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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, 2022
Commission File Number: 1-10853

TRUIST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________________________
North Carolina56-0939887
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
214 North Tryon Street
Charlotte,North Carolina28202
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:(336)733-2000
_________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $5 par valueTFCNew York Stock Exchange
Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred StockTFC.PINew 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 StockTFC.PJNew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred StockTFC.PONew York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred StockTFC.PRNew 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 accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth 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 March 31, 2022, 1,331,413,896 shares of the registrant’s common stock, $5 par value, were outstanding.

TABLE OF CONTENTS
TRUIST FINANCIAL CORPORATION
FORM 10-Q
March 31, 2022
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’ 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. Securities Financing Activities
Note 4. Investment Securities
Note 5. Loans and ACL
Note 6. Goodwill and Other Intangible Assets
Note 7. Loan Servicing
Note 8. Other Assets and Liabilities
Note 9. Borrowings
Note 10. Shareholders’ Equity
Note 11. AOCI
Note 12. Income Taxes
Note 13. Benefit Plans
Note 14. Commitments and Contingencies
Note 15. Fair Value Disclosures
Note 16. Derivative Financial Instruments
Note 17. Computation of EPS
Note 18. Operating Segments
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management in MD&A)
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



Glossary of Defined Terms
The following terms may be used throughout this report, including the consolidated financial statements and related notes.
TermDefinition
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
ARRC
Alternative Reference Rates Committee of the FRB and the Federal Reserve Bank of New York
AOCI
Accumulated other comprehensive income (loss)
BB&T
BB&T Corporation and subsidiaries (changed to “Truist Financial Corporation” effective with the Merger)
BoardTruist’s Board of Directors
C&CB
Corporate and Commercial Banking, an operating segment
CARES ActThe Coronavirus Aid, Relief, and Economic Security Act
CB&W
Consumer Banking and Wealth, an operating segment
CCAR
Comprehensive Capital Analysis and Review
CDI
Core deposit intangible
CECLCurrent expected credit loss model
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CET1
Common equity tier 1
CFPB
Consumer Financial Protection Bureau
Company
Truist Financial Corporation and its subsidiaries (interchangeable with “Truist” below)
COVID-19Coronavirus disease 2019
CRE
Commercial real estate
CRO
Chief Risk Officer
CVACredit valuation adjustment
EPS
Earnings per common share
ESGEnvironmental, Social, and Governance
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
GDPGross Domestic Product
GSE
U.S. government-sponsored enterprise
HFI
Held for investment
HQLA
High-quality liquid assets
HTM
Held-to-maturity
IH
Insurance Holdings, an operating segment
IPV
Independent price verification
ISDA
International Swaps and Derivatives Association, Inc.
LCR
Liquidity Coverage Ratio
LHFS
Loans held for sale
LIBOR
London Interbank Offered Rate
LOCOMLower of cost or market
Market Risk RuleMarket risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBS
Mortgage-backed securities
MD&AManagement’s Discussion and Analysis of Financial Condition and Results of Operations
MergerMerger of BB&T and SunTrust effective December 6, 2019
MRM
Model Risk Management
MSR
Mortgage servicing right
NA
Not applicable
NIM
Net interest margin, computed on a TE basis
NM
Not meaningful
NPA
Nonperforming asset
NPL
Nonperforming loan
NSFR
Net stable funding ratio
NYSE
New York Stock Exchange
OAS
Option adjusted spread
OCCOffice of the Comptroller of the Currency
OCI
Other comprehensive income (loss)
OPEB
Other post-employment benefit
OREO
Other real estate owned
OT&C
Other, Treasury and Corporate
Parent Company
Truist Financial Corporation, the parent company of Truist Bank and other subsidiaries
PCD
Purchased credit deteriorated loans
PPPPaycheck Protection Program, established by the CARES Act
ROU assets
Right-of-use assets
Truist Financial Corporation 1

TermDefinition
RUFC
Reserve for unfunded lending commitments
S&P
Standard & Poor’s
SBIC
Small Business Investment Company
SCBStress Capital Buffer
SEC
Securities and Exchange Commission
SOFR
Secured Overnight Financing Rate
SunTrust
SunTrust Banks, Inc.
TDR
Troubled debt restructuring
TE
Taxable-equivalent
TRSTotal Return Swap
Truist
Truist Financial Corporation and its subsidiaries (interchangeable with the “Company” above)
Truist BankTruist Bank, formerly Branch Banking and Trust Company
U.S.
United States of America
U.S. Treasury
United States Department of the Treasury
UPB
Unpaid principal balance
VaR
Value-at-risk
VIE
Variable interest entity
2 Truist Financial Corporation

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of Truist. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” “would,” “could,” and other similar expressions are intended to identify these forward-looking statements.

Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding Truist’s business, the economy, and other future conditions. Such statements involve inherent uncertainties, risks, and changes in circumstances that are 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 in Part I, Item 1A-Risk Factors in Truist’s Form 10-K for the year ended December 31, 2021:

•residual risks and uncertainties relating to the Merger of heritage BB&T and heritage SunTrust, including the ability to realize the anticipated benefits of the Merger;
•expenses relating to the Merger and application and data center decommissioning;
•deposit attrition, client loss or revenue loss following completed mergers or acquisitions may be greater than anticipated;
•the COVID-19 pandemic disrupted the global economy and adversely impacted Truist’s financial condition and results of operations, including through increased expenses, reduced fee income and net interest margin, decreased demand for certain types of loans, and increases in the allowance for credit losses; a resurgence of the pandemic, whether due to new variants of the coronavirus or other factors, could reintroduce or prolong these negative 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, 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 climate, 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, including in response to rising inflation, 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 teammates, 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 in the increased work-from-home environment caused by the COVID-19 pandemic as job markets may be less constrained by physical geography;
•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, which have increased in frequency with current geopolitical tensions, identity theft, ransomware attacks, and physical security risks, such as natural disasters, environmental conditions, and intentional acts of destruction, 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, including physical risks, such as more frequent and intense weather events, and risks related to the transition to a lower carbon economy, such as regulatory or technological changes or shifts in market dynamics or consumer preferences, 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)		Mar 31, 2022Dec 31, 2021
Assets
Cash and due from banks$5,516 $5,085 
Interest-bearing deposits with banks23,606 15,210 
Securities borrowed or purchased under agreements to resell2,322 4,028 
Trading assets at fair value5,920 4,423 
AFS securities at fair value84,753 153,123 
HTM securities (fair value of $59,124 and $1,495 at fair value, respectively)61,662 1,494 
LHFS (including $3,364 and $3,544 at fair value, respectively)4,167 4,812 
Loans and leases (including $21 and $23 at fair value, respectively)290,081 289,513 
ALLL(4,170)(4,435)
Loans and leases, net of ALLL285,911 285,078 
Premises and equipment3,662 3,700 
Goodwill26,284 26,098 
CDI and other intangible assets3,693 3,408 
Loan servicing rights at fair value3,013 2,633 
Other assets (including $3,137 and $3,436 at fair value, respectively)33,470 32,149 
Total assets$543,979 $541,241 
Liabilities
Noninterest-bearing deposits$150,446 $145,892 
Interest-bearing deposits277,882 270,596 
Short-term borrowings (including $1,717 and $1,731 at fair value, respectively)5,147 5,292 
Long-term debt33,773 35,913 
Other liabilities (including $1,482 and $586 at fair value, respectively)11,687 14,277 
Total liabilities478,935 471,970 
Shareholders’ Equity
Preferred stock6,673 6,673 
Common stock, $5 par value6,657 6,639 
Additional paid-in capital34,539 34,565 
Retained earnings23,687 22,998 
AOCI, net of deferred income taxes(6,535)(1,604)
Noncontrolling interests23 — 
Total shareholders’ equity65,044 69,271 
Total liabilities and shareholders’ equity$543,979 $541,241 
Common shares outstanding1,331,414 1,327,818 
Common shares authorized2,000,000 2,000,000 
Preferred shares outstanding223 223 
Preferred shares authorized5,000 5,000 

The accompanying notes are an integral part of these consolidated financial statements.
4 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)		Three Months Ended March 31,
20222021
Interest Income  
Interest and fees on loans and leases$2,644 $3,002 
Interest on securities640 443 
Interest on other earning assets73 49 
Total interest income3,357 3,494 
Interest Expense  
Interest on deposits32 47 
Interest on long-term debt132 148 
Interest on other borrowings10 14 
Total interest expense174 209 
Net Interest Income3,183 3,285 
Provision for credit losses(95)48 
Net Interest Income After Provision for Credit Losses3,278 3,237 
Noninterest Income  
Insurance income727 626 
Investment banking and trading income261 346 
Wealth management income343 341 
Service charges on deposits252 258 
Card and payment related fees212 200 
Residential mortgage income89 100 
Lending related fees85 100 
Operating lease income58 68 
Commercial mortgage income32 33 
Income from bank-owned life insurance51 50 
Securities gains (losses)(69)— 
Other income101 75 
Total noninterest income2,142 2,197 
Noninterest Expense  
Personnel expense2,051 2,142 
Professional fees and outside processing363 350 
Software expense232 210 
Net occupancy expense208 209 
Amortization of intangibles137 144 
Equipment expense118 113 
Marketing and customer development84 66 
Operating lease depreciation48 50 
Loan-related expense44 54 
Regulatory costs35 25 
Merger-related and restructuring charges216 141 
Loss (gain) on early extinguishment of debt— (3)
Other expense138 109 
Total noninterest expense3,674 3,610 
Earnings  
Income before income taxes1,746 1,824 
Provision for income taxes330 351 
Net income1,416 1,473 
Noncontrolling interests1 (4)
Net income available to the bank holding company1,415 1,477 
Preferred stock dividends and other88 143 
Net income available to common shareholders$1,327 $1,334 
Basic EPS$1.00 $0.99 
Diluted EPS0.99 0.98 
Basic weighted average shares outstanding1,329,037 1,345,666 
Diluted weighted average shares outstanding1,341,563 1,358,932 

The accompanying notes are an integral part of these consolidated financial statements.
Truist Financial Corporation 5

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)		Three Months Ended March 31,
20222021
Net income$1,416 $1,473 
OCI, net of tax:  
Net change in net pension and postretirement costs8 35 
Net change in cash flow hedges5 36 
Net change in AFS securities(4,989)(2,304)
Net change in HTM securities44 — 
Other, net1 1 
Total OCI, net of tax(4,931)(2,232)
Total comprehensive income$(3,515)$(759)
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs$2 $11 
Net change in cash flow hedges1 11 
Net change in AFS securities(1,513)(707)
Net change in HTM securities13 — 
Other, net— — 
Total income taxes related to OCI$(1,497)$(685)

The accompanying notes are an integral part of these consolidated financial statements.
6 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, shares in thousands)		Shares of Common StockPreferred StockCommon StockAdditional Paid-In CapitalRetained EarningsAOCINoncontrolling InterestsTotal Shareholders’ Equity
Balance, January 1, 20211,348,961 $8,048 $6,745 $35,843 $19,455 $716 $105 $70,912 
Net income— — — — 1,477 — (4)1,473 
OCI— — — — — (2,232)— (2,232)
Issued in connection with equity awards, net5,388 — 27 (111)— — — (84)
Repurchase of common stock(9,504)— (48)(458)— — — (506)
Redemption of preferred stock— (924)— — (26)— — (950)
Cash dividends declared on common stock— — — — (605)— — (605)
Cash dividends declared on preferred stock— — — — (117)— — (117)
Equity-based compensation expense— — — 86 — — — 86 
Other, net— — — — — — (101)(101)
Balance, March 31, 20211,344,845 $7,124 $6,724 $35,360 $20,184 $(1,516)$— $67,876 
Balance, January 1, 20221,327,818 $6,673 $6,639 $34,565 $22,998 $(1,604)$— $69,271 
Net income— — — — 1,415 — 1 1,416 
OCI— — — — — (4,931)— (4,931)
Issued in connection with equity awards, net3,596 — 18 (106)(1)— — (89)
Cash dividends declared on common stock— — — — (637)— — (637)
Cash dividends declared on preferred stock— — — — (88)— — (88)
Equity-based compensation expense— — — 80 — — — 80 
Other, net— — — — — — 22 22 
Balance, March 31, 20221,331,414 $6,673 $6,657 $34,539 $23,687 $(6,535)$23 $65,044 

The accompanying notes are an integral part of these consolidated financial statements.
Truist Financial Corporation 7

CONSOLIDATED STATEMENTS OF CASH FLOWS
TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)		Three Months Ended March 31,
20222021
Cash Flows From Operating Activities:  
Net income$1,416 $1,473 
Adjustments to reconcile net income to net cash from operating activities:  
Provision for credit losses(95)48 
Depreciation195 201 
Amortization of intangibles137 144 
Securities (gains) losses69 — 
Net change in operating assets and liabilities:  
LHFS180 (510)
Loan servicing rights(380)(342)
Pension asset(410)(452)
Derivative assets and liabilities986 1,060 
Trading assets(1,497)(1,222)
Other assets and other liabilities(558)(915)
Other, net(231)482 
Net cash from operating activities(188)(33)
Cash Flows From Investing Activities:  
Proceeds from sales of AFS securities3,127 60 
Proceeds from maturities, calls and paydowns of AFS securities5,259 8,862 
Purchases of AFS securities(7,219)(15,601)
Proceeds from maturities, calls and paydowns of HTM securities857 — 
Purchases of HTM securities(3,020)— 
Originations and purchases of loans and leases, net of sales and principal collected(134)8,249 
Net cash received (paid) for securities borrowed or purchased under agreements to resell1,706 396 
Net cash received (paid) for asset acquisitions, business combinations, and divestitures(488)1,130 
Other, net(122)23 
Net cash from investing activities(34)3,119 
Cash Flows From Financing Activities:
Net change in deposits11,842 14,489 
Net change in short-term borrowings(145)(203)
Proceeds from issuance of long-term debt66 1,299 
Repayment of long-term debt(1,699)(3,032)
Repurchase of common stock— (506)
Redemption of preferred stock— (950)
Cash dividends paid on common stock(637)(605)
Cash dividends paid on preferred stock(88)(117)
Net cash received (paid) for hedge unwinds(198)— 
Other, net(92)(197)
Net cash from financing activities9,049 10,178 
Net Change in Cash and Cash Equivalents8,827 13,264 
Cash and Cash Equivalents, January 120,295 18,868 
Cash and Cash Equivalents, March 31$29,122 $32,132 
Supplemental Disclosure of Cash Flow Information:
Net cash paid (received) during the period for:
Interest expense$156 $248 
Income taxes40 28 
Noncash investing activities:
Transfer of AFS securities to HTM59,436 — 

The accompanying notes are an integral part of these consolidated financial statements.
8 Truist Financial Corporation

NOTE 1. Basis of Presentation

General

See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q, and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, and cash flow activity required in accordance with GAAP. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. The year-end consolidated balance sheet data was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2021 should be referred to in connection with these unaudited interim consolidated financial statements. There were no 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, 2021 that could have a material effect on the Company’s financial statements.

Reclassifications

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

Use of Estimates in the Preparation of Financial Statements

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

Changes in Accounting Principles and Effects of New Accounting Pronouncements
Standard / Adoption DateDescriptionEffects on the Financial Statements
Standards Not Yet Adopted
Troubled Debt Restructurings and Vintage Disclosures
January 1, 2023
Eliminates the accounting guidance for TDRs, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Additionally, requires disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.
Truist is evaluating this standard. Upon adoption, Truist expects the newly required disclosures to be included in the Loans and ACL footnote.
Fair Value Hedging – Portfolio Layer Method
January 1, 2023
Introduces the portfolio layer method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio under the method (previously named, last-of-layer method).

Additionally, expands the scope of the portfolio layer method to include non-prepayable assets, specifies eligible hedging instruments in a single-layer hedge, provides additional guidance on the accounting for and disclosure of hedge basis adjustments under the portfolio layer method, and specifies how hedge basis adjustments should be considered when determining credit losses for the assets included in the closed portfolio.
Truist is evaluating the use of the portfolio layer method in its hedging programs.

Truist Financial Corporation 9

NOTE 2. Business Combinations

On March 1, 2022, Truist acquired Kensington Vanguard National Land Services, one of the country's largest independent full-service national title insurance agencies, which resulted in approximately $187 million of goodwill and $148 million of identifiable intangible assets in the IH segment. Fair value estimates related to the acquired assets and liabilities are subject to adjustment during the one-year measurement period following the closing of the acquisition. The intangible assets are being amortized over a term of 15 years based upon the estimated economic benefits received. Goodwill of $129 million and identifiable intangible assets of $110 million are deductible for tax purposes.

