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Defined Benefit Retirement Plans | International equity securities include a common/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Investments measured at fair value using the net asset value per share or equivalent as a practical expedient are not required to be classified in the fair value hierarchy. The pension plan held alternative investments valued using net asset values totaling $105 million and $199 million at December 31, 2017 and 2016, respectively. |
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| | | December 31, 2017 | | | | | | | | | | | | December 31, 2016 | | | | | | | | | | |
| (Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Total | | | | Level 1 | | | | Level 2 | | |
| Cash and cash-equivalents | | $ | 67 | | | $ | 67 | | | $ | — | | | $ | 179 | | | $ | 179 | | | $ | — | |
| U.S. equity securities | | 2,503 | | | | 1,333 | | | | 1,170 | | | | 1,892 | | | | 1,018 | | | | 874 | | |
| International equity securities | | 1,130 | | | | 195 | | | | 935 | | | | 839 | | | | 165 | | | | 674 | | |
| Fixed income securities | | 2,452 | | | | 10 | | | | 2,442 | | | | 1,914 | | | | 10 | | | | 1,904 | | |
| Total | | $ | 6,152 | | | $ | 1,605 | | | $ | 4,547 | | | $ | 4,824 | | | $ | 1,372 | | | $ | 3,452 | |
| TFC/10-K/0000092230-18-000021 |
NOTE 13. Commitments and Contingencies | Letters of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support borrowing arrangements, including commercial paper issuance, bond financing and similar transactions, the majority of which are to tax exempt entities. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary.BB&T invests in certain affordable housing projects throughout its market area as a means of supporting local communities. BB&T receives tax credits related to these investments. BB&T typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. BB&T typically provides financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. BB&T’s maximum potential exposure to losses relative to investments in VIEs is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity. Loans to these entities are underwritten in substantially the same manner as are other loans and are generally secured.BB&T has investments in and future funding commitments to private equity and certain other equity method investments. The majority of these investments are private equity funds that are consolidated into BB&T's financial statements. The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made.BB&T has sold certain mortgage-related loans that contain recourse provisions. These provisions generally require BB&T to reimburse the investor for a share of any loss that is incurred after the disposal of the property. BB&T also issues standard representations and warranties related to mortgage loan sales to GSEs. Refer to "Note 6. Loan Servicing" for additional disclosures related to these exposures.In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from pending litigation. BB&T also issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnification arrangements provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial position or results of operations of BB&T. |
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| | | December 31, | | | | | | |
| (Dollars in millions) | | 2017 | | | | 2016 | | |
| Letters of credit | | $ | 2,466 | | | $ | 2,786 | |
| Carrying amount of the liability for letters of credit | | 21 | | | | 27 | | |
| Investments in affordable housing projects: | | | | | | | | |
| Carrying amount | | 1,948 | | | | 1,719 | | |
| Amount of future funding commitments included in carrying amount | | 928 | | | | 738 | | |
| Lending exposure | | 561 | | | | 495 | | |
| Tax credits subject to recapture | | 471 | | | | 413 | | |
| Private equity investments | | 471 | | | | 417 | | |
| Future funding commitments to private equity investments | | 143 | | | | 199 | | |
| TFC/10-K/0000092230-18-000021 |
NOTE 14. Regulatory Requirements and Other Restrictions | As an approved seller/servicer, Branch Bank is required to maintain minimum levels of capital, as specified by various agencies, including the U.S. Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At December 31, 2017 and 2016, Branch Bank’s capital was above all required levels. |
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| | | December 31, 2017 | | | | | | | | | | | | | | | December 31, 2016 | | | | | | | | | | | | | |
| | | Actual Capital | | | | | | | Capital Requirements | | | | | | | | Actual Capital | | | | | | | Capital Requirements | | | | | | |
| (Dollars in millions) | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | |
| CET1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BB&T Corporation | | 10.2 | % | | $ | 18,051 | | | $ | 7,975 | | | $ | 11,519 | | | 10.2 | % | | $ | 18,050 | | | $ | 7,926 | | | $ | 11,449 | |
| Branch Bank | | 11.3 | | | 19,480 | | | | 7,752 | | | | 11,197 | | | | 11.5 | | | 19,839 | | | | 7,730 | | | | 11,166 | | |
| Tier 1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BB&T Corporation | | 11.9 | | | 21,102 | | | | 10,633 | | | | 14,177 | | | | 12.0 | | | 21,102 | | | | 10,568 | | | | 14,091 | | |
| Branch Bank | | 11.3 | | | 19,480 | | | | 10,336 | | | | 13,781 | | | | 11.5 | | | 19,839 | | | | 10,307 | | | | 13,743 | | |
| Total Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BB&T Corporation | | 13.9 | | | 24,653 | | | | 14,177 | | | | 17,722 | | | | 14.1 | | | 24,872 | | | | 14,091 | | | | 17,614 | | |
| Branch Bank | | 13.3 | | | 22,915 | | | | 13,781 | | | | 17,226 | | | | 13.6 | | | 23,289 | | | | 13,743 | | | | 17,179 | | |
| Leverage Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| BB&T Corporation | | 9.9 | | | 21,102 | | | | 8,567 | | | | 10,708 | | | | 10.0 | | | 21,102 | | | | 8,460 | | | | 10,576 | | |
| Branch Bank | | 9.4 | | | 19,480 | | | | 8,315 | | | | 10,394 | | | | 9.6 | | | 19,839 | | | | 8,249 | | | | 10,311 | | |
| TFC/10-K/0000092230-18-000021 |
NOTE 15. Parent Company Financial Statements | The transfer of funds in the form of dividends, loans or advances from bank subsidiaries to the Parent Company is restricted. Federal law requires loans to the Parent Company or its affiliates to be secured and at market terms and generally limits loans to the Parent Company or an individual affiliate to 10% of Branch Bank’s unimpaired capital and surplus. In the aggregate, loans to the Parent Company and all affiliates cannot exceed 20% of the bank’s unimpaired capital and surplus.Dividend payments to the Parent Company by Branch Bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. In general, dividends from Branch Bank to the Parent Company are limited by rules which compare dividends to net income for regulatory-defined periods. Furthermore, dividends are restricted by regulatory minimum capital constraints. |
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| Parent Company - Statements of Cash Flows | | Year Ended December 31, | | | | | | | | | | |
| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |
| Cash Flows From Operating Activities: | | | | | | | | | | | | |
| Net income | | $ | 2,415 | | | $ | 2,442 | | | $ | 2,123 | |
| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | |
| Equity in earnings of subsidiaries in excess of dividends from subsidiaries | | (558 | | ) | | (1,188 | | ) | | (273 | | ) |
| Other, net | | — | | | | (14 | | ) | | 35 | | |
| Net cash from operating activities | | 1,857 | | | | 1,240 | | | | 1,885 | | |
| Cash Flows From Investing Activities: | | | | | | | | | | | | |
| Proceeds from maturities, calls and paydowns of AFS securities | | 29 | | | | 27 | | | | 49 | | |
| Purchases of AFS securities | | (29 | | ) | | (31 | | ) | | (21 | | ) |
| Proceeds from maturities, calls and paydowns of HTM securities | | — | | | | 2 | | | | 27 | | |
| Investment in subsidiaries | | 1,100 | | | | (85 | | ) | | 17 | | |
| Advances to subsidiaries | | (6,958 | | ) | | (7,719 | | ) | | (7,461 | | ) |
| Proceeds from repayment of advances to subsidiaries | | 4,671 | | | | 6,975 | | | | 6,831 | | |
| Net cash from acquisitions and divestitures | | — | | | | (254 | | ) | | (595 | | ) |
| Other, net | | 1 | | | | — | | | | — | | |
| Net cash from investing activities | | (1,186 | | ) | | (1,085 | | ) | | (1,153 | | ) |
| Cash Flows From Financing Activities: | | | | | | | | | | | | |
| Net change in short-term borrowings | | (39 | | ) | | (60 | | ) | | 30 | | |
| Net change in long-term debt | | 1,319 | | | | 465 | | | | (92 | | ) |
| Repurchase of common stock | | (1,613 | | ) | | (520 | | ) | | — | | |
| Net cash from common stock transactions in connection with equity awards | | 108 | | | | 218 | | | | 68 | | |
| Net proceeds from preferred stock issued | | — | | | | 450 | | | | — | | |
| Cash dividends paid on common and preferred stock | | (1,179 | | ) | | (1,092 | | ) | | (937 | | ) |
| Other, net | | (4 | | ) | | 7 | | | | — | | |
| Net cash from financing activities | | (1,408 | | ) | | (532 | | ) | | (931 | | ) |
| Net Change in Cash and Cash Equivalents | | (737 | | ) | | (377 | | ) | | (199 | | ) |
| Cash and Cash Equivalents at Beginning of Period | | 7,115 | | | | 7,492 | | | | 7,691 | | |
| Cash and Cash Equivalents at End of Period | | $ | 6,378 | | | $ | 7,115 | | | $ | 7,492 | |
| TFC/10-K/0000092230-18-000021 |
NOTE 16. Fair Value Disclosures | The following discussion focuses on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities.A third-party pricing service is generally utilized in determining the fair value of the securities portfolio. Management independently evaluates the fair values provided by the pricing service through comparisons to other external pricing sources, review of additional information provided by the pricing service and other third party sources for selected securities and back-testing to compare the price realized on any security sales to the daily pricing information received from the pricing service. Fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. As described by security type below, additional inputs may be used, or some inputs may not be applicable. In the event that market observable data was not available, which would generally occur due to the lack of an active market for a given security, the valuation of the security would be subjective and may involve substantial judgment by management.Trading securities: Trading securities include various types of debt and equity securities, primarily consisting of debt securities issued by the U.S. Treasury, GSEs, or states and political subdivisions. The valuation techniques used for these investments are more fully discussed below.U.S. Treasury securities: Treasury securities are valued using quoted prices in active over the counter markets.GSE securities and agency MBS: GSE pass-through securities are valued using market-based pricing matrices that reference observable inputs including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE CMOs are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above.States and political subdivisions: These securities are valued using market-based pricing matrices that reference observable inputs including MSRB reported trades, issuer spreads, material event notices and benchmark yield curves.Non-agency MBS: Pricing matrices for these securities are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Non-agency MBS also include investments in Re-REMIC trusts that primarily hold non-agency MBS, which are valued based on broker pricing models that use baseline securities yields and tranche-level yield adjustments to discount cash flows modeled using market convention prepayment speed and default assumptions.Other securities: These securities consist primarily of mutual funds and corporate bonds. These securities are valued based on a review of quoted market prices for assets as well as through the various other inputs discussed previously.LHFS: Certain mortgage loans are originated to be sold to investors, which are carried at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage LHFS.MSRs: Residential MSRs are valued using an OAS valuation model to project cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, other observable market data. Commercial MSRs are valued using a cash flow valuation model that calculates the present value of estimated future net servicing cash flows. BB&T considers actual and expected loan prepayment rates, discount rates, servicing costs and other economic factors that are determined based on current market conditions. Derivative assets and liabilities: The fair values of derivatives are determined based on quoted market prices and internal pricing models that use market observable data. The fair values of interest rate lock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices adjusted for commitments that are not expected to fund and include the value attributable to the net servicing fees.Private equity investments: Private equity investments are measured at fair value based on the investment’s net asset value. In many cases there are no observable market values for these investments and therefore management must estimate the fair value based on a comparison of the operating performance of the company to multiples in the marketplace for similar entities. This analysis requires significant judgment, and actual values in a sale could differ materially from those estimated.Securities sold short: Securities sold short represent debt securities sold short that are entered into as a hedging strategy for the purposes of supporting institutional and retail client trading activities.The following table summarizes activity for Level 3 assets and liabilities: |
