321		265		521
Indirect other	45		68		52		50		74
Student	556		618		666		442		593
Credit card	35		51		39		34		57

Total loans 30-89 days past due and still accruing	$	1,788	$	2,220	$	2,148	$	1,901	$	2,374

(1)The past due status of loans that received a deferral under the ~~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

~~(1) Excludes loans held for sale.~~CARES Act is generally frozen during the deferral period.

5446 Truist Financial Corporation

Nonperforming assets totaled ~~$1.2~~$1.3 billion at March 31, ~~2020, up $493~~2021, down $88 million compared to December 31, ~~2019 due almost entirely to the adoption of CECL, which resulted in the discontinuation of the pool-level accounting for PCI~~2020. Nonperforming loans and ~~replaced that with a loan-level evaluation for nonaccrual status. As~~leases represented 0.42 percent of total loans and leases, down two basis points compared to 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.~~2020. Nonperforming loans and leases held for investment ~~represented 0.32% of~~decreased $159 million, primarily in the commercial and industrial portfolio, while nonperforming loans ~~and leases~~ held for ~~investment, up 17 basis points compared~~sale increased $67 million as a portfolio of residential mortgage loans was transferred to ~~December 31, 2019, but down three basis points from March 31, 2019.~~ held for sale during the quarter.

Performing TDRs were up ~~$99~~$178 million during the first quarter primarily in the residential mortgage ~~loans,~~and commercial and industrial portfolios. The increase in residential mortgage was driven by modifications of loans that were not eligible for relief in accordance with the provisions of the CARES Act. The increase in commercial and ~~indirect automobile loans.~~industrial loan modifications was driven by an increase in the volume of loans entering workout agreements.

Loans 90 days or more past due and still accruing totaled ~~$1.7~~$2.1 billion at March 31, ~~2020, down $246~~2021, up $64 million compared to the prior quarter. The ~~decline~~increase was primarily in residential mortgage loans due to ~~loans that transitioned into nonaccrual status as a result~~the repurchase of ~~the change in pool level accounting described above, partially offset by an increase in~~delinquent 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 ~~0.55%~~0.71 percent at March 31, ~~2020, down 11~~2021, up four 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%~~0.04 percent at March 31, ~~2020, up one basis point~~2021, unchanged from ~~0.03% at~~ December 31, ~~2019.~~2020.

Loans 30-89 days past due and still accruing totaled ~~$2.4~~$1.8 billion at March 31, ~~2020, up $161~~2021, down $432 million compared to the prior quarter. The ~~increase~~decrease was ~~largely~~primarily in ~~commercial and industrial~~consumer loans ~~and~~for residential mortgage ~~loans, partially offset by a decrease in student loans.~~and indirect automobile due to seasonality and consumers receiving stimulus funds. The ratio of loans 30-89 days ~~or more~~ past due and still accruing as a percentage of loans and leases was ~~0.74%~~0.61 percent at March 31, ~~2020, unchanged~~2021 down, 13 basis points 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 9.10. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to ~~"Note 5.~~“Note 4. Loans and ~~ACL"~~ACL” for additional disclosures related to these potential problem loans.


Table 10: Asset Quality Ratios
Table 11: Asset Quality Ratios												Table 11: Asset Quality Ratios

As of / For the Three Months Ended	As of / For the Three Months Ended	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		As of / For the Three Months Ended	Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI	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 30-89 days past due and still accruing as a percentage of loans and leases HFI	0.61	%	0.74	%	0.70	%	0.60	%	0.74	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	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		Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI	0.71		0.67		0.39		0.34		0.55
NPLs as a percentage of loans and leases HFI	NPLs as a percentage of loans and leases HFI	0.32		0.15		0.30		0.30		0.35		NPLs as a percentage of loans and leases HFI	0.40		0.44		0.37		0.35		0.32
Nonperforming loans and leases as a percentage of loans and leases (1)		0.33		0.18		0.30		0.30		0.35
NPLs as a percentage of total loans and leases (1)												NPLs as a percentage of total loans and leases (1)	0.42		0.44		0.40		0.37		0.33
NPAs as a percentage of:	NPAs as a percentage of:											NPAs as a percentage of:
Total assets (1)	Total assets (1)	0.23		0.14		0.22		0.23		0.26		Total assets (1)	0.25		0.27		0.26		0.25		0.23
Loans and leases HFI plus foreclosed property	Loans and leases HFI plus foreclosed property	0.36		0.19		0.34		0.34		0.39		Loans and leases HFI plus foreclosed property	0.42		0.46		0.39		0.37		0.36
Net charge-offs as a percentage of average loans and leases HFI	Net charge-offs as a percentage of average loans and leases HFI	0.36		0.40		0.41		0.38		0.40		Net charge-offs as a percentage of average loans and leases HFI	0.33		0.27		0.42		0.39		0.36
ALLL as a percentage of loans and leases HFI	ALLL as a percentage of loans and leases HFI	1.63		0.52		1.05		1.05		1.05		ALLL as a percentage of loans and leases HFI	1.94		1.95		1.91		1.81		1.63
Ratio of ALLL to:	Ratio of ALLL to:											Ratio of ALLL to:
Net charge-offs	Net charge-offs	4.76x		2.03x		2.59x		2.80x		2.62x		Net charge-offs	5.87x		7.15x		4.52x		4.49x		4.76x
NPLs	NPLs	5.04x		3.41x		3.52x		3.46x		2.97x		NPLs	4.84x		4.39x		5.22x		5.24x		5.04x
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	%
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)												Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI, excluding PPP and other government guaranteed (2)	0.04	%	0.04	%	0.03	%	0.04	%	0.04	%

Applicable ratios are annualized.

(1)Includes LHFS.

(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student, and ~~student loans and PCI, as applicable.~~PPP loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio such that it might not be reflective of asset collectability or might not be comparable to other periods presented or to other portfolios that do not have government ~~guarantees or were not impacted by PCI accounting requirements.~~guarantees.

Truist Financial Corporation 5547

The following table presents activity related to NPAs:


Table 11: Rollforward of NPAs
Table 12: Rollforward of NPAs						Table 12: Rollforward of NPAs
(Dollars in millions)	(Dollars in millions)	2020		2019		(Dollars in millions)	2021		2020
Balance, January 1	Balance, January 1	$	684	$	585	Balance, January 1	$	1,387	$	684
New NPAs (1)	New NPAs (1)	949		294		New NPAs (1)	563		1,032
Advances and principal increases	Advances and principal increases	86		64		Advances and principal increases	102		86
Disposals of foreclosed assets (2)	Disposals of foreclosed assets (2)	(158)		(122)		Disposals of foreclosed assets (2)	(112)		(158)
Disposals of NPLs (3)	Disposals of NPLs (3)	(23)		(30)		Disposals of NPLs (3)	(41)		(106)
Charge-offs and losses	Charge-offs and losses	(124)		(71)		Charge-offs and losses	(112)		(124)
Payments	Payments	(147)		(106)		Payments	(300)		(147)
Transfers to performing status	Transfers to performing status	(85)		(30)		Transfers to performing status	(183)		(85)
Other, net	Other, net	(5)		—		Other, net	(5)		(5)
Ending balance, March 31	Ending balance, March 31	$	1,177	$	584	Ending balance, March 31	$	1,299	$	1,177

(1)For 2020, includes approximately $500 million of loans previously classified as PCI ~~loans~~ that would have otherwise been ~~classified as~~ nonperforming as of December 31, 2019.