NOTE 3. Securities Financing Activities

Securities purchased under agreements to resell are primarily collateralized by U.S. government or agency securities and are carried at the amounts at which the securities will be subsequently sold, plus accrued interest. Securities borrowed are primarily collateralized by corporate securities. The Company borrows securities and purchases securities under agreements to resell as part of its securities financing activities. On the acquisition date of these securities, the Company and the related counterparty agree on the amount of collateral required to secure the principal amount loaned under these arrangements. The Company monitors collateral values daily and calls for additional collateral to be provided as warranted under the respective agreements. The following table presents securities borrowed or purchased under agreements to resell:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Securities purchased under agreements to resell$1,678 $3,460 
Securities borrowed644 568 
Total securities borrowed or purchased under agreements to resell$2,322 $4,028 
Fair value of collateral held available to be resold or repledged$2,316 $4,005 
Fair value of securities repledged342 1,141 

For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to “Note 14. Commitments and Contingencies” for additional information related to pledged securities. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity:
March 31, 2022December 31, 2021
(Dollars in millions)Overnight and ContinuousUp to 30 daysTotalOvernight and ContinuousUp to 30 daysTotal
U.S. Treasury$439 $41 $480 $749 $409 $1,158 
GSE81 31 112 53 25 78 
Agency MBS - residential973 338 1,311 720 141 861 
Corporate and other debt securities150 314 464 213 125 338 
Total securities sold under agreements to repurchase$1,643 $724 $2,367 $1,735 $700 $2,435 

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

10 Truist Financial Corporation

NOTE 4. Investment Securities

The following tables summarize the Company’s AFS and HTM securities:
March 31, 2022
(Dollars in millions)		Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:    
U.S. Treasury$9,891 $— $479 $9,412 
GSE257 — 12 245 
Agency MBS - residential71,956 37 3,755 68,238 
Agency MBS - commercial2,831 2 174 2,659 
States and political subdivisions366 19 15 370 
Non-agency MBS4,149 — 346 3,803 
Other26 — — 26 
Total AFS securities$89,476 $58 $4,781 $84,753 
HTM securities:    
Agency MBS - residential$61,662 $— $2,538 $59,124 
December 31, 2021
(Dollars in millions)		Amortized CostGross UnrealizedFair Value
GainsLosses
AFS securities:    
U.S. Treasury$9,892 $9 $106 $9,795 
GSE1,667 33 2 1,698 
Agency MBS - residential135,886 656 2,500 134,042 
Agency MBS - commercial2,928 18 64 2,882 
States and political subdivisions382 39 1 420 
Non-agency MBS4,305 — 47 4,258 
Other28 — — 28 
Total AFS securities$155,088 $755 $2,720 $153,123 
HTM securities:    
Agency MBS - residential$1,494 $1 $— $1,495 

In the first quarter of 2022, Truist transferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies. Management determined that it has both the positive intent and ability to hold these securities to maturity. On the date of transfer, the difference between the par value and the fair value of these securities, which was recorded as a loss in AOCI, resulted in a net discount of $3.7 billion, inclusive of $510 million of basis adjustment gains from terminated fair value hedges attributable to the transferred securities. The discount will be accreted and unrealized loss in AOCI will be amortized, offsetting within interest income over the remaining life of the securities using the interest method. There were no gains or losses recognized as a result of this transfer.

Certain MBS securities issued by FNMA and FHLMC exceeded 10% of shareholders’ equity at March 31, 2022. The FNMA investments had total amortized cost and fair value of $45.2 billion and $43.0 billion, respectively. The FHLMC investments had total amortized cost and fair value of $45.7 billion and $43.4 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 be shorter than the contractual maturities because borrowers may have the right to prepay their obligations with or without penalties.
Amortized CostFair Value
March 31, 2022
(Dollars in millions)		Due in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotalDue in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten yearsTotal
AFS securities:
U.S. Treasury$309 $8,602 $980 $— $9,891 $307 $8,188 $917 $— $9,412 
GSE— — — 257 257 — — — 245 245 
Agency MBS - residential— 1 633 71,322 71,956 — 1 624 67,613 68,238 
Agency MBS - commercial— 8 15 2,808 2,831 — 8 14 2,637 2,659 
States and political subdivisions15 76 124 151 366 15 76 129 150 370 
Non-agency MBS— — — 4,149 4,149 — — — 3,803 3,803 
Other— 6 — 20 26 — 6 — 20 26 
Total AFS securities$324 $8,693 $1,752 $78,707 $89,476 $322 $8,279 $1,684 $74,468 $84,753 
HTM securities:
Agency MBS - residential$— $— $— $61,662 $61,662 $— $— $— $59,124 $59,124 

Truist Financial Corporation 11

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 months12 months or moreTotal
March 31, 2022
(Dollars in millions)		Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:      
U.S. Treasury$8,793 $431 $602 $48 $9,395 $479 
GSE209 12 — — 209 12 
Agency MBS - residential54,565 2,940 9,386 815 63,951 3,755 
Agency MBS - commercial909 401,672 134 2,581 174 
States and political subdivisions206 13 21 2 227 15 
Non-agency MBS3,803 346 — — 3,803 346 
Other21 — — — 21 — 
Total$68,506 $3,782 $11,681 $999 $80,187 $4,781 
HTM securities:      
Agency MBS - residential$39,486 $1,388 $19,638 $1,150 $59,124 $2,538 
Less than 12 months12 months or moreTotal
December 31, 2021
(Dollars in millions)		Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
AFS securities:      
U.S. Treasury$8,412 $88 $582 $18 $8,994 $106 
GSE104 2 — — 104 2 
Agency MBS - residential101,262 2,377 2,638 123 103,900 2,500 
Agency MBS - commercial1,749 50 413 14 2,162 64 
States and political subdivisions— — 22 1 22 1 
Non-agency MBS4,258 47 — — 4,258 47 
Other6 — — — 6 — 
Total$115,791 $2,564 $3,655 $156 $119,446 $2,720 

At March 31, 2022 and December 31, 2021, no ACL was established for AFS or HTM securities. Substantially all of the unrealized losses on the securities portfolio, including non-agency MBS, were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. HTM debt securities consists of residential agency MBS. Accordingly, the Company does not expect to incur any credit losses on HTM investment securities.

The following table presents gross securities gains and losses recognized in earnings:
(Dollars in millions)Three Months Ended March 31,
20222021
Gross realized gains$13 $— 
Gross realized losses(82)— 
Securities gains (losses), net$(69)$— 

12 Truist Financial Corporation

NOTE 5. Loans and ACL

The following tables present loans and leases HFI by aging category. Government guaranteed loans are not placed on nonperforming status regardless of delinquency because collection of principal and interest is reasonably assured. 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
March 31, 2022
(Dollars in millions)		Current30-89 Days Past Due90 Days Or More Past Due (1)NonperformingTotal
Commercial:     
Commercial and industrial$140,428 $280 $22 $330 $141,060 
CRE22,734 13 — 27 22,774 
Commercial construction5,219 1 — — 5,220 
Consumer:
Residential mortgage46,287 542 1,027 315 48,171 
Residential home equity and direct24,558 142 12 141 24,853 
Indirect auto24,999 529 1 227 25,756 
Indirect other10,972 65 2 4 11,043 
Student5,210 482 822 — 6,514 
Credit card4,615 47 28 — 4,690 
Total$285,022 $2,101 $1,914 $1,044 $290,081 
(1)Includes government guaranteed loans of $996 million in the residential mortgage portfolio and $818 million in the student portfolio.
Accruing
December 31, 2021
(Dollars in millions)		Current30-89 Days Past Due90 Days Or More Past Due (1)NonperformingTotal
Commercial:     
Commercial and industrial$138,225 $130 $13 $394 $138,762 
CRE23,902 20 — 29 23,951 
Commercial construction4,962 2 — 7 4,971 
Consumer:    
Residential mortgage46,033 514 1,009 296 47,852 
Residential home equity and direct24,809 107 9 141 25,066 
Indirect auto25,615 607 1 218 26,441 
Indirect other10,811 64 3 5 10,883 
Student5,357 555 868 — 6,780 
Credit card4,735 45 27 — 4,807 
Total$284,449 $2,044 $1,930 $1,090 $289,513 
(1)Includes government guaranteed loans of $978 million in the residential mortgage portfolio and $864 million in the student portfolio.

Truist Financial Corporation 13

The following tables present the amortized cost basis of loans by origination year and credit quality indicator:
March 31, 2022
(Dollars in millions)		Amortized Cost Basis by Origination YearRevolving Credit Loans Converted to TermOther (1)
20222021202020192018Prior Total
Commercial:    
Commercial and industrial:
Pass$10,993 $30,955 $15,100 $11,947 $7,874 $13,160 $46,584 $— $(65)$136,548 
Special mention104 227 303 212 279 100 530 — — 1,755 
Substandard98 334 361 375 238 256 765 — — 2,427 
Nonperforming4 42 11 62 10 43 158 — — 330 
Total11,199 31,558 15,775 12,596 8,401 13,559 48,037 — (65)141,060 
CRE:
Pass971 4,396 2,744 4,951 3,093 3,405 882 — (50)20,392 
Special mention9 37 93 140 164 99 — — — 542 
Substandard64 212 207 463 450 417 — — — 1,813 
Nonperforming1 1 1 11 1 12 — — — 27 
Total1,045 4,646 3,045 5,565 3,708 3,933 882 — (50)22,774 
Commercial construction:
Pass417 1,219 1,124 896 346 164 832 — — 4,998 
Special mention4 — 14 66 — — — — — 84 
Substandard1 4 22 33 61 17 — — — 138 
Nonperforming— — — — — — — — — — 
Total422 1,223 1,160 995 407 181 832 — — 5,220 
Consumer:
Residential mortgage:
Current$2,066 $17,749 $6,519 $3,238 $1,621 $15,094 $— $— $— $46,287 
30 - 89 days past due10 66 43 35 35 353 — — — 542 
90 days or more past due1 4 52 93 128 749 — — — 1,027 
Nonperforming— 4 7 21 27 256 — — — 315 
Total2,077 17,823 6,621 3,387 1,811 16,452 — — — 48,171 
Residential home equity and direct:
Current1,481 4,361 2,268 1,447 560 476 10,534 3,446 (15)24,558 
30 - 89 days past due1 12 8 9 3 4 67 38 — 142 
90 days or more past due— 1 — — — — 6 5 — 12 
Nonperforming— 3 3 4 1 7 42 81 — 141 
Total1,482 4,377 2,279 1,460 564 487 10,649 3,570 (15)24,853 
Indirect auto:
Current2,369 9,794 5,938 3,775 1,860 1,263 — — — 24,999 
30 - 89 days past due5 139 116 116 75 78 — — — 529 
90 days or more past due— 1 — — — — — — — 1 
Nonperforming— 42 51 60 39 35 — — — 227 
Total2,374 9,976 6,105 3,951 1,974 1,376 — — — 25,756 
Indirect other:
Current1,433 3,869 2,405 1,424 812 1,029 — — — 10,972 
30 - 89 days past due2 18 16 13 8 8 — — — 65 
90 days or more past due— 1 1 — — — — — — 2 
Nonperforming— — — 3 — 1 — — — 4 
Total1,435 3,888 2,422 1,440 820 1,038 — — — 11,043 
Student:
Current— — 20 82 66 5,041 — — 1 5,210 
30 - 89 days past due— — — — 1 481 — — — 482 
90 days or more past due— — — — 1 821 — — — 822 
Total— — 20 82 68 6,343 — — 1 6,514 
Credit card:
Current4,591 21 3 4,615 
30 - 89 days past due45 2 — 47 
90 days or more past due27 1 — 28 
Total— — — — — — 4,663 24 3 4,690 
Total$20,034 $73,491 $37,427 $29,476 $17,753 $43,369 $65,063 $3,594 $(126)$290,081 
14 Truist Financial Corporation

December 31, 2021
(Dollars in millions)		Amortized Cost Basis by Origination YearRevolving CreditLoans Converted to TermOther (1)
20212020201920182017PriorTotal
Commercial:
Commercial and industrial:
Pass$35,530 $17,430 $14,105 $8,994 $5,633 $9,424 $43,035 $— $(169)$133,982 
Special mention195 221 326 317 46 70 691 — — 1,866 
Substandard352 356 395 197 91 335 794 — — 2,520 
Nonperforming50 19 49 42 16 34 184 — — 394 
Total36,127 18,026 14,875 9,550 5,786 9,863 44,704 — (169)138,762 
CRE:
Pass4,836 2,946 5,109 3,201 1,774 2,131 762 — (61)20,698 
Special mention13 118 483 247 44 83 — — — 988 
Substandard321 264 523 528 321 279 — — — 2,236 
Nonperforming1 1 11 — 9 7 — — — 29 
Total5,171 3,329 6,126 3,976 2,148 2,500 762 — (61)23,951 
Commercial construction:
Pass1,113 1,179 1,259 419 44 95 558 — 12 4,679 
Special mention— 14 72 50 — — — — — 136 
Substandard7 13 45 67 17 — — — — 149 
Nonperforming— — 1 — 5 — — — 1 7 
Total1,120 1,206 1,377 536 66 95 558 — 13 4,971 
Consumer:
Residential mortgage:
Current17,271 6,798 3,642 1,753 2,237 14,240 — — 92 46,033 
30 - 89 days past due58 31 32 40 31 322 — — — 514 
90 or more days past due3 44 91 133 95 643 — — — 1,009 
Nonperforming1 5 18 27 20 226 — — (1)296 
Total17,333 6,878 3,783 1,953 2,383 15,431 — — 91 47,852 
Residential home equity and direct:
Current4,962 2,630 1,717 691 189 425 10,757 3,388 50 24,809 
30 - 89 days past due8 8 10 3 1 3 53 21 — 107 
90 days or more past due— — — — — — 5 4 — 9 
Nonperforming2 3 4 1 — 7 48 75 1 141 
Total4,972 2,641 1,731 695 190 435 10,863 3,488 51 25,066 
Indirect auto:
Current10,699 6,691 4,293 2,158 1,081 504 — — 189 25,615 
30 - 89 days past due119 138 145 97 56 52 — — — 607 
90 days or more past due— — — — — 1 — — — 1 
Nonperforming28 48 61 41 21 19 — — — 218 
Total10,846 6,877 4,499 2,296 1,158 576 — — 189 26,441 
Indirect other:
Current4,333 2,724 1,638 937 455 691 — — 33 10,811 
30 - 89 days past due14 15 15 12 4 4 — — — 64 
90 days or more past due1 1 1 — — — — — — 3 
Nonperforming1 1 1 — — 2 — — — 5 
Total4,349 2,741 1,655 949 459 697 — — 33 10,883 
Student:
Current— 21 88 73 61 5,122 — — (8)5,357 
30 - 89 days past due— — 1 1 1 552 — — — 555 
90 days or more past due— — — — 1 867 — — — 868 
Total— 21 89 74 63 6,541 — — (8)6,780 
Credit card:
Current4,711 24 — 4,735 
30 - 89 days past due43 2 — 45 
90 days or more past due26 1 — 27 
Total— — — — — — 4,780 27 — 4,807 
Total$79,918 $41,719 $34,135 $20,029 $12,253 $36,138 $61,667 $3,515 $139 $289,513 
(1)Includes certain deferred fees and costs, unapplied payments, and other adjustments.

Truist Financial Corporation 15

ACL

The following tables present activity in the ACL:
(Dollars in millions)Balance at Jan 1, 2021Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Mar 31, 2021
Commercial:
Commercial and industrial$2,204 $(79)$19 $(8)$— $2,136 
CRE573 (4)1 (26)— 544 
Commercial construction81 (2)1 (3)— 77 
Consumer:
Residential mortgage368 (11)2 (16)— 343 
Residential home equity and direct714 (55)18 30 — 707 
Indirect auto1,198 (105)22 61 — 1,176 
Indirect other208 (17)6 (10)— 187 
Student130 (3)— 2 2 131 
Credit card359 (40)9 33 — 361 
ALLL5,835 (316)78 63 2 5,662 
RUFC364 — — (15)— 349 
ACL$6,199 $(316)$78 $48 $2 $6,011 
(Dollars in millions)Balance at Jan 1, 2022 Charge-OffsRecoveriesProvision (Benefit)Other (1)Balance at Mar 31, 2022
Commercial: 
Commercial and industrial$1,426 $(31)$17 $(93)$— $1,319 
CRE350 (1)1 (67)— 283 
Commercial construction52 (1)1 1 — 53 
Consumer:
Residential mortgage308 (2)6 (2)— 310 
Residential home equity and direct615 (58)20 (3)— 574 
Indirect auto1,022 (102)23 14 — 957 
Indirect other195 (19)6 29 — 211 
Student117 (6)— 3 1 115 
Credit card350 (41)9 30 — 348 
ALLL4,435 (261)83 (88)1 4,170 
RUFC260 — — (7)— 253 
ACL$4,695 $(261)$83 $(95)$1 $4,423 
(1)Includes the amounts for the ALLL for PCD acquisitions, and other activity.

The commercial ALLL decreased $173 million and the consumer ALLL decreased $90 million for the three months ended March 31, 2022. The decrease reflects a continued favorable credit environment tempered by uncertainty associated with inflation, supply chain disruption, rising rates, and geopolitical events.

The RUFC decreased $7 million for the three months ended March 31, 2022. The decrease reflects a continued favorable credit environment.

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

The primary economic forecast incorporates a third-party baseline forecast that is adjusted to reflect Truist’s interest rate outlook. Management also considers optimistic and pessimistic third-party macro-economic forecasts in order to capture uncertainty in the economic environment. These forecasts, along with the primary economic forecast, are weighted 40% baseline, 30% optimistic, and 30% pessimistic in the March 31, 2022 ACL, unchanged since December 31, 2021. The primary economic forecast shaping the ACL estimate at March 31, 2022 included GDP growth in the mid-single digits followed by a decline to the low-single digits through the end of 2022 and an unemployment rate starting in the low-single digits with improvement through the end of the reasonable and supportable period.