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| December 31, 2016 | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | | |
| Assets: | | | | | | | | | | | | | | | | |
| Trading securities | | $ | 748 | | | $ | 324 | | | $ | 424 | | | $ | — | |
| AFS securities: | | | | | | | | | | | | | | | | |
| U.S. Treasury | | 2,587 | | | | — | | | | 2,587 | | | | — | | |
| GSE | | 180 | | | | — | | | | 180 | | | | — | | |
| Agency MBS | | 21,264 | | | | — | | | | 21,264 | | | | — | | |
| States and political subdivisions | | 2,205 | | | | — | | | | 2,205 | | | | — | | |
| Non-agency MBS | | 679 | | | | — | | | | 172 | | | | 507 | | |
| Other | | 11 | | | | 8 | | | | 3 | | | | — | | |
| Total AFS securities | | 26,926 | | | | 8 | | | | 26,411 | | | | 507 | | |
| LHFS | | 1,716 | | | | — | | | | 1,716 | | | | — | | |
| MSRs | | 1,052 | | | | — | | | | — | | | | 1,052 | | |
| Derivative assets: | | | | | | | | | | | | | | | | |
| Interest rate contracts | | 814 | | | | — | | | | 807 | | | | 7 | | |
| Foreign exchange contracts | | 8 | | | | — | | | | 8 | | | | — | | |
| Total derivative assets | | 822 | | | | — | | | | 815 | | | | 7 | | |
| Private equity investments | | 362 | | | | — | | | | — | | | | 362 | | |
| Total assets | | $ | 31,626 | | | $ | 332 | | | $ | 29,366 | | | $ | 1,928 | |
| Liabilities: | | | | | | | | | | | | | | | | |
| Derivative liabilities: | | | | | | | | | | | | | | | | |
| Interest rate contracts | | $ | 998 | | | $ | — | | | $ | 978 | | | $ | 20 | |
| Foreign exchange contracts | | 5 | | | | — | | | | 5 | | | | — | | |
| Total derivative liabilities | | 1,003 | | | | — | | | | 983 | | | | 20 | | |
| Securities sold short | | 137 | | | | — | | | | 137 | | | | — | | |
| Total liabilities | | $ | 1,140 | | | $ | — | | | $ | 1,120 | | | $ | 20 | |
| TFC/10-K/0000092230-18-000021 |
NOTE 16. Fair Value Disclosures | (1)Amounts related to non-agency MBS are included in interest income, amounts related to MSRs and net derivatives are primarily included in mortgage banking income and amounts related to private equity investments are included in other income in the Consolidated Statements of Income.BB&T’s policy is to recognize transfers between levels as of the end of a reporting period. Transfers in and out of Level 3 are shown in the preceding tables. There were no transfers between Level 1 and Level 2 during 2017, 2016 or 2015.The non-agency MBS categorized as Level 3 represent ownership interest in various tranches of Re-REMIC trusts. These securities are valued at a discount, which is unobservable in the market, to the fair value of the underlying securities owned by the trusts. The Re-REMIC tranches do not have an active market and therefore are categorized as Level 3. At December 31, 2017, the fair value of the Re-REMIC non-agency MBS represented a discount of 21.1% to the fair value of the underlying securities owned by the Re-REMIC trusts.The majority of private equity investments are in SBIC qualified funds, which primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates on an approximately ratable basis through 2026, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes, among others. As of December 31, 2017, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner approval for transfer of ownership. BB&T’s investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. The significant unobservable inputs for these investments are EBITDA multiples that ranged from 5x to 14x, with a weighted average of 9x, at December 31, 2017.The following table details the fair value and UPB of LHFS that were elected to be carried at fair value: |
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| | | Non-agency MBS | | | | MSRs | | | | Net Derivatives | | | | Private Equity Investments | | |
| (Dollars in millions) | | | | |
| Balance at January 1, 2015 | | $ | 745 | | | $ | 844 | | | $ | 17 | | | $ | 329 | |
| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |
| Included in earnings (1) | | 23 | | | | 10 | | | | 81 | | | | 49 | | |
| Included in unrealized holding gains (losses) in OCI | | (45 | | ) | | — | | | | — | | | | — | | |
| Purchases | | — | | | | — | | | | 1 | | | | 81 | | |
| Issuances | | — | | | | 156 | | | | 74 | | | | — | | |
| Sales | | — | | | | — | | | | — | | | | (132 | | ) |
| Settlements | | (97 | | ) | | (130 | | ) | | (169 | | ) | | (38 | | ) |
| Transfers into Level 3 | | — | | | | — | | | | — | | | | — | | |
| Transfers out of Level 3 | | — | | | | — | | | | — | | | | — | | |
| Balance at December 31, 2015 | | 626 | | | | 880 | | | | 4 | | | | 289 | | |
| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |
| Included in earnings (1) | | 25 | | | | 63 | | | | 97 | | | | 20 | | |
| Included in unrealized net holding gains (losses) in OCI | | (45 | | ) | | — | | | | — | | | | — | | |
| Purchases | | — | | | | — | | | | — | | | | 106 | | |
| Issuances | | — | | | | 146 | | | | 82 | | | | — | | |
| Sales | | — | | | | — | | | | — | | | | (4 | | ) |
| Settlements | | (99 | | ) | | (160 | | ) | | (196 | | ) | | (49 | | ) |
| Transfers into Level 3 | | — | | | | — | | | | — | | | | — | | |
| Transfers out of Level 3 | | — | | | | — | | | | — | | | | — | | |
| Adoption of fair value option for commercial MSRs | | — | | | | 123 | | | | — | | | | — | | |
| Balance at December 31, 2016 | | 507 | | | | 1,052 | | | | (13 | | ) | | 362 | | |
| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |
| Included in earnings (1) | | 36 | | | | 48 | | | | 38 | | | | 58 | | |
| Included in unrealized net holding gains (losses) in OCI | | (40 | | ) | | — | | | | — | | | | — | | |
| Purchases | | — | | | | — | | | | — | | | | 142 | | |
| Issuances | | — | | | | 124 | | | | 43 | | | | — | | |
| Sales | | — | | | | — | | | | — | | | | (119 | | ) |
| Settlements | | (71 | | ) | | (168 | | ) | | (65 | | ) | | (26 | | ) |
| Transfers into Level 3 | | — | | | | — | | | | — | | | | — | | |
| Transfers out of Level 3 | | — | | | | — | | | | — | | | | (13 | | ) |
| Balance at December 31, 2017 | | $ | 432 | | | $ | 1,056 | | | $ | 3 | | | $ | 404 | |
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| Change in unrealized gains (losses) included in earnings for the year attributable to assets and liabilities still held at December 31, 2017 | | $ | 35 | | | $ | 48 | | | $ | 3 | | | $ | 12 | |
| TFC/10-K/0000092230-18-000021 |
NOTE 16. Fair Value Disclosures | Excluding government guaranteed, LHFS that were in nonaccrual status or 90 days or more past due and still accruing interest were not material at December 31, 2017.The following table provides information about certain financial assets measured at fair value on a nonrecurring basis, which are primarily collateral dependent and may be subject to liquidity adjustments. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end. These assets are considered to be Level 3 assets (excludes PCI). |
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| | | December 31, 2017 | | | | | | | | | | | | December 31, 2016 | | | | | | | | | | |
| (Dollars in millions) | | Fair Value | | | | Aggregate UPB | | | | Difference | | | | Fair Value | | | | Aggregate UPB | | | | Difference | | |
| LHFS reported at fair value | | $ | 1,099 | | | $ | 1,084 | | | $ | 15 | | | $ | 1,716 | | | $ | 1,736 | | | $ | (20 | ) |
| TFC/10-K/0000092230-18-000021 |
NOTE 16. Fair Value Disclosures | For financial instruments not recorded at fair value, estimates of fair value are based on relevant market data and information about the instrument. Values obtained relate to one trading unit without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications, estimated transaction costs that may result from bulk sales or the relationship between various instruments.An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions, currency and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates. The following assumptions were used to estimate the fair value of these financial instruments.Cash and cash equivalents and restricted cash: For these short-term instruments, the carrying amounts are a reasonable estimate of fair values.HTM securities: The fair values of HTM securities are based on a market approach using observable inputs such as benchmark yields and securities, TBA prices, reported trades, issuer spreads, current bids and offers, monthly payment information and collateral performance.Loans receivable: The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are deemed to be indicative of orderly transactions in the current market. For commercial loans and leases, discount rates may be adjusted to address additional credit risk on lower risk grade instruments. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using a LIBOR based rate. The carrying amounts of accrued interest approximate fair values.Deposit liabilities: The fair values for demand deposits are equal to the amount payable on demand. Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to aggregate expected maturities. BB&T has developed long-term relationships with its deposit customers, commonly referred to as CDIs, that have not been considered in the determination of the deposit liabilities’ fair value.Short-term borrowings: The carrying amounts of short-term borrowings, excluding securities sold short, approximate their fair values.Long-term debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.Contractual commitments: The fair values of commitments are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of guarantees and letters of credit are estimated based on the counterparties’ creditworthiness and average default rates for loan products with similar risks. These respective fair value measurements are categorized within Level 3 of the fair value hierarchy. Retail lending commitments are assigned no fair value as BB&T typically has the ability to cancel such commitments by providing notice to the borrower.Financial assets and liabilities not recorded at fair value are summarized below: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | |
| | | As Of / For the Year Ended | | | | | | | | | | | | | | |
| | | December 31, 2017 | | | | | | | | December 31, 2016 | | | | | | |
| (Dollars in millions) | | Carrying Value | | | | Valuation Adjustments | | | | Carrying Value | | | | Valuation Adjustments | | |
| Impaired loans | | $ | 163 | | | $ | (22 | ) | | $ | 278 | | | $ | (89 | ) |
| Foreclosed real estate | | 32 | | | | (255 | | ) | | 50 | | | | (221 | | ) |
| TFC/10-K/0000092230-18-000021 |
NOTE 16. Fair Value Disclosures | The following is a summary of selected information pertaining to off-balance sheet financial instruments: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | |
| December 31, 2016 | | Carrying Amount | | | | Total Fair Value | | | | Level 2 | | | | Level 3 | | |
| (Dollars in millions) | | | | |
| Financial assets: | | | | | | | | | | | | | | | | |
| HTM securities | | $ | 16,680 | | | $ | 16,546 | | | $ | 16,546 | | | $ | — | |
| Loans and leases HFI, net of ALLL | | 141,833 | | | | 142,044 | | | | — | | | | 142,044 | | |
| Financial liabilities: | | | | | | | | | | | | | | | | |
| Deposits | | 160,234 | | | | 160,403 | | | | 160,403 | | | | — | | |
| Long-term debt | | 21,965 | | | | 22,423 | | | | 22,423 | | | | — | | |
| TFC/10-K/0000092230-18-000021 |
NOTE 17. Derivative Financial Instruments | The fair values of derivatives in a gain or loss position are presented on a gross basis in other assets or other liabilities, respectively, in the Consolidated Balance Sheets. Cash collateral posted for derivatives in a loss position is reported as restricted cash. Derivatives with dealer counterparties at both the bank and the parent company are governed by the terms of ISDA Master netting agreements and Credit Support Annexes. The ISDA Master agreements allow counterparties to offset trades in a gain against trades in a loss to determine net exposure and allows for the right of setoff in the event of either a default or an additional termination event. Credit Support Annexes govern the terms of daily collateral posting practices. Collateral practices mitigate the potential loss impact to affected parties by requiring liquid collateral to be posted on a scheduled basis to secure the aggregate net unsecured exposure. In addition to collateral, the right of setoff allows counterparties to offset net derivative values with a defaulting party against certain other contractual receivables from or obligations due to the defaulting party in determining the net termination amount. No portion of the change in fair value of derivatives designated as hedges has been excluded from effectiveness testing. The ineffective portion was immaterial for all periods presented. The following table presents the effect of hedging derivative instruments on the consolidated statements of income: |
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| | | | | December 31, 2017 | | | | | | | | | | | | December 31, 2016 | | | | | | | | | | |
| | | | | Notional Amount | | | | Fair Value | | | | | | | | Notional Amount | | | | Fair Value | | | | | | |
| (Dollars in millions) | | Hedged Item or Transaction | | | Gain | | | | Loss | | | | | Gain | | | | Loss | | |
| Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pay fixed swaps | | 3 mo. LIBOR funding | | $ | 6,500 | | | $ | — | | | $ | (126 | ) | | $ | 7,050 | | | $ | — | | | $ | (187 | ) |
| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Receive fixed swaps | | Long-term debt | | 15,538 | | | | 118 | | | | (166 | | ) | | 12,099 | | | | 202 | | | | (100 | | ) |
| Options | | Long-term debt | | 6,087 | | | | — | | | | (1 | | ) | | 2,790 | | | | — | | | | (1 | | ) |
| Pay fixed swaps | | Commercial loans | | 416 | | | | 5 | | | | (1 | | ) | | 346 | | | | 4 | | | | (2 | | ) |
| Pay fixed swaps | | Municipal securities | | 231 | | | | — | | | | (76 | | ) | | 231 | | | | — | | | | (83 | | ) |
| Total | | | | 22,272 | | | | 123 | | | | (244 | | ) | | 15,466 | | | | 206 | | | | (186 | | ) |
| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Receive fixed swaps | | | | 10,880 | | | | 141 | | | | (61 | | ) | | 9,989 | | | | 235 | | | | (44 | | ) |
| Pay fixed swaps | | | | 10,962 | | | | 59 | | | | (155 | | ) | | 10,263 | | | | 43 | | | | (252 | | ) |
| Other swaps | | | | 936 | | | | 2 | | | | (2 | | ) | | 1,086 | | | | 2 | | | | (5 | | ) |
| Other | | | | 722 | | | | 2 | | | | (2 | | ) | | 709 | | | | 2 | | | | (2 | | ) |
| Forward commitments | | | | 3,549 | | | | 3 | | | | (2 | | ) | | 5,972 | | | | 29 | | | | (28 | | ) |
| Foreign exchange contracts | | | | 470 | | | | 3 | | | | (6 | | ) | | 669 | | | | 8 | | | | (5 | | ) |
| Total | | | | 27,519 | | | | 210 | | | | (228 | | ) | | 28,688 | | | | 319 | | | | (336 | | ) |
| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate lock commitments | | | | 1,308 | | | | 7 | | | | (3 | | ) | | 2,219 | | | | 7 | | | | (20 | | ) |
| When issued securities, forward rate agreements and forward commitments | | | | 3,124 | | | | 4 | | | | (3 | | ) | | 6,683 | | | | 51 | | | | (14 | | ) |
| Other | | | | 182 | | | | 1 | | | | — | | | | 449 | | | | 2 | | | | (1 | | ) |
| Total | | | | 4,614 | | | | 12 | | | | (6 | | ) | | 9,351 | | | | 60 | | | | (35 | | ) |
| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Receive fixed swaps | | | | 4,498 | | | | 15 | | | | (86 | | ) | | 5,034 | | | | 18 | | | | (236 | | ) |
| Pay fixed swaps | | | | 3,418 | | | | 32 | | | | (13 | | ) | | 3,768 | | | | 56 | | | | (7 | | ) |
| Options | | | | 4,535 | | | | 50 | | | | (11 | | ) | | 5,710 | | | | 160 | | | | (8 | | ) |
| When issued securities, forward rate agreements and forward commitments | | | | 1,813 | | | | 1 | | | | — | | | | 3,210 | | | | 3 | | | | (8 | | ) |
| Other | | | | 3 | | | | — | | | | — | | | | — | | | | — | | | | — | | |
| Total | | | | 14,267 | | | | 98 | | | | (110 | | ) | | 17,722 | | | | 237 | | | | (259 | | ) |
| Total derivatives not designated as hedges | | | | 46,400 | | | | 320 | | | | (344 | | ) | | 55,761 | | | | 616 | | | | (630 | | ) |
| Total derivatives | | | | $ | 75,172 | | | 443 | | | | (714 | | ) | | $ | 78,277 | | | 822 | | | | (1,003 | | ) |
| Gross amounts not offset in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amounts subject to master netting arrangements not offset due to policy election | | | | | | | | (297 | | ) | | 297 | | | | | | | | (443 | | ) | | 443 | | |
| Cash collateral (received) posted | | | | | | | | (20 | | ) | | 344 | | | | | | | | (119 | | ) | | 450 | | |
| Net amount | | | | | | | | $ | 126 | | | $ | (73 | ) | | | | | | $ | 260 | | | $ | (110 | ) |
| TFC/10-K/0000092230-18-000021 |
NOTE 17. Derivative Financial Instruments | The following table provides a summary of derivative strategies and the related accounting treatment: |
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| | | Effective Portion | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31 | | Pre-tax Gain (Loss) Recognized in OCI | | | | | | | | | | | | Location of Amounts Reclassified from AOCI into Income | | Pre-tax Gain (Loss) Reclassified from AOCI into Income | | | | | | | | | | |
| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | | 2017 | | | | 2016 | | | | 2015 | | |
| Cash Flow Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts | | $ | 10 | | | $ | (24 | ) | | $ | (130 | ) | | Total interest expense | | $ | (15 | ) | | $ | (11 | ) | | $ | (83 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Location of Amounts Recognized in Income | | Pre-tax Gain (Loss) Recognized in Income | | | | | | | | | | |
| | | | | | | | | | | | | | | | 2017 | | | | 2016 | | | | 2015 | | |
| | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | |
| Fair Value Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts | | | | | | | | | | | | | | Total interest income | | $ | (19 | ) | | $ | (18 | ) | | $ | (20 | ) |
| Interest rate contracts | | | | | | | | | | | | | | Total interest expense | | 148 | | | | 226 | | | | 279 | | |
| Total | | | | | | | | | | | | | | | | $ | 129 | | | $ | 208 | | | $ | 259 | |
| Not Designated as Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts | | | | | | | | | | | | | | Other income | | $ | 50 | | | $ | 52 | | | $ | 27 | |
| Foreign exchange contracts | | | | | | | | | | | | | | Other income | | 1 | | | | 11 | | | | 21 | | |
| Mortgage Banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | (12 | | ) | | 8 | | | | 7 | | |
| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | — | | | | 31 | | | | 32 | | |
| Total | | | | | | | | | | | | | | | | $ | 39 | | | $ | 102 | | | $ | 87 | |
| TFC/10-K/0000092230-18-000021 |
NOTE 17. Derivative Financial Instruments | The following table presents information about BB&T's cash flow and fair value hedges: |
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| --- | --- | --- | --- | --- | --- | --- |
| | | | | | | |
| | | Cash Flow Hedges | | Fair Value Hedges | | Derivatives Not Designated as Hedges |
| Risk exposure | | Variability in cash flows of interest payments on floating rate business loans, overnight funding and various LIBOR funding instruments. | | Losses in value on fixed rate long-term debt, CDs, FHLB advances, loans and state and political subdivision securities due to changes in interest rates. | | Risk associated with an asset or liability, including mortgage banking operations and MSRs, or for client needs. Includes exposure to changes in market rates and conditions subsequent to the interest rate lock and funding date for mortgage loans originated for sale. |
| Risk management objective | | Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest. | | Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps. | | For interest rate lock commitment derivatives and LHFS, use mortgage-based derivatives such as forward commitments and options to mitigate market risk. For MSRs, mitigate the income statement effect of changes in the fair value of the MSRs. |
| Treatment for portion that is highly effective | | Recognized in AOCI until the related cash flows from the hedged item are recognized in earnings. | | Recognized in current period income along with the corresponding changes in the fair value of the designated hedged item attributable to the risk being hedged. | | Entire change in fair value recognized in current period income. |
| Treatment for portion that is ineffective | | Recognized in current period income. | | Recognized in current period income. | | Not applicable |
| Treatment if hedge ceases to be highly effective or is terminated | | Hedge is dedesignated. Effective changes in value that are recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. | | If hedged item remains outstanding, cash flows from terminations are reported in the same category as the cash flows from the hedged item and effective changes in value are reflected as part of the carrying value of the financial instrument and amortized to earnings over its estimated remaining life. | | Not applicable |
| Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter | | Hedge accounting is ceased and any gain or loss in AOCI is reported in earnings immediately. | | Not applicable | | Not applicable |
| TFC/10-K/0000092230-18-000021 |
Other, Treasury & Corporate | (1) Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. |
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| Year Ended December 31, | | CB-Retail | | | | | | | | | | | | CB-Commercial | | | | | | | | | | | | FS&CF | | | | | | | | | | |
| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | |
| Net interest income (expense) | | $ | 3,415 | | | $ | 3,290 | | | $ | 3,035 | | | $ | 1,740 | | | $ | 1,604 | | | $ | 1,345 | | | $ | 583 | | | $ | 511 | | | $ | 443 | |
| Net intersegment interest income (expense) | | 149 | | | | 115 | | | | (119 | | ) | | 379 | | | | 404 | | | | 324 | | | | 127 | | | | 142 | | | | 110 | | |
| Segment net interest income | | 3,564 | | | | 3,405 | | | | 2,916 | | | | 2,119 | | | | 2,008 | | | | 1,669 | | | | 710 | | | | 653 | | | | 553 | | |
| Allocated provision for credit losses | | 501 | | | | 475 | | | | 365 | | | | 69 | | | | (40 | | ) | | 1 | | | | (15 | | ) | | 128 | | | | 67 | | |
| Segment net interest income after provision | | 3,063 | | | | 2,930 | | | | 2,551 | | | | 2,050 | | | | 2,048 | | | | 1,668 | | | | 725 | | | | 525 | | | | 486 | | |
| Noninterest income | | 1,404 | | | | 1,354 | | | | 1,342 | | | | 423 | | | | 392 | | | | 390 | | | | 1,181 | | | | 1,148 | | | | 1,046 | | |
| Noninterest expense | | 2,725 | | | | 2,469 | | | | 2,357 | | | | 1,198 | | | | 1,302 | | | | 1,153 | | | | 1,190 | | | | 1,141 | | | | 1,020 | | |
| Income (loss) before income taxes | | 1,742 | | | | 1,815 | | | | 1,536 | | | | 1,275 | | | | 1,138 | | | | 905 | | | | 716 | | | | 532 | | | | 512 | | |