(2)Includes charge-offs and losses recorded upon sale of ~~$53~~$46 million and ~~$58~~$53 million for the three months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

(3)Includes charge-offs and losses recorded upon sale of $7$5 million and $6$10 million for the three months ended March 31, 2021 and 2020, ~~and 2019,~~ respectively.

TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term and a concession has been granted to the borrower. As a result, Truist works with borrowers to prevent further difficulties and to improve the likelihood of recovery on ~~the~~a loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR. In accordance with the CARES Act, Truist implemented loan modification programs in response to the COVID-19 pandemic in order to provide borrowers with flexibility with respect to repayment terms. ~~These loan~~Payment relief assistance provided by Truist includes forbearance, deferrals, extension, and re-aging programs, along with certain other modification strategies. The Company adopted certain provisions of the CARES Act and other regulatory guidance that provide relief from the requirement to apply TDR accounting to (1) certain modifications ~~are not considered TDRs to the extent that~~of federally backed mortgages upon request from the borrower, ~~was~~and (2) certain modifications of other non-federally backed mortgages for borrowers impacted by the COVID-19 pandemic ~~and was~~that were less than 30 days past due at December 31, ~~2019, or~~2019. Refer to “Note 1. Basis of Presentation” in ~~certain circumstances, at~~Truist’s Annual Report on Form 10-K for the ~~time that~~year ended December 31, 2020 for the policies related to TDRs and COVID-19 loan ~~modification program was implemented, unless the loan was previously classified as a TDR.~~modifications.

TDRs identified by SunTrust prior to the Merger date are not included in ~~Truist's~~Truist’s TDR disclosure because all such loans were recorded at fair value and a new accounting basis was established as of the Merger date. Subsequent modifications ~~will be~~are evaluated for potential treatment as TDRs in accordance with ~~Truist's~~Truist’s accounting policies.

The following table provides a summary of performing TDR activity:


Table 12: Rollforward of Performing TDRs
Table 13: Rollforward of Performing TDRs						Table 13: Rollforward of Performing TDRs
(Dollars in millions)	(Dollars in millions)	2020		2019		(Dollars in millions)	2021		2020
Balance, January 1	Balance, January 1	$	980	$	1,119	Balance, January 1	$	1,361	$	980
Inflows	Inflows	183		152		Inflows	294		183
Payments and payoffs(1)	Payments and payoffs(1)	(15)		(55)		Payments and payoffs(1)	(57)		(15)
Charge-offs	Charge-offs	(18)		(16)		Charge-offs	(13)		(18)
Transfers to nonperforming TDRs(2)	Transfers to nonperforming TDRs(2)	(19)		(19)		Transfers to nonperforming TDRs(2)	(13)		(19)
Removal due to the passage of time	Removal due to the passage of time	(4)		(14)		Removal due to the passage of time	(7)		(4)
Non-concessionary re-modifications	Non-concessionary re-modifications	(1)		(4)		Non-concessionary re-modifications	(12)		(1)
Transferred to LHFS and/or sold		(27)		(33)
Transferred to LHFS, sold and other						Transferred to LHFS, sold and other	(14)		(27)

Balance, March 31	Balance, March 31	$	1,079	$	1,130	Balance, March 31	$	1,539	$	1,079

(1)Includes scheduled principal payments, prepayments, and payoffs of amounts outstanding.

(2)Represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.

5648 Truist Financial Corporation

The following table provides further details regarding the payment status of TDRs outstanding at March 31, ~~2020:~~2021:


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
Table 14: Payment Status of TDRs (1)																Table 14: Payment Status of TDRs (1)
March 31, 2021 (Dollars in millions)																March 31, 2021 (Dollars in millions)	Current				Past Due 30-89 Days				Past Due 90 Days Or More				Total
Performing TDRs:	Performing TDRs:															Performing TDRs:
Commercial:	Commercial:															Commercial:
Commercial and industrial	Commercial and industrial	$	64	98.5	%	$	1	1.5	%	$	—	—	%	$	65	Commercial and industrial	$	142	100.0	%	$	—	—	%	$	—	—	%	$	142
CRE	CRE	7		100.0		—		—		—		—		7		CRE	47		100.0		—		—		—		—		47
Commercial construction		36		100.0		—		—		—		—		36

Lease financing	Lease financing	1		100.0		—		—		—		—		1		Lease financing	59		100.0		—		—		—		—		59
Consumer:	Consumer:															Consumer:
Residential mortgage	Residential mortgage	272		53.0		87		17.0		154		30.0		513		Residential mortgage	480		65.5		91		12.4		162		22.1		733
Residential home equity and direct	Residential home equity and direct	64		97.0		2		3.0		—		—		66		Residential home equity and direct	104		95.4		5		4.6		—		—		109
Indirect auto	Indirect auto	295		84.3		55		15.7		—		—		350		Indirect auto	357		89.5		42		10.5		—		—		399
Indirect other	Indirect other	5		100.0		—		—		—		—		5		Indirect other	7		100.0		—		—		—		—		7
Student	Student	1		100.0		—		—		—		—		1		Student	8		100.0		—		—		—		—		8
Credit card	Credit card	29		82.9		4		11.4		2		5.7		35		Credit card	32		91.4		2		5.7		1		2.9		35
Total performing TDRs	Total performing TDRs	774		71.7		149		13.8		156		14.5		1,079		Total performing TDRs	1,236		80.3		140		9.1		163		10.6		1,539
Nonperforming TDRs	Nonperforming TDRs	75		61.9		6		5.0		40		33.1		121		Nonperforming TDRs	105		50.7		24		11.6		78		37.7		207
Total TDRs	Total TDRs	$	849	70.8		$	155	12.9		$	196	16.3		$	1,200	Total TDRs	$	1,341	76.8		$	164	9.4		$	241	13.8		$	1,746

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

Truist Financial Corporation 5749

ACL

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


Table 14: Activity in ACL
Table 15: Activity in ACL												Table 15: Activity in ACL

Quarters ended (Dollars in millions)		Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019
(Dollars in millions)												(Dollars in millions)	Mar 31, 2021			Dec 31, 2020			Sep 30, 2020			Jun 30, 2020			Mar 31, 2020
Balance, beginning of period	Balance, beginning of period	$	1,889	$	1,653	$	1,689	$	1,659	$	1,651				Balance, beginning of period		$	6,199		$	6,229		$	6,133		$	5,611	$	1,889
CECL adoption - impact to retained earnings before tax	CECL adoption - impact to retained earnings before tax	2,762		—		—		—		—					CECL adoption - impact to retained earnings before tax		—			—			—			—		2,762
CECL adoption - reserves on PCD assets	CECL adoption - reserves on PCD assets	378		—		—		—		—					CECL adoption - reserves on PCD assets		—			—			—			—		378
Provision for credit losses	Provision for credit losses	893		171		117		172		155					Provision for credit losses		48			177			421			844		893

