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: June 30, 2023

Commission File Number: 1-10853

TRUIST FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

_________________________________________________________________

North Carolina		56-0939887
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
214 North Tryon Street
Charlotte,	North Carolina	28202
(Address of principal executive offices)		(Zip Code)
Registrant’s telephone number, including area code:		(336)	733-2000

_________________________________________________________________

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $5 par value	TFC	New York Stock Exchange
Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred Stock	TFC.PI	New York Stock Exchange
5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred Stock	TFC.PJ	New York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series O Non-Cumulative Perpetual Preferred Stock	TFC.PO	New York Stock Exchange
Depositary Shares each representing 1/1,000th interest in a share of Series R Non-Cumulative Perpetual Preferred Stock	TFC.PR	New York Stock Exchange

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large 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 June 30, 2023, 1,331,976,019 shares of the registrant’s common stock, $5 par value, were outstanding.

TABLE OF CONTENTS
TRUIST FINANCIAL CORPORATION
FORM 10-Q
June 30, 2023
		Page No.
PART I - Financial Information
	Glossary of Defined Terms	1
	Forward-Looking Statements	3
Item 1.	Financial Statements
	Consolidated Balance Sheets (Unaudited)	4
	Consolidated Statements of Income (Unaudited)	5
	Consolidated Statements of Comprehensive Income (Unaudited)	6
	Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)	7
	Consolidated Statements of Cash Flows (Unaudited)	8
	Notes to Consolidated Financial Statements (Unaudited)
	Note 1. Basis of Presentation	9
	Note 2. Business Combinations, Divestitures, and Noncontrolling Interests	11
	Note 3. Securities Financing Activities	11
	Note 4. Investment Securities	12
	Note 5. Loans and ACL	14
	Note 6. Goodwill and Other Intangible Assets	23
	Note 7. Loan Servicing	24
	Note 8. Other Assets and Liabilities	25
	Note 9. Borrowings	26
	Note 10. Shareholders’ Equity	27
	Note 11. AOCI	27
	Note 12. Income Taxes	28
	Note 13. Benefit Plans	28
	Note 14. Commitments and Contingencies	29
	Note 15. Fair Value Disclosures	33
	Note 16. Derivative Financial Instruments	37
	Note 17. Computation of EPS	41
	Note 18. Operating Segments	42
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Regulatory Considerations	44
	Executive Overview	44
	Analysis of Results of Operations	47
	Analysis of Financial Condition	56
	Risk Management	63
	Liquidity	68
	Capital	70
	Share Repurchase activity	71
	Critical Accounting Policies	72
Item 3.	Quantitative and Qualitative Disclosures About Market Risk (see Market Risk in MD&A)	63
Item 4.	Controls and Procedures	72
PART II - Other Information
Item 1.	Legal Proceedings	72
Item 1A.	Risk Factors	72
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 3.	Defaults Upon Senior Securities - (none)
Item 4.	Mine Safety Disclosures - (not applicable)
Item 5.	Other Information	72
Item 6.	Exhibits	73

Glossary of Defined Terms

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

Term	Definition
ACL	Allowance for credit losses
AFS	Available-for-sale
Agency MBS	Mortgage-backed securities issued by a U.S. government agency or GSE
ALLL	Allowance for loan and lease losses
AOCI	Accumulated other comprehensive income (loss)
Board	Truist’s Board of Directors
C&CB	Corporate and Commercial Banking, an operating segment
CB&W	Consumer Banking and Wealth, an operating segment
CCAR	Comprehensive Capital Analysis and Review
CDI	Core deposit intangible
CECL	Current expected credit loss model
CEO	Chief Executive Officer
CFTC	Commodity Futures Trading Commission
CFO	Chief Financial Officer
CET1	Common equity tier 1
Company	Truist Financial Corporation and its subsidiaries (interchangeable with “Truist” below)
COVID-19	Coronavirus disease 2019
CRE	Commercial real estate
DEI	Diversity, Equity & Inclusion
DTA	Deferred tax asset
EPS	Earnings per common share
Exchange Act	Securities Exchange Act of 1934, as amended
FDIC	Federal Deposit Insurance Corporation
FHLB	Federal Home Loan Bank
FHLMC	Federal Home Loan Mortgage Corporation
FNMA	Federal National Mortgage Association
FRB	Board of Governors of the Federal Reserve System
GAAP	Accounting principles generally accepted in the United States of America
GDP	Gross Domestic Product
Grandbridge	Grandbridge Real Estate Capital, LLC
GSE	U.S. government-sponsored enterprise
HFI	Held for investment
HQLA	High-quality liquid assets
HTM	Held-to-maturity
IH	Truist Insurance Holdings, LLC, 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
LIBOR Act	Adjustable Interest Rate (LIBOR) Act
LOCOM	Lower of cost or market
Market Risk Rule	Market risk capital requirements issued jointly by the OCC, U.S. Treasury, FRB, and FDIC
MBS	Mortgage-backed securities
MD&A	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Merger	Merger of BB&T Corporation and SunTrust Banks, Inc effective December 6, 2019
MRO	Model Risk Oversight
MSR	Mortgage servicing right
NA	Not applicable
NIM	Net interest margin, computed on a TE basis
NPA	Nonperforming asset
NPL	Nonperforming loan
NSFR	Net stable funding ratio
NYSE	New York Stock Exchange
OAS	Option adjusted spread
OCC	Office of the Comptroller of the Currency
OCI	Other comprehensive income (loss)
OPEB	Other post-employment benefit
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
ROU assets	Right-of-use assets
RUFC	Reserve for unfunded lending commitments
S&P	Standard & Poor’s
SBIC	Small Business Investment Company
SCB	Stress Capital Buffer