| Provision (benefit) for income taxes | | 650 | | | | 686 | | | | 588 | | | | 441 | | | | 403 | | | | 324 | | | | 225 | | | | 156 | | | | 151 | | |
| Segment net income (loss) | | $ | 1,092 | | | $ | 1,129 | | | $ | 948 | | | $ | 834 | | | $ | 735 | | | $ | 581 | | | $ | 491 | | | $ | 376 | | | $ | 361 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Identifiable assets (period end) | | $ | 71,093 | | | $ | 74,642 | | | $ | 71,027 | | | $ | 56,563 | | | $ | 55,035 | | | $ | 51,231 | | | $ | 29,144 | | | $ | 26,795 | | | $ | 25,294 | |
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| | | IH&PF | | | | | | | | | | | | OT&C (1) | | | | | | | | | | | | Total BB&T Corporation | | | | | | | | | | |
| | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | |
| Net interest income (expense) | | $ | 98 | | | $ | 86 | | | $ | 79 | | | $ | 699 | | | $ | 830 | | | $ | 690 | | | $ | 6,535 | | | $ | 6,321 | | | $ | 5,592 | |
| Net intersegment interest income (expense) | | (21 | | ) | | (19 | | ) | | (16 | | ) | | (634 | | ) | | (642 | | ) | | (299 | | ) | | — | | | | — | | | | — | | |
| Segment net interest income | | 77 | | | | 67 | | | | 63 | | | | 65 | | | | 188 | | | | 391 | | | | 6,535 | | | | 6,321 | | | | 5,592 | | |
| Allocated provision for credit losses | | 4 | | | | 3 | | | | 4 | | | | (12 | | ) | | 6 | | | | (9 | | ) | | 547 | | | | 572 | | | | 428 | | |
| Segment net interest income after provision | | 73 | | | | 64 | | | | 59 | | | | 77 | | | | 182 | | | | 400 | | | | 5,988 | | | | 5,749 | | | | 5,164 | | |
| Noninterest income | | 1,777 | | | | 1,731 | | | | 1,611 | | | | (3 | | ) | | (153 | | ) | | (370 | | ) | | 4,782 | | | | 4,472 | | | | 4,019 | | |
| Noninterest expense | | 1,590 | | | | 1,525 | | | | 1,371 | | | | 741 | | | | 284 | | | | 365 | | | | 7,444 | | | | 6,721 | | | | 6,266 | | |
| Income (loss) before income taxes | | 260 | | | | 270 | | | | 299 | | | | (667 | | ) | | (255 | | ) | | (335 | | ) | | 3,326 | | | | 3,500 | | | | 2,917 | | |
| Provision (benefit) for income taxes | | 99 | | | | 104 | | | | 105 | | | | (504 | | ) | | (291 | | ) | | (374 | | ) | | 911 | | | | 1,058 | | | | 794 | | |
| Segment net income (loss) | | $ | 161 | | | $ | 166 | | | $ | 194 | | | $ | (163 | ) | | $ | 36 | | | $ | 39 | | | $ | 2,415 | | | $ | 2,442 | | | $ | 2,123 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Identifiable assets (period end) | | $ | 6,024 | | | $ | 5,943 | | | $ | 4,998 | | | $ | 58,818 | | | $ | 56,861 | | | $ | 57,397 | | | $ | 221,642 | | | $ | 219,276 | | | $ | 209,947 | |
| TFC/10-K/0000092230-18-000021 |
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES | *Management compensatory plan or arrangement.†Exhibit filed with the SEC and available upon request. |
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| --- | --- | --- | --- | --- |
| | | | | |
| Exhibit No. | | Description | | Location |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase. | | Filed herewith. |
| 101.DEF | | XBRL Taxonomy Definition Linkbase. | | Filed herewith. |
| 101.INS | | XBRL Instance Document. | | Filed herewith. |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase. | | Filed herewith. |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase. | | Filed herewith. |
| 101.SCH | | XBRL Taxonomy Extension Schema. | | Filed herewith. |
| TFC/10-K/0000092230-18-000021 |
Net Interest Income and NIM | (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)Excludes basis adjustments for fair value hedges.(6)Total deposit costs were 0.22%, 0.64% and 0.41% for the years ended December 31, 2020, 2019 and 2018, respectively. |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Table 9: Taxable-Equivalent Net Interest Income and Rate / Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 vs. 2019 | | | | | | | | | | | | | | | | | | 2019 vs. 2018 | | | | | | | | | | | | | | |
| Year Ended December 31,(Dollars in millions) | | | Average Balances (5) | | | | | | | | | | | | | | | | | | Yield/Rate | | | | | | | | | | | | | | | | | | Income/Expense | | | | | | | | | | | | | | | | | | Incr.(Decr.) | | | | | | Change due to | | | | | | | | | | | | Incr.(Decr.) | | | | | | Change due to | | | | | | | | |
| 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | | | | Rate | | | | | | Volume | | | | | | | | | Rate | | | | | | Volume | | |
| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | $ | 2,194 | | | | | $ | 2,644 | | | | | $ | 3,800 | | | | | 1.81 | | % | | | | 2.01 | | % | | | | 1.89 | | % | | | | $ | 40 | | | | | $ | 53 | | | | | $ | 72 | | | | | $ | (13) | | | | | $ | (5) | | | | | $ | (8) | | | | | $ | (19) | | | | | $ | 4 | | | | | $ | (23) | |
| GSE | | | 1,846 | | | | | | 2,402 | | | | | | 2,394 | | | | | | 2.33 | | | | | | 2.26 | | | | | | 2.23 | | | | | | 43 | | | | | | 53 | | | | | | 54 | | | | | | (10) | | | | | | 2 | | | | | | (12) | | | | | | (1) | | | | | | (1) | | | | | | — | | |
| Agency MBS | | | 78,564 | | | | | | 44,710 | | | | | | 39,559 | | | | | | 2.07 | | | | | | 2.59 | | | | | | 2.45 | | | | | | 1,625 | | | | | | 1,161 | | | | | | 969 | | | | | | 464 | | | | | | (270) | | | | | | 734 | | | | | | 192 | | | | | | 59 | | | | | | 133 | | |
| States and political subdivisions | | | 501 | | | | | | 587 | | | | | | 958 | | | | | | 3.92 | | | | | | 3.73 | | | | | | 3.68 | | | | | | 19 | | | | | | 21 | | | | | | 35 | | | | | | (2) | | | | | | 1 | | | | | | (3) | | | | | | (14) | | | | | | — | | | | | | (14) | | |
| Non-agency MBS | | | 86 | | | | | | 269 | | | | | | 349 | | | | | | 16.81 | | | | | | 14.05 | | | | | | 11.93 | | | | | | 15 | | | | | | 38 | | | | | | 42 | | | | | | (23) | | | | | | 6 | | | | | | (29) | | | | | | (4) | | | | | | 7 | | | | | | (11) | | |
| Other | | | 36 | | | | | | 33 | | | | | | 40 | | | | | | 2.33 | | | | | | 3.75 | | | | | | 3.34 | | | | | | 1 | | | | | | 1 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total securities | | | 83,227 | | | | | | 50,645 | | | | | | 47,100 | | | | | | 2.09 | | | | | | 2.62 | | | | | | 2.49 | | | | | | 1,743 | | | | | | 1,327 | | | | | | 1,173 | | | | | | 416 | | | | | | (266) | | | | | | 682 | | | | | | 154 | | | | | | 69 | | | | | | 85 | | |
| Interest earning trading assets | | | 4,655 | | | | | | 1,277 | | | | | | 633 | | | | | | 3.62 | | | | | | 2.02 | | | | | | 3.82 | | | | | | 168 | | | | | | 26 | | | | | | 24 | | | | | | 142 | | | | | | 33 | | | | | | 109 | | | | | | 2 | | | | | | (15) | | | | | | 17 | | |
| Other earning assets (3) | | | 31,240 | | | | | | 2,888 | | | | | | 1,618 | | | | | | 0.50 | | | | | | 2.89 | | | | | | 2.63 | | | | | | 156 | | | | | | 83 | | | | | | 43 | | | | | | 73 | | | | | | (122) | | | | | | 195 | | | | | | 40 | | | | | | 5 | | | | | | 35 | | |
| Loans and leases, net of unearned income: (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | 141,850 | | | | | | 67,435 | | | | | | 59,663 | | | | | | 3.39 | | | | | | 4.25 | | | | | | 3.98 | | | | | | 4,801 | | | | | | 2,868 | | | | | | 2,374 | | | | | | 1,933 | | | | | | (681) | | | | | | 2,614 | | | | | | 494 | | | | | | 169 | | | | | | 325 | | |
| CRE | | | 27,410 | | | | | | 17,651 | | | | | | 16,994 | | | | | | 3.32 | | | | | | 4.79 | | | | | | 4.67 | | | | | | 914 | | | | | | 849 | | | | | | 798 | | | | | | 65 | | | | | | (311) | | | | | | 376 | | | | | | 51 | | | | | | 21 | | | | | | 30 | | |
| Commercial Construction | | | 6,659 | | | | | | 4,061 | | | | | | 4,441 | | | | | | 3.72 | | | | | | 5.23 | | | | | | 4.79 | | | | | | 243 | | | | | | 208 | | | | | | 209 | | | | | | 35 | | | | | | (74) | | | | | | 109 | | | | | | (1) | | | | | | 19 | | | | | | (20) | | |
| Lease financing | | | 5,753 | | | | | | 2,443 | | | | | | 1,917 | | | | | | 4.38 | | | | | | 3.44 | | | | | | 3.19 | | | | | | 252 | | | | | | 84 | | | | | | 61 | | | | | | 168 | | | | | | 28 | | | | | | 140 | | | | | | 23 | | | | | | 5 | | | | | | 18 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | 51,423 | | | | | | 31,668 | | | | | | 29,932 | | | | | | 4.51 | | | | | | 4.08 | | | | | | 4.05 | | | | | | 2,320 | | | | | | 1,291 | | | | | | 1,212 | | | | | | 1,029 | | | | | | 148 | | | | | | 881 | | | | | | 79 | | | | | | 9 | | | | | | 70 | | |
| Residential home equity and direct | | | 26,951 | | | | | | 12,716 | | | | | | 11,860 | | | | | | 6.03 | | | | | | 5.97 | | | | | | 5.41 | | | | | | 1,625 | | | | | | 759 | | | | | | 641 | | | | | | 866 | | | | | | 8 | | | | | | 858 | | | | | | 118 | | | | | | 70 | | | | | | 48 | | |
| Indirect auto | | | 25,055 | | | | | | 12,545 | | | | | | 11,215 | | | | | | 6.61 | | | | | | 8.51 | | | | | | 8.18 | | | | | | 1,656 | | | | | | 1,068 | | | | | | 917 | | | | | | 588 | | | | | | (282) | | | | | | 870 | | | | | | 151 | | | | | | 38 | | | | | | 113 | | |
| Indirect other | | | 11,264 | | | | | | 6,654 | | | | | | 5,896 | | | | | | 7.11 | | | | | | 6.65 | | | | | | 6.25 | | | | | | 801 | | | | | | 443 | | | | | | 368 | | | | | | 358 | | | | | | 33 | | | | | | 325 | | | | | | 75 | | | | | | 25 | | | | | | 50 | | |
| Student | | | 7,596 | | | | | | 460 | | | | | | — | | | | | | 4.62 | | | | | | 5.20 | | | | | | — | | | | | | 351 | | | | | | 24 | | | | | | — | | | | | | 327 | | | | | | (3) | | | | | | 330 | | | | | | 24 | | | | | | — | | | | | | 24 | | |
| Credit card | | | 5,027 | | | | | | 3,181 | | | | | | 2,723 | | | | | | 9.34 | | | | | | 9.05 | | | | | | 8.73 | | | | | | 470 | | | | | | 288 | | | | | | 238 | | | | | | 182 | | | | | | 10 | | | | | | 172 | | | | | | 50 | | | | | | 9 | | | | | | 41 | | |
| PCI | | | — | | | | | | 631 | | | | | | 548 | | | | | | — | | | | | | 16.05 | | | | | | 19.64 | | | | | | — | | | | | | 102 | | | | | | 108 | | | | | | (102) | | | | | | — | | | | | | (102) | | | | | | (6) | | | | | | (21) | | | | | | 15 | | |
| Total loans and leases HFI | | | 308,988 | | | | | | 159,445 | | | | | | 145,189 | | | | | | 4.35 | | | | | | 5.01 | | | | | | 4.77 | | | | | | 13,433 | | | | | | 7,984 | | | | | | 6,926 | | | | | | 5,449 | | | | | | (1,124) | | | | | | 6,573 | | | | | | 1,058 | | | | | | 344 | | | | | | 714 | | |
| LHFS | | | 5,513 | | | | | | 2,159 | | | | | | 1,228 | | | | | | 3.13 | | | | | | 3.91 | | | | | | 4.13 | | | | | | 173 | | | | | | 85 | | | | | | 50 | | | | | | 88 | | | | | | (20) | | | | | | 108 | | | | | | 35 | | | | | | (3) | | | | | | 38 | | |
| Total loans and leases | | | 314,501 | | | | | | 161,604 | | | | | | 146,417 | | | | | | 4.33 | | | | | | 4.99 | | | | | | 4.77 | | | | | | 13,606 | | | | | | 8,069 | | | | | | 6,976 | | | | | | 5,537 | | | | | | (1,144) | | | | | | 6,681 | | | | | | 1,093 | | | | | | 341 | | | | | | 752 | | |
| Total earning assets | | | 433,623 | | | | | | 216,414 | | | | | | 195,768 | | | | | | 3.61 | | | | | | 4.39 | | | | | | 4.20 | | | | | | 15,673 | | | | | | 9,505 | | | | | | 8,216 | | | | | | 6,168 | | | | | | (1,499) | | | | | | 7,667 | | | | | | 1,289 | | | | | | 400 | | | | | | 889 | | |
| Nonearning assets | | | 65,462 | | | | | | 31,080 | | | | | | 26,505 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | | $ | 499,085 | | | | | $ | 247,494 | | | | | $ | 222,273 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-checking | | | $ | 94,879 | | | | | $ | 31,592 | | | | | $ | 26,951 | | | | | 0.23 | | | | | | 0.62 | | | | | | 0.43 | | | | | | 216 | | | | | | 197 | | | | | | 116 | | | | | | 19 | | | | | | (184) | | | | | | 203 | | | | | | 81 | | | | | | 59 | | | | | | 22 | | |
| Money market and savings | | | 123,826 | | | | | | 67,922 | | | | | | 62,257 | | | | | | 0.21 | | | | | | 0.91 | | | | | | 0.62 | | | | | | 264 | | | | | | 621 | | | | | | 387 | | | | | | (357) | | | | | | (664) | | | | | | 307 | | | | | | 234 | | | | | | 196 | | | | | | 38 | | |
| Time deposits | | | 30,008 | | | | | | 17,970 | | | | | | 13,963 | | | | | | 1.02 | | | | | | 1.54 | | | | | | 0.94 | | | | | | 305 | | | | | | 277 | | | | | | 132 | | | | | | 28 | | | | | | (115) | | | | | | 143 | | | | | | 145 | | | | | | 100 | | | | | | 45 | | |
| Foreign office deposits - interest-bearing | | | — | | | | | | 272 | | | | | | 494 | | | | | | — | | | | | | 2.35 | | | | | | 1.67 | | | | | | — | | | | | | 6 | | | | | | 9 | | | | | | (6) | | | | | | — | | | | | | (6) | | | | | | (3) | | | | | | 2 | | | | | | (5) | | |