Charge-offs:	Charge-offs:														Charge-offs:
Commercial and industrial	Commercial and industrial	(39)		(23)		(28)		(22)		(17)					Commercial and industrial		(73)			(84)			(112)			(123)		(39)
CRE	CRE	(1)		(5)		(2)		(18)		(8)					CRE		(4)			(19)			(44)			(14)		(1)
Commercial construction	Commercial construction	(3)		—		—		—		—					Commercial construction		(2)			(8)			(19)			—		(3)
Lease financing	Lease financing	(2)		(9)		(1)		—		(1)					Lease financing		(6)			(4)			(44)			(4)		(2)
Residential mortgage	Residential mortgage	(11)		(8)		(3)		(5)		(5)					Residential mortgage		(11)			(6)			(4)			(35)		(11)
Residential home equity and direct	Residential home equity and direct	(68)		(25)		(24)		(24)		(20)					Residential home equity and direct		(55)			(46)			(52)			(65)		(68)
Indirect auto	Indirect auto	(142)		(107)		(92)		(79)		(92)					Indirect auto		(105)			(84)			(72)			(80)		(142)
Indirect other	Indirect other	(18)		(19)		(14)		(12)		(17)					Indirect other		(17)			(14)			(8)			(20)		(18)
Student	Student	(8)		—		—		—		—					Student		(3)			(3)			(6)			(6)		(8)
Credit card	Credit card	(53)		(37)		(25)		(23)		(24)					Credit card		(40)			(35)			(44)			(50)		(53)
PCI		—		—		—		—		—

Total charge-offs	Total charge-offs	(345)		(233)		(189)		(183)		(184)					Total charge-offs		(316)			(303)			(405)			(397)		(345)
Recoveries:	Recoveries:														Recoveries:
Commercial and industrial	Commercial and industrial	17		6		5		8		6					Commercial and industrial		19			34			20			21		17
CRE	CRE	—		—		3		2		—					CRE		1			1			—			4		—
Commercial construction	Commercial construction	1		1		—		1		1					Commercial construction		1			1			2			7		1
Lease financing	Lease financing	—		—		1		—		—					Lease financing		—			—			4			—		—
Residential mortgage	Residential mortgage	2		1		—		—		1					Residential mortgage		2			3			3			2		2
Residential home equity and direct	Residential home equity and direct	15		10		6		8		6					Residential home equity and direct		18			20			16			15		15
Indirect auto	Indirect auto	23		13		12		14		13					Indirect auto		22			24			22			18		23
Indirect other	Indirect other	7		5		3		5		4					Indirect other		6			5			4			7		7
Student	Student	—		—		—		—		—					Student		—			—			—			1		—
Credit card	Credit card	8		5		6		3		6					Credit card		9			10			8			6		8
Total recoveries	Total recoveries	73		41		36		41		37					Total recoveries		78			98			79			81		73
Net charge-offs	Net charge-offs	(272)		(192)		(153)		(142)		(147)					Net charge-offs		(238)			(205)			(326)			(316)		(272)
Other	Other	(39)		257		—		—		—					Other		2			(2)			1			(6)		(39)
Balance, end of period	Balance, end of period	$	5,611	$	1,889	$	1,653	$	1,689	$	1,659				Balance, end of period		$	6,011		$	6,199		$	6,229		$	6,133	$	5,611
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
ALLL (excluding PCD loans)												ALLL (excluding PCD loans)	$	5,506		$	5,668		$	5,675		$	5,408		$	4,880
ALLL for PCD loans												ALLL for PCD loans	156			167			188			294			331
RUFC	RUFC	400		340		80		94		98					RUFC		349			364			366			431		400
Total ACL	Total ACL	$	5,611	$	1,889	$	1,653	$	1,689	$	1,659				Total ACL		$	6,011		$	6,199		$	6,229		$	6,133	$	5,611

The ACL consists of the ALLL, which is presented separately on the Consolidated Balance Sheets, and the RUFC, which is included in Other liabilities on the Consolidated Balance Sheets. The ACL totaled $5.6 billion at

At March 31, ~~2020, up $3.7 billion compared to the prior quarter. The increase in~~2021, the allowance for credit losses was ~~primarily due the adoption of CECL. Upon adoption, the Company recorded a $3.1~~$6.0 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~~$5.7 billion for loans and leases and ~~$400~~$349 million for the reserve for unfunded commitments. AsThe allowance for loan and lease losses represented 1.94 percent of loans and leases held for investment compared to 1.95 percent at December 31, 2020. The allowance for loan and lease losses covered nonperforming loans and leases held for investment 4.84 times compared to 4.39 times at December 31, 2020. At March 31, ~~2020,~~2021, 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, 2019. At March 31, 2020, the allowance for loan and lease losses was 4.765.87 times annualized net charge-offs, compared to ~~2.03~~7.15 times at December 31, ~~2019.~~2020.

~~58 Truist Financial Corporation~~

Net charge-offs during the first quarter totaled ~~$272~~$238 million, up ~~$80~~$33 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 ~~0.36%, down four~~0.33 percent, up six basis points compared to the prior quarter. The increase in net charge-offs was primarily in the indirect auto portfolio due to seasonality.

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

Table 15: Allocation of ALLL by Category
March 31, 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

50 Truist Financial Corporation


Table 16: Allocation of ALLL by Category
	March 31, 2021						December 31, 2020

(Dollars in millions)	Amount		% ALLL in Each Category		% Loans in Each Category		Amount		% ALLL in Each Category		% Loans in Each Category
Commercial and industrial	$	2,091	36.8	%	46.3	%	$	2,156	37.0	%	46.2	%
CRE	544		9.6		8.9		573		9.8		8.9
Commercial construction	77		1.4		2.3		81		1.4		2.2
Lease financing	45		0.8		1.7		48		0.8		1.7
Residential mortgage	343		6.1		15.2		368		6.3		15.8
Residential home equity and direct	707		12.5		8.7		714		12.2		8.7
Indirect auto	1,176		20.8		9.1		1,198		20.5		8.7
Indirect other	187		3.3		3.6		208		3.6		3.7
Student	131		2.3		2.6		130		2.2		2.5
Credit card	361		6.4		1.6		359		6.2		1.6
Total ALLL	5,662		100.0	%	100.0	%	5,835		100.0	%	100.0	%
RUFC	349						364
Total ACL	$	6,011					$	6,199

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

Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. ~~As a result, using migration assumptions that are based on historical experience and adjusted for current trends,~~ Truist estimates ~~the volume of~~ second lien ~~positions~~loans where the first lien is delinquent ~~and adjusts the ALLL to reflect~~based on historical experience; the increased risk of loss on these ~~credits. Finally, Truist also provides additional reserves for second lien positions when~~credits is reflected in the ~~estimated combined current loan to value ratio for the credit exceeds 100%.~~ALLL. As of March 31, ~~2020,~~2021, Truist held or serviced the first lien on ~~30.9%~~30.2 percent of its second lien positions.