16 Truist Financial Corporation

Quantitative models have certain limitations with respect to estimating expected losses, particularly in times of rapidly changing macro-economic conditions and forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to be an important component of the ACL for the foreseeable future. The March 31, 2022 ACL estimate includes adjustments to consider the impact of current and expected events or risks not captured by the loss forecasting models, the outcomes of which are uncertain and may not be completely considered by quantitative models. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

NPAs

The following table provides a summary of nonperforming loans, excluding LHFS. Interest income recognized on nonperforming loans HFI was immaterial for the three months ended March 31, 2022 and 2021, respectively.
March 31, 2022December 31, 2021
Recorded InvestmentRecorded Investment
(Dollars in millions)Without an ALLLWith an ALLLWithout an ALLLWith an ALLL
Commercial: 
Commercial and industrial$139 $191 $125 $269 
CRE18 9 12 17 
Commercial construction— — — 7 
Consumer:
Residential mortgage5 310 4 292 
Residential home equity and direct3 138 3 138 
Indirect auto3 224 1 217 
Indirect other— 4 — 5 
Total$168 $876 $145 $945 

The following table presents a summary of nonperforming assets and residential mortgage loans in the process of foreclosure.
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Nonperforming loans and leases HFI$1,044 $1,090 
Nonperforming LHFS39 22 
Foreclosed real estate3 8 
Other foreclosed property49 43 
Total nonperforming assets$1,135 $1,163 
Residential mortgage loans in the process of foreclosure$208 $135 

TDRs

The following table presents a summary of TDRs:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Performing TDRs:  
Commercial:  
Commercial and industrial$104 $147 
CRE5 5 
Commercial construction1 — 
Consumer:
Residential mortgage866 692 
Residential home equity and direct91 98 
Indirect auto392 389 
Indirect other6 7 
Student25 25 
Credit card25 27 
Total performing TDRs1,515 1,390 
Nonperforming TDRs189 152 
Total TDRs$1,704 $1,542 
ALLL attributable to TDRs$87 $102 

Truist Financial Corporation 17

The primary type of modification for newly designated TDRs is summarized in the tables below. 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, 2022
(Dollars in millions)Type of ModificationPrior Quarter Loan BalanceALLL at Period End
RateStructure
Newly designated TDRs:
Commercial$— $8 $10 $— 
Consumer148 191 329 15 
Credit card2 — 2 1 
Re-modification of previously designated TDRs21 11 
As of / For the Three Months Ended March 31, 2021
Type of ModificationPrior Quarter Loan BalanceALLL at Period End
(Dollars in millions)RateStructure
Newly designated TDRs:
Commercial$27 $103 $147 $13 
Consumer75 155 233 13 
Credit card4 — 4 2 
Re-modification of previously designated TDRs14 14 

Charge-offs and forgiveness of principal and interest for TDRs were immaterial for all periods presented. The amount of modified loans that were classified as TDRs during the previous 12 months and experienced a payment default for three months ended March 31, 2022 and 2021 was immaterial. Payment default is defined as movement of the TDR to nonperforming status, foreclosure, or charge-off, whichever occurs first.

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

The following table presents additional information about loans and leases:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Unearned income, discounts, and net deferred loan fees and costs$537 $849 

18 Truist Financial Corporation

NOTE 6. Goodwill and Other Intangible Assets

The Company performed a qualitative assessment of current events and circumstances, including macroeconomic and market factors, industry and banking sector events, Truist specific performance indicators, and a comparison of management’s forecast and assumptions to those used in its October 1, 2021 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, 2022, and therefore no triggering event occurred that required a quantitative goodwill impairment test. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

The changes in the carrying amount of goodwill attributable to operating segments are reflected in the table below. Activity during 2022 reflects the acquisition of Kensington Vanguard National Land Services. Activity during 2021 primarily reflects the acquisitions of Service Finance, LLC, and Constellation Affiliated Partners. Refer to “Note 2. Business Combinations” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information on the acquisitions and “Note 18. Operating Segments” for additional information on segments.
(Dollars in millions)CB&WC&CBIHTotal
Goodwill, January 1, 2021$15,841 $6,167 $2,439 $24,447 
Mergers and acquisitions1,168 — 556 1,724 
Adjustments and other(139)(18)84 (73)
Goodwill, December 31, 202116,870 6,149 3,079 26,098 
Mergers and acquisitions— — 187 187 
Adjustments and other(1)— — (1)
Goodwill, March 31, 2022$16,869 $6,149 $3,266 $26,284 

The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:
 March 31, 2022December 31, 2021
(Dollars in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
CDI$2,563 $(1,267)$1,296 $2,563 $(1,190)$1,373 
Other, primarily client relationship intangibles
3,531 (1,134)2,397 3,116 (1,081)2,035 
Total$6,094 $(2,401)$3,693 $5,679 $(2,271)$3,408 

Truist redeemed a noncontrolling equity interest in SunTrust Merchant Services, LLC, and paid cash of $175 million in exchange for the rights to certain merchant banking relations, including relations previously referred by Truist to SunTrust Merchant Services, LLC. Upon completion of this transaction, Truist recognized a gain on the redemption of noncontrolling equity interest of $74 million and $282 million of other intangibles representing the fair value of acquired contractual relationships as of the transaction date. The intangible assets are being amortized over a term of 12 years based upon the estimated economic benefits received.
Truist Financial Corporation 19

NOTE 7. Loan Servicing

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

Residential Mortgage Activities
The following tables summarize residential mortgage servicing activities:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
UPB of residential mortgage loan servicing portfolio$246,664 $246,727 
UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate
195,737 196,011 
Mortgage loans sold with recourse221 244 
Maximum recourse exposure from mortgage loans sold with recourse liability137 155 
Indemnification, recourse and repurchase reserves73 74 
As of / For the Three Months Ended March 31,
(Dollars in millions)		20222021
UPB of residential mortgage loans sold from LHFS$8,818 $9,489 
Pre-tax gains recognized on mortgage loans sold and held for sale39 119 
Servicing fees recognized from mortgage loans serviced for others145 141 
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 others3.41 3.76 

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)		20222021
Residential MSRs, carrying value, January 1$2,305 $1,778 
Additions147 174 
Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds376 219 
OAS(26)141 
Realization of expected net servicing cash flows, passage of time and other(110)(209)
Residential MSRs, carrying value, March 31$2,692 $2,103 

The sensitivity of the fair value of the Company’s residential MSRs to changes in key assumptions is presented in the following table:
March 31, 2022December 31, 2021
RangeWeighted AverageRangeWeighted Average
(Dollars in millions)MinMaxMinMax
Prepayment speed10.0 %12.8 %11.1 %11.4 %15.3 %13.8 %
Effect on fair value of a 10% increase$(104)$(113)
Effect on fair value of a 20% increase(199)(216)
OAS1.2 %11.2 %4.3 %1.5 %10.7 %4.2 %
Effect on fair value of a 10% increase$(44)$(37)
Effect on fair value of a 20% increase(87)(73)
Composition of loans serviced for others:   
Fixed-rate residential mortgage loans99.3 %99.3 %
Adjustable-rate residential mortgage loans
0.7 0.7 
Total  100.0 %  100.0 %
Weighted average life  6.0 years  5.2 years

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 15. Fair Value Disclosures” for additional information on the valuation techniques used.

20 Truist Financial Corporation

Commercial Mortgage Activities

The following table summarizes commercial mortgage servicing activities:
As of/Year-to-Date Ended
(Dollars in millions)Mar 31, 2022Dec 31, 2021
UPB of CRE mortgages serviced for others$37,397 $37,960 
CRE mortgages serviced for others covered by recourse provisions9,938 10,243 
Maximum recourse exposure from CRE mortgages sold with recourse liability2,861 2,958 
Recorded reserves related to recourse exposure15 16 
CRE mortgages originated during the year-to-date period1,557 9,380 
Commercial MSRs at fair value280 280 

Other Servicing Activities

The Company had $41 million and $48 million of other loan servicing rights at fair value as of March 31, 2022 and December 31, 2021, respectively.

NOTE 8. Other Assets and Liabilities

Lessee Operating and Finance Leases

The Company leases certain assets, consisting primarily of real estate, and assesses at contract inception whether a contract is, or contains, a lease. The following tables present additional information on leases, excluding leases related to the lease financing businesses:
March 31, 2022December 31, 2021
(Dollars in millions)Operating LeasesFinance LeasesOperating LeasesFinance Leases
ROU assets$1,126 $22 $1,168 $22 
Lease liabilities1,529 26 1,600 26 
Weighted average remaining term6.5 years6.2 years6.6 years6.4 years
Weighted average discount rate2.3 %3.4 %2.3 %3.5 %
Three Months Ended March 31,
(Dollars in millions)20222021
Operating lease costs$85 $85 

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.
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Assets held under operating leases (1)$2,034 $2,110 
Accumulated depreciation (524)(539)
Net$1,510 $1,571 
(1) Includes certain land parcels subject to operating leases that have indefinite lives.

Bank-Owned Life Insurance

Bank-owned life insurance consists of life insurance policies held on certain teammates for which the Company is the beneficiary. 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 $7.5 billion at March 31, 2022 and $7.3 billion December 31, 2021.
Truist Financial Corporation 21

NOTE 9. Borrowings

The following table presents a summary of short-term borrowings:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Securities sold under agreements to repurchase$2,367 $2,435 
Collateral in excess of derivative exposures
380 318 
Master notes683 808 
Securities sold short1,717 1,731 
Total short-term borrowings$5,147 $5,292 

The following table presents a summary of long-term debt:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Truist Financial Corporation:
Fixed rate senior notes (1)$12,038 $13,271 
Floating rate senior notes (1)999 1,348 
Fixed rate subordinated notes (2)927 1,254 
Capital notes (2)621 620 
Structured notes (3)11 11 
Truist Bank:
Fixed rate senior notes (1)9,442 9,545 
Floating rate senior notes (1)2,398 2,399 
Fixed rate subordinated notes (2)4,908 5,043 
FHLB advances
860 863 
Other long-term debt (4)1,275 1,263 
Nonbank subsidiaries:
Other long-term debt (5)294 296 
Total long-term debt$33,773 $35,913 
(1)Prior period was revised to reclassify certain floating rate senior notes that were reported as fixed rate senior notes at December 31, 2021.
(2)Subordinated and capital notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.
(3)Consist of notes with various terms that include fixed or floating rate interest or returns that are linked to an equity index.
(4)Includes debt associated with finance leases, tax credit investments, and other.
(5)Includes debt associated with structured real estate leases.

NOTE 10. Shareholders’ Equity

Common Stock

The following table presents total dividends declared per share of common stock:
Three Months Ended March 31,
20222021
Cash dividends declared per share$0.48 $0.45 

Share Repurchase Activity

The Board of Directors has authorized the repurchase of up to $4.2 billion of the Company’s common stock through September 30, 2022. At March 31, 2022, Truist had remaining authorization to repurchase $2.6 billion of common stock under the Board approved repurchase plan. The amount of share repurchases is dependent on capital deployment through organic growth and acquisitions, giving consideration to economic and regulatory conditions.

22 Truist Financial Corporation

NOTE 11. AOCI

AOCI includes the after-tax change in unrecognized net costs related to defined benefit pension and OPEB plans as well as unrealized gains and losses on cash flow hedges, AFS securities, and HTM securities transferred from AFS securities.
Three Months Ended March 31, 2022 and 2021
(Dollars in millions)		Pension and OPEB CostsCash Flow HedgesAFS SecuritiesHTM SecuritiesOther, netTotal
AOCI balance, January 1, 2021$(875)$(64)$1,654 $— $1 $716 
OCI before reclassifications, net of tax28 — (2,408)— 1 (2,379)
Amounts reclassified from AOCI:     
Before tax9 47 136 — — 192 
Tax effect2 11 32 — — 45 
Amounts reclassified, net of tax7 36 104 — — 147 
Total OCI, net of tax35 36 (2,304)— 1 (2,232)
AOCI balance, March 31, 2021$(840)$(28)$(650)$— $2 $(1,516)
AOCI balance, January 1, 2022$(86)$(9)$(1,510)$— $1 $(1,604)
OCI before reclassifications, net of tax2 — (5,036)— 1 (5,033)
AFS Securities transferred to HTM, net of tax— — 2,872 (2,872)— — 
Amounts reclassified from AOCI:     
Before tax8 6 61 57 — 132 
Tax effect2 1 14 13 — 30 
Amounts reclassified, net of tax6 5 47 44 — 102 
Total OCI, net of tax8 5 (4,989)44 1 (4,931)
AOCI balance, March 31, 2022$(78)$(4)$(3,627)$(2,828)$2 $(6,535)
Primary income statement location of amounts reclassified from AOCI
Other expenseNet interest income and Other expenseSecurities gains (losses) and Net interest income Net interest incomeNet interest income

NOTE 12. Income Taxes

For the three months ended March 31, 2022 and 2021, the provision for income taxes was $330 million and $351 million, respectively, representing effective tax rates of 18.9% and 19.2%, respectively. The lower effective tax rate for the three months ended March 31, 2022 was primarily due to discrete tax expenses resulting from the divestiture of certain businesses in the prior 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 13. 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)Income Statement Location20222021
Service costPersonnel expense$139 $158 
Interest costOther expense88 79 
Estimated return on plan assetsOther expense(269)(249)
Amortization and otherOther expense8 8 
Net periodic (benefit) cost$(34)$(4)

Truist makes contributions to the qualified pension plans up to the maximum deductible for federal income tax purposes. Discretionary contributions totaling $351 million were made to the Truist pension plan during the three months ended March 31, 2022. There are no required contributions for 2022.

Truist Financial Corporation 23

NOTE 14. Commitments and Contingencies

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

Tax Credit and Certain Equity Investments

The following table summarizes certain tax credit and certain equity investments:
(Dollars in millions)Balance Sheet LocationMar 31, 2022Dec 31, 2021
Investments in affordable housing projects:  
Carrying amountOther assets$4,133 $4,107 
Amount of future funding commitments included in carrying amountOther liabilities1,346 1,285 
Lending exposureLoans and leases for funded amounts942 763 
Renewable energy investments:
Carrying amountOther assets199 257 
Amount of future funding commitments not included in carrying amountNA70 71 
Private equity and certain other equity method investments:
Carrying amountOther assets1,925 1,822 
Amount of future funding commitments not included in carrying amountNA435 411 

The following table presents a summary of tax credits and amortization associated with the Company’s tax credit investment activity:
Three Months Ended March 31,
(Dollars in millions)Income Statement Location20222021
Tax credits:
Investments in affordable housing projectsProvision for income taxes$127 $120 
Other community development investmentsProvision for income taxes23 23 
Renewable energy investmentsNA (1)37 39 
Amortization and other changes in carrying amount:
Investments in affordable housing projectsProvision for income taxes$124 $119 
Other community development investmentsOther noninterest income19 19 
Renewable energy investmentsOther noninterest income4 — 
(1)Tax credits received for these investments are recorded as a reduction to the carrying value of these investments.

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)Mar 31, 2022Dec 31, 2021
Commitments to extend, originate, or purchase credit$202,695 $198,658 
Residential mortgage loans sold with recourse221 244 
CRE mortgages serviced for others covered by recourse provisions9,938 10,243 
Other loans serviced for others covered by recourse provisions594 588 
Letters of credit5,818 5,568 

24 Truist Financial Corporation

Total Return Swaps

The Company facilitates matched book TRS transactions on behalf of clients, whereby a VIE purchases reference assets identified by a client and the Company enters into a TRS with the VIE, with a mirror-image TRS facing the client. The Company provides senior financing to the VIE in the form of demand notes to fund the purchase of the reference assets. Reference assets are typically fixed income instruments primarily composed of syndicated bank loans. The TRS contracts pass through interest and other cash flows on the reference assets to the third party clients, along with exposing those clients to decreases in value on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial margin collateral, as well as ongoing margin as the fair values of the underlying reference assets change. The following table provides a summary of the TRS transactions with VIE purchases. VIE assets include trading loans and bonds:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Total return swaps:
VIE assets$1,627 $1,519 
Trading loans and bonds1,602 1,491 
VIE liabilities104 50 

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. The activities of the VIEs are restricted to buying and selling the reference assets and the risks/benefits of any such assets owned by the VIEs are passed to the third party clients via the TRS contracts. For additional information on TRS contracts and the related VIEs, see “Note 16. Derivative Financial Instruments.”