| Total interest-bearing deposits (6) | | | 248,713 | | | | | | 117,756 | | | | | | 103,665 | | | | | | 0.32 | | | | | | 0.93 | | | | | | 0.62 | | | | | | 785 | | | | | | 1,101 | | | | | | 644 | | | | | | (316) | | | | | | (963) | | | | | | 647 | | | | | | 457 | | | | | | 357 | | | | | | 100 | | |
| Short-term borrowings | | | 10,129 | | | | | | 8,462 | | | | | | 5,955 | | | | | | 1.35 | | | | | | 2.34 | | | | | | 1.86 | | | | | | 137 | | | | | | 198 | | | | | | 111 | | | | | | (61) | | | | | | (95) | | | | | | 34 | | | | | | 87 | | | | | | 33 | | | | | | 54 | | |
| Long-term debt | | | 45,793 | | | | | | 24,756 | | | | | | 23,755 | | | | | | 1.75 | | | | | | 3.22 | | | | | | 2.88 | | | | | | 800 | | | | | | 797 | | | | | | 683 | | | | | | 3 | | | | | | (472) | | | | | | 475 | | | | | | 114 | | | | | | 84 | | | | | | 30 | | |
| Total interest-bearing liabilities | | | 304,635 | | | | | | 150,974 | | | | | | 133,375 | | | | | | 0.57 | | | | | | 1.39 | | | | | | 1.08 | | | | | | 1,722 | | | | | | 2,096 | | | | | | 1,438 | | | | | | (374) | | | | | | (1,530) | | | | | | 1,156 | | | | | | 658 | | | | | | 474 | | | | | | 184 | | |
| Noninterest-bearing deposits (6) | | | 114,580 | | | | | | 55,513 | | | | | | 53,818 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other liabilities | | | 11,846 | | | | | | 6,899 | | | | | | 5,337 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 68,024 | | | | | | 34,108 | | | | | | 29,743 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total liabilities and shareholders' equity | | | $ | 499,085 | | | | | $ | 247,494 | | | | | $ | 222,273 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Average interest-rate spread | | | | | | | | | | | | | | | | | | | | | 3.04 | | % | | | | 3.00 | | % | | | | 3.12 | | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NIM/net interest income | | | | | | | | | | | | | | | | | | | | | 3.22 | | % | | | | 3.42 | | % | | | | 3.46 | | % | | | | $ | 13,951 | | | | | $ | 7,409 | | | | | $ | 6,778 | | | | | $ | 6,542 | | | | | $ | 31 | | | | | $ | 6,511 | | | | | $ | 631 | | | | | $ | (74) | | | | | $ | 705 | |
| Taxable-equivalent adjustment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 125 | | | | | $ | 96 | | | | | $ | 96 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Noninterest Income | Noninterest income for the year ended December 31, 2020 increased $3.6 billion compared to the earlier period. The current period includes $402 million of net securities gains primarily from the sale of non-agency MBS in the second quarter of 2020 and agency MBS in the third quarter of 2020. The prior period includes $116 million of net securities losses from the sale of agency MBS. Excluding the net securities gains and losses, noninterest income increased $3.1 billion, with nearly all categories of noninterest income being impacted by the Merger. In addition to the impacts from the Merger, insurance income increased $121 million due to strong production and acquisitions. Service charges on deposits were up despite reduced overdraft incident rates and increased refunds and waivers to support clients impacted by the COVID-19 pandemic. Residential mortgage banking income was up due to strong production and refinance activity driven by the lower rate environment, partially offset by lower valuations of the mortgage servicing rights and increased amortization driven by higher prepayments speeds. Investment banking and trading income was up, but was negatively impacted by credit valuation adjustments on the derivatives portfolio primarily related to the decline in interest rates and widening of credit spreads. 46 Truist Financial Corporation |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| Table 10: Noninterest Income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Change | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 vs. 2019 | | | | | | 2019 vs. 2018 | | | | | |
| Insurance income | | | | | | | | | | | | | | | | | | | | | $ | 2,193 | | | | | $ | 2,072 | | | | | $ | 1,852 | | | | | 5.8 | | % | | | | 11.9 | | % | | | |
| Wealth management income | | | | | | | | | | | | | | | | | | | | | 1,277 | | | | | | 715 | | | | | | 660 | | | | | | 78.6 | | | | | | 8.3 | | | | | |
| Service charges on deposits | | | | | | | | | | | | | | | | | | | | | 1,020 | | | | | | 762 | | | | | | 712 | | | | | | 33.9 | | | | | | 7.0 | | | | | |
| Residential mortgage income | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | | | 285 | | | | | | 258 | | | | | | NM | | | | | | 10.5 | | | | | |
| Investment banking and trading income | | | | | | | | | | | | | | | | | | | | | 944 | | | | | | 244 | | | | | | 154 | | | | | | NM | | | | | | 58.4 | | | | | |
| Card and payment related fees | | | | | | | | | | | | | | | | | | | | | 761 | | | | | | 555 | | | | | | 522 | | | | | | 37.1 | | | | | | 6.3 | | | | | |
| Lending related fees | | | | | | | | | | | | | | | | | | | | | 315 | | | | | | 124 | | | | | | 99 | | | | | | 154.0 | | | | | | 25.3 | | | | | |
| Operating lease income | | | | | | | | | | | | | | | | | | | | | 309 | | | | | | 153 | | | | | | 145 | | | | | | 102.0 | | | | | | 5.5 | | | | | |
| Commercial real estate related income | | | | | | | | | | | | | | | | | | | | | 271 | | | | | | 116 | | | | | | 100 | | | | | | 133.6 | | | | | | 16.0 | | | | | |
| Income from bank-owned life insurance | | | | | | | | | | | | | | | | | | | | | 179 | | | | | | 129 | | | | | | 116 | | | | | | 38.8 | | | | | | 11.2 | | | | | |
| Securities gains (losses) | | | | | | | | | | | | | | | | | | | | | 402 | | | | | | (116) | | | | | | 3 | | | | | | NM | | | | | | NM | | | | | |
| Other income (loss) | | | | | | | | | | | | | | | | | | | | | 208 | | | | | | 216 | | | | | | 255 | | | | | | (3.7) | | | | | | (15.3) | | | | | |
| Total noninterest income | | | | | | | | | | | | | | | | | | | | | $ | 8,879 | | | | | $ | 5,255 | | | | | $ | 4,876 | | | | | 69.0 | | | | | | 7.8 | | | | | |
| TFC/10-K/0000092230-21-000032 |
Noninterest Expense | Noninterest expense for the year ended December 31, 2020 was up $7.0 billion compared to the earlier period. Merger-related and restructuring charges and other incremental operating expenses related to the Merger increased $500 million and $370 million, respectively. In addition, the current period was impacted by $235 million of losses on the early extinguishment of long-term debt and a $50 million charitable contribution to the Truist Charitable Fund. Excluding the items mentioned above and the impact of an increase of $521 million of amortization expense for intangibles, noninterest expense increased $5.3 billion, primarily reflecting the impact of the Merger. In addition to the impacts of the Merger, operating costs were elevated due to COVID-19, which resulted in approximately $250 million of expenses compared to the earlier period. This was primarily related to additional on-site pay and bonuses for certain teammates, net occupancy costs for enhanced cleaning and teammate support expenses. Additionally, personnel expenses increased as a result of the completion of a post-Merger reevaluation of job grades that resulted in additional salaries, incentives and equity-based compensation expenses. |
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| Table 11: Noninterest Expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Change | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 vs. 2019 | | | | | | 2019 vs. 2018 | | |
| Personnel expense | | | | | | | | | | | | | | | | | | | | | $ | 8,146 | | | | | $ | 4,833 | | | | | $ | 4,313 | | | | | 68.5 | | % | | | | 12.1 | | % |
| Professional fees and outside processing | | | | | | | | | | | | | | | | | | | | | 1,252 | | | | | | 433 | | | | | | 365 | | | | | | 189.1 | | | | | | 18.6 | | |
| Net occupancy expense | | | | | | | | | | | | | | | | | | | | | 904 | | | | | | 507 | | | | | | 491 | | | | | | 78.3 | | | | | | 3.3 | | |
| Software expense | | | | | | | | | | | | | | | | | | | | | 862 | | | | | | 338 | | | | | | 272 | | | | | | 155.0 | | | | | | 24.3 | | |
| Amortization of intangibles | | | | | | | | | | | | | | | | | | | | | 685 | | | | | | 164 | | | | | | 131 | | | | | | NM | | | | | | 25.2 | | |
| Equipment expense | | | | | | | | | | | | | | | | | | | | | 484 | | | | | | 280 | | | | | | 267 | | | | | | 72.9 | | | | | | 4.9 | | |
| Marketing and customer development | | | | | | | | | | | | | | | | | | | | | 273 | | | | | | 137 | | | | | | 102 | | | | | | 99.3 | | | | | | 34.3 | | |
| Operating lease depreciation | | | | | | | | | | | | | | | | | | | | | 258 | | | | | | 136 | | | | | | 120 | | | | | | 89.7 | | | | | | 13.3 | | |
| Loan-related expense | | | | | | | | | | | | | | | | | | | | | 242 | | | | | | 123 | | | | | | 108 | | | | | | 96.7 | | | | | | 13.9 | | |
| Regulatory costs | | | | | | | | | | | | | | | | | | | | | 125 | | | | | | 81 | | | | | | 134 | | | | | | 54.3 | | | | | | (39.6) | | |
| Merger-related and restructuring charges | | | | | | | | | | | | | | | | | | | | | 860 | | | | | | 360 | | | | | | 146 | | | | | | 138.9 | | | | | | 146.6 | | |
| Loss (gain) on early extinguishment of debt | | | | | | | | | | | | | | | | | | | | | 235 | | | | | | — | | | | | | — | | | | | | NM | | | | | | NM | | |
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| Other expense | | | | | | | | | | | | | | | | | | | | | 571 | | | | | | 542 | | | | | | 483 | | | | | | 5.4 | | | | | | 12.2 | | |
| Total noninterest expense | | | | | | | | | | | | | | | | | | | | | $ | 14,897 | | | | | $ | 7,934 | | | | | $ | 6,932 | | | | | 87.8 | | | | | | 14.5 | | |
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| TFC/10-K/0000092230-21-000032 |
Merger-Related and Restructuring Charges | (1)The Company recognized $825 million and $298 million for the year ended December 31, 2020 and 2019, respectively, related to the Merger. At December 31, 2020 and 2019, the Company had an accrual of $50 million and $76 million related to the Merger, respectively. The remaining expense and accrual relate to other restructuring activities. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| Table 12: Merger-Related and Restructuring Accrual Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | Accrual at Jan 1, 2019 | | | | | | Expense | | | | | | Utilized | | | | | | Accrual at Dec 31, 2019 | | | | | | | | | | | | Expense | | | | | | Utilized | | | | | | Accrual at Dec 31, 2020 | | | | | | | | | | | | | | |
| Severance and personnel-related | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 43 | | | | | $ | 149 | | | | | $ | (146) | | | | | $ | 46 | | | | | | | | | | | $ | 232 | | | | | $ | (242) | | | | | $ | 36 | | | | | | | | | | | | | |
| Occupancy and equipment | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | 13 | | | | | | (13) | | | | | | — | | | | | | | | | | | | 294 | | | | | | (294) | | | | | | — | | | | | | | | | | | | | | |
| Professional services | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 102 | | | | | | (61) | | | | | | 42 | | | | | | | | | | | | 238 | | | | | | (264) | | | | | | 16 | | | | | | | | | | | | | | |
| Systems conversion and related costs | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | 4 | | | | | | (4) | | | | | | — | | | | | | | | | | | | 30 | | | | | | (30) | | | | | | — | | | | | | | | | | | | | | |
| Other adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | 92 | | | | | | (91) | | | | | | 1 | | | | | | | | | | | | 66 | | | | | | (56) | | | | | | 11 | | | | | | | | | | | | | | |
| Total (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 44 | | | | | $ | 360 | | | | | $ | (315) | | | | | $ | 89 | | | | | | | | | | | $ | 860 | | | | | $ | (886) | | | | | $ | 63 | | | | | | | | | | | | | |
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| TFC/10-K/0000092230-21-000032 |