~~Truist Financial Corporation 59~~

Other Assets

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


Table 16: Other Assets as of Period End
Table 17: Other Assets as of Period End						Table 17: Other Assets as of Period End
(Dollars in millions)	(Dollars in millions)	March 31, 2020		December 31, 2019		(Dollars in millions)	March 31, 2021		December 31, 2020

Bank-owned life insurance	Bank-owned life insurance	$	6,413	$	6,383	Bank-owned life insurance	$	6,488	$	6,479
Tax credit and other private equity investments	Tax credit and other private equity investments	5,617		5,448		Tax credit and other private equity investments	5,612		5,685
Pension assets		3,915		3,579
Prepaid pension assets						Prepaid pension assets	4,810		4,358
Derivative assets						Derivative assets	2,926		3,837
Accrued income						Accrued income	1,959		1,934
Accounts receivable	Accounts receivable	3,168		2,418		Accounts receivable	2,252		1,833
Derivative assets		4,040		2,053
Lease assets - leased assets and related assets		1,726		1,897
Leased assets and related assets						Leased assets and related assets	1,870		1,810
ROU assets	ROU assets	1,773		1,823		ROU assets	1,277		1,333
Accrued income		1,879		1,807
Prepaid expenses	Prepaid expenses	1,281		1,254		Prepaid expenses	1,197		1,247
Equity securities at fair value						Equity securities at fair value	875		1,054
Structured real estate	Structured real estate	813		987		Structured real estate	383		390
Equity securities at fair value		641		817
FHLB stock	FHLB stock	1,415		764		FHLB stock	124		164
Other	Other	1,071		2,602		Other	532		549
Total other assets	Total other assets	$	33,752	$	31,832	Total other assets	$	30,305	$	30,673

Truist Financial Corporation 51

Funding Activities

Deposits

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

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 for each of the last five quarters:~~


Table 18: Average Deposits	Table 18: Average Deposits																					Table 18: Average Deposits
Three Months Ended (Dollars in millions)	Three Months Ended (Dollars in millions)	Mar 31, 2020		Dec 31, 2019		Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		Three Months Ended (Dollars in millions)	Mar 31, 2021		Dec 31, 2020		Sep 30, 2020		Jun 30, 2020		Mar 31, 2020
Noninterest-bearing deposits	Noninterest-bearing deposits	$	93,135	$	64,485	$	52,500	$	52,680	$	52,283	Noninterest-bearing deposits	$	128,579	$	127,103	$	123,966	$	113,875	$	93,135
Interest checking	Interest checking	85,008		43,246		27,664		27,708		27,622		Interest checking	104,744		99,866		96,707		97,863		85,008
Money market and savings	Money market and savings	120,936		79,903		64,920		63,394		63,325		Money market and savings	129,303		124,692		123,598		126,071		120,936
Time deposits	Time deposits	35,570		23,058		16,643		15,730		16,393		Time deposits	20,559		23,605		27,940		33,009		35,570
Foreign office deposits - interest-bearing		—		24		265		379		422

Total average deposits	Total average deposits	$	334,649	$	210,716	$	161,992	$	159,891	$	160,045	Total average deposits	$	383,185	$	375,266	$	372,211	$	370,818	$	334,649

Average deposits for the first quarter of ~~2020~~2021 were ~~$334.6~~$383.2 billion, ~~up $123.9~~an increase of $7.9 billion compared to the prior quarter. Average interest checking and money market and savings deposit growth was strong for the first quarter ~~primarily due~~of 2021 driven by growth resulting from additional government stimulus programs and pandemic-related client behavior. Average noninterest bearing deposits grew 4.7 percent compared to the ~~merged deposits.~~

~~Noninterest-bearing deposits~~prior quarter and represented ~~27.8%~~33.6 percent of total ~~average~~ deposits for the first quarter of ~~2020,~~2021, compared to ~~30.6%~~33.9 percent for the prior ~~quarter~~quarter.

Average time deposits decreased primarily due to the maturity of wholesale negotiable certificates of deposit and ~~32.7% for the prior year quarter.~~ higher-cost personal accounts.

The cost of average total deposits was ~~0.51%~~0.05 percent for the first quarter, down ~~six~~two basis points compared to the prior quarter. The cost of average interest-bearing deposits was ~~0.70%~~0.07 percent for the first quarter, down 12four basis points compared to the prior quarter.

~~60 Truist Financial Corporation~~

Borrowings

At March 31, ~~2020,~~2021, short-term borrowings totaled ~~$12.7~~$5.9 billion, a decrease of ~~$5.5 billion~~$203 million compared to December 31, ~~2019,~~2020, due ~~largely~~primarily to a decrease of ~~$4.7 billion~~$649 million in short-term FHLB ~~advances.~~ advances, partially offset by an increase of $272 million in securities sold under agreements to repurchase.

Average short-term borrowings were ~~$18.9~~$6.7 billion or ~~4.7%~~1.6 percent of total funding for the first quarter ~~2020,~~of 2021, as compared to ~~$5.6~~$18.9 billion or ~~3.0%~~4.7 percent for the prior ~~year quarter.~~

year. Average short-term borrowings decreased as a percentage of funding sources due to strong deposit growth. Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled ~~$65.7~~$37.8 billion at March 31, ~~2020, an increase~~2021, a decrease of ~~$24.3~~$1.8 billion compared to December 31, ~~2019, as management took actions to increase liquidity to meet potential funding needs. These actions included an increase of $20.0 billion in long-term FHLB advances, and issuances of $2.5~~2020. During 2021, $3.0 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~~matured. These maturities were partially offset by issuances of $1.3 billion of ~~subordinated~~senior notes with an interest rate of ~~2.25%~~1.27 percent maturing in ~~2030. These increases were partially offset by the redemption~~2027. FHLB advances represented 2.3 percent of ~~$750 million of senior notes during the first quarter of~~total outstanding long-term debt at March 31, 2021, compared to 2.2 percent at December 31, 2020. The average cost of long-term debt was ~~2.34%~~1.57 percent for the three months ended March 31, ~~2020,~~2021, down 9677 basis points compared to the same period in ~~2019. FHLB advances represented 36.8% of total outstanding long-term debt at March 31, 2020, compared to 10.0% at December 31, 2019.~~2020.

~~During the second quarter of 2020,~~In April 2021, Truist ~~announced the redemption of $750 million~~redeemed $1.3 billion of fixed rate ~~and $300~~senior notes due in May 2021. In May 2021, Truist redeemed $250 million of floating rate ~~medium term~~senior notes ~~with a maturity date~~due in June ~~2020.~~2021.

~~Shareholders'~~Shareholders’ Equity

Total ~~shareholders'~~shareholders’ equity was ~~$66.1~~$67.9 billion at March 31, ~~2020,~~2021, a decrease of ~~$497 million~~$3.0 billion from December 31, ~~2019. The~~2020. This decrease includes a decrease of $2.2 billion in ~~shareholders’ equity includes $2.1 billion related to the adoption~~AOCI, redemptions of ~~CECL~~$950 million in preferred stock for Series F and ~~$679~~G, $722 million ~~for~~in dividends and $506 million in repurchases of common ~~and preferred dividends, which was~~stock, partially offset by ~~$1.1~~$1.5 billion in net income available to common ~~shareholders and an increase of $1.7 billion in AOCI. In addition, Truist redeemed $500 million of its Series K preferred stock during the first quarter of 2020. Truist's~~shareholders. Truist’s book value per common share at March 31, ~~2020~~2021 was ~~$45.49,~~$45.17, compared to ~~$45.66~~$46.52 at December 31, ~~2019.~~2020.

