Loans and ACL

6 Months Ended

Jun. 30, 2020

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


	Accruing
June 30, 2020 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:
Commercial and industrial	$	146,422	$	282	$	9	$	428	$	147,141
CRE	27,912		6		3		42		27,963
Commercial construction	6,877		1		—		13		6,891
Lease financing	5,716		10		1		56		5,783
Consumer:
Residential mortgage	50,249		703		521		198		51,671
Residential home equity and direct	26,626		108		9		192		26,935
Indirect auto	24,079		265		10		155		24,509
Indirect other	11,536		50		3		3		11,592
Student	6,564		442		478		—		7,484
Credit card	4,784		34		38		—		4,856

Total	$	310,765	$	1,901	$	1,072	$	1,087	$	314,825

	Accruing
December 31, 2019 (Dollars in millions)	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonperforming		Total
Commercial:
Commercial and industrial	$	129,873	$	94	$	1	$	212	$	130,180
CRE	26,817		5		—		10		26,832
Commercial construction	6,204		1		—		—		6,205
Lease financing	6,112		2		—		8		6,122
Consumer:
Residential mortgage	50,975		498		543		55		52,071
Residential home equity and direct	26,846		122		9		67		27,044
Indirect auto	23,771		560		11		100		24,442
Indirect other	11,011		85		2		2		11,100
Student	5,905		650		188		—		6,743
Credit card	5,541		56		22		—		5,619
PCI	2,126		140		1,218		—		3,484
Total	$	295,181	$	2,213	$	1,994	$	454	$	299,842

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


June 30, 2020 (Dollars in millions)	Amortized Cost Basis by Origination Year																											Revolving Credit	Loans Converted to Term	Other (1)
			2020			2019			2018			2017			2016			Prior									Total
Commercial:
Commercial and industrial:
Pass	$	25,664		$	22,605		$	15,180		$	9,756		$	5,963		$	11,545		$	50,186	$	10	$	(952)	$	139,957
Special mention	381			408			365			74			211			119			2,321		1		(1)		3,879
Substandard	220			233			306			161			93			248			1,612		1		3		2,877
Nonperforming	30			76			140			72			20			13			166		2		(91)		428
Total	26,295			23,322			15,991			10,063			6,287			11,925			54,285		14		(1,041)		147,141
CRE:
Pass	3,229			7,609			5,481			3,123			1,838			3,135			747		—		(83)		25,079
Special mention	118			557			512			163			180			219			5		—		—		1,754
Substandard	66			195			230			198			132			267			—		—		—		1,088
Nonperforming	—			3			2			3			9			24			1		—		—		42
Total	3,413			8,364			6,225			3,487			2,159			3,645			753		—		(83)		27,963
Commercial construction:
Pass	601			1,885			1,972			595			75			299			642		—		19		6,088
Special mention	16			26			141			40			11			1			—		—		—		235
Substandard	7			137			229			59			67			55			1		—		—		555
Nonperforming	—			2			10			11			—			—			3		—		(13)		13
Total	624			2,050			2,352			705			153			355			646		—		6		6,891
Lease financing:
Pass	609			1,656			1,056			993			323			1,131			—		—		(127)		5,641
Special mention	3			12			3			2			4			6			—		—		—		30
Substandard	—			10			4			7			2			33			—		—		—		56
Nonperforming	—			—			—			63			3			8			—		—		(18)		56
Total	612			1,678			1,063			1,065			332			1,178			—		—		(145)		5,783
Consumer:
Residential mortgage:
Performing	4,985			7,833			4,765			5,493			6,468			21,634			—		—		295		51,473
Nonperforming	—			2			6			4			8			178			—		—		—		198
Total	4,985			7,835			4,771			5,497			6,476			21,812			—		—		295		51,671
Residential home equity and direct:
Performing	2,875			4,991			2,698			1,323			784			1,667			10,576		1,811		18		26,743
Nonperforming	—			5			5			4			4			1			67		84		22		192
Total	2,875			4,996			2,703			1,327			788			1,668			10,643		1,895		40		26,935
Indirect auto:
Performing	4,206			8,581			4,850			3,026			1,699			878			976		—		138		24,354
Nonperforming	2			42			44			30			20			14			2		—		1		155
Total	4,208			8,623			4,894			3,056			1,719			892			978		—		139		24,509
Indirect other:
Performing	2,792			3,828			2,222			1,089			569			806			195		—		88		11,589
Nonperforming	—			1			—			—			—			2			—		—		—		3
Total	2,792			3,829			2,222			1,089			569			808			195		—		88		11,592
Student:
Performing	26			118			105			87			71			7,077			—		—		—		7,484
Nonperforming	—			—			—			—			—			—			—		—		—		—
Total	26			118			105			87			71			7,077			—		—		—		7,484
Credit card	—			—			—			—			—			—			4,816		37		3		4,856
Total	$	45,830		$	60,815		$	40,326		$	26,376		$	18,554		$	49,360		$	72,316	$	1,946	$	(698)	$	314,825