Investment Activities | The securities portfolio totaled $120.8 billion at December 31, 2020, compared to $74.7 billion at December 31, 2019. The increase was due primarily to a $47.0 billion increase in Agency MBS. The increase in the Agency MBS portfolio includes the redeployment of excess liquidity. During 2020, the Company sold non-Agency MBS, and sold and reinvested residential Agency MBS. These sales were the primary drivers for the gains of $402 million for the year ended December 31, 2020.As of December 31, 2020, approximately 1.9% of the securities portfolio was variable rate, compared to 3.6% as of December 31, 2019. The effective duration of the securities portfolio was 4.0 years at December 31, 2020, compared to 4.7 years at December 31, 2019.U.S. Treasury, GSE and Agency MBS represented 99.6% of the total securities portfolio as of December 31, 2020, compared to 98.7% as of the prior year end.50 Truist Financial CorporationThe following table presents the securities portfolio at December 31, 2020, segregated by major category of security holdings with ranges of maturities and average yields disclosed: |
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| Table 14: Composition of Securities Portfolio | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | |
| AFS securities (at fair value): | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | $ | 1,746 | | | | | $ | 2,276 | | | | | | | | | | | | | |
| GSE | | | 1,917 | | | | | | 1,881 | | | | | | | | | | | | | | |
| Agency MBS - residential | | | 113,541 | | | | | | 68,236 | | | | | | | | | | | | | | |
| Agency MBS - commercial | | | 3,057 | | | | | | 1,341 | | | | | | | | | | | | | | |
| States and political subdivisions | | | 493 | | | | | | 585 | | | | | | | | | | | | | | |
| Non-agency MBS | | | — | | | | | | 368 | | | | | | | | | | | | | | |
| Other | | | 34 | | | | | | 40 | | | | | | | | | | | | | | |
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| Total AFS securities | | | $ | 120,788 | | | | | $ | 74,727 | | | | | | | | | | | | | |
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| TFC/10-K/0000092230-21-000032 |
Investment Activities | (1)Yields represent interest computed under the effective interest method on a TE basis using the federal income tax rate and the amortized cost of the securities.(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans. |
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| Table 15: Securities Yields by Major Category and Maturity | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | AFS | | | | | | | | | | | | | | |
| Fair Value | | | | | | Yield (1) | | | | | | | | | | | | | | |
| U.S. Treasury: | | | | | | | | | | | | | | | | | | | | | | | |
| Within one year | | | $ | 254 | | | | | 1.51 | | % | | | | | | | | | | | | |
| One to five years | | | 1,492 | | | | | | 0.85 | | | | | | | | | | | | | | |
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| Total | | | 1,746 | | | | | | 0.95 | | | | | | | | | | | | | | |
| GSE: | | | | | | | | | | | | | | | | | | | | | | | |
| Within one year | | | 288 | | | | | | 2.81 | | | | | | | | | | | | | | |
| One to five years | | | 1,553 | | | | | | 2.20 | | | | | | | | | | | | | | |
| After ten years | | | 76 | | | | | | 3.03 | | | | | | | | | | | | | | |
| Total | | | 1,917 | | | | | | 2.33 | | | | | | | | | | | | | | |
| Agency MBS - residential: (2) | | | | | | | | | | | | | | | | | | | | | | | |
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| One to five years | | | 1 | | | | | | 2.77 | | | | | | | | | | | | | | |
| Five to ten years | | | 441 | | | | | | 2.42 | | | | | | | | | | | | | | |
| After ten years | | | 113,099 | | | | | | 1.95 | | | | | | | | | | | | | | |
| Total | | | 113,541 | | | | | | 1.95 | | | | | | | | | | | | | | |
| Agency MBS - commercial: (2) | | | | | | | | | | | | | | | | | | | | | | | |
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| One to five years | | | 2 | | | | | | 2.80 | | | | | | | | | | | | | | |
| Five to ten years | | | 10 | | | | | | 2.86 | | | | | | | | | | | | | | |
| After ten years | | | 3,045 | | | | | | 1.92 | | | | | | | | | | | | | | |
| Total | | | 3,057 | | | | | | 1.93 | | | | | | | | | | | | | | |
| States and political subdivisions: | | | | | | | | | | | | | | | | | | | | | | | |
| Within one year | | | 29 | | | | | | 3.54 | | | | | | | | | | | | | | |
| One to five years | | | 132 | | | | | | 2.58 | | | | | | | | | | | | | | |
| Five to ten years | | | 115 | | | | | | 4.58 | | | | | | | | | | | | | | |
| After ten years | | | 217 | | | | | | 3.65 | | | | | | | | | | | | | | |
| Total | | | 493 | | | | | | 3.57 | | | | | | | | | | | | | | |
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| Other: | | | | | | | | | | | | | | | | | | | | | | | |
| Within one year | | | 1 | | | | | | 1.83 | | | | | | | | | | | | | | |
| One to five years | | | 7 | | | | | | 3.55 | | | | | | | | | | | | | | |
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| After ten years | | | 26 | | | | | | 1.70 | | | | | | | | | | | | | | |
| Total | | | 34 | | | | | | 2.08 | | | | | | | | | | | | | | |
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| Total securities | | | $ | 120,788 | | | | | 1.95 | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
PCI | Loans and leases HFI were $299.7 billion at December 31, 2020, down $108 million compared to 2019.Commercial loans increased $7.3 billion during 2020. The growth in the commercial portfolio was primarily in commercial and industrial loans and reflects PPP loan originations, which was partially offset by lower utilization of commercial lines. Truist served as the fourth largest PPP lender in 2020. The carrying value of PPP loans was $11.0 billion as of December 31, 2020. Additionally, within the commercial and industrial portfolio, Truist experienced growth in loans from mortgage warehouse lending due to the decline in rates and increased refinance activity. Growth in commercial portfolios was partially offset by a decline in dealer floor plan lending and the transfer of $1.0 billion of certain loans and leases to held for sale related to the decision to exit a small ticket loan and lease portfolio.Consumer loans decreased $3.2 billion during 2020 primarily due to refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans. This was partially offset by an increase in indirect auto due to expanded client offerings and an improving credit environment.Credit card loans decreased $780 million during 2020 due to lower business and consumer spending as a result of COVID-19.LHFS decreased $2.3 billion during 2020 primarily due to the sale of loans that had been placed in LHFS after the close of the Merger and the branch divestiture in connection with the Merger, partially offset by the transfer of $1.0 billion to LHFS due to the decision to exit a small ticket loan and lease portfolio.The following table presents a summary of the commercial loan portfolio, segregated by contractual maturities and interest rate terms. Determinations of maturities are based on contractual terms. Truist's credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the client generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time. |
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| Table 16: Loans and Leases as of Period End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | $ | 138,354 | | | | | $ | 130,180 | | | | | $ | 61,935 | | | | | $ | 59,153 | | | | | $ | 57,739 | | | | | | | |
| CRE | | | | | | 26,595 | | | | | | 26,832 | | | | | | 16,808 | | | | | | 17,173 | | | | | | 15,945 | | | | | | | | |
| Commercial construction | | | | | | 6,491 | | | | | | 6,205 | | | | | | 4,252 | | | | | | 4,090 | | | | | | 3,819 | | | | | | | | |
| Lease financing | | | | | | 5,240 | | | | | | 6,122 | | | | | | 2,018 | | | | | | 1,911 | | | | | | 1,677 | | | | | | | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | 47,272 | | | | | | 52,071 | | | | | | 31,393 | | | | | | 28,725 | | | | | | 29,921 | | | | | | | | |
| Residential home equity and direct | | | | | | 26,064 | | | | | | 27,044 | | | | | | 11,775 | | | | | | 12,088 | | | | | | 12,295 | | | | | | | | |
| Indirect auto | | | | | | 26,150 | | | | | | 24,442 | | | | | | 11,282 | | | | | | 11,641 | | | | | | 13,342 | | | | | | | | |
| Indirect other | | | | | | 11,177 | | | | | | 11,100 | | | | | | 6,143 | | | | | | 5,594 | | | | | | 5,222 | | | | | | | | |
| Student | | | | | | 7,552 | | | | | | 6,743 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Credit card | | | | | | 4,839 | | | | | | 5,619 | | | | | | 2,941 | | | | | | 2,675 | | | | | | 2,452 | | | | | | | | |
| PCI | | | | | | — | | | | | | 3,484 | | | | | | 466 | | | | | | 651 | | | | | | 910 | | | | | | | | |
| Total loans and leases HFI | | | | | | 299,734 | | | | | | 299,842 | | | | | | 149,013 | | | | | | 143,701 | | | | | | 143,322 | | | | | | | | |
| LHFS | | | | | | 6,059 | | | | | | 8,373 | | | | | | 988 | | | | | | 1,099 | | | | | | 1,716 | | | | | | | | |
| Total loans and leases | | | | | | $ | 305,793 | | | | | $ | 308,215 | | | | | $ | 150,001 | | | | | $ | 144,800 | | | | | $ | 145,038 | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
PCI | Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $358 million and $392 million at December 31, 2020 and December 31, 2019, respectively. The following table presents the composition of average loans and leases for each of the last five quarters: |
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| Table 17: Commercial Loan Maturities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | | | | 1 Year or Less | | | | | | 1 to 5 Years | | | | | | After 5 Years | | | | | | | | | | | | Total | | |
| Fixed rate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | $ | 4,776 | | | | | $ | 21,910 | | | | | $ | 18,383 | | | | | | | | | | | $ | 45,069 | | | | |
| CRE | | | | | | 359 | | | | | | 2,296 | | | | | | 2,273 | | | | | | | | | | | | 4,928 | | | | | |
| Commercial construction | | | | | | 10 | | | | | | 85 | | | | | | 116 | | | | | | | | | | | | 211 | | | | | |
| Lease financing | | | | | | 189 | | | | | | 1,876 | | | | | | 1,807 | | | | | | | | | | | | 3,872 | | | | | |
| Total fixed rate | | | | | | 5,334 | | | | | | 26,167 | | | | | | 22,579 | | | | | | | | | | | | 54,080 | | | | | |
| Variable rate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | 20,610 | | | | | | 54,435 | | | | | | 18,240 | | | | | | | | | | | | 93,285 | | | | | |
| CRE | | | | | | 3,354 | | | | | | 12,364 | | | | | | 5,949 | | | | | | | | | | | | 21,667 | | | | | |
| Commercial construction | | | | | | 1,738 | | | | | | 4,054 | | | | | | 488 | | | | | | | | | | | | 6,280 | | | | | |
| Lease financing | | | | | | 147 | | | | | | 315 | | | | | | 906 | | | | | | | | | | | | 1,368 | | | | | |
| Total variable rate | | | | | | 25,849 | | | | | | 71,168 | | | | | | 25,583 | | | | | | | | | | | | 122,600 | | | | | |
| Total commercial loans and leases | | | | | | $ | 31,183 | | | | | $ | 97,335 | | | | | $ | 48,162 | | | | | | | | | | | $ | 176,680 | | | | |
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| TFC/10-K/0000092230-21-000032 |
PCI | Average loans and leases held for investment for the fourth quarter of 2020 were $302.9 billion, down $7.6 billion compared to the third quarter of 2020.Average commercial loans decreased $5.4 billion, primarily in commercial and industrial loans due to paydowns on commercial lines. This was partially offset by growth in mortgage warehouse lending, dealer floor plan lending and governmental finance loans. The carrying value of PPP loans was down $1.4 billion compared to September 30, 2020, which resulted in a decline of $304 million in average PPP loans compared to the average for the third quarter of 2020. In addition, average commercial loans were impacted by the transfer of $1.0 billion of certain loans and leases to held for sale, which resulted in a decline in the average balance of $323 million compared to the third quarter of 2020.Average consumer loans decreased $2.2 billion primarily due to seasonally lower loan production and refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans. This was partially offset by an increase in indirect auto loans.54 Truist Financial Corporation |
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| Table 18: Average Loans and Leases | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| For the Three Months Ended(Dollars in millions) | | | | | | Dec 31, 2020 | | | | | | Sep 30, 2020 | | | | | | Jun 30, 2020 | | | | | | Mar 31, 2020 | | | | | | Dec 31, 2019 | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | $ | 139,223 | | | | | $ | 143,452 | | | | | $ | 152,991 | | | | | $ | 131,743 | | | | | $ | 81,853 | |