In connection with the redemptions of preferred stock, net income available to common shareholders was reduced by $26 million to recognize the difference between the redemption price and the carrying value. Refer to “Note 9. Shareholders’ Equity” for additional disclosures related to preferred stock redemptions.

Truist has approximately $1.5 billion authorization remaining under the share repurchase program approved by the Board of Directors in December 2020.

In April 2021, the Company announced the redemption of $465 million in preferred stock for Series H.

52 Truist Financial Corporation

Risk Management

Truist maintains a comprehensive risk management framework supported by people, processes, and systems to identify, measure, monitor, manage, and report significant risks arising from its exposures and business activities. Effective risk management involves ~~appropriately managing risk to optimize~~optimizing risk and return ~~and operate~~while operating in a safe and sound manner, ~~while ensuring~~and promoting compliance with applicable laws and regulations. The Company’s risk management framework ~~is designed to ensure that~~promotes the execution of business strategies and objectives ~~are executed~~ in alignment with its risk appetite.

Truist has developed and employs a risk taxonomy that further guides business functions in identifying, measuring, responding to, monitoring, and reporting on possible exposures to the organization. The risk taxonomy drives internal risk conversations and enables Truist to clearly and transparently communicate to stakeholders the level of potential risk the Company faces, both presently and in the future, and the Company’s position on managing risk to acceptable levels.

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

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

Compensation decisions take into account a ~~teammate's~~teammate’s adherence to and successful implementation of ~~Truist's~~Truist’s risk values and associated policies and procedures. The ~~Company's~~Company’s compensation structure supports its core values and sound risk management practices in an effort to promote judicious risk-taking behavior.

Truist employs a comprehensive change management program to manage the risks associated with integrating heritage BB&T and heritage SunTrust. The Board and Executive Leadership oversee the change management program, which is designed to ensure key decisions are reviewed and that there is appropriate oversight of integration activities.

Refer to ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for additional disclosures under the section titled ~~"Risk~~“Risk Management."”

Market ~~risk management~~Risk

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

~~Truist Financial Corporation 61~~

Effective management of market risk is essential to achieving ~~Truist's~~Truist’s strategic financial objectives. ~~Truist's~~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~~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 to minimize adverse effects from changes in market risk factors on net interest income, net income, and capital, and to offset the risk of price changes for certain assets and liabilities recorded at fair value. At Truist, market risk management also includes the enterprise-wide IPV function.

Interest ~~rate market risk (other than trading)~~Rate Market Risk

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 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.

Truist Financial Corporation 53

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~~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 modeling process. Truist applies an average deposit beta (the sensitivity of deposit rate changes relative to market rate changes) of approximately ~~55%~~50 percent to its non-maturity interest-bearing deposit accounts ~~for~~when 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~~these variables could have on the Company’s interest rate risk position. The predictive value of the simulation model depends upon the accuracy of the assumptions, but management believes that it provides helpful information for the management 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	Table 19: Interest Sensitivity Simulation Analysis																								Table 19: Interest Sensitivity Simulation Analysis
Interest Rate Scenario	Interest Rate Scenario													Annualized Hypothetical Percentage Change in Net Interest Income							Interest Rate Scenario								Annualized Hypothetical Percentage Change in Net Interest Income
Linear Change in Prime Rate (bps)	Linear Change in Prime Rate (bps)	Prime Rate																Linear Change in Prime Rate (bps)		Prime Rate								Annualized Hypothetical Percentage Change in Net Interest Income
				Mar 31, 2020			Mar 31, 2019			Mar 31, 2020			Mar 31, 2019			Linear Change in Prime Rate (bps)	Mar 31, 2021			Mar 31, 2020			Mar 31, 2021				Mar 31, 2020
Up 100	Up 100	4.25	%		6.50	%		2.56	%		1.04	%	Up 100	4.25	%		4.25		%		3.74	%			2.56	%
Up 50	Up 50	3.75			6.00			2.00			0.64		Up 50		3.75		3.75			2.92				2.00
No Change	No Change	3.25			5.50			—			—		No Change		3.25		3.25			—				—
Down 25(1)	Down 25(1)	3.00			5.25			(2.11)			N/A		Down 25(1)		3.00		3.00			(1.32)				(2.11)
Down 50 (1)	Down 50 (1)	2.75			5.00			(3.86)			(1.58)		Down 50 (1)		2.75		2.75			(1.75)				(3.86)

(1)The Down 25 and 50 rates are floored at one basis point and may not reflect Down 25 and 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 as a result of government stimulus programs.

Management considers how the 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 resulted in growth in noninterest-bearing demand deposits. Consistent with the industry, Truist has ~~established parameters related to~~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 Truist. A decrease in the amount of these deposits in the future would reduce the asset sensitivity ~~measures that prescribe a maximum impact on~~of Truist’s balance sheet because the Company would increase interest-bearing funds to offset the loss of this advantageous funding source.

The following table shows the results of Truist’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, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100 percent.



Table 20: Deposit Mix Sensitivity Analysis
Linear Change in Rates (bps)	Base Scenario at March 31, 2021 (1)		Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
			$20 Billion		$40 Billion
Up 100	3.74	%	2.92	%	2.09	%
Up 50	2.92		2.32		1.72

(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income ~~under different interest rate scenarios that would result~~at March 31, 2021 as presented 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.~~preceding table.

~~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 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.

54 Truist Financial Corporation

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


Table 20: EVE Simulation Analysis
Table 21: EVE Simulation Analysis							Table 21: EVE Simulation Analysis
Change in Interest Rates (bps)	Change in Interest Rates (bps)	Hypothetical Percentage Change in EVE							Change in Interest Rates (bps)	Hypothetical Percentage Change in EVE
				Mar 31, 2020			Mar 31, 2019	Change in Interest Rates (bps)				Mar 31, 2021			Mar 31, 2020

Up 100	Up 100	4.8	%		1.1	%	Up 100			(2.2)	%		4.8	%
No Change	No Change	—			—		No Change			—			—

Down 100	Down 100	(10.7)			(11.0)		Down 100			(1.9)			(10.7)

Truist uses financial instruments including derivatives to 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,~~2021, Truist had derivative financial instruments outstanding with notional amounts totaling ~~$326.0~~$311.6 billion, with an associated net fair value of ~~$3.3~~$2.2 billion. See ~~"Note~~“Note 15. Derivative Financial ~~Instruments"~~Instruments” for additional disclosures.

LIBOR in its current form ~~may~~was anticipated to no longer be available after 2021. For most tenors of U.S. dollar LIBOR, the administrator of LIBOR is extending publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR, are still anticipated to cease publication at December 31, 2021, based on this new guidance. Truist has U.S. dollar LIBOR-based contracts that extend beyond ~~2021.~~June 30, 2023. 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 team provides ~~regular reports~~updates to Executive Leadership and the Board.