Pledged Assets

Certain assets were pledged to secure municipal deposits, securities sold under agreements to repurchase, certain derivative agreements, and borrowings or borrowing capacity, as well as to fund certain obligations related to nonqualified defined benefit and defined contribution retirement plans and for other purposes as required or permitted by law. Assets pledged to the FHLB and FRB are subject to applicable asset discounts when determining borrowing capacity. The Company obtains secured financing and letters of credit from the FRB and FHLB. The Company’s letters of credit from the FHLB can be used to secure various client deposits, including public fund relationships. Excluding assets related to nonqualified benefit plans, the majority of the agreements governing the pledged assets do not permit the other party to sell or repledge the collateral. The following table provides the total carrying amount of pledged assets by asset type:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Pledged securities$28,614 $29,678 
Pledged loans:
FRB70,815 73,349 
FHLB60,151 64,698 
Unused borrowing capacity:
FRB51,876 52,170 
FHLB45,961 49,244 

Litigation and Regulatory Matters

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

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

Truist Financial Corporation 25

The Company estimates reasonably possible losses, in excess of amounts accrued, of up to approximately $200 million as of March 31, 2022. This estimate does not represent Truist’s maximum loss exposure, and actual losses may vary significantly. In addition, the matters underlying this estimate will change from time to time. Estimated losses are based upon currently available information and involve considerable judgment, given that claims often include significant legal uncertainties, damages alleged by plaintiffs are often unspecified or overstated, discovery may not have started or may not be complete, and material facts may be disputed or unsubstantiated, among other factors.

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

The following is a description of a certain legal 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, and seeks damages on a class-wide basis, including refunds of challenged overdraft fees and pre-judgment interest. On October 6, 2017, the trial court granted plaintiff’s motion for class certification and defined the class as “Every Georgia citizen who had or has one or more accounts with SunTrust Bank and who, from July 12, 2006, to October 6, 2017 (i) had at least one overdraft of $500.00 or less resulting from an ATM or debit card transaction (the “Transaction”); (ii) paid any Overdraft Fees as a result of the Transaction; and (iii) did not receive a refund of those Fees,” and the granting of a certified class was affirmed on appeal. On April 8, 2020, the Company filed a motion seeking to narrow the scope of this 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.

26 Truist Financial Corporation

NOTE 15. Fair Value Disclosures

Recurring Fair Value Measurements

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

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

The following tables present fair value information for assets and liabilities measured at fair value on a recurring basis:
March 31, 2022
(Dollars in millions)		TotalLevel 1Level 2Level 3Netting Adjustments (1)
Assets:    
Trading assets:
U.S. Treasury$965 $— $965 $— $— 
GSE391 — 391 — — 
Agency MBS - residential1,164 — 1,164 — — 
Agency MBS - commercial52 — 52 — — 
States and political subdivisions69 — 69 — — 
Corporate and other debt securities1,023 — 1,023 — — 
Loans1,933 — 1,933 — — 
Other323 273 50 — — 
Total trading assets5,920 273 5,647 — — 
AFS securities: 
U.S. Treasury9,412 — 9,412 — — 
GSE245 — 245 — — 
Agency MBS - residential68,238 — 68,238 — — 
Agency MBS - commercial2,659 — 2,659 — — 
States and political subdivisions370 — 370 — — 
Non-agency MBS3,803 — 3,803 — — 
Other26 — 26 — — 
Total AFS securities84,753 — 84,753 — — 
LHFS at fair value3,364 — 3,364 — — 
Loans and leases21 — — 21 — 
Loan servicing rights at fair value3,013 — — 3,013 — 
Other assets:
Derivative assets2,113 739 2,989 7 (1,622)
Equity securities1,024 812 212 — — 
Total assets$100,208 $1,824 $96,965 $3,041 $(1,622)
Liabilities:    
Derivative liabilities$1,482 $360 $4,128 $81 $(3,087)
Securities sold short1,717 13 1,704 — — 
Total liabilities$3,199 $373 $5,832 $81 $(3,087)
Truist Financial Corporation 27

December 31, 2021
(Dollars in millions)		TotalLevel 1Level 2Level 3Netting Adjustments (1)
Assets:    
Trading assets:
U.S. Treasury$125 $— $125 $— $— 
GSE306 — 306 — — 
Agency MBS - residential1,016 — 1,016 — — 
Agency MBS - commercial13 — 13 — — 
States and political subdivisions91 — 91 — — 
Corporate and other debt securities738 — 738 — — 
Loans1,791 — 1,791 — — 
Other343 285 58 — — 
Total trading assets4,423 285 4,138 — — 
AFS securities:    
U.S. Treasury9,795 — 9,795 — — 
GSE1,698 — 1,698 — — 
Agency MBS - residential134,042 — 134,042 — — 
Agency MBS - commercial2,882 — 2,882 — — 
States and political subdivisions420 — 420 — — 
Non-agency MBS4,258 — 4,258 — — 
Other28 — 28 — — 
Total AFS securities153,123 — 153,123 — — 
LHFS at fair value3,544 — 3,544 — — 
Loans and leases23 — — 23 — 
Loan servicing rights at fair value2,633 — — 2,633 — 
Other assets:    
Derivative assets2,370 887 3,110 30 (1,657)
Equity securities1,066 967 99 — — 
Total assets$167,182 $2,139 $164,014 $2,686 $(1,657)
Liabilities:    
Derivative liabilities$586 $438 $3,056 $42 $(2,950)
Securities sold short1,731 8 1,723 — — 
Total liabilities$2,317 $446 $4,779 $42 $(2,950)
(1)Refer to “Note 16. Derivative Financial Instruments” for additional discussion on netting adjustments.

At March 31, 2022 and December 31, 2021, investments totaling $495 million and $440 million, respectively, have been excluded from the table above as they are valued based on net asset value as a practical expedient. These investments primarily consist of certain SBIC funds.

For additional information on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities that are measured at fair value on a recurring basis, see “Note 18. Fair Value Disclosures” of the Annual Report on Form 10-K for the year ended December 31, 2021.

28 Truist Financial Corporation

Activity for Level 3 assets and liabilities is summarized below:
Three Months Ended March 31, 2022 and 2021
(Dollars in millions)		Loans and LeasesLoan Servicing RightsNet Derivatives
Balance at January 1, 2021$— $2,023 $172 
Total realized and unrealized gains (losses): 
Included in earnings— 374 (164)
Issuances— 192 96 
Settlements— (224)(114)
Balance at March 31, 2021$— $2,365 $(10)
Balance at January 1, 2022$23 $2,633 $(12)
Total realized and unrealized gains (losses):
Included in earnings— 357 (170)
Issuances— 158 17 
Settlements— (135)91 
Other(2)— — 
Balance at March 31, 2022$21 $3,013 $(74)
Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at March 31, 2022$— $357 $(45)
Primary income statement location of realized gains (losses) included in earnings
Other incomeResidential mortgage income and Commercial mortgage incomeResidential mortgage income and Commercial mortgage income

Fair Value Option

The following table details the fair value and UPB of certain loans that were elected to be measured at fair value:
 March 31, 2022December 31, 2021
(Dollars in millions)Fair ValueUPBDifferenceFair ValueUPBDifference
Trading loans$1,933 $1,944 $(11)$1,791 $1,784 $7 
Loans and leases21 23 (2)23 35 (12)
LHFS at fair value3,364 3,405 (41)3,544 3,450 94 

Nonrecurring Fair Value Measurements

The following table provides information about certain assets measured at fair value on a nonrecurring basis still held as of period end. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. These assets are considered to be Level 3 assets.
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Carrying value:
LHFS$141 $101 
Loans and leases429 443 
Other52 100 

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.
Three Months Ended March 31,
(Dollars in millions)20222021
Valuation adjustments:
LHFS$(3)$(16)
Loans and leases(97)(154)
Other(139)(95)

LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at LOCOM. The table above excludes $662 million and $1.2 billion of LHFS carried at cost at March 31, 2022 and December 31, 2021, respectively, that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value. LHFS that were classified as nonperforming and LHFS that were 90 days or more past due and still accruing interest were not material at March 31, 2022 and December 31, 2021.

Truist Financial Corporation 29

Loans and leases consists of larger commercial loans and leases that are collateral-dependent and other secured loans and leases that have been charged-off to the fair value of the collateral. Valuation adjustments for loans and leases are primarily recorded in the Provision for credit losses in the Consolidated statement of income. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional discussion of individually evaluated loans and leases.

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

Financial Instruments Not Recorded at Fair Value

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

An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets. In addition, changes in assumptions could significantly affect these fair value estimates. Financial assets and liabilities not recorded at fair value are summarized below:
March 31, 2022December 31, 2021
(Dollars in millions)Fair Value HierarchyCarrying AmountFair ValueCarrying AmountFair Value
Financial assets:
HTM securitiesLevel 2$61,662 $59,124 $1,494 $1,495 
Loans and leases HFI, net of ALLLLevel 3285,890 282,709 285,055 284,914 
Financial liabilities:  
Time depositsLevel 214,476 14,582 15,886 16,017 
Long-term debtLevel 233,773 33,275 35,913 36,251 

The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was $253 million and $260 million at March 31, 2022 and December 31, 2021, respectively.
30 Truist Financial Corporation

NOTE 16. Derivative Financial Instruments

Impact of Derivatives on the Consolidated Balance Sheets

The following table presents the gross notional amounts and estimated fair value of derivative instruments employed by the Company. Truist held no cash flow hedges as of March 31, 2022 and December 31, 2021.
 March 31, 2022December 31, 2021
 Notional AmountFair ValueNotional AmountFair Value
(Dollars in millions)AssetsLiabilitiesAssetsLiabilities
Fair value hedges:   
Interest rate contracts:   
Swaps hedging long-term debt $7,043 $— $(34)$12,690 $— $(6)
Swaps hedging AFS securities7,098 — — 12,711 — (2)
Total14,141 — (34)25,401 — (8)
Not designated as hedges:      
Client-related and other risk management:      
Interest rate contracts:      
Swaps153,378 733 (1,320)150,223 1,716 (733)
Options30,904 113 (95)23,659 43 (30)
Forward commitments4,118 29 (14)2,404 2 (5)
Other2,572 — (1)2,927 — — 
Equity contracts39,530 1,275 (1,630)34,232 1,582 (2,089)
Credit contracts:
Loans and leases630 — (1)570 — (2)
Risk participation agreements7,330 — (3)8,145 — (4)
Total return swaps1,515 8 (5)1,445 3 (19)
Foreign exchange contracts18,663 207 (204)16,102 160 (156)
Commodity6,338 1,152 (1,144)4,641 475 (468)
Total264,978 3,517 (4,417)244,348 3,981 (3,506)
Mortgage banking:      
Interest rate contracts:      
Swaps1,016 3 — 441 — — 
Interest rate lock commitments3,911 7 (51)4,163 30 (7)
When issued securities, forward rate agreements and forward commitments
7,129 147 (1)6,913 7 (15)
Other357 2 — 424 1 — 
Total12,413 159 (52)11,941 38 (22)
MSRs:      
Interest rate contracts:      
Swaps19,634 1 — 12,837 — — 
Options5,237 39 — 101 1 — 
When issued securities, forward rate agreements and forward commitments
2,856 19 (66)3,927 7 — 
Other1,273 — — 2,017 — — 
Total29,000 59 (66)18,882 8 — 
Total derivatives not designated as hedges306,391 3,735 (4,535)275,171 4,027 (3,528)
Total derivatives$320,532 3,735 (4,569)$300,572 4,027 (3,536)
Gross amounts in the Consolidated Balance Sheets:    
Amounts subject to master netting arrangements
(1,290)1,290  (1,312)1,312 
Cash collateral (received) posted for amounts subject to master netting arrangements
 (332)1,797  (345)1,638 
Net amount $2,113 $(1,482) $2,370 $(586)

Truist Financial Corporation 31

The following table presents the offsetting of derivative instruments including financial instrument collateral related to legally enforceable master netting agreements and amounts held or pledged as collateral. U.S. GAAP does not permit netting of non-cash collateral balances in the Consolidated Balance Sheets:
March 31, 2022
(Dollars in millions)		Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement$2,787 $(1,270)$1,517 $— $1,517 
Derivatives not subject to master netting arrangement or similar arrangement209 — 209 — 209 
Exchange traded derivatives739 (352)387 — 387 
Total derivative assets$3,735 $(1,622)$2,113 $— $2,113 
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement$(3,819)$2,735 $(1,084)$64 $(1,020)
Derivatives not subject to master netting arrangement or similar arrangement(390)— (390)— (390)
Exchange traded derivatives(360)352 (8)— (8)
Total derivative liabilities$(4,569)$3,087 $(1,482)$64 $(1,418)
December 31, 2021
(Dollars in millions)		Gross AmountAmount OffsetNet Amount in Consolidated Balance SheetsHeld/Pledged Financial InstrumentsNet Amount
Derivative assets:
Derivatives subject to master netting arrangement or similar arrangement$2,752 $(1,221)$1,531 $(1)$1,530 
Derivatives not subject to master netting arrangement or similar arrangement388 — 388 — 388 
Exchange traded derivatives887 (436)451 — 451 
Total derivative assets$4,027 $(1,657)$2,370 $(1)$2,369 
Derivative liabilities:
Derivatives subject to master netting arrangement or similar arrangement$(2,873)$2,514 $(359)$66 $(293)
Derivatives not subject to master netting arrangement or similar arrangement(225)— (225)— (225)
Exchange traded derivatives(438)436 (2)— (2)
Total derivative liabilities$(3,536)$2,950 $(586)$66 $(520)

The following table presents the carrying value of hedged items in fair value hedging relationships:
March 31, 2022December 31, 2021
Hedge Basis AdjustmentHedge Basis Adjustment
(Dollars in millions)Hedged Asset / Liability BasisItems Currently DesignatedDiscontinued HedgesHedged Asset / Liability BasisItems Currently DesignatedDiscontinued Hedges
AFS securities (1)$48,429 $(441)$(5)$108,758 $(400)$(150)
Loans and leases377 — 12 382 — 12 
Long-term debt24,562 (355)361 27,361 (137)629 
(1)The amortized cost of AFS securities was $51.3 billion at March 31, 2022 and $110.6 billion at December 31, 2021.

32 Truist Financial Corporation

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

Derivatives Designated as Hedging Instruments under GAAP

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

The following table summarizes amounts related to cash flow hedges, which consist of interest rate contracts.
Three Months Ended March 31,
(Dollars in millions)20222021
Pre-tax gain (loss) reclassified from AOCI into interest expense:
Deposits$— $(1)
Short-term borrowings— (5)
Long-term debt(6)(5)
Total$(6)$(11)
Pre-tax gain (loss) reclassified from AOCI into other expense: (1)
Deposits$— $(12)
Short-term borrowings— (20)
Long-term debt— (4)
Total$— $(36)
(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,
(Dollars in millions)20222021
AFS securities:
Amounts related to interest settlements$(5)$(11)
Recognized on derivatives414 524 
Recognized on hedged items
(402)(526)
Net income (expense) recognized7 (13)
Loans and leases:
Amounts related to interest settlements— — 
Recognized on derivatives— — 
Recognized on hedged items
(1)(1)
Net income (expense) recognized(1)(1)
Long-term debt:
Amounts related to interest settlements16 — 
Recognized on derivatives(429)— 
Recognized on hedged items
486 79 
Net income (expense) recognized73 79 
Net income (expense) recognized, total
$79 $65 

The following table presents information about the Company’s terminated cash flow and fair value hedges:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Cash flow hedges:
Net unrecognized after-tax gain (loss) on terminated hedges recorded in AOCI (to be recognized in earnings through 2022)
$(4)$(9)
Estimated portion of net after-tax gain (loss) on terminated hedges to be reclassified from AOCI into earnings during the next 12 months
(4)(9)
Fair value hedges:
Unrecognized pre-tax net gain (loss) on terminated hedges (to be recognized as interest primarily through 2030) (1)
$856 $767 
Portion of pre-tax net gain (loss) on terminated hedges to be recognized as a change in interest during the next 12 months
216 231 
(1)Includes deferred gains that are recorded in AOCI as a result of the reclassification to HTM of previously hedged securities of $502 million at March 31, 2022.

Derivatives Not Designated as Hedging Instruments under GAAP

The Company also enters into derivatives that are not designated as accounting hedges under GAAP to economically hedge certain risks as well as in a trading capacity with its clients.
Truist Financial Corporation 33


The following table presents pre-tax gain (loss) recognized in income for derivative instruments not designated as hedges:
Three Months Ended March 31,
(Dollars in millions)Income Statement Location20222021
Client-related and other risk management:
Interest rate contractsInvestment banking and trading income and other income$56 $102 
Foreign exchange contractsInvestment banking and trading income and other income32 26 
Equity contractsInvestment banking and trading income and other income5 (8)
Credit contractsInvestment banking and trading income and other income8 (34)
Commodity contractsInvestment banking and trading income5 2 
Mortgage banking:  
Interest rate contractsResidential mortgage income261 91 
Interest rate contractsCommercial mortgage income(1)(1)
MSRs:  
Interest rate contractsResidential mortgage income(349)(333)
Interest rate contractsCommercial mortgage income(9)(12)
Total$8 $(167)

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, risk participations, TRS, and credit default swaps. The Company accounts for these contracts as derivatives.

Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on the derivative due to a failure to pay by the counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At March 31, 2022, the remaining terms on these risk participations ranged from less than one year to 16 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming 100% default by all obligors on the maximum value.