| CRE | | | | | | 27,030 | | | | | | 27,761 | | | | | | 27,804 | | | | | | 27,046 | | | | | | 19,896 | | |
| Commercial construction | | | | | | 6,616 | | | | | | 6,861 | | | | | | 6,748 | | | | | | 6,409 | | | | | | 4,506 | | |
| Lease financing | | | | | | 5,401 | | | | | | 5,626 | | | | | | 5,922 | | | | | | 6,070 | | | | | | 3,357 | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | 48,847 | | | | | | 51,500 | | | | | | 52,380 | | | | | | 52,993 | | | | | | 34,824 | | |
| Residential home equity and direct | | | | | | 26,327 | | | | | | 26,726 | | | | | | 27,199 | | | | | | 27,564 | | | | | | 15,810 | | |
| Indirect auto | | | | | | 25,788 | | | | | | 24,732 | | | | | | 24,721 | | | | | | 24,975 | | | | | | 15,390 | | |
| Indirect other | | | | | | 11,291 | | | | | | 11,530 | | | | | | 11,282 | | | | | | 10,950 | | | | | | 7,772 | | |
| Student | | | | | | 7,519 | | | | | | 7,446 | | | | | | 7,633 | | | | | | 7,787 | | | | | | 1,825 | | |
| Credit card | | | | | | 4,818 | | | | | | 4,810 | | | | | | 4,949 | | | | | | 5,534 | | | | | | 3,788 | | |
| PCI | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,220 | | |
| Total average loans and leases HFI | | | | | | $ | 302,860 | | | | | $ | 310,444 | | | | | $ | 321,629 | | | | | $ | 301,071 | | | | | $ | 190,241 | |
| TFC/10-K/0000092230-21-000032 |
COVID-19 Lending Activities | (1)Excludes approximately 46,000 of active accommodations related to government guaranteed loans totaling approximately $2.3 billion.(2)Calculated based on accommodation count; includes loans that are less than 30 days past due. The following table provides a summary of the Company’s exposure related to loans that have exited accommodations: |
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| Table 19: Client Accommodations (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Active Accommodations | | | | | | | | | | | | Exited Accommodations | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Total Count | | | | | | Outstanding Balance | | | | | | Outstanding Balance | | | | | | % Paid-off or Current (2) | | | | | | Types of Accommodations | | |
| Commercial | | | 835 | | | | | | $ | 274 | | | | | $ | 21,239 | | | | | 97.2 | | % | | | | Clients may elect to defer loan or lease payments for up to 90 days without late fees being incurred but with finance charges continuing to accrue. | | |
| Consumer | | | 123,191 | | | | | | 3,729 | | | | | | 8,062 | | | | | | 90.8 | | | | | | Clients may elect to defer loan payments for time periods that generally range from 30 to 90 days without late fees being incurred but with finance charges generally continuing to accrue. The Company’s residential mortgage forbearance program generally provides up to 180 days of relief, provided that additional relief may be provided in certain circumstances. | | |
| Credit card | | | 5,996 | | | | | | 31 | | | | | | 187 | | | | | | 88.5 | | | | | | Clients may elect to defer payments for up to 90 days without late fees being incurred but with finance charges accruing. In addition, Truist provided credit card clients with 5% cash back on qualifying card purchases for certain important basic needs. | | |
| Total | | | 130,022 | | | | | | $ | 4,034 | | | | | $ | 29,488 | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
COVID-19 Lending Activities | The following table provides a summary of exposure to industries that management believes are most vulnerable in the current economic environment. These selected industry exposures represent 9.0% of loans held for investment at December 31, 2020. Truist is actively managing these portfolios and will continue to make underwriting or risk acceptance adjustments as appropriate. These exposures decreased $0.8 billion or 2.6% during the fourth quarter. In addition, management is closely monitoring its leveraged lending and small secured real estate portfolios which comprised 3.1% and 1.5% of loans held for investment at December 31, 2020, respectfully. |
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| Table 20: Accommodations Exposure | | | | | |
| December 31, 2020(Dollars in billions) | | | Exposure | | |
| Current | | | $ | 28,571 | |
| Past due and still accruing | | | 545 | | |
| Nonperforming | | | 372 | | |
| Total | | | $ | 29,488 | |
| TFC/10-K/0000092230-21-000032 |
Asset Quality | (1)The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period.56 Truist Financial CorporationNonperforming assets totaled $1.4 billion at December 31, 2020, up $703 million compared to December 31, 2019 primarily from the adoption of CECL, which resulted in the discontinuation of the pool-level accounting for PCI loans and replaced that with a loan-level evaluation for nonaccrual status. As of December 31, 2019, there was approximately $500 million of PCI loans that would have been classified as nonperforming had the Company evaluated accrual status on a loan level basis. The remaining increase in nonperforming loans held for investment is primarily in commercial and industrial loans and an increase in nonperforming mortgage loans due to loans exiting certain accommodation programs related to the CARES Act. Nonperforming loans and leases represented 0.44% of total loans and leases, up 26 basis points compared to December 31, 2019. Performing TDRs were up $381 million compared to the prior year primarily in residential mortgage, lease financing and indirect auto loans. This increase primarily reflects the application of acquisition accounting related to the Merger, which resulted in the removal of the TDR designation on all loans that were restructured by SunTrust prior to the Merger date.Loans 90 days or more past due and still accruing totaled $2.0 billion at December 31, 2020, relatively flat compared to the prior year. In connection with the discontinuation of pool level accounting for PCI loans, loans 90 days or more past due and still accruing decreased as loan-level evaluations resulted in certain loans being placed in nonaccrual status. This decrease was partially offset by an increase in government guaranteed student loans. Additionally, residential mortgage loans 90 days or more past due increased primarily due to the repurchase of delinquent government guaranteed loans. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.67% at December 31, 2020, an increase of 1 basis point from the prior year. Excluding government guaranteed and PCI loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at December 31, 2020, up 1 basis point from December 31, 2019.Loans 30-89 days past due and still accruing totaled $2.2 billion at December 31, 2020, relatively flat compared to the prior year. Loans 30-89 days past due reflects a decrease in PCI loans, offset by a corresponding increase in the portfolios where these loans were transferred in connection with the implementation of CECL. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases was 0.74% at December 31, 2020, flat compared to the prior year.Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 22. 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. |
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| Table 22: Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | |
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| NPAs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NPLs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 532 | | | | | | | | | | | | | | | | | | | | | | | $ | 212 | | | | | $ | 200 | | | | | $ | 259 | | | | | $ | 369 | | | | | | | |
| CRE | | | 75 | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | | | 63 | | | | | | 37 | | | | | | 40 | | | | | | | | |
| Commercial construction | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | 2 | | | | | | 8 | | | | | | 17 | | | | | | | | |
| Lease financing | | | 28 | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 3 | | | | | | 1 | | | | | | 4 | | | | | | | | |
| Residential mortgage | | | 316 | | | | | | | | | | | | | | | | | | | | | | | | 55 | | | | | | 119 | | | | | | 129 | | | | | | 172 | | | | | | | | |
| Residential home equity and direct | | | 205 | | | | | | | | | | | | | | | | | | | | | | | | 67 | | | | | | 53 | | | | | | 64 | | | | | | 63 | | | | | | | | |
| Indirect auto | | | 155 | | | | | | | | | | | | | | | | | | | | | | | | 100 | | | | | | 82 | | | | | | 71 | | | | | | 71 | | | | | | | | |
| Indirect other | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | — | | | | | | 1 | | | | | | — | | | | | | | | |
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| Total NPLs HFI | | | 1,330 | | | | | | | | | | | | | | | | | | | | | | | | 454 | | | | | | 522 | | | | | | 570 | | | | | | 736 | | | | | | | | |
| Loans held for sale | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 107 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Total nonaccrual loans and leases | | | 1,335 | | | | | | | | | | | | | | | | | | | | | | | | 561 | | | | | | 522 | | | | | | 570 | | | | | | 736 | | | | | | | | |
| Foreclosed real estate | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | 82 | | | | | | 35 | | | | | | 32 | | | | | | 50 | | | | | | | | |
| Other foreclosed property | | | 32 | | | | | | | | | | | | | | | | | | | | | | | | 41 | | | | | | 28 | | | | | | 25 | | | | | | 27 | | | | | | | | |
| Total nonperforming assets | | | $ | 1,387 | | | | | | | | | | | | | | | | | | | | | | | $ | 684 | | | | | $ | 585 | | | | | $ | 627 | | | | | $ | 813 | | | | | | | |
| TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 78 | | | | | | | | | | | | | | | | | | | | | | | $ | 47 | | | | | $ | 65 | | | | | $ | 50 | | | | | $ | 57 | | | | | | | |
| CRE | | | 47 | | | | | | | | | | | | | | | | | | | | | | | | 6 | | | | | | 8 | | | | | | 11 | | | | | | 16 | | | | | | | | |
| Commercial construction | | | — | | | | | | | | | | | | | | | | | | | | | | | | 37 | | | | | | 2 | | | | | | 5 | | | | | | 9 | | | | | | | | |
| Lease financing | | | 60 | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Residential mortgage | | | 648 | | | | | | | | | | | | | | | | | | | | | | | | 470 | | | | | | 656 | | | | | | 605 | | | | | | 769 | | | | | | | | |
| Residential home equity and direct | | | 88 | | | | | | | | | | | | | | | | | | | | | | | | 51 | | | | | | 56 | | | | | | 63 | | | | | | 69 | | | | | | | | |
| Indirect auto | | | 392 | | | | | | | | | | | | | | | | | | | | | | | | 333 | | | | | | 299 | | | | | | 274 | | | | | | 234 | | | | | | | | |
| Indirect other | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | 6 | | | | | | | | |
| Student | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Credit card | | | 37 | | | | | | | | | | | | | | | | | | | | | | | | 31 | | | | | | 27 | | | | | | 28 | | | | | | 27 | | | | | | | | |
| Total performing TDRs | | | $ | 1,361 | | | | | | | | | | | | | | | | | | | | | | | $ | 980 | | | | | $ | 1,119 | | | | | $ | 1,043 | | | | | $ | 1,187 | | | | | | | |
| Nonperforming TDRs | | | 164 | | | | | | | | | | | | | | | | | | | | | | | | 82 | | | | | | 176 | | | | | | 189 | | | | | | 184 | | | | | | | | |
| Total TDRs | | | $ | 1,525 | | | | | | | | | | | | | | | | | | | | | | | $ | 1,062 | | | | | $ | 1,295 | | | | | $ | 1,232 | | | | | $ | 1,371 | | | | | | | |
| Loans 90 days or more past due and still accruing: (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 13 | | | | | | | | | | | | | | | | | | | | | | | $ | 1 | | | | | $ | — | | | | | $ | 1 | | | | | $ | — | | | | | | | |
| CRE | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | 1 | | | | | | — | | | | | | | | |
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| Residential mortgage | | | 841 | | | | | | | | | | | | | | | | | | | | | | | | 543 | | | | | | 405 | | | | | | 465 | | | | | | 522 | | | | | | | | |
| Residential home equity and direct | | | 10 | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | 8 | | | | | | 6 | | | | | | 6 | | | | | | | | |
| Indirect auto | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | 11 | | | | | | 6 | | | | | | 6 | | | | | | 5 | | | | | | | | |
| Indirect other | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 1 | | | | | | | | |