~~The project team is reviewing contract~~Contract fallback language for existing loans and leases is under review and ~~noted that~~ certain contracts will need updated provisions for the ~~transition,~~transition. Current fallback language used for new, renewed, and ~~the team~~modified contracts is ~~coordinating with impacted lines of business to update LIBOR fallback language~~ generally consistent with ARRC recommendations. Updates to current fallback language will be evaluated according to new regulatory guidance for the ~~ARRC recommendation.~~extension of timelines for the transition and expectations for production of U.S. dollar LIBOR contracts during 2021. Truist ~~is continuing~~continues to ~~evaluate~~manage the impact onof these contracts and other financial instruments, systems implications, hedging strategies, and ~~other~~ related operational and market ~~risks.~~risks on established project plans for business and operational readiness for the transition. 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 the section titled ~~"Item 1A.~~“Item1A. Risk ~~Factors"~~Factors” in the Form 10-K for the year ended December 31, ~~2019.~~2020. In 2020, Truist began offering SOFR-based lending solutions to wholesale and consumer clients and entered into SOFR-based derivative contracts. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry. Truist continues to evaluate SOFR for additional product offerings and other alternative reference rates as replacements for LIBOR.

Market risk from trading activities

~~Truist also manages market risk associated with trading activities.~~ As a financial intermediary, Truist provides its clients access to derivatives, foreign exchange and securities ~~markets.~~markets, which generate market risks. Trading market risk is managed using a comprehensive risk management approach, which includes measuring risk using VaR, stress testing, and sensitivity analysis. Risk metrics are monitored against a suite of limits on a daily basis at both the trading ~~desks~~desk level and at the aggregate portfolio level, which is intended to ensure that exposures are in line with ~~Truist's~~Truist’s risk appetite.

Truist is also 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.~~Rule.

Covered ~~trading positions~~Trading Positions

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

Valuation policies ~~procedures,~~ and methodologies exist for all covered positions. Additionally, trading positions are subject to independent price verification. See ~~"Note~~“Note 15. Derivative Financial Instruments,” ~~"Note~~“Note 14. Fair Value Disclosures,” and “Critical Accounting Policies” herein for discussion of valuation policies ~~procedures~~ and methodologies.

Truist Financial Corporation 6355

Securitizations

As of March 31, ~~2020,~~2021, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $4$30 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~~Trading Positions

The trading portfolio of covered positions did not contain any correlation trading positions as of March 31, ~~2020.~~2021.

~~VaR-based measures~~VaR-Based Measures

VaR measures the ~~estimated~~ potential loss of a given position or portfolio of positions at a specified confidence level and time horizon. Truist utilizes a historical VaR methodology to measure and aggregate risks across its covered trading positions. Following the Merger, Truist elected to 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 holding period at a one-tail, ~~99%~~99 percent confidence level. For Market Risk Rule purposes, the Company calculates VaR using a 10-day holding period and a ~~99%~~99 percent 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 trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, and the correlation between different positions. A portfolio of trading positions is typically less risky than the sum of the risk from each of the individual ~~sub-portfolios. As such,~~sub-portfolios, because, under normal market conditions, risk within each category partially offsets the exposure to other risk ~~categories thereby creating portfolio diversification benefit.~~categories. The following table summarizes certain VaR-based measures for the three months ended March 31, ~~2020~~2021 and ~~2019. The increase from the prior year was mainly due to the integration of the heritage SunTrust trading business and the~~2020. Heightened market volatility ~~due to COVID-19 pandemic in March.~~experienced during March 2020 significantly impacted the year-over-year comparison.


Table 22: VaR-based Measures


Three Months Ended March 31,	2021				2020
(Dollars in millions)	10-Day Holding Period		1-Day Holding Period		10-Day Holding Period		1-Day Holding Period
VaR-based Measures:
Maximum	$	68	$	16	$	30	$	10
Average	39		10		10		3
Minimum	3		3		3		1
Period-end	5		3		19		8
VaR by Risk Class:
Interest Rate Risk			2				5
Credit Spread Risk			4				4
Equity Price Risk			1				8
Foreign Exchange Risk			—				—
Portfolio Diversification			(5)				(9)
Period-end			3				8

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
For most of the first quarter of 2021, the rolling 12-month VaR historic look-back window incorporated the peak March 2020 volatility, which contributed to the increase in Average and Maximum VaR. VaR as of March 31, 2021 declined compared to March 31, 2020 as this volatile period in March 2020 aged out of the 12-month VaR look-back window, partially offset by the normalization of inventory levels in March 2021 compared to March 2020.

56 Truist Financial Corporation

Stressed VaR-based measures

Stressed VaR, another component of market risk capital, is calculated using the same internal models as used for the VaR-based measure. Stressed VaR is calculated over a ten-day holding period at a one-tail, ~~99%~~99 percent 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~~the Company’s 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
Table 23: Stressed VaR-based Measures - 10 Day Holding Period						Table 23: Stressed VaR-based Measures - 10 Day Holding Period
							Three Months Ended March 31,

(Dollars in millions)						(Dollars in millions)		2021		2020
Maximum	Maximum	$	65	$	6	Maximum		$	72	$	65
Average	Average	33		5		Average		54		33
Minimum	Minimum	16		4		Minimum		26		16
Period-end	Period-end	19		6		Period-end		64		19

The increase from the prior year in stressed VaR-based measures was due to inclusion of volatility levels from March 2020 in the ~~integration~~12-month Stressed VaR window and normalization of ~~heritage SunTrust trading business after~~market making inventory levels in March 2021 compared to March 2020 when inventory levels were lower due to the ~~Merger.~~market volatility.

Specific ~~risk measures~~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~~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~~ As illustrated in the following graph, there were ~~seven company-wide~~no Company-wide VaR backtesting exceptions during the twelve months ended March 31, ~~2020, primarily driven by~~2021. The total number of Company-wide VaR backtesting exceptions over the ~~COVID-19 pandemic which led~~preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a ~~sudden and significant repricing~~maximum 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~~four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. ~~Following such reviews, it~~There was ~~determined that~~no change in the ~~VaR model performed in line with expectations. However,~~capital multiplication factor over 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.~~preceding twelve months.

Truist Financial Corporation 6557

Model ~~risk management~~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~~incorporates regulatory guidance related to the evaluation of model conceptual soundness, ongoing monitoring, and outcomes analysis. As part of ongoing monitoring efforts, the performance of all trading risk models are reviewed regularly to preemptively address emerging developments in financial markets, assess evolving modeling approaches, and to identify potential model enhancement.

Stress ~~testing~~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~~Company’s comprehensive stress testing framework. Management reviews stress testing scenarios on an ongoing basis and makes updates, as necessary, which is intended 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 ~~this~~ MD&A for additional discussion of capital adequacy.

Liquidity

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

Truist monitors the ability to meet client demand for funds under both normal and stressed market conditions. In considering its liquidity position, management evaluates ~~Truist's~~Truist’s funding mix based on client core funding, client rate-sensitive funding and national markets funding. In addition, management evaluates exposure to rate-sensitive funding sources that mature in one year or less. Management also measures liquidity needs against 30 days of stressed cash outflows for Truist and Truist Bank. To ensure a strong liquidity position and compliance with regulatory requirements, management maintains a liquid asset buffer of cash on hand and highly liquid unencumbered securities. As of March 31, ~~2020~~2021 and December 31, ~~2019, Truist's~~2020, Truist’s liquid asset buffer, as a percent of total assets, was ~~19.6%~~23.2 percent and ~~16.5%,~~20.2 percent, 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, ~~each~~ as defined under the LCR rule. As of January 1, 2020, Truist is subject to the Category III reduced LCR ~~requirements (85% of the full requirements). Truist's~~requirements. Truist’s average LCR was ~~117%~~111 percent for the three months ended March 31, ~~2020,~~2021, well above the regulatory ~~minimum.~~minimum of 100 percent.