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

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

The following table presents additional information related to interest rate derivative risk participation agreements and total return swaps:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Risk participation agreements:
Maximum potential amount of exposure
$327 $521 
Total return swaps:
Cash collateral held323 290 

34 Truist Financial Corporation

The following table summarizes collateral positions with counterparties:
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Dealer and other counterparties:
Cash and other collateral received from counterparties$332 $346 
Derivatives in a net gain position secured by collateral received450 506 
Unsecured positions in a net gain with counterparties after collateral postings
79 143 
Cash collateral posted to counterparties1,861 1,704 
Derivatives in a net loss position secured by collateral2,196 2,591 
Additional collateral that would have been posted had the Company’s credit ratings dropped below investment grade
2 3 
Central counterparties clearing:
Cash collateral, including initial margin, posted to central clearing parties— 31 
Derivatives in a net loss position7 18 
Derivatives in a net gain position86 — 
Securities pledged to central counterparties clearing797 904 

NOTE 17. 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)20222021
Net income available to common shareholders$1,327 $1,334 
Weighted average number of common shares1,329,037 1,345,666 
Effect of dilutive outstanding equity-based awards12,526 13,266 
Weighted average number of diluted common shares1,341,563 1,358,932 
Basic EPS$1.00 $0.99 
Diluted EPS$0.99 $0.98 
Anti-dilutive awards— 376 

NOTE 18. Operating Segments

Truist operates and measures business activity across three segments: CB&W, C&CB, and IH, with functional activities included in OT&C. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. For additional information, see “Note 21. Operating Segments” of the Annual Report on Form 10-K for the year ended December 31, 2021.

Truist Financial Corporation 35

The following table presents results by segment:
Three Months Ended March 31,
(Dollars in millions)		CB&WC&CBIHOT&C (1)Total
2022202120222021202220212022202120222021
Net interest income (expense)$1,529 $1,753 $1,093 $1,208 $24 $24 $537 $300 $3,183 $3,285 
Net intersegment interest income (expense)649 231 156 72 — — (805)(303)— — 
Segment net interest income2,178 1,984 1,249 1,280 24 24 (268)(3)3,183 3,285 
Allocated provision for credit losses74 100 (150)(35)— 1 (19)(18)(95)48 
Segment net interest income after provision2,104 1,884 1,399 1,315 24 23 (249)15 3,278 3,237 
Noninterest income950 920 619 692 737 633 (164)(48)2,142 2,197 
Amortization of intangibles73 79 33 38 31 27 — — 137 144 
Other noninterest expense1,846 1,836 724 737 529 453 438 440 3,537 3,466 
Income (loss) before income taxes1,135 889 1,261 1,232 201 176 (851)(473)1,746 1,824 
Provision (benefit) for income taxes271 208 276 266 49 43 (266)(166)330 351 
Segment net income (loss)$864 $681 $985 $966 $152 $133 $(585)$(307)$1,416 $1,473 
Identifiable assets (period end)$160,220 $159,541 $184,834 $183,241 $10,292 $8,062 $188,633 $166,693 $543,979 $517,537 
(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.

36 Truist Financial Corporation

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

MD&A is intended to assist readers in their analysis of the accompanying Consolidated Financial Statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements, the accompanying Notes to the Consolidated Financial Statements in this Form 10-Q, other information contained in this document, as well as with Truist’s Annual Report on Form 10-K for the year ended December 31, 2021.

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. The descriptions below summarize updates since the filing of the Annual Report on Form 10-K for the year ended December 31, 2021 to state and federal laws to which Truist is subject. These descriptions 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. Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional disclosures.

In March 2022, the U.S. enacted federal legislation that is intended to minimize legal and economic uncertainty following U.S. dollar LIBOR’s cessation by replacing LIBOR references in certain contracts under certain circumstances with a SOFR-based rate to be established in a forthcoming FRB rule that incorporates a spread adjustment specified in the statute. While some states have already adopted LIBOR legislation, the federal legislation expressly preempts any provision of any state or local law, statute, rule, regulation, or standard.

Executive Overview

The first quarter of 2022 marked a pivotal turning point for Truist as we completed our final core bank conversion and are positioned to focus on executional excellence. Our financial results for the first quarter of 2022 were solid, though underlying results were mixed in light of market volatility and geopolitical uncertainty. The continued favorable credit environment also led to a strong credit performance and a benefit from the provision for credit losses. Revenues were lower as a result of a challenging environment for investment banking and mortgage, but we remain confident in our outlook given expectations for higher interest rates, our diverse business model, and continued expense discipline. At the same time, we acknowledge the increasing uncertainty presented by a range of geopolitical and economic risks. See below for further updates on our final integration and ESG efforts and a more detailed discussion of our first quarter financial performance.

Merger Integration

Truist completed our largest conversion event during the first quarter of 2022, transitioning nearly seven million clients to the Truist ecosystem and rebranding more than 6,000 signs at branches, ATMs, and other locations. We now operate officially as one brand and one bank to our clients. This accomplishment was possible because of the expertise, purposeful commitment, and hard work of thousands of teammates. We remain guided by our purpose as we continue supporting our clients through the transition and look forward to shifting our focus to executional excellence and purposeful growth throughout this year.

ESG

Environmental

•Truist has joined the Partnership for Carbon Accounting Financials, and set 2030 goals to reduce Scope 1 and Scope 2 emissions by 35% each, and to reduce water consumption by 25%, relative to 2019.
•We announced our goal to achieve net zero greenhouse gas emissions by 2050, supporting our clients’ transition to a low-carbon economy.

Truist Financial Corporation 37

Social

•Truist continued to be ahead of schedule with regard to our $60 billion Community Benefits Plan commitment.
•In January 2022, Truist announced Truist One Banking, a first-of-its-kind approach to the checking account experience, designed to address clients’ direct feedback. Truist One Banking will be available to clients beginning in the summer of 2022. The Truist One checking account features will include: no overdraft fees; a $100 negative balance buffer for qualifying clients; an easily accessible, deposit-based line of credit of up to $750; and premium rewards that instantly recognize relationships and honor loyalty. In addition, Truist will offer an alternative checking account product created for clients who are new to credit and want simplicity and control without overdraft fees. It will help clients avoid high fees from check-cashing and payday lenders, bring many more households into mainstream banking, and create a pathway to upgrade to a Truist One checking account.
•In March 2022, Truist issued its first Social Bond Impact Report, which details the investments made from the bond proceeds and underscores the Company's commitment to advancing its ESG goals.
•In March 2022, Truist partnered with Connect Humanity to provide internet connectivity to historically marginalized communities.

Governance

•Truist made several leadership changes during 2022 as we continued to execute on the strategy first agreed upon in the Merger. Effective March 12, 2022, William H. Rogers, Jr. was appointed chairman of the board and Thomas E. Skains was appointed lead independent director. Rogers succeeds Kelly S. King, who stepped down from the role of chairman as previously announced. Skains succeeds David M. Ratcliffe. Both King and Ratcliffe remain on the board.
•In March 2022, Truist appointed Dontá L. Wilson to lead Retail and Small Business Banking. In his new role, Wilson will oversee Truist's branches across the Southeast, Mid-Atlantic, and Texas; ATMs; mortgage; card-based services; retail payments; deposit and loan products; small business delivery; retail loan approval channels; and brand, sports, performance, and digital marketing. Wilson assumes these responsibilities from Brant J. Standridge, who left Truist to pursue a new opportunity.
•In January 2022, Truist appointed Denise M. DeMaio as Chief Audit Officer, effective February 28, 2022. Denise joined the Executive Leadership team, leading Truist’s internal audit function, and providing counsel to senior management on emerging risk trends from the vantage points of governance, processes, technologies and reporting.

Financial Results

Net income available to common shareholders for the first quarter of 2022 of $1.3 billion was relatively stable compared with the first quarter of 2021. On a diluted per common share basis, earnings for the first quarter of 2022 were $0.99, an increase of $0.01 compared to the first quarter of 2021. Truist’s results of operations for the first quarter of 2022 produced an annualized return on average assets of 1.07% and an annualized return on average common shareholders’ equity of 9.0% compared to prior year returns of 1.17% and 8.7%, respectively. Results for the first quarter of 2022 included merger-related and restructuring charges of $216 million ($166 million after-tax), incremental operating expenses related to the Merger of $202 million ($155 million after-tax), a gain on the redemption of noncontrolling equity interest of $74 million ($57 million after-tax) related to the acquisition of certain merchant services relationships, and net losses on the sales of securities of $69 million ($53 million after-tax). Results for the first quarter of 2021 included $141 million ($108 million after-tax) of merger-related and restructuring charges, $175 million ($134 million after-tax) of incremental operating expenses related to the Merger, and an acceleration of loss recognition related to certain terminated cash flow hedges of $36 million ($28 million after-tax).

On a TE basis, revenue was $5.4 billion for the first quarter of 2022, a decrease of $159 million, or 2.9%, compared to the same period in 2021. TE net interest income for the first quarter of 2022 was down $104 million, or 3.1%, compared to the earlier quarter due to lower purchase accounting accretion, lower PPP fees, and a decrease in loan balances. These decreases were partially offset by growth in the securities portfolio and lower funding costs. Average earning assets increased $26.0 billion, or 5.9%, compared to the earlier quarter. The increase in average earning assets reflects a $30.4 billion, or 25%, increase in average securities, a $1.5 billion, or 8.7%, increase in average other earning assets, and a $1.1 billion, or 23%, increase in average interest earning trading assets, while average total loans and leases decreased $7.1 billion, or 2.4%. The growth in average earning assets is a result of the deployment of strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $32.1 billion, or 8.4%, compared to the earlier quarter, while average long-term debt decreased $2.5 billion, or 6.6%.

Net interest margin was 2.76%, down 25 basis points compared to the earlier quarter. The yield on the total loan portfolio for the first quarter of 2022 was 3.69%, down 40 basis points compared to the earlier quarter, reflecting the impact of lower purchase accounting accretion, lower PPP fees, and the ongoing impact of the lower rate environment. The yield on the average securities portfolio was 1.68%, up 23 basis points compared to the earlier quarter primarily due to higher yields on new purchases and lower premium amortization.

38 Truist Financial Corporation

The provision for credit losses was a benefit of $95 million, compared to a cost of $48 million for the earlier quarter. The current quarter includes a reserve release due to the continued favorable credit environment. Net charge-offs for the first quarter of 2022 totaled $178 million compared to $238 million in the earlier quarter. The net charge-off ratio for the current quarter of 0.25% was down eight basis points compared to the earlier quarter.

Noninterest income for the first quarter of 2022 decreased $55 million, or 2.5%, compared to the earlier quarter. The first quarter of 2022 includes net securities losses of $69 million and the gain on the redemption of noncontrolling equity interest (other income) of $74 million. The earlier quarter included a gain of $37 million from the divestiture of certain businesses (other income). Excluding the aforementioned items, noninterest income was down $23 million, or 1.1%. Insurance income increased $101 million, or 16%, due to continued organic growth and acquisitions. Investment banking and trading income decreased $85 million, or 25%, due to lower high yield bond and equity originations fees, lower core trading income, and lower CVA gains, partially offset by higher structured real estate fees. Residential mortgage income decreased $11 million, or 11%, as lower production income (due to margins and refinance volumes) was largely offset by higher servicing income (due to lower prepayments). Excluding the gain on the redemption of noncontrolling equity interest, the gain in the earlier quarter from the divestiture of certain businesses and a $67 million decrease for assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense, other income increased $56 million, due to higher investment income from the Company's SBIC and other investments.

Noninterest expense for the first quarter of 2022 was up $64 million, or 1.8%, compared to the earlier quarter. Merger-related and restructuring charges increased $75 million due to costs for client day one conversions. Incremental operating expenses related to the Merger increased $27 million, primarily reflected in net occupancy expense in connection with updating the branch network to incorporate the Truist brand. The prior quarter also includes $36 million of expense associated with an acceleration of loss recognition related to certain terminated cash flow hedges and a small gain on the extinguishment of debt. Excluding the aforementioned items and the amortization of intangibles, adjusted noninterest expense was relatively stable compared to the earlier quarter. Personnel expense decreased $91 million, or 4.2%, due to lower other employee benefits as a result of the decrease in noninterest income for post-retirement benefits, lower incentives (due to declines in noninterest income), and lower salaries driven by fewer FTEs. Additionally, other expense increased $29 million due to increased operational losses, software expense increased $22 million, and marketing and customer development expense increased $18 million due to increased branding efforts.

The provision for income taxes was $330 million for the first quarter of 2022, compared to $351 million for the earlier quarter. The effective tax rate for the first quarter of 2022 was 18.9%, compared to 19.2% for the earlier quarter, primarily due to discrete tax expenses resulting from the divestiture of certain businesses in the prior year.

Truist’s total assets at March 31, 2022 were $544.0 billion, an increase of $2.7 billion, or 0.5%, compared to December 31, 2021. Total deposits at March 31, 2022 were $428.3 billion, an increase of $11.8 billion, or 2.8%, compared to December 31, 2021. In April 2022, Truist redeemed $800 million notional of FHLB advances, which resulted in a gain on early extinguishment of long-term debt of $39 million.

Truist transferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies.

Asset quality remains excellent, reflecting Truist’s prudent risk culture, diverse portfolio, and the continued favorable credit environment.

Truist maintained strong capital and liquidity. As of March 31, 2022, the CET1 ratio was 9.4% and the average LCR was 111%. The 20 basis point decline compared to the fourth quarter 2021 CET1 ratio reflects capital deployed through the acquisition of Kensington Vanguard National Land Services, the acquisition of certain merchant services relationships, an increase in risk-weighted assets, and the impact from the phase-in of the CECL transition relief. Additionally, the Company had $1.7 billion of senior long-term debt maturities and redemptions. Truist declared common dividends of $0.48 per share in the first quarter of 2022, resulting in dividend and total payout ratios of 48%.
Truist Financial Corporation 39

Analysis of Results of Operations

Net Interest Income and NIM

First Quarter 2022 compared to First Quarter 2021

Net interest income for the first quarter of 2022 was down $104 million, or 3.1%, compared to the earlier quarter due to lower purchase accounting accretion, lower PPP fees, and a decrease in loan balances. These decreases were partially offset by growth in the securities portfolio and lower funding costs. Average earning assets increased $26.0 billion, or 5.9%, compared to the earlier quarter. The increase in average earning assets reflects a $30.4 billion, or 25%, increase in average securities, a $1.5 billion, or 8.7%, increase in average other earning assets, and a $1.1 billion, or 23%, increase in average interest earning trading assets, while average total loans and leases decreased $7.1 billion, or 2.4%. The growth in average earning assets is a result of the deployment of strong deposit growth resulting from fiscal and monetary stimulus. Average deposits increased $32.1 billion, or 8.4%, compared to the earlier quarter, while average long-term debt decreased $2.5 billion, or 6.6%.

Net interest margin was 2.76%, down 25 basis points compared to the earlier quarter. The yield on the total loan portfolio for the first quarter of 2022 was 3.69%, down 40 basis points compared to the earlier quarter, reflecting the impact of lower purchase accounting accretion, lower PPP fees, and the ongoing impact of the lower rate environment. The yield on the average securities portfolio was 1.68%, up 23 basis points compared to the earlier quarter primarily due to higher yields on new purchases and lower premium amortization.

The average cost of total deposits was 0.03%, down two basis points compared to the earlier quarter. The average cost of short-term borrowings was 0.60%, down 22 basis points compared to the earlier quarter. The average cost of long-term debt was 1.50%, down seven basis points compared to the earlier quarter. The lower rates on interest-bearing liabilities reflect the impact of repricing of liabilities at lower rates.

As of March 31, 2022, the remaining unamortized fair value marks on the loan and lease portfolio, deposits, and long-term debt were $1.1 billion, $5 million, and $122 million, respectively. As of December 31, 2021, the remaining unamortized fair value marks on the loan and lease portfolio, deposits and long-term debt were $1.3 billion, $7 million, and $139 million, respectively.