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

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


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


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

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

ACL

The following tables present activity in the ACL:









(Dollars in millions)	Balance at Apr 1, 2019		Charge-Offs		Recoveries		Provision (Benefit)		Other		Balance at Jun 30, 2019
Commercial:
Commercial and industrial	$	548	$	(22)	$	8	$	40	$	—	$	574
CRE	152		(18)		2		21		—		157
Commercial construction	44		—		1		(1)		—		44
Lease financing	11		—		—		(1)		—		10
Consumer:
Residential mortgage	225		(5)		—		4		—		224
Residential home equity and direct	103		(24)		8		19		—		106
Indirect auto	300		(79)		14		65		—		300
Indirect other	58		(12)		5		8		—		59

Credit card	112		(23)		3		21		—		113
PCI	8		—		—		—		—		8
ALLL	1,561		(183)		41		176		—		1,595
RUFC	98		—		—		(4)		—		94
ACL	$	1,659	$	(183)	$	41	$	172	$	—	$	1,689


(Dollars in millions)	Balance at Apr 1, 2020		Charge-Offs		Recoveries		Provision (Benefit)		Other (2)		Balance at Jun 30, 2020
Commercial:
Commercial and industrial	$	1,813	$	(123)	$	21	$	426	$	—	$	2,137
CRE	299		(14)		4		102		—		391
Commercial construction	88		—		7		39		—		134
Lease financing	79		(4)		—		(16)		—		59
Consumer:
Residential mortgage	427		(35)		2		36		1		431
Residential home equity and direct	607		(65)		15		137		3		697
Indirect auto	1,192		(80)		18		60		—		1,190
Indirect other	213		(20)		7		15		(2)		213
Student	146		(6)		1		(21)		3		123
Credit card	347		(50)		6		24		—		327

ALLL	5,211		(397)		81		802		5		5,702
RUFC	400		—		—		42		(11)		431
ACL	$	5,611	$	(397)	$	81	$	844	$	(6)	$	6,133



















(Dollars in millions)	Balance at Jan 1, 2019		Charge-Offs		Recoveries		Provision (Benefit)		Other		Balance at Jun 30, 2019
Commercial:
Commercial and industrial	$	546	$	(39)	$	14	$	53	$	—	$	574
CRE	142		(26)		2		39		—		157
Commercial construction	48		—		2		(6)		—		44
Lease financing	11		(1)		—		—		—		10
Consumer:
Residential mortgage	232		(10)		1		1		—		224
Residential home equity and direct	104		(44)		14		32		—		106
Indirect auto	298		(171)		27		146		—		300
Indirect other	58		(29)		9		21		—		59

Credit card	110		(47)		9		41		—		113
PCI	9		—		—		(1)		—		8
ALLL	1,558		(367)		78		326		—		1,595
RUFC	93		—		—		1		—		94
ACL	$	1,651	$	(367)	$	78	$	327	$	—	$	1,689