Truist Financial Corporation 1

Term	Definition
SEC	Securities and Exchange Commission
SOFR	Secured Overnight Financing Rate
TBA	To-be-announced
TBVPS	Tangible book value per common share
TDR	Troubled debt restructuring
TE	Taxable-equivalent
TRS	Total Return Swap
Truist	Truist Financial Corporation and its subsidiaries (interchangeable with the “Company” above)
Truist Bank	Truist Bank, formerly Branch Banking and Trust Company
U.S.	United States of America
U.S. Treasury	United States Department of the Treasury
UPB	Unpaid principal balance
USAA	United Services Automobile Association
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, 2022:

•changes in the interest rate environment, including the replacement of LIBOR as an interest rate benchmark, could adversely affect Truist’s revenue and expenses, the value of assets and obligations, including our portfolio of investment securities, and the availability and cost of capital, cash flows, and liquidity;

•Truist is subject to credit risk by lending or committing to lend money, 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, and may suffer losses if the value of collateral declines in stressed market conditions;

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

•Truist may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased expenses, including FDIC insurance premiums, and could affect our ability to attract and retain depositors and to borrow or raise capital;

•general economic or business conditions, either globally, nationally or regionally, may be less favorable than expected, including as a result of supply chain disruptions, inflationary pressures and labor shortages, and instability in global geopolitical matters, including due to an outbreak or escalation of hostilities, 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;

•the monetary and fiscal policies of the federal government and its agencies, including in response to higher inflation, could have a material adverse effect on the economy and Truist’s profitability;

•unexpected outflows of uninsured deposits may require us to sell investment securities at a loss;

•a loss of value of our investment portfolio could negatively impact market perceptions of Truist and could lead to deposit withdrawals;

•the effects of COVID-19 adversely impacted the Company’s operations and financial performance and similar adverse impacts resulting from pandemics could occur in future periods;

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

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

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

•Truist could fail 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 or compliance costs, 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 could damage Truist’s reputation and adversely impact business and revenues, including the effects of social media on market perceptions of Truist and banks generally;

•regulatory matters, litigation or other legal actions may result in, among other things, costs, fines, penalties, restrictions on Truist’s business activities, reputational harm, negative publicity, or other adverse consequences;

•Truist faces substantial legal and operational risks in safeguarding personal information;

•evolving legislative, accounting and regulatory standards, including with respect to climate, capital, and liquidity requirements, which may become more stringent in light of recent market events, such as long-term debt requirements, and results of regulatory examinations may adversely affect Truist’s financial condition and results of operations;

•increased scrutiny regarding Truist’s consumer sales practices, training practices, incentive compensation design, and governance could damage its reputation and adversely impact business and revenues;

•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;

•Truist faces 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;

•there are 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 could be adversely impacted, which could be exacerbated in the increased work-from-home environment as job markets may be less constrained by physical geography;

•Truist’s operations rely on its ability, and the ability of key external parties, to maintain appropriate-staffed workforces, and on the competence, trustworthiness, health and safety of teammates;