The remaining unamortized fair value mark on loans and leases consist of $624 million for consumer loans and leases, and $495 million for commercial loans and leases. These amounts will be recognized over the remaining contractual lives of the underlying instruments or as 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.
40 Truist Financial Corporation

Table 1: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1)
Three Months Ended March 31,
(Dollars in millions)		Average Balances (5)Annualized Yield/RateIncome/ExpenseIncr.
(Decr.)		Change due to
202220212022202120222021RateVolume
Assets         
Total securities, at amortized cost: (2)         
U.S. Treasury$9,890 $1,759 0.72 %0.89 %$18 $4 $14 $(1)$15 
GSE1,120 1,839 2.13 2.33 6 11 (5)(1)(4)
Agency MBS137,052 118,171 1.72 1.44 590 426 164 90 74 
States and political subdivisions374 444 3.72 3.52 3 4 (1)— (1)
Non-agency MBS4,224 — 2.25 — 24 — 24 — 24 
Other27 33 2.04 1.92 — — — — — 
Total securities152,687 122,246 1.68 1.45 641 445 196 88 108 
Interest earning trading assets5,837 4,742 3.04 2.79 43 32 11 3 8 
Other earning assets (3)18,932 17,417 0.63 0.37 30 16 14 13 1 
Loans and leases, net of unearned income: (4)        
Commercial and industrial138,872 141,026 2.88 3.14 987 1,093 (106)(90)(16)
CRE23,555 26,211 2.84 2.90 168 189 (21)(4)(17)
Commercial Construction5,046 6,557 3.05 3.04 35 48 (13)— (13)
Residential mortgage47,976 45,823 3.57 4.42 428 507 (79)(102)23 
Residential home equity and direct24,883 25,658 5.38 5.81 330 368 (38)(27)(11)
Indirect auto26,088 26,363 5.56 6.56 357 426 (69)(65)(4)
Indirect other10,860 10,848 6.32 6.98 169 187 (18)(18)— 
Student6,648 7,519 3.86 3.96 63 73 (10)(2)(8)
Credit card4,682 4,645 8.97 9.24 104 106 (2)(3)1 
Total loans and leases HFI288,610 294,650 3.70 4.11 2,641 2,997 (356)(311)(45)
LHFS3,874 4,891 2.87 2.59 28 32 (4)3 (7)
Total loans and leases292,484 299,541 3.69 4.09 2,669 3,029 (360)(308)(52)
Total earning assets469,940 443,946 2.90 3.20 3,383 3,522 (139)(204)65 
Nonearning assets66,041 64,887       
Total assets$535,981 $508,833       
Liabilities and Shareholders’ Equity        
Interest-bearing deposits:        
Interest-checking$112,159 $104,744 0.05 0.06 14 15 (1)(2)1 
Money market and savings141,500 129,303 0.03 0.03 11 10 1 — 1 
Time deposits15,646 20,559 0.18 0.44 7 22 (15)(11)(4)
Total interest-bearing deposits (6)269,305 254,606 0.05 0.07 32 47 (15)(13)(2)
Short-term borrowings6,944 6,731 0.60 0.82 10 14 (4)(4)— 
Long-term debt35,337 37,820 1.50 1.57 132 148 (16)(6)(10)
Total interest-bearing liabilities311,586 299,157 0.22 0.28 174 209 (35)(23)(12)
Noninterest-bearing deposits (6)145,933 128,579        
Other liabilities11,664 11,050        
Shareholders’ equity66,798 70,047        
Total liabilities and shareholders’ equity$535,981 $508,833        
Average interest-rate spread  2.68 %2.92 %     
NIM/net interest income - taxable equivalent  2.76 %3.01 %$3,209 $3,313 $(104)$(181)$77 
Taxable-equivalent adjustment    $26 $28    
(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 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) 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) Represents daily average balances. Excludes basis adjustments for fair value hedges.
(6) Total deposit costs were 0.03% and 0.05% for the three months ended March 31, 2022 and 2021, respectively.
Truist Financial Corporation 41

Provision for Credit Losses

First Quarter 2022 compared to First Quarter 2021

The provision for credit losses was a benefit of $95 million, compared to a cost of $48 million for the earlier quarter. The current quarter includes a reserve release due to the continued favorable credit environment. Net charge-offs for the first quarter of 2022 totaled $178 million compared to $238 million in the earlier quarter. The net charge-off ratio for the current quarter of 0.25% was down eight basis points compared to the earlier quarter.

Noninterest Income

Noninterest income is a significant contributor to Truist’s financial results. Management focuses on diversifying its sources of revenue to reduce Truist’s reliance on traditional spread-based interest income, as certain fee-based activities are a relatively stable revenue source during periods of changing interest rates.
Table 2: Noninterest Income
Three Months Ended March 31,
(Dollars in millions)20222021% Change
Insurance income$727 $626 16.1 %
Investment banking and trading income261 346 (24.6)
Wealth management income343 341 0.6 
Service charges on deposits252 258 (2.3)
Card and payment related fees212 200 6.0 
Residential mortgage income89 100 (11.0)
Lending related fees85 100 (15.0)
Operating lease income58 68 (14.7)
Commercial mortgage income32 33 (3.0)
Income from bank-owned life insurance51 50 2.0 
Securities gains (losses)(69)— NM
Other income101 75 34.7 
Total noninterest income$2,142 $2,197 (2.5)

First Quarter 2022 compared to First Quarter 2021

Noninterest income for the first quarter of 2022 decreased $55 million, or 2.5%, compared to the earlier quarter. The first quarter of 2022 includes net securities losses of $69 million and the gain on the redemption of noncontrolling equity interest (other income) of $74 million. The earlier quarter included a gain of $37 million from the divestiture of certain businesses (other income). Excluding the aforementioned items, noninterest income was down $23 million, or 1.1%. Insurance income increased $101 million, or 16%, due to continued organic growth and acquisitions. Investment banking and trading income decreased $85 million, or 25%, due to lower high yield bond and equity originations fees, lower core trading income, and lower CVA gains, partially offset by higher structured real estate fees. Residential mortgage income decreased $11 million, or 11%, as lower production income (due to lower margins and refinance volumes) was largely offset by higher servicing income (due to lower prepayments). Excluding the gain on the redemption of noncontrolling equity interest, the gain in the earlier quarter from the divestiture of certain businesses and a $67 million decrease for assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense, other income increased $56 million, due to higher investment income from the Company’s SBIC and other investments.

42 Truist Financial Corporation

Noninterest Expense

The following table provides a breakdown of Truist’s noninterest expense:
Table 3: Noninterest Expense
Three Months Ended March 31,
(Dollars in millions)20222021% Change
Personnel expense$2,051 $2,142 (4.2)%
Professional fees and outside processing363 350 3.7 
Software expense232 210 10.5 
Net occupancy expense208 209 (0.5)
Amortization of intangibles137 144 (4.9)
Equipment expense118 113 4.4 
Marketing and customer development84 66 27.3 
Operating lease depreciation48 50 (4.0)
Loan-related expense44 54 (18.5)
Regulatory costs35 25 40.0 
Merger-related and restructuring charges216 141 53.2 
Loss (gain) on early extinguishment of debt— (3)(100.0)
Other expense138 109 26.6 
Total noninterest expense$3,674 $3,610 1.8 

First Quarter 2022 compared to First Quarter 2021

Noninterest expense for the first quarter of 2022 was up $64 million, or 1.8%, compared to the earlier quarter. Merger-related and restructuring charges increased $75 million due to costs for client day one conversions. Incremental operating expenses related to the merger increased $27 million, primarily reflected in net occupancy expense in connection with updating the branch network to incorporate the Truist brand. The prior quarter also includes $36 million of expense associated with an acceleration of loss recognition related to certain terminated cash flow hedges and a small gain on the extinguishment of debt. Excluding the aforementioned items and the amortization of intangibles, adjusted noninterest expense was relatively stable compared to the earlier quarter. Personnel expense decreased $91 million, or 4.2%, due to lower other employee benefits as a result of the decrease in noninterest income for post-retirement benefits, lower incentives (due to declines in noninterest income), and lower salaries driven by fewer FTEs. Additionally, other expense increased $29 million due to increased operational losses, software expense increased $22 million, and marketing and customer development expense increased $18 million due to increased branding efforts.

Merger-Related and Restructuring Charges

The following table presents a summary of merger-related and restructuring charges and the related accruals. The 2022 and 2021 merger-related and restructuring costs primarily reflect charges as a result of the Merger, including costs for severance and other benefits, costs related to exiting facilities, and other restructuring initiatives.
Table 4: Merger-Related and Restructuring Accrual Activity
Three Months Ended March 31, 2022
(Dollars in millions)Accrual at Jan 1, 2022ExpenseUtilizedAccrual at Mar 31, 2022
Severance and personnel-related$77 $37 $(72)$42 
Occupancy and equipment— 98 (98)— 
Professional services37 64 (64)37 
Systems conversion and related costs
— 20 (17)3 
Other12 (3)(2)7 
Total (1)$126 $216 $(253)$89 
(1)Related to the Merger, the Company recognized $208 million for the three months ended March 31, 2022. At March 31, 2022, the Company had an accrual of $81 million related to the Merger. The remaining expense and accrual relate to other restructuring activities.

Truist Financial Corporation 43

Segment Results

Truist operates and measures business activity across three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings, with functional activities included in Other, Treasury, and Corporate. The Company’s business segment structure is based on the manner in which financial information is evaluated by management as well as the products and services provided or the type of client served. See “Note 18. Operating Segments” herein and “Note 21. Operating Segments” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional disclosures related to 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
 Three Months Ended March 31,
(Dollars in millions)20222021% Change
Consumer Banking and Wealth$864 $681 26.9 %
Corporate and Commercial Banking985 966 2.0 
Insurance Holdings152 133 14.3 
Other, Treasury & Corporate(585)(307)(90.6)
Truist Financial Corporation$1,416 $1,473 (3.9)

First Quarter 2022 compared to First Quarter 2021

Consumer Banking and Wealth

CB&W net income was $864 million for the first quarter of 2022, an increase of $183 million compared to the earlier quarter. Segment net interest income increased $194 million primarily driven by higher interest rates, favorable funding credit on deposits, and increased deposit balances, partially offset by lower purchase accounting accretion. The allocated provision for credit losses decreased $26 million reflecting the impact of a larger allowance release than the earlier quarter as well as lower charge offs. Noninterest income increased $30 million compared to the earlier quarter primarily due to the gain on the redemption of noncontrolling equity interest in the current quarter as well as an increase in card and payment fees driven by increased sales volume, partially offset by a gain from the divestiture of certain businesses in the earlier quarter and lower residential mortgage income. Noninterest expense was flat compared to the earlier quarter.

CB&W average loans and leases held for investment decreased $1.8 billion, or 1.4%, for the first quarter of 2022 compared to the earlier quarter, primarily driven by lower mortgage warehouse balances, home equity and other direct consumer lending as well as lower student lending along with lower partnership balances net of Service Finance balances resulting from acquisition, partially offset by increased residential mortgage balances and recreational lending. Average mortgage warehouse loans, home equity and other direct consumer loans, student lending balances, and partnership balances net of Service Finance balances resulting from acquisition declined $2.7 billion, or 51%, $947 million, or 5.2%, $871 million, or 12%, and $211 million, or 6.0%, respectively, while residential mortgage and recreational lending balances increased $2.1 billion, or 4.7%, and $193 million, or 6.6%, respectively.

Average total deposits increased $22.6 billion, or 9.8%, for the first quarter of 2022 compared to the earlier quarter, primarily driven by the impact of fiscal and monetary stimulus. Average money market and savings accounts, interest checking accounts, and noninterest-bearing deposits increased $10.1 billion, or 10%, $8.5 billion, or 17%, and $8.3 billion, or 13%, respectively, partially offset by a decline in time deposits of $4.3 billion, or 23%.

Corporate and Commercial Banking

C&CB net income was $985 million for the first quarter of 2022, an increase of $19 million compared to the earlier quarter. Segment net interest income decreased $31 million primarily due to lower fee income associated with PPP loan forgiveness and lower purchase accounting accretion, partially offset by higher funding credit on deposits and increases to noninterest-bearing deposit balances. The allocated provision for credit losses decreased $115 million primarily reflecting a reserve release due to continued favorable credit environment and lower charge offs in the current quarter. Noninterest income decreased $73 million compared to the earlier quarter due to lower high yield bond and equity originations fees, lower credit trading income, and lower CVA mark to market gains, partially offset by higher structured real estate fees as well as higher investment income from the Company’s SBIC and other investments. Noninterest expense decreased $18 million driven by lower professional fees and intangible amortization expense in the current quarter.

C&CB average loans held for investment decreased $3.7 billion, or 2.4%, for the first quarter of 2022 compared to the earlier quarter, primarily due to PPP loan forgiveness. Excluding PPP loans, Corporate and Commercial Banking average loans held for investment increased $4.6 billion, or 3.1%.

44 Truist Financial Corporation

Average total deposits increased $7.8 billion, or 5.4%, for the first quarter of 2022 compared to the earlier quarter, primarily due to the impact of fiscal and monetary stimulus. Average noninterest-bearing deposits increased $9.0 billion, or 14%, while interest bearing deposits decreased $1.2 billion, or 1.5%.

Insurance Holdings

IH net income was $152 million for the first quarter of 2022, an increase of $19 million compared to the earlier quarter. Noninterest income increased $104 million primarily due to continued organic growth and acquisitions. Noninterest expense increased $80 million primarily due to higher performance-based incentives and salaries.

Other, Treasury & Corporate

OT&C generated a net loss of $585 million in the first quarter of 2022, compared to a net loss of $307 million in the earlier quarter. Net interest income decreased $265 million primarily due to higher funding credit on deposits to other segments, partially offset by higher earnings in the securities portfolio from higher yields on new purchases and lower premium amortization. The allocated provision for credit losses was flat compared to the earlier quarter. Noninterest income decreased $116 million primarily due to securities losses in the current quarter and valuation changes from assets held for certain post-retirement benefits, which is primarily offset by lower personnel expense. Noninterest expense was flat compared to the earlier quarter.

Analysis of Financial Condition

Investment Activities

The securities portfolio totaled $146.4 billion at March 31, 2022, compared to $154.6 billion at December 31, 2021. The decrease was due primarily to declines in residential agency MBS and GSE securities as a result of prepayment activity. In the first quarter of 2022, Truist transferred $59.4 billion of AFS securities to HTM as the Company continues to execute upon its asset-liability management strategies.

As of March 31, 2022, approximately 5.6% of the securities portfolio was variable rate, excluding the impact of swaps, compared to 4.6% as of December 31, 2021. The effective duration of the securities portfolio was 6.9 years at March 31, 2022, compared to 5.8 years at December 31, 2021, excluding the impact of unsettled security purchases at period end.

U.S. Treasury, GSE, and Agency MBS represents 97% of the total securities portfolio as of March 31, 2022 and December 31, 2021. While the overwhelming majority of the portfolio remains in agency MBS securities, the Company also holds AAA rated non-agency MBS as the risk adjusted returns for these securities are more attractive than agency MBS.

Lending Activities

The following table presents the composition of average loans and leases:
Table 6: Average Loans and Leases
For the Three Months Ended
(Dollars in millions)
Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
Commercial:
Commercial and industrial$138,872 $134,804 $134,942 $138,539 $141,026 
CRE23,555 24,396 24,849 25,645 26,211 
Commercial construction5,046 5,341 5,969 6,359 6,557 
Consumer:
Residential mortgage47,976 47,185 45,369 43,605 45,823 
Residential home equity and direct24,883 25,146 25,242 25,238 25,658 
Indirect auto26,088 26,841 26,830 26,444 26,363 
Indirect other10,860 10,978 11,112 10,797 10,848 
Student6,648 6,884 7,214 7,396 7,519 
Credit card4,682 4,769 4,632 4,552 4,645 
Total average loans and leases HFI$288,610 $286,344 $286,159 $288,575 $294,650 

Average loans and leases held for investment for the first quarter of 2022 were $288.6 billion, up $2.3 billion, or 0.8%, compared to the fourth quarter of 2021. Excluding a $1.1 billion decrease in average PPP loans, average loans held for investment were up $3.3 billion, or 1.2%.

Truist Financial Corporation 45

Average commercial loans increased $2.9 billion, or 1.8%, as a result of $6.5 billion, or 5.1%, growth within the commercial and industrial portfolio, excluding PPP and mortgage warehouse lending. This growth was partially offset by a $1.4 billion decrease in mortgage warehouse lending (commercial and industrial), a $1.1 billion decrease in average PPP loans (commercial and industrial), an $841 million decrease in average CRE loans, and a $295 million decrease in average commercial construction loans.

Average consumer loans decreased $579 million, or 0.5% due to a $753 million decrease in indirect auto due to market dynamics and the competitive environment, a $263 million decrease in residential home equity and direct, and a $236 million decrease in student loans. The decreases were partially offset by a $791 million increase in residential mortgages due to the continued strategy to put certain correspondent channel production onto the balance sheet and lower prepayments.

At March 31, 2022 and December 31, 2021, 52% of loans and leases HFI were variable rate.
46 Truist Financial Corporation

Asset Quality

The following tables summarize asset quality information:
Table 7: Asset Quality
(Dollars in millions)Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
NPAs:
NPLs:
Commercial and industrial$330 $394 $423 $402 $474 
CRE27 29 20 25 58 
Commercial construction— 7 7 12 13 
Residential mortgage315 296 306 302 290 
Residential home equity and direct141 141 146 165 172 
Indirect auto227 218 172 148 158 
Indirect other4 5 6 6 6 
Total NPLs HFI1,044 1,090 1,080 1,060 1,171 
Loans held for sale39 22 76 78 72 
Total nonaccrual loans and leases1,083 1,112 1,156 1,138 1,243 
Foreclosed real estate3 8 9 13 18 
Other foreclosed property49 43 39 41 38 
Total nonperforming assets$1,135 $1,163 $1,204 $1,192 $1,299 
TDRs:
Performing TDRs:
Commercial and industrial$104 $147 $200 $202 $201 
CRE5 5 8 24 47 
Commercial construction1 — — — — 
Residential mortgage - government guaranteed622 480 507 520 535 
Residential mortgage - nonguaranteed244 212 205 207 198 
Residential home equity and direct91 98 105 107 109 
Indirect auto392 389 390 389 399 
Indirect other6 7 7 7 7 
Student - nonguaranteed25 25 23 13 8 
Credit card25 27 30 32 35 
Total performing TDRs1,515 1,390 1,475 1,501 1,539 
Nonperforming TDRs189 152 159 190 207 
Total TDRs$1,704 $1,542 $1,634 $1,691 $1,746 
Loans 90 days or more past due and still accruing:
Commercial and industrial$22 $13 $18 $14 $14 
Residential mortgage - government guaranteed996 978 823 929 935 
Residential mortgage - nonguaranteed31 31 29 47 40 
Residential home equity and direct12 9 7 7 11 
Indirect auto1 1 2 2 2 
Indirect other2 3 2 1 1 
Student - government guaranteed818 864 965 1,043 1,033 
Student - nonguaranteed4 4 3 3 4 
Credit card28 27 23 22 32 
Total loans 90 days or more past due and still accruing$1,914 $1,930 $1,872 $2,068 $2,072 
Loans 30-89 days past due and still accruing:
Commercial and industrial$280 $130 $135 $146 $152 
CRE13 20 4 7 9 
Commercial construction1 2 2 1 4 
Residential mortgage - government guaranteed216 256 264 307 330 
Residential mortgage - nonguaranteed326 258 231 236 247 
Residential home equity and direct142 107 81 73 82 
Indirect auto529 607 560 428 328 
Indirect other65 64 53 47 45 
Student - government guaranteed476 549 451 543 551 
Student - nonguaranteed6 6 5 5 5 
Credit card47 45 37 31 35 
Total loans 30-89 days past due and still accruing$2,101 $2,044 $1,823 $1,824 $1,788 

Truist Financial Corporation 47

Nonperforming assets totaled $1.1 billion at March 31, 2022, down $28 million compared to December 31, 2021 due to declines in the commercial and industrial portfolio. Nonperforming loans and leases held for investment were 0.36% of loans and leases held for investment at March 31, 2022, down two basis points compared to December 31, 2021.