(Dollars in millions)	Balance at Jan 1, 2020 (1)		Charge-Offs		Recoveries		Provision (Benefit)		Other (2)		Balance at Jun 30, 2020
Commercial:
Commercial and industrial	$	560	$	(162)	$	38	$	797	$	904	$	2,137
CRE	150		(15)		4		170		82		391
Commercial construction	52		(3)		8		61		16		134
Lease financing	10		(6)		—		(39)		94		59
Consumer:
Residential mortgage	176		(46)		4		32		265		431
Residential home equity and direct	107		(133)		30		239		454		697
Indirect auto	304		(222)		41		249		818		1,190
Indirect other	60		(38)		14		27		150		213
Student	—		(14)		1		13		123		123
Credit card	122		(103)		14		119		175		327
PCI	8		—		—		—		(8)		—
ALLL	1,549		(742)		154		1,668		3,073		5,702
RUFC	340		—		—		69		22		431
ACL	$	1,889	$	(742)	$	154	$	1,737	$	3,095	$	6,133

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

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

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

The commercial ALLL increased $442 million and $853 million for the three and six months ended June 30, 2020, respectively. The increases are primarily attributed to a more pessimistic outlook with respect to future economic conditions driven by the COVID-19 pandemic and specific consideration of the risks associated with exposures to certain industries, including oil and gas, hospitality, and lending to small businesses. Excluding guaranteed PPP loans, loan growth, primarily driven by draws on existing credit facilities, was also a contributor to the increase in the allowance for the six months ended June 30, 2020.

The consumer ALLL increased $69 million and $199 million for the three and six months ended June 30, 2020, respectively. These increases reflect the impact of the more pessimistic outlook described above, with the largest quarterly and year-to-date increases seen in the unsecured portfolios and the nonprime auto lending portfolio.

The ALLL for credit card decreased $20 million and increased $30 million for the three and six months ended June 30, 2020, respectively. The decrease for the quarter reflects lower loan balances; the year-to-date increase reflects risks associated with COVID-19 and a more pessimistic economic outlook.

The RUFC increased $31 million and $22 million for the three and six months ended June 30, 2020, respectively. The net increase reflects the more pessimistic outlook with respect to future economic conditions driven by the COVID-19 pandemic partially offset by lower levels of unfunded commitments that resulted from first quarter draws on existing credit facilities and the sale of certain unfunded commitments.

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

The quantitative models have been designed to estimate losses using macro-economic forecasts over a reasonable and supportable forecast period, which management has determined to be two years, followed by a reversion to long-term historical loss conditions over a one-year period. These macro-economic forecasts include a number of key economic variables utilized in loss forecasting that include, but are not limited to, the US unemployment rate, US unemployment claims rate, US real GDP, Home Price Index, US Central Bank Policy Interest Rate and the Manheim Index.

The primary economic forecast incorporates a third-party baseline forecast that is adjusted to reflect Truist’s interest rate outlook. Management considered multiple macro-economic forecasts that reflected a range of possible outcomes in order to capture the changing severity of the pandemic and the associated economic disruption. The economic forecast shaping the ACL estimate at June 30, 2020 included an extended GDP recovery through the two-year reasonable and supportable forecast period and an initial double-digit unemployment followed by a continued sustained high single-digit level of unemployment.

Quantitative models have certain limitations with respect to estimating expected losses in times of rapidly changing macro-economic forecasts. As a result, management believes that the qualitative component of the ACL, which incorporates management’s expert judgment related to expected future credit losses, will continue to represent a significant portion of the ACL for the foreseeable future. The June 30, 2020 ACL estimate includes qualitative adjustments to adjust for limitations in modeled results with respect to forecasted economic conditions that are well outside of historic economic conditions used to develop the models and to give consideration to significant government relief programs, stimulus and client accommodations.

PCD Loan Activity

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


Six Months Ended June 30, 2020 (Dollars in millions)
Par value	$	287
ALLL at acquisition	(4)
Non-credit premium (discount)	1
Purchase price	$	284

Nonperforming and Impaired Loans

The following table provides a summary of nonperforming loans, excluding LHFS. Interest income recognized on nonperforming loans HFI was $7 million for the three months ended June 30, 2020 and $15 million for the six months ended June 30, 2020.