•Truist faces the risk of 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, cyberattacks, which have increased in frequency with 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 represented management’s views on the date they were 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)	Jun 30, 2023		Dec 31, 2022
Assets
Cash and due from banks	$	4,782	$	5,379
Interest-bearing deposits with banks	25,228		16,042
Securities borrowed or purchased under agreements to resell	2,315		3,181
Trading assets at fair value	4,097		4,905
AFS securities at fair value	68,965		71,801
HTM securities (fair value of $45,956 and $47,791, respectively)	55,958		57,713
LHFS (including $1,645 and $1,065 at fair value, respectively)	1,923		1,444
Loans and leases (including $16 and $18 at fair value, respectively)	322,092		325,991
ALLL	(4,606)		(4,377)
Loans and leases, net of ALLL	317,486		321,614
Premises and equipment	3,453		3,605
Goodwill	27,013		27,013
CDI and other intangible assets	3,403		3,672
Loan servicing rights at fair value	3,497		3,758
Other assets (including $1,715 and $1,582 at fair value, respectively)	36,429		35,128
Total assets	$	554,549	$	555,255
Liabilities
Noninterest-bearing deposits	$	121,831	$	135,742
Interest-bearing deposits	284,212		277,753
Short-term borrowings (including $1,585 and $1,551 at fair value, respectively)	24,456		23,422
Long-term debt	44,749		43,203
Other liabilities (including $3,128 and $2,971 at fair value, respectively)	15,620		14,598
Total liabilities	490,868		494,718
Shareholders’ Equity
Preferred stock	6,673		6,673
Common stock, $5 par value	6,660		6,634
Additional paid-in capital	35,990		34,544
Retained earnings	27,577		26,264
AOCI, net of deferred income taxes	(13,374)		(13,601)
Noncontrolling interests	155		23
Total shareholders’ equity	63,681		60,537
Total liabilities and shareholders’ equity	$	554,549	$	555,255
Common shares outstanding	1,331,976		1,326,829
Common shares authorized	2,000,000		2,000,000
Preferred shares outstanding	223		223
Preferred shares authorized	5,000		5,000

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

4 Truist Financial Corporation

CONSOLIDATED STATEMENTS OF INCOME

TRUIST FINANCIAL CORPORATION AND SUBSIDIARIES

Unaudited (Dollars in millions, except per share data, shares in thousands)	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Interest Income
Interest and fees on loans and leases	$	4,915	$	2,898	$	9,571	$	5,542
Interest on securities	749		675		1,501		1,315
Interest on other earning assets	512		100		889		173
Total interest income	6,176		3,673		11,961		7,030
Interest Expense
Interest on deposits	1,506		99		2,631		131
Interest on long-term debt	734		137		1,248		269
Interest on other borrowings	311		30		589		40
Total interest expense	2,551		266		4,468		440
Net Interest Income	3,625		3,407		7,493		6,590
Provision for credit losses	538		171		1,040		76
Net Interest Income After Provision for Credit Losses	3,087		3,236		6,453		6,514
Noninterest Income
Insurance income	935		825		1,748		1,552
Wealth management income	330		337		669		680
Investment banking and trading income	211		255		472		516
Service charges on deposits	240		254		489		506
Card and payment related fees	236		246		466		458
Mortgage banking income	99		100		241		221
Lending related fees	86		100		192		185
Operating lease income	64		66		131		124
Securities gains (losses)	—		(1)		—		(70)
Other income	92		66		119		218
Total noninterest income	2,293		2,248		4,527		4,390
Noninterest Expense
Personnel expense	2,256		2,102		4,437		4,153
Professional fees and outside processing	352		349		666		712
Software expense	237		234		451		466
Net occupancy expense	180		181		363		389
Amortization of intangibles	131		143		267		280
Equipment expense	92		114		202		232
Marketing and customer development	79		93		157		177
Operating lease depreciation	44		47		90		95
Regulatory costs	73		44		148		79
Merger-related and restructuring charges	54		121		117		337
Other expense	250		152		541		334
Total noninterest expense	3,748		3,580		7,439		7,254
Earnings
Income before income taxes	1,632		1,904		3,541		3,650
Provision for income taxes	287		372		681		702
Net income	1,345		1,532		2,860		2,948
Noncontrolling interests	36		1		38		2
Preferred stock dividends and other	75		77		178		165
Net income available to common shareholders	$	1,234	$	1,454	$	2,644	$	2,781
Basic EPS	$	0.93	$	1.09	$	1.99	$	2.09
Diluted EPS	0.92		1.09		1.98		2.08
Basic weighted average shares outstanding	1,331,953		1,330,160		1,330,286		1,329,601
Diluted weighted average shares outstanding	1,337,307		1,338,864		1,338,346		1,340,225

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net income	$	1,345	$	1,532	$	2,860	$	2,948
OCI, net of tax:
Net change in net pension and postretirement costs	8		5		(6)		13
Net change in cash flow hedges	(317)		49		(192)		54
Net change in AFS securities	(550)		(2,849)		303		(7,838)
Net change in HTM securities	65		92		120		136
Other, net	1		(2)		2		(1)
Total OCI, net of tax	(793)		(2,705)		227		(7,636)
Total OCI	$	552	$	(1,173)	$	3,087	$	(4,688)
Income Tax Effect of Items Included in OCI:
Net change in net pension and postretirement costs	$	3	$	3	$	—	$	5
Net change in cash flow hedges	(97)		15		(59)		16
Net change in AFS securities	(187)		(867)		75		(2,380)
Net change in HTM securities	17		27		32		40
Total income taxes related to OCI	$	(264)	$	(822)	$	48