Performing TDRs were up $125 million compared to the prior quarter primarily due to an increase in government guaranteed residential mortgages.

Loans 90 days or more past due and still accruing totaled $1.9 billion at March 31, 2022, down $16 million compared to the prior quarter. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.66% at March 31, 2022, down one basis point from the prior quarter. Excluding government guaranteed loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at March 31, 2022, up one basis point from December 31, 2021.

Loans 30-89 days past due and still accruing of $2.1 billion at March 31, 2022 were up one basis point compared to the prior quarter due to an increase in the commercial and industrial portfolio, partially offset by seasonal declines in the indirect auto portfolio and a decline in the student portfolio.

Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 7. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to “Note 5. Loans and ACL” for additional disclosures related to these potential problem loans.
Table 8: Asset Quality Ratios
Mar 31, 2022Dec 31, 2021
Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI
0.72 %0.71 %
Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI
0.66 0.67 
NPLs as a percentage of loans and leases HFI
0.36 0.38 
NPLs as a percentage of total loans and leases (1)0.37 0.38 
NPAs as a percentage of:
Total assets (1)
0.21 0.21 
Loans and leases HFI plus foreclosed property
0.38 0.39 
ALLL as a percentage of loans and leases HFI
1.44 1.53 
Ratio of ALLL to NPLs
3.99x4.07x
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 %0.03 %
(1)Includes LHFS.
(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student, and PPP loans. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio because collection of principal and interest is reasonably assured or the ratio might not be comparable to other periods presented or to other portfolios that do not have government guarantees.

Table 9: Asset Quality Ratios (Continued)
For the Three Months EndedMar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
Net charge-offs as a percentage of average loans and leases HFI:
Commercial:
Commercial and industrial0.04 %0.09 %0.04 %0.09 %0.17 %
CRE0.01 0.07 — (0.05)0.04 
Commercial construction(0.02)(0.10)(0.06)(0.06)0.08 
Consumer:
Residential mortgage(0.03)(0.02)0.04 (0.01)0.08 
Residential home equity and direct0.61 0.49 0.49 0.59 0.58 
Indirect auto1.23 1.01 0.75 0.63 1.28 
Indirect other0.48 0.39 0.26 0.17 0.39 
Student0.33 0.65 0.31 0.16 0.16 
Credit card2.77 2.31 1.90 2.75 2.74 
Total0.25 0.25 0.19 0.20 0.33 
Ratio of ALLL to net charge-offs5.78x6.14x8.79x8.98x5.87x
Ratios are annualized, as applicable.
48 Truist Financial Corporation

The following table presents activity related to NPAs:
Table 10: Rollforward of NPAs
(Dollars in millions)20222021
Balance, January 1$1,163 $1,387 
New NPAs395 563 
Advances and principal increases108 102 
Disposals of foreclosed assets (1)(112)(112)
Disposals of NPLs (2)(37)(41)
Charge-offs and losses(115)(112)
Payments(180)(300)
Transfers to performing status(101)(183)
Other, net14 (5)
Ending balance, March 31$1,135 $1,299 
(1)Includes charge-offs and losses recorded upon sale of $29 million and $46 million for the three months ended March 31, 2022 and 2021, respectively.
(2)Includes charge-offs and losses recorded upon sale of $3 million and $5 million for the three months ended March 31, 2022 and 2021, 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 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. For loan modification programs in response to the COVID-19 pandemic, Truist applied the relief from TDR accounting described in the CARES Act. Payment relief assistance provided by Truist includes forbearance, deferrals, extension, and re-aging programs, along with certain other modification strategies. Refer to “Note 1. Basis of Presentation” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for the policies related to TDRs and COVID-19 loan modifications. The following table provides a summary of performing TDR activity:
Table 11: Rollforward of Performing TDRs
(Dollars in millions)20222021
Balance, January 1$1,390 $1,361 
Inflows306 294 
Payments and payoffs (1)(60)(57)
Charge-offs(9)(13)
Transfers to nonperforming TDRs (2)(19)(13)
Removal due to the passage of time(71)(7)
Non-concessionary re-modifications(1)(12)
Transferred to LHFS, sold and other(21)(14)
Balance, March 31$1,515 $1,539 
(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.

Truist Financial Corporation 49

The following table provides further details regarding the payment status of TDRs outstanding at March 31, 2022:
Table 12: Payment Status of TDRs (1)
March 31, 2022
(Dollars in millions)		CurrentPast Due 30-89 DaysPast Due 90 Days Or MoreTotal
Performing TDRs:       
Commercial:
Commercial and industrial$102 98.1 %$2 1.9 %$— — %$104 
CRE5 100.0 — — — — 5 
Commercial construction1 100.0 — — — — 1 
Consumer:
Residential mortgage - government guaranteed290 46.6 58 9.3 274 44.1 622 
Residential mortgage - nonguaranteed210 86.1 25 10.2 9 3.7 244 
Residential home equity and direct85 93.4 6 6.6 — — 91 
Indirect auto336 85.7 56 14.3 — — 392 
Indirect other5 83.3 1 16.7 — — 6 
Student - nonguaranteed22 88.0 2 8.0 1 4.0 25 
Credit card22 88.0 2 8.0 1 4.0 25 
Total performing TDRs1,078 71.2 152 10.0 285 18.8 1,515 
Nonperforming TDRs57 30.2 24 12.7 108 57.1 189 
Total TDRs$1,135 66.6 $176 10.3 $393 23.1 $1,704 
(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.
50 Truist Financial Corporation

ACL

Activity related to the ACL is presented in the following tables:
Table 13: Activity in ACL
For the Three Months Ended
(Dollars in millions)		Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
Balance, beginning of period$4,695 $4,978 $5,436 $6,011 $6,199 
Provision for credit losses(95)(103)(324)(434)48 
Charge-offs:     
Commercial and industrial(31)(54)(57)(53)(79)
CRE(1)(5)(1)— (4)
Commercial construction(1)— — — (2)
Residential mortgage(2)(1)(7)(4)(11)
Residential home equity and direct(58)(51)(51)(57)(55)
Indirect auto(102)(89)(73)(69)(105)
Indirect other(19)(16)(13)(11)(17)
Student(6)(12)(6)(3)(3)
Credit card(41)(37)(31)(42)(40)
Total charge-offs(261)(265)(239)(239)(316)
Recoveries:     
Commercial and industrial17 23 42 23 19 
CRE1 — 1 4 1 
Commercial construction1 1 1 1 1 
Residential mortgage6 2 3 5 2 
Residential home equity and direct20 21 20 20 18 
Indirect auto23 21 22 27 22 
Indirect other6 6 5 7 6 
Student— — 1 — — 
Credit card9 9 9 10 9 
Total recoveries83 83 104 97 78 
Net charge-offs(178)(182)(135)(142)(238)
Other1 2 1 1 2 
Balance, end of period$4,423 $4,695 $4,978 $5,436 $6,011 
ACL:
ALLL$4,170 $4,435 $4,702 $5,121 $5,662 
RUFC253 260 276 315 349 
Total ACL$4,423 $4,695 $4,978 $5,436 $6,011 

Net charge-offs during the first quarter totaled $178 million, or 0.25% as a percentage of average loans, and was stable compared to the prior quarter.

The allowance for credit losses was $4.4 billion and includes $4.2 billion for the allowance for loan and lease losses and $253 million for the reserve for unfunded commitments. The ALLL ratio was 1.44% compared to 1.53% at December 31, 2021. The decrease reflects a continued favorable credit environment tempered by uncertainty associated with inflation, supply chain disruption, rising rates, and geopolitical events. The ALLL covered nonperforming loans and leases held for investment 3.99X compared to 4.07X at December 31, 2021. At March 31, 2022, the ALLL was 5.78X annualized net charge-offs, compared to 6.14X at December 31, 2021.

Truist Financial Corporation 51

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 14: Allocation of ALLL by Category
March 31, 2022December 31, 2021
(Dollars in millions)Amount% ALLL in Each Category% Loans in Each CategoryAmount% ALLL in Each Category% Loans in Each Category
Commercial and industrial$1,319 31.6 %48.6 %$1,426 32.2 %47.9 %
CRE283 6.8 7.9 350 7.9 8.3 
Commercial construction53 1.3 1.8 52 1.2 1.7 
Residential mortgage310 7.4 16.6 308 6.9 16.5 
Residential home equity and direct574 13.8 8.6 615 13.9 8.7 
Indirect auto957 22.9 8.9 1,022 23.0 9.1 
Indirect other211 5.1 3.8 195 4.4 3.8 
Student115 2.8 2.2 117 2.6 2.3 
Credit card348 8.3 1.6 350 7.9 1.7 
Total ALLL4,170 100.0 %100.0 %4,435 100.0 %100.0 %
RUFC253  260  
Total ACL$4,423  $4,695  

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

Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. Truist estimates second lien loans where the first lien is delinquent based on historical experience; the increased risk of loss on these credits is reflected in the ALLL. As of March 31, 2022, Truist held or serviced the first lien on 32% of its second lien positions.

Other Assets

The components of other assets are presented in the following table:
Table 15: Other Assets as of Period End
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Bank-owned life insurance$7,545 $7,281 
Tax credit and other private equity investments6,352 6,309 
Prepaid pension assets6,348 5,938 
Derivative assets2,113 2,370 
Accounts receivable2,323 2,244 
Leased assets and related assets2,162 2,092 
Accrued income1,875 1,791 
ROU assets1,126 1,168 
Prepaid expenses1,174 1,152 
Equity securities at fair value1,024 1,066 
Other1,428 738 
Total other assets$33,470 $32,149 

Funding Activities

Deposits

The following table presents average deposits:
Table 16: Average Deposits
Three Months Ended
(Dollars in millions)
Mar 31, 2022Dec 31, 2021Sep 30, 2021Jun 30, 2021Mar 31, 2021
Noninterest-bearing deposits$145,933 $146,492 $141,738 $137,892 $128,579 
Interest checking112,159 110,506 107,802 106,121 104,744 
Money market and savings141,500 137,676 136,094 134,029 129,303 
Time deposits15,646 16,292 17,094 18,213 20,559 
Total average deposits$415,238 $410,966 $402,728 $396,255 $383,185 

52 Truist Financial Corporation

Average deposits for the first quarter of 2022 were $415.2 billion, an increase of $4.3 billion, or 1.0%, compared to the prior quarter. Average noninterest bearing deposits declined 0.4% compared to the prior quarter and represented 35.1% of total deposits for the first quarter of 2022, compared to 35.6% for the prior quarter. Average interest checking and money market and savings grew 1.5% and 2.8%, respectively, compared to the prior quarter. Average time deposits decreased 4.0% primarily due to the maturity of higher-cost accounts.

Borrowings

At March 31, 2022, short-term borrowings totaled $5.1 billion, a decrease of $145 million compared to December 31, 2021. Average short-term borrowings were $6.9 billion or 1.5% of total funding for the first quarter of 2022, as compared to $6.7 billion or 1.6% for the prior year.

Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $33.8 billion at March 31, 2022, a decrease of $2.1 billion compared to December 31, 2021. During 2022, the Company had $1.4 billion of senior and $300 million of subordinated long-term debt redemptions. FHLB advances represented 2.5% of total outstanding long-term debt at March 31, 2022, compared to 2.4% at December 31, 2021. The average cost of long-term debt was 1.50% for the three months ended March 31, 2022, down seven basis points compared to the same period in 2021.

In April 2022, Truist redeemed $800 million of FHLB advances, which resulted in a gain on early extinguishment of long-term debt of $39 million. Additionally, Truist redeemed $1.4 billion of fixed rate senior notes and $650 million of floating rate senior notes that were due in May 2022.

Shareholders’ Equity

Total shareholders’ equity was $65.0 billion at March 31, 2022, a decrease of $4.2 billion from December 31, 2021. This decrease includes a decrease of $4.9 billion in AOCI, $725 million in dividends, partially offset by $1.4 billion in net income. Truist’s book value per common share at March 31, 2022 was $43.82, compared to $47.14 at December 31, 2021.

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 optimizing risk and return while operating in a safe and sound manner, and promoting compliance with applicable laws and regulations. The Company’s risk management framework promotes the execution of business strategies and objectives 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 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 adherence to and successful implementation of Truist’s risk values and associated policies and procedures. The 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 residual risks associated with integrating heritage BB&T and heritage SunTrust. While integration activities are largely complete, the Board and Executive Leadership oversee the change management program, which is designed to ensure appropriate oversight of application and data center decommissioning and residual integration activities, achieved through Truist’s risk management process.

Refer to Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional disclosures under the section titled “Risk Management.”

Truist Financial Corporation 53

Market Risk

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

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

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

Interest Rate Market Risk

As a financial institution, Truist is exposed to interest rate risk from assets, liabilities, and off-balance sheet positions. To keep net interest margin as stable as possible, 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. Truist primarily uses three methods to measure and monitor its interest rate risk: (i) simulations of possible changes to net interest income over the next two years based on gradual changes in interest rates; (ii) analysis of interest rate shock scenarios; and (iii) analysis of economic value of equity based on changes in interest rates.

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

Deposit betas (the sensitivity of deposit rate changes relative to market rate changes) are an important assumption in the interest rate risk modeling process. Truist applies deposit beta assumptions to non-maturity interest-bearing deposit accounts that are not contractually tied to an index 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 utilizes a tiered deposit beta assumption framework that accounts for historically observed behaviors of clients and the Company. The deposit beta assumptions are reduced when interest rates are exceptionally low and competition for interest-bearing deposits is commensurately low. As interest rates rise, the deposit beta assumptions also rise to reflect increasing competition among banks as well as increased client demand for interest-bearing deposits. Truist applies an average deposit beta of approximately 25% for the first 100 basis point increase in the Federal funds rate, approximately 35% for the second 100 basis point increase, and approximately 50% for any additional increases. Truist also regularly conducts sensitivity analyses on other key variables, including noninterest-bearing deposits, to determine the impact 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 17: Interest Sensitivity Simulation Analysis
Interest Rate ScenarioAnnualized Hypothetical Percentage Change in Net Interest Income
Gradual Change in Prime Rate (bps)Prime Rate
Mar 31, 2022Mar 31, 2021Mar 31, 2022Mar 31, 2021
Up 1004.50 %4.25 %4.27 %3.74 %
Up 504.00 3.75 3.29 2.92 
No Change3.50 3.25 — — 
Down 25 (1)3.25 3.00 (2.48)(1.32)
Down 50 (1)3.00 2.75 (3.46)(1.75)
(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 prior periods, primarily driven by a change to the Company’s deposit beta assumptions, partially offset by an increase in the investment securities portfolio.
54 Truist Financial Corporation


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 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 of Truist’s balance sheet because the Company may increase interest-bearing funds to offset the loss of this advantageous funding source. Alternatively, the Company may reduce the size of its investment portfolio to offset the loss of noninterest-bearing demand deposits to limit the impact on the balance sheet’s asset sensitivity.

The following table shows the results of Truist’s interest-rate sensitivity position assuming the loss of additional demand deposits and an associated increase in managed rate deposits versus current projections under various interest rate scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%.
Table 18: Deposit Mix Sensitivity Analysis
Gradual Change in Rates (bps)Base Scenario at March 31, 2022 (1)Results Assuming a Decrease in Noninterest-Bearing Demand Deposits
$20 Billion$40 Billion
Up 1004.27 %3.45 %2.63 %
Up 503.29 2.69 2.10 
(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at March 31, 2022 as presented in the preceding table.

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 hedges a portion of its AFS securities to reduce mark-to-market volatility within AOCI and also to increase its overall asset sensitivity position. Truist has utilized derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of March 31, 2022, Truist had derivative financial instruments outstanding with notional amounts totaling $320.5 billion, with an associated net fair value of $631 million. See “Note 16. Derivative Financial Instruments” for additional disclosures.