	Recorded Investment
June 30, 2020 (Dollars in millions)	Without an ALLL		With an ALLL
Commercial:
Commercial and industrial	$	85	$	343
CRE	10		32
Commercial construction	10		3
Lease financing	6		50
Consumer:
Residential mortgage	3		195
Residential home equity and direct	2		190
Indirect auto	—		155
Indirect other	—		3


Total	$	116	$	971

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



















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

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

TDRs

The following table presents a summary of TDRs:


(Dollars in millions)	Jun 30, 2020		Dec 31, 2019

Performing TDRs:
Commercial:
Commercial and industrial	$	57	$	47
CRE	22		6
Commercial construction	36		37
Lease financing	1		—
Consumer:
Residential mortgage	533		470
Residential home equity and direct	71		51
Indirect auto	342		333
Indirect other	4		5
Student	4		—
Credit card	37		31
Total performing TDRs	1,107		980
Nonperforming TDRs	111		82
Total TDRs	$	1,218	$	1,062
ALLL attributable to TDRs	$	221	$	132

The primary reason loan modifications were classified as TDRs is summarized below. Balances represent the recorded investment at the end 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 June 30, 2020														As of / For the Six Months Ended June 30, 2020
	Type of Modification						Prior Quarter Loan Balance		ALLL at Period End		Type of Modification						Prior Quarter Loan Balance	ALLL at Period End
(Dollars in millions)	Rate		Structure								Rate		Structure
Newly designated TDRs:
Commercial:
Commercial and industrial	$	5	$	1	$	12	$	1	$	33	$	4	$	48	$	3
CRE	23		1		16		2		24		1		17		2

Lease financing	—		—		—		—		1		—		1		—
Consumer:
Residential mortgage	67		32		105		5		144		47		199		10
Residential home equity and direct	11		5		16		—		28		10		39		1
Indirect auto	22		8		31		7		78		22		104		12
Indirect other	1		—		1		—		2		—		2		—
Student	—		3		3		—		—		4		4		—
Credit card	8		—		7		3		18		—		17		6
Re-modification of previously designated TDRs	8		5						26		6



	As of / For the Three Months Ended June 30, 2019														As of / For the Six Months Ended June 30, 2019
	Type of Modification						Prior Quarter Loan Balance		ALLL at Period End		Type of Modification						Prior Quarter Loan Balance	ALLL at Period End
(Dollars in millions)	Rate		Structure								Rate		Structure
Newly designated TDRs:
Commercial:
Commercial and industrial	$	24	$	3	$	27	$	4	$	50	$	6	$	46	$	7
CRE	—		1		1		—		1		1		4		—
Commercial construction	—		—		—		—		—		—		—		—
Lease financing	—		—		—		—		—		—		—		—
Consumer:
Residential mortgage	49		6		52		4		122		14		127		10
Residential home equity and direct	2		1		2		—		5		2		5		1
Indirect auto	49		1		52		10		96		2		103		21
Indirect other	1		—		1		—		2		—		2		—
Student	—		—		—		—		—		—		—		—
Credit card	5		—		5		2		11		—		11		5
Re-modification of previously designated TDRs	14		11						37		16

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

The re-default balance for modifications that had been classified as TDRs during the previous 12 months that experienced a payment default was $18 million and $21 million for the three months ended June 30, 2020 and 2019, respectively, and $39 million and $39 million for the six months ended June 30, 2020 and 2019, respectively. Payment default is defined as movement of the TDR to nonperforming status, foreclosure or charge-off, whichever occurs first.

NPAs

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


(Dollars in millions)	Jun 30, 2020		Dec 31, 2019

Nonperforming loans and leases HFI (1)	$	1,087	$	454
Nonperforming LHFS	102		107
Foreclosed real estate	43		82
Other foreclosed property	20		41
Total nonperforming assets	$	1,252	$	684

Residential mortgage loans in the process of foreclosure	$	241	$	409

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

Unearned Income, Discounts and Net Deferred Loan Fees and Costs

The following table presents additional information about loans and leases:


(Dollars in millions)	Jun 30, 2020		Dec 31, 2019

Unearned income, discounts and net deferred loan fees and costs, excluding PCI	$	3,080	$	4,069