The ability to raise funding at competitive prices is affected by the rating ~~agencies'~~agencies’ views of the Parent ~~Company's~~Company’s and Truist ~~Bank's~~Bank’s credit quality, liquidity, capital, and earnings. Management meets with the rating agencies on a regular basis to discuss current outlooks. ~~In April 2020, DBRS revised its outlook for~~There were no changes to the ratings of Truist ~~and~~or 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 to A-, and upgraded Truist’s preferred stock to BBB, in order to align these ratings to its recently revised bankby the major rating ~~methodology. Fitch affirmed all other Truist ratings.~~agencies during the quarter ended March 31, 2021. See ~~"Liquidity"~~the “Liquidity” section of ~~the~~ MD&A ~~of the~~in Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for

additional information regarding credit ratings.

Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent ~~Company's~~Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and ~~accounts~~notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, retirement of common stock, and payments on long-term debt.

See ~~"Note~~“Note 22. Parent Company Financial ~~Information" of the~~Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for

additional information regarding dividends from subsidiaries and debt transactions.

6658 Truist Financial Corporation

Access to funding at the Parent Company is more sensitive to market disruptions. Therefore, Truist prudently manages cash levels at the Parent Company to cover a minimum of one year of projected cash outflows which includes unfunded external commitments, debt service, common and preferred dividends and scheduled debt maturities, without the benefit of any new cash inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, serving as a source of strength to Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Parent Company had 2640 months and 2943 months, respectively, of cash on hand to satisfy projected cash outflows, and 1722 months ~~and 20 months, respectively,~~at each such date when including the payment of common stock dividends.

Truist Bank

Truist carefully manages liquidity risk at Truist Bank. Truist ~~Bank's~~Bank’s primary source of funding is client deposits. Continued access to client deposits is highly dependent on public confidence in the stability of Truist Bank and its ability to return funds to clients when requested.

Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and term Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to secured borrowing sources including FHLB advances, repurchase agreements, and the FRB discount window. At March 31, ~~2020,~~2021, Truist Bank ~~has approximately $137.8~~had $203.4 billion of available secured borrowing capacity, which represents approximately ~~3.5~~10.7 times the amount of ~~one year~~ wholesale funding ~~maturities.~~maturities in one-year or less. In addition to secured borrowing sources, Truist had excess eligible cash at the Federal Reserve Bank of $26.8 billion at March 31, 2021.

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

Refer to ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 for discussion with respect to ~~Truist's~~Truist’s quantitative and qualitative disclosures about its fixed and determinable contractual obligations. ~~Truist's~~Truist’s commitments include investments in affordable housing projects throughout its market area, renewable energy credits, private equity funds, derivative contracts to manage various financial risks, as well as other commitments. Refer to ~~"Note~~“Note 13. Commitments and Contingencies,” “Note 14. Fair Value ~~Disclosures”~~Disclosures,” and “Note 15. Derivative Financial Instruments” in this Form 10-Q, and “Note 16. Commitments and ~~Contingencies"~~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. ~~Truist's~~Truist’s principal goals related to the maintenance of capital are to provide adequate capital to support ~~Truist'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 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.

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. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, ~~management's~~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"~~“well capitalized” minimums. Management has implemented stressed capital ratio minimum targets to evaluate whether capital ratios calculated after the effect of alternative capital actions are likely to remain above minimums specified by the FRB for the annual CCAR process. Breaches of stressed minimum targets prompt a review of the planned capital actions included in ~~Truist's~~Truist’s capital plan.


Table 23: Capital Requirements and Targets
Table 24: Capital Requirements and Targets																Table 24: Capital Requirements and Targets
		Minimum Capital		Well Capitalized						Minimum Capital Plus Capital Conservation Buffer			Truist Targets (1)							Minimum Capital			Well Capitalized			Minimum Capital Plus Stress Capital Buffer (3)			Truist Targets (1)
					Truist		Truist Bank							Interim Operating (2)				Stressed					Truist	Truist Bank			Interim Operating (2)			Stressed
CET1	CET1	4.5	%	NA	6.5	%		7.0	%		8.0	%		7.0	%	CET1	4.5		%	NA	6.5	%		7.2	%		8.0	%		7.2	%
Tier 1 capital	Tier 1 capital	6.0		6.0	8.0			8.5			9.3			8.5		Tier 1 capital	6.0			6.0	8.0			8.7		9.3			8.7
Total capital	Total capital	8.0		10.0	10.0			10.5			11.3			10.5		Total capital	8.0			10.0	10.0			10.7		11.3			10.7
Leverage ratio	Leverage ratio	4.0		NA	5.0			N/A			7.5			7.0		Leverage ratio	4.0			NA	5.0			NA		7.5			7.0
Supplementary leverage ratio	Supplementary leverage ratio	3.0		NA	NA			NA			6.5			6.0		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, feedback, and other strategic factors.

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

(3)Reflects a SCB of 270 basis points for Truist.

Truist Financial Corporation 6759

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.

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

Truist has approximately $1.5 billion authorization remaining under the share repurchase program approved by the Board of Directors in December 2020. Management’s intention is to maintain an approximate 10 percent Common Equity Tier 1 ratio after considering strategic actions such as non-bank acquisitions or stock repurchases, as well as changes in risk-weighted assets. For the second quarter of 2021, Truist intends to execute share repurchases consistent with the Federal Reserve’s capital restrictions announced on March 25, 2021. In addition to these restrictions, any future stock repurchase activity will be informed by economic and regulatory considerations, as well as Truist’s capital position, dividends, earnings outlook, and capital deployment priorities.

~~Truist's~~

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


Table 24: Capital Ratios - Truist Financial Corporation
Table 25: Capital Ratios - Truist Financial Corporation								Table 25: Capital Ratios - Truist Financial Corporation