LIBOR Transition

For most tenors of U.S. dollar LIBOR, the administrator of LIBOR extended publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR and all non-U.S. dollar LIBOR, ceased publication at December 31, 2021, based on the October 20, 2021 interagency Joint Statement on Managing the LIBOR transition. To prepare for the transition to an alternative reference rate, management formed a cross-functional project team to address the LIBOR transition. The project team performed an assessment to identify the potential risks related to the transition from LIBOR to a new index or multiple indices and provides updates to Executive Leadership and the Board. As of March 31, 2022, Truist had outstanding LIBOR-based instruments that mature after June 30, 2023, including: loan and lease exposures totaling approximately $159 billion, notional derivative exposure totaling approximately $135 billion, long-term debt of $1.1 billion, and preferred stock of $1.5 billion. These amounts are inclusive of remediated contracts, which contain adequate fallback language for the transition.

Contract fallback language for existing loans and leases has largely been reviewed and certain contracts will require amendments to support the transition away from LIBOR. For impacted lines of business, the Company has started remediating these contracts to include standardized fallback language. Current fallback language used for new, renewed, and modified contracts is generally consistent with ARRC recommendations and includes use of “hardwired fallback” language, where appropriate.

The progress and approach to remediation will vary based on the type of contract and existing language used in the agreement. For commercial lending and general consumer lending, a significant number of remaining LIBOR contracts will require client outreach and remediation. Efforts to amend and remediate contracts, excluding mortgage and student loans, that mature post June 30, 2023 ($148 billion) will be accelerated in 2022. Truist has determined that adjustable rate mortgage products ($4.0 billion) have consistent and adequate fallback language to transition away from LIBOR in line with industry expectations; therefore, these contracts will not require remediation. Remediation of student loans ($5.8 billion) will depend on guidance from the Department of Education and recent guidance from the CFPB to allow transition to “comparable rates,” including SOFR or Prime. Certain derivatives without a clearly defined or practicable replacement benchmark rate will use the recent Federal legislation to replace LIBOR with a SOFR-based rate that will be established by FRB rulemaking. This legislation will also provide additional administrative benefit for a small portion of the commercial and consumer lending portfolios where contracts do not contain fallback language.

Truist Financial Corporation 55

Training has been provided for impacted teammates and will continue during 2022. Truist will continue to provide timely notices and information to impacted clients about the transition during 2022 and the first half of 2023. Truist continues to manage the impact of these contracts and other financial instruments, systems implications, hedging strategies, and related operational and market risks on established project plans for business and operational readiness to support the transition.

As of December 31, 2021, Truist ceased entering into new contracts with a LIBOR reference rate for all product offerings, except on a limited basis, as permissible. Market risks associated with this change are dependent on the alternative reference rates available and market conditions as of the transition. The Company is actively using SOFR as a reference rate and has originated approximately $30 billion of loans, issued $5 billion of long-term debt, and has $50 billion in notional derivative exposure using this alternative reference rate as of March 31, 2022. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry and will continue to offer additional SOFR based products during 2022. Additional alternative reference rates, such as Bloomberg Short Term Bank Yield will be supported based on market demand. Other emerging credit sensitive rates will be evaluated as additional alternatives for LIBOR based on market developments. 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 “Item1A. Risk Factors” in the Form 10-K for the year ended December 31, 2021.

Market risk from trading activities

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

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

Covered Trading Positions

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

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

Securitizations

As of March 31, 2022, the aggregate market value of on-balance sheet securitization positions subject to the Market Risk Rule was $33 million, all of which were non-agency asset backed securities positions. Consistent with the Market Risk Rule requirements, the Company performs pre-purchase due diligence on each securitization position to identify the characteristics including, but not limited to, deal structure and the asset quality of the underlying assets, that materially affect valuation and performance. Securitization positions are subject to Truist’s comprehensive risk management framework, which includes daily monitoring against a suite of limits. There were no off-balance sheet securitization positions during the reporting period.

Correlation Trading Positions

The trading portfolio of covered positions did not contain any correlation trading positions as of March 31, 2022.

56 Truist Financial Corporation

VaR-Based Measures

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

The trading portfolio’s VaR profile is influenced by a variety of factors, including the size and composition of the portfolio, market volatility, and the correlation between different positions. A portfolio of trading positions is typically less risky than the sum of the risk from each of the individual sub-portfolios, because, under normal market conditions, risk within each category partially offsets the exposure to other risk categories. The following table summarizes certain VaR-based measures for the three months ended March 31, 2022 and 2021. Average one and ten day VaR measures declined from last year as heightened market volatility experienced during March 2020 aged out of the 12-month VaR look-back window.
Table 19: VaR-based Measures
Three Months Ended March 31,
20222021
(Dollars in millions)10-Day Holding Period1-Day Holding Period10-Day Holding Period1-Day Holding Period
VaR-based Measures:
Maximum$38 $14 $68 $16 
Average18 6 39 10 
Minimum9 3 3 3 
Period-end15 4 5 3 
VaR by Risk Class:
Interest Rate Risk4 2 
Credit Spread Risk4 4 
Equity Price Risk4 1 
Foreign Exchange Risk— — 
Portfolio Diversification(8)(5)
Period-end4 3 

Stressed VaR-based measures

Stressed VaR, another component of market risk capital, is calculated using the same internal models as used for the VaR-based measure. Stressed VaR is calculated over a ten-day holding period at a one-tail, 99% confidence level and employs a historical simulation approach based on a continuous twelve-month historical window selected to reflect a period of significant financial stress for the Company’s trading portfolio. The following table summarizes Stressed VaR-based measures:
Table 20: Stressed VaR-based Measures - 10 Day Holding Period
Three Months Ended March 31,
(Dollars in millions)20222021
Maximum$109 $72 
Average76 54 
Minimum59 26 
Period-end72 64 

Compared to the prior year, stressed VaR measures increased in 2022 primarily due to the normalization of market making inventory levels this year.

Specific Risk Measures

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

Truist Financial Corporation 57

VaR Model Backtesting

In accordance with the Market Risk Rule, the Company evaluates the accuracy of its VaR model through daily backtesting by comparing aggregate daily trading gains and losses (excluding fees, commissions, reserves, net interest income, and intraday trading) from covered positions with the corresponding daily VaR-based measures generated by the model. As illustrated in the following graph, VaR measures briefly increased in the first quarter of 2022 due to the increase in market volatility that normalized towards the end of the quarter. There were no Company-wide VaR backtesting exceptions during the twelve months ended March 31, 2022. The total number of Company-wide VaR backtesting exceptions over the preceding twelve months is used to determine the multiplication factor for the VaR-based capital requirement under the Market Risk Rule. The capital multiplication factor increases from a minimum of three to a maximum of four, depending on the number of exceptions. All Company-wide VaR backtesting exceptions are thoroughly reviewed in the context of VaR model use and performance. There was no change in the capital multiplication factor over the preceding twelve months.
tfc-20220331_g1.jpg
Model Risk Management

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

Stress Testing

The Company uses a comprehensive range of stress testing techniques to help monitor risks across trading desks and to augment standard daily VaR and other risk limits reporting. The stress testing framework is designed to quantify the impact of extreme, but plausible, stress scenarios that could lead to large unexpected losses. Stress tests include simulations for historical repeats and hypothetical risk factor shocks. All trading positions within each applicable market risk category (interest rate risk, equity risk, foreign exchange rate risk, credit spread risk, and commodity price risk) are included in the Company’s comprehensive stress testing framework. Management reviews stress testing scenarios on an ongoing basis and makes updates, as necessary, 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 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.

58 Truist Financial Corporation

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

Internal Liquidity Stress Testing

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

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

Contingency Funding Plan

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

LCR and HQLA

The LCR rule requires that Truist and Truist Bank maintain an amount of eligible HQLA that is sufficient to meet its estimated total net cash outflows over a prospective 30 calendar-day period of stress. Eligible HQLA, for purposes of calculating the LCR, is the amount of unencumbered HQLA that satisfy operational requirements of the LCR rule. Truist and Truist Bank are subject to the Category III reduced LCR requirements. Truist held average weighted eligible HQLA of $83.9 billion and Truist’s average LCR was 111% for the three months ended March 31, 2022.

Effective July 2021, Truist became subject to final rules implementing the NSFR, which are designed to ensure that banking organizations maintain a stable, long-term funding profile in relation to their asset composition and off-balance sheet activities. At March 31, 2022, the Company was compliant with this requirement.

Sources of Funds

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

Truist Bank maintains a number of diverse funding sources to meet its liquidity requirements. These sources include unsecured borrowings from the capital markets through the issuance of senior or subordinated bank notes, institutional CDs, overnight and term Federal funds markets, and retail brokered CDs. Truist Bank also maintains access to secured borrowing sources including FHLB advances, repurchase agreements, and the FRB discount window. The following table presents a summary of Truist Bank’s available secured borrowing capacity and eligible cash at the FRB:
Truist Financial Corporation 59

Table 21: Liquidity Sources
(Dollars in millions)Mar 31, 2022Dec 31, 2021
Unused borrowing capacity:
FRB$51,876 $52,170 
FHLB45,961 49,244 
Available investment securities (after haircuts)
110,327 116,600 
Available secured borrowing capacity208,164 218,014 
Eligible cash at the FRB23,060 14,714 
Total$231,224 $232,728 

At March 31, 2022, Truist Bank’s available secured borrowing capacity represented approximately 7.4 times the amount of wholesale funding maturities in one-year or less.

Parent Company

The Parent Company serves as the primary source of capital for the operating subsidiaries. The Parent Company’s assets consist primarily of cash on deposit with Truist Bank, equity investments in subsidiaries, advances to subsidiaries, and notes receivable from subsidiaries. The principal obligations of the Parent Company are payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, repurchases of common stock, and payments on long-term debt. See “Note 22. Parent Company Financial Information” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding dividends from subsidiaries and debt transactions.

Access to funding at the Parent Company is more sensitive to market disruptions. Therefore, Truist prudently manages cash levels at the Parent Company to cover a minimum of one year of projected cash outflows which includes unfunded external commitments, debt service, common and preferred dividends and scheduled debt maturities, without the benefit of any new cash inflows. Truist maintains a significant buffer above the projected one year of cash outflows. In determining the buffer, Truist considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, serving as a source of strength to Truist Bank, and being able to withstand sustained market disruptions that could limit access to the capital markets. At March 31, 2022 and December 31, 2021, the Parent Company had 30 months and 35 months, respectively, of cash on hand to satisfy projected cash outflows, and 19 months and 19 months, respectively, when including the payment of common stock dividends.

Credit Ratings

Credit ratings are forward-looking opinions of rating agencies as to the Company’s ability to meet its financial commitments and repay its securities and obligations in accordance with their terms of issuance. Credit ratings influence both borrowing costs and access to the capital markets. The Company’s credit ratings are continuously monitored by the rating agencies and are subject to change at any time. As Truist seeks to maintain high-quality credit ratings, management meets with the major rating agencies on a regular basis to provide financial and business updates and to discuss current outlooks and trends. See Item 1A, “Risk Factors” in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding factors that influence credit ratings and potential risks that could materialize in the event of downgrade in the Company’s credit ratings.

The credit ratings and outlooks of Truist and Truist Bank are unchanged from those presented in the Company’s 2021 Annual Report on Form 10-K.

Capital

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

60 Truist Financial Corporation

Truist regularly performs stress testing on its capital levels and is required to periodically submit the Company’s capital plans and stress testing results to the banking regulators. Management regularly monitors the capital position of Truist on both a consolidated and bank-level basis. In this regard, management’s overriding policy is to maintain capital at levels that are in excess of internal capital targets, which are above the regulatory “well capitalized” minimums. Management evaluates 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 minimum targets prompt a review of the planned capital actions included in Truist’s capital plan.
Table 22: Capital Requirements
 Minimum CapitalWell CapitalizedMinimum Capital Plus Stress Capital Buffer (1)
 TruistTruist Bank
CET1
4.5 %NA6.5 %7.0 %
Tier 1 capital6.0 6.0 %8.0 8.5 
Total capital8.0 10.0 10.0 10.5 
Leverage ratio4.0 NA5.0 NA
Supplementary leverage ratio3.0 NANANA
(1)Reflects a SCB of 2.5% applicable to Truist as of March 31, 2022. Truist’s SCB, received in the 2021 CCAR process, is effective from October 1, 2021 to September 30, 2022.

Truist’s capital ratios are presented in the following table:
Table 23: Capital Ratios - Truist Financial Corporation
(Dollars in millions, except per share data, shares in thousands)Mar 31, 2022Dec 31, 2021
Risk-based:(preliminary) 
CET1 capital to risk-weighted assets9.4 %9.6 %
Tier 1 capital to risk-weighted assets11.0 11.3 
Total capital to risk-weighted assets13.0 13.2 
Leverage ratio8.6 8.7 
Supplementary leverage ratio7.3 7.4 
Non-GAAP capital measure (1):  
Tangible common equity per common share$21.87 $25.47 
Calculation of tangible common equity (1):  
Total shareholders’ equity$65,044 $69,271 
Less:  
Preferred stock6,673 6,673 
Noncontrolling interests23 — 
Goodwill and intangible assets, net of deferred taxes29,229 28,772 
Tangible common equity$29,119 $33,826 
Risk-weighted assets$397,611 $390,886 
Common shares outstanding at end of period1,331,414 1,327,818 
(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist’s management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.

Capital ratios remained strong compared to the regulatory requirements for well capitalized banks. For the three months ended March 31, 2022, Truist paid $637 million in common stock dividends or $0.48 per share. The dividend and total payout ratios for the three months ended March 31, 2022 were 48%.

Truist CET1 ratio was 9.4% as of March 31, 2022. The 20 basis point decline compared to the fourth quarter 2021 CET1 ratio reflects capital deployed through the acquisition of Kensington Vanguard National Land Services, the acquisition of certain merchant services relationships, an increase in risk-weighted assets, and the impact from the phase in of the CECL transition relief.

Truist Financial Corporation 61

Share Repurchase Activity
Table 24: 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 2022— $— — $2,565 
February 2022— — — 2,565 
March 202247 58.02 — 2,565 
Total47 58.02 — 
(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. In June 2021, the Board of Directors increased, effective July 1, 2021, the previous repurchase authority to effectuate repurchases up to an additional $2.2 billion in shares of the Company’s common stock through September 30, 2022 (up to $4.2 billion in aggregate amount). With the additional authorization, the Company has $2.6 billion remaining for share repurchases.

Critical Accounting Policies

The accounting and reporting policies of Truist are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Truist’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities, and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in the consolidated financial position and/or consolidated results of operations, and related disclosures. Material estimates that are particularly susceptible to significant change include the determination of the ACL; determination of fair value for securities, MSRs, LHFS, trading loans, and derivative assets and liabilities; goodwill and other intangible assets; income taxes; and pension and postretirement benefit obligations. Understanding Truist’s accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. The critical accounting policies are discussed in MD&A in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021. 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, 2021. Disclosures regarding the effects of new accounting pronouncements are included in the “Note 1. Basis of Presentation” in this report. There have been no changes to the significant accounting policies during 2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

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

During the first quarter of 2022, Truist completed platform conversions related to its commercial, direct-to-consumer and mortgage lending portfolios, as well as platform conversions related to its deposits and payment processing systems. In connection with these activities, Truist fully integrated certain surviving applications into its general ledger accounting system. Internal controls and processes have been appropriately modified to address changes in key business applications and financial processes as a result of these implementations.

There were no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
62 Truist Financial Corporation


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to the Litigation and Regulatory Matters section in “Note 14. Commitments and Contingencies,” which is incorporated by reference into this item.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors disclosed in Truist’s Annual Report on Form 10-K for the year ended December 31, 2021. Additional risks and uncertainties not currently known to Truist or that management has deemed to be immaterial also may materially adversely affect Truist’s business, financial condition, or operating results.

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.

ITEM 6. EXHIBITS
Exhibit No.DescriptionLocation
3.1
Amended and Restated Bylaws of Truist Financial Corporation
10.1
Truist Financial Corporation 2022 Incentive Plan
10.2
Letter to the Board of Directors from William H. Rogers Jr. dated, April 14, 2022, waiving certain rights under his employment agreement
10.3
Form of Employee Restricted Stock Unit Agreement for the Truist Financial Corporation 2022 Incentive Plan
11Statement re computation of earnings per share.
31.1Certification 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.
31.2Certification 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.
32Certification 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.
101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema.Filed herewith.
101.CALXBRL Taxonomy Extension Calculation Linkbase.Filed herewith.
101.LABXBRL Taxonomy Extension Label Linkbase.Filed herewith.
101.PREXBRL Taxonomy Extension Presentation Linkbase.Filed herewith.
101.DEFXBRL Taxonomy Definition Linkbase.Filed herewith.
104Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits101).Filed herewith.
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 4, 2022By:/s/ Daryl N. Bible
  Daryl N. Bible
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date:May 4, 2022By:/s/ Cynthia B. Powell
  Cynthia B. Powell
Executive Vice President and Corporate Controller
(Principal Accounting Officer)

64 Truist Financial Corporation