(Dollars in millions, except per share data, shares in thousands)	(Dollars in millions, except per share data, shares in thousands)	Mar 31, 2020			Dec 31, 2019			(Dollars in millions, except per share data, shares in thousands)	Mar 31, 2021			Dec 31, 2020
Risk-based:	Risk-based:	(preliminary)						Risk-based:	(preliminary)
CET1 capital to risk-weighted assets	CET1 capital to risk-weighted assets	9.3		%	9.5		%	CET1 capital to risk-weighted assets	10.1		%	10.0		%
Tier 1 capital to risk-weighted assets	Tier 1 capital to risk-weighted assets	10.5			10.8			Tier 1 capital to risk-weighted assets	12.0			12.1
Total capital to risk-weighted assets	Total capital to risk-weighted assets	12.6			12.6			Total capital to risk-weighted assets	14.3			14.5
Leverage ratio	Leverage ratio	9.0			14.7			Leverage ratio	9.4			9.6
Supplementary leverage ratio	Supplementary leverage ratio	7.8			NA			Supplementary leverage ratio	8.3			8.7
Non-GAAP capital measure (1):	Non-GAAP capital measure (1):							Non-GAAP capital measure (1):
Tangible common equity per common share	Tangible common equity per common share	$	26.00		$	25.93		Tangible common equity per common share	$	25.53		$	26.78
Calculation of tangible common equity (1):	Calculation of tangible common equity (1):							Calculation of tangible common equity (1):
Total shareholders' equity		$	66,061		$	66,558
Total shareholders’ equity								Total shareholders’ equity	$	67,876		$	70,912
Less:	Less:							Less:
Preferred stock	Preferred stock	4,599			5,102			Preferred stock	7,124			8,048
Noncontrolling interests	Noncontrolling interests	167			174			Noncontrolling interests	—			105
Goodwill and intangible assets, net of deferred taxes	Goodwill and intangible assets, net of deferred taxes	26,263			26,482			Goodwill and intangible assets, net of deferred taxes	26,413			26,629
Tangible common equity	Tangible common equity	$	35,032		$	34,800		Tangible common equity	$	34,339		$	36,130
Risk-weighted assets	Risk-weighted assets	$	391,387		$	376,056		Risk-weighted assets	$	378,522		$	379,153
Common shares outstanding at end of period	Common shares outstanding at end of period	1,347,461			1,342,166			Common shares outstanding at end of period	1,344,845			1,348,961

(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~~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.~~risk. 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 remainremained strong compared to the regulatory levels for well capitalized ~~banks at March 31, 2020.~~banks. Truist declared common dividends of ~~$0.450~~$0.45 per share during the first quarter of ~~2020.~~2021 and completed $506 million of share repurchases. The dividend and total payout ratios for the first quarter of ~~2020~~2021 were ~~61.4%. As previously communicated at~~45.4 percent and 83.3 percent, respectively. Truist also redeemed $950 million of preferred stock during the ~~time~~quarter to optimize the Company’s capital position. In connection with the redemptions of preferred stock, net income available to common shareholders was reduced by $26 million to recognize the ~~Merger announcement, Truist suspended its share repurchase program until capital ratios return to higher levels.~~difference between the redemption price and the carrying value.

6860 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 —


Table 26: 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 (3)	Maximum Remaining Dollar Value of Shares Available for Repurchase Pursuant to Publicly-Announced Plan
January 2021	2,339	$	49.50	2,339	$	1,884
February 2021	7,165	54.46		7,165	1,494
March 2021	64	59.48		—	1,494
Total	9,568	53.28		9,504

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

(2)Excludes commissions.

(3)Pursuant to the 2020 Repurchase Plan, announced in December 2020, authorizing up to $2.0 billion of share repurchases beginning in the first quarter of 2021.

Critical Accounting Policies

The accounting and reporting policies of Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. ~~Truist's~~Truist’s financial position and results of operations are affected by ~~management's~~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 ~~Truist'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 MD&A in ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in “Note 1. Basis of Presentation” in Form 10-K for the year ended December 31, ~~2019.~~2020. Additional disclosures regarding the effects of new accounting pronouncements are included in the “Note 1. Basis of Presentation” included herein. Except for the ~~items~~item noted below, there have been no other changes to the significant accounting policies during ~~2020.~~2021.

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~~Company performed a qualitative assessment of ~~the goodwill carried by the CB&W, C&CB~~current events and ~~IH reporting units for impairment in~~circumstances during the first quarter of ~~2020. In performing this assessment, Truist considered whether~~2021, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, and a ~~sensitivity analysis on~~comparison of management’s forecast and assumptions ~~and Truist specific performance indicators, including any changes from when the merger closed~~to those used 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~~October 1, 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~~quantitative impairment test, concluding that it was not more-likely-than-not that the fair value of one or more of its reporting units is below its respective carrying amount as of March 31, ~~2020,~~2021, 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~~Company’s CEO and CFO, carried out an evaluation of the effectiveness of the ~~Company's~~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~~Company’s disclosure controls and procedures 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~~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~~Company’s internal control over financial reporting that occurred during the quarter ended March 31, ~~2020~~2021 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Truist Financial Corporation 61

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

~~70 Truist Financial Corporation~~

ITEM 1A. RISK FACTORS

~~The following risk factor supplements~~There have been no material changes to the risk factors disclosed in ~~Truist's~~Truist’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Additional risks and uncertainties not currently known to Truist or that management has deemed to be immaterial also may materially adversely affect ~~Truist's~~Truist’s business, financial condition, 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

Refer to the Share Repurchase Activity section in the MD&A, which is incorporated by reference into this item.

62 Truist Financial Corporation 71

ITEM 6. EXHIBITS

Exhibit No.

Description

Location

10.1*

Form of Restricted Stock Unit Agreement ~~(Non-Employee Directors)~~(Category 2 Employee) for the Truist Financial Corporation 2012 Incentive Plan (effective ~~2020)~~2021).

Filed herewith.

10.2*

Form of Restricted Stock Unit Agreement (Executive Officers) for the Truist Financial Corporation 2012 Incentive Plan (effective ~~2020)~~2021).

Filed herewith.

10.3*

Form of LTIP Award Agreement for the Truist Financial Corporation 2012 Incentive Plan (effective ~~2020)~~2021).

Filed herewith.

10.4*

Form of Performance Unit Award Agreement for the Truist Financial Corporation 2012 Incentive Plan (effective ~~2020)~~2021).

Filed herewith.

Statement re computation of earnings per share.

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

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 63

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~~3, 2021

By:

/s/ Daryl N. Bible

Daryl N. Bible

Senior Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

Date:

May ~~8, 2020~~3, 2021

By:

/s/ Cynthia B. Powell

Cynthia B. Powell

Executive Vice President and Corporate Controller

(Principal Accounting Officer)

64 Truist Financial Corporation 73


(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


(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


	December 31, 2019
(Dollars in millions)	Commercial & Industrial		CRE		Commercial Construction		Lease Financing


Commercial:
Pass	$	127,229	$	26,393	$	6,037	$	6,039
Special mention	1,264		145		37		19
Substandard	1,475		284		131		56
Nonperforming	212		10		—		8
Total	$	130,180	$	26,832	$	6,205	$	6,122

	December 31, 2019
	Residential Mortgage		Residential home equity and direct		Indirect auto		Indirect Other
Consumer:
Performing	$	52,016	$	26,977	$	24,342	$	11,098
Nonperforming	55		67		100		2
Total	$	52,071	$	27,044	$	24,442	$	11,100



















	UPB		Recorded Investment								Related ALLL		Average Recorded Investment		Interest Income Recognized
As of / For The Year Ended December 31, 2019 (Dollars in millions)					Without an ALLL			With an ALLL
Commercial:
Commercial and industrial	$	339	$	124		$	167		$	20	$	298	$	6
CRE	29		3			26			2		71		1
Commercial construction	39		—			38			7		5		—
Lease financing	18		7			2			—		2		—
Consumer:
Residential mortgage	650		92			527			42		799		34
Residential home equity and direct	76		24			37			5		65		3
Indirect auto	367		9			349			64		334		53
Indirect other	5		—			5			1		4		—

Credit card	31		—			31			12		28		1
Total	$	1,554	$	259		$	1,182		$	153	$	1,606	$	98



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	%



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 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


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


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		—