| Student | | | 1,111 | | | | | | | | | | | | | | | | | | | | | | | | 188 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Credit card | | | 29 | | | | | | | | | | | | | | | | | | | | | | | | 22 | | | | | | 13 | | | | | | 12 | | | | | | 12 | | | | | | | | |
| PCI | | | — | | | | | | | | | | | | | | | | | | | | | | | | 1,218 | | | | | | 30 | | | | | | 57 | | | | | | 90 | | | | | | | | |
| Total loans 90 days or more past due and still accruing | | | $ | 2,008 | | | | | | | | | | | | | | | | | | | | | | | $ | 1,994 | | | | | $ | 462 | | | | | $ | 548 | | | | | $ | 636 | | | | | | | |
| Loans 30-89 days past due and still accruing: (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 83 | | | | | | | | | | | | | | | | | | | | | | | $ | 94 | | | | | $ | 34 | | | | | $ | 41 | | | | | $ | 44 | | | | | | | |
| CRE | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 4 | | | | | | 8 | | | | | | 6 | | | | | | | | |
| Commercial construction | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | — | | | | | | 2 | | | | | | | | |
| Lease financing | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | 1 | | | | | | 4 | | | | | | 4 | | | | | | | | |
| Residential mortgage | | | 782 | | | | | | | | | | | | | | | | | | | | | | | | 498 | | | | | | 456 | | | | | | 472 | | | | | | 525 | | | | | | | | |
| Residential home equity and direct | | | 98 | | | | | | | | | | | | | | | | | | | | | | | | 122 | | | | | | 63 | | | | | | 67 | | | | | | 62 | | | | | | | | |
| Indirect auto | | | 495 | | | | | | | | | | | | | | | | | | | | | | | | 560 | | | | | | 390 | | | | | | 373 | | | | | | 347 | | | | | | | | |
| Indirect other | | | 68 | | | | | | | | | | | | | | | | | | | | | | | | 85 | | | | | | 46 | | | | | | 39 | | | | | | 30 | | | | | | | | |
| Student | | | 618 | | | | | | | | | | | | | | | | | | | | | | | | 650 | | | | | | — | | | | | | — | | | | | | — | | | | | | | | |
| Credit card | | | 51 | | | | | | | | | | | | | | | | | | | | | | | | 56 | | | | | | 26 | | | | | | 21 | | | | | | 21 | | | | | | | | |
| PCI | | | — | | | | | | | | | | | | | | | | | | | | | | | | 140 | | | | | | 23 | | | | | | 27 | | | | | | 36 | | | | | | | | |
| Total loans 30-89 days past due and still accruing | | | $ | 2,220 | | | | | | | | | | | | | | | | | | | | | | | $ | 2,213 | | | | | $ | 1,044 | | | | | $ | 1,052 | | | | | $ | 1,077 | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Asset Quality | Applicable ratios are annualized.(1)Includes LHFS.(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student and PPP loans, and PCI, as applicable. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio such that it might not be reflective of asset collectability or might not be comparable to other periods presented or to other portfolios that do not have government guarantees or were not impacted by PCI accounting requirements.The following table presents activity related to NPAs: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Table 23: Asset Quality Ratios | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| As Of / For The Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |
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| Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.74 | | % | | | | 0.74 | | % | | | | 0.70 | | % | | | | 0.73 | | % | | | | 0.75 | | % |
| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.67 | | | | | | 0.66 | | | | | | 0.31 | | | | | | 0.38 | | | | | | 0.44 | | |
| NPLs as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.44 | | | | | | 0.15 | | | | | | 0.35 | | | | | | 0.40 | | | | | | 0.51 | | |
| Nonperforming loans and leases as a percentage of loans and leases (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.44 | | | | | | 0.18 | | | | | | 0.35 | | | | | | 0.40 | | | | | | 0.51 | | |
| NPAs as a percentage of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.27 | | | | | | 0.14 | | | | | | 0.26 | | | | | | 0.28 | | | | | | 0.37 | | |
| Loans and leases HFI plus foreclosed property | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.46 | | | | | | 0.19 | | | | | | 0.39 | | | | | | 0.44 | | | | | | 0.57 | | |
| Net charge-offs as a percentage of average loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.36 | | | | | | 0.40 | | | | | | 0.36 | | | | | | 0.38 | | | | | | 0.38 | | |
| ALLL as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.95 | | | | | | 0.52 | | | | | | 1.05 | | | | | | 1.04 | | | | | | 1.04 | | |
| Ratio of ALLL to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.21x | | | | | | 2.44x | | | | | | 2.98x | | | | | | 2.78x | | | | | | 2.80x | | |
| NPLs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.39x | | | | | | 3.41x | | | | | | 2.99x | | | | | | 2.62x | | | | | | 2.03x | | |
| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI excluding PPP, other government guaranteed and PCI loans(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.04 | | % | | | | 0.03 | | % | | | | 0.04 | | % | | | | 0.05 | | % | | | | 0.07 | | % |
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| TFC/10-K/0000092230-21-000032 |
Asset Quality | (1)For 2020, includes approximately $500 million of loans previously classified as PCI that would have otherwise been nonperforming as of December 31, 2019.(2)Includes charge-offs and losses recorded upon sale of $139 million and $228 million for the year ended December 31, 2020 and 2019, respectively.(3)Includes charge-offs and losses recorded upon sale of $132 million and $39 million for the year ended December 31, 2020 and 2019, respectively.TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term and a concession has been granted to the borrower. As a result, Truist works with borrowers to prevent further difficulties and to improve the likelihood of recovery on a loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR. In accordance with the CARES Act, Truist implemented loan modification programs in response to the COVID-19 pandemic in order to provide borrowers with flexibility with respect to repayment terms. Payment relief assistance provided by Truist includes forbearance, deferrals, extension and re-aging programs, along with certain other modification strategies. The Company adopted certain provisions of the CARES Act and other regulatory guidance that provide relief from the requirement to apply TDR accounting to (1) certain modifications of federally backed mortgages upon request from the borrower, and (2) certain modifications of other non-federally backed mortgages for borrowers impacted by the COVID-19 pandemic that were less than 30 days past due at December 31, 2019. Refer to "Note 1. Basis of Presentation" for Truist’s policy related to TDRs and COVID-19 loan modifications. TDRs identified by SunTrust prior to the Merger date are not included in Truist's TDR disclosure because all such loans were recorded at fair value and a new accounting basis was established as of the Merger date. Subsequent modifications are evaluated for potential treatment as TDRs in accordance with Truist's accounting policies.The following table provides a summary of performing TDR activity: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Table 24: Rollforward of NPAs | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |
| Balance, January 1 | | | | | | $ | 684 | | | | | $ | 585 | | | | |
| New NPAs (1) | | | | | | 3,247 | | | | | | 1,499 | | | | | |
| Advances and principal increases | | | | | | 299 | | | | | | 143 | | | | | |
| Disposals of foreclosed assets (2) | | | | | | (432) | | | | | | (479) | | | | | |
| Disposals of NPLs (3) | | | | | | (712) | | | | | | (239) | | | | | |
| Charge-offs and losses | | | | | | (578) | | | | | | (295) | | | | | |
| Payments | | | | | | (766) | | | | | | (392) | | | | | |
| Transfers to performing status | | | | | | (339) | | | | | | (137) | | | | | |
| Other, net | | | | | | (16) | | | | | | (1) | | | | | |
| Ending balance, December 31 | | | | | | $ | 1,387 | | | | | $ | 684 | | | | |
| TFC/10-K/0000092230-21-000032 |
Asset Quality | (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.TDR classification may be removed due to the passage of time if the loan: (i) did not include a forgiveness of principal or interest, (ii) has performed in accordance with the modified terms (generally a minimum of six months), (iii) was reported as a TDR over a year-end reporting period, and (iv) reflected an interest rate on the modified loan that was no less than a market rate at the date of modification. TDR classification may also be removed for an accruing loan upon the occurrence of a subsequent non-concessionary modification granted at market terms and within current underwriting guidelines. In connection with consumer TDRs, a NPL will be returned to accruing status when (i) the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments, (ii) management concludes that all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment, and (iii) there is a sustained period of repayment performance, generally a minimum of six months.58 Truist Financial CorporationThe following table provides further details regarding the payment status of TDRs outstanding at December 31, 2020: |
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| Table 25: Rollforward of Performing TDRs | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |
| Balance, January 1 | | | | | | $ | 980 | | | | | $ | 1,119 | | | | |
| Inflows | | | | | | 933 | | | | | | 576 | | | | | |
| Payments and payoffs (1) | | | | | | (194) | | | | | | (214) | | | | | |
| Charge-offs | | | | | | (44) | | | | | | (67) | | | | | |
| Transfers to nonperforming TDRs (2) | | | | | | (78) | | | | | | (77) | | | | | |
| Removal due to the passage of time | | | | | | (8) | | | | | | (18) | | | | | |
| Non-concessionary re-modifications | | | | | | (3) | | | | | | (8) | | | | | |
| Transferred to LHFS, sold and other | | | | | | (225) | | | | | | (331) | | | | | |
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| Balance, December 31 | | | | | | $ | 1,361 | | | | | $ | 980 | | | | |
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| TFC/10-K/0000092230-21-000032 |
Asset Quality | (1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures. |
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| Table 26: Payment Status of TDRs (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Current | | | | | | | | | | | | Past Due 30-89 Days | | | | | | | | | | | | Past Due 90 Days Or More | | | | | | | | | | | | Total | | |
| Performing TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 77 | | | | | 98.7 | | % | | | | $ | — | | | | | — | | % | | | | $ | 1 | | | | | 1.3 | | % | | | | $ | 78 | |
| CRE | | | 47 | | | | | | 100.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 47 | | |
| Commercial construction | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Lease financing | | | 60 | | | | | | 100.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 60 | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | 383 | | | | | | 59.1 | | | | | | 107 | | | | | | 16.5 | | | | | | 158 | | | | | | 24.4 | | | | | | 648 | | |
| Residential home equity and direct | | | 82 | | | | | | 93.2 | | | | | | 5 | | | | | | 5.7 | | | | | | 1 | | | | | | 1.1 | | | | | | 88 | | |
| Indirect auto | | | 333 | | | | | | 84.9 | | | | | | 59 | | | | | | 15.1 | | | | | | — | | | | | | — | | | | | | 392 | | |
| Indirect other | | | 5 | | | | | | 83.3 | | | | | | 1 | | | | | | 16.7 | | | | | | — | | | | | | — | | | | | | 6 | | |
| Student | | | 5 | | | | | | 100.0 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | |
| Credit card | | | 32 | | | | | | 86.5 | | | | | | 3 | | | | | | 8.1 | | | | | | 2 | | | | | | 5.4 | | | | | | 37 | | |
| Total performing TDRs | | | 1,024 | | | | | | 75.2 | | | | | | 175 | | | | | | 12.9 | | | | | | 162 | | | | | | 11.9 | | | | | | 1,361 | | |
| Nonperforming TDRs | | | 76 | | | | | | 46.3 | | | | | | 20 | | | | | | 12.2 | | | | | | 68 | | | | | | 41.5 | | | | | | 164 | | |
| Total TDRs | | | $ | 1,100 | | | | | 72.1 | | | | | | $ | 195 | | | | | 12.8 | | | | | | $ | 230 | | | | | 15.1 | | | | | | $ | 1,525 | |
| TFC/10-K/0000092230-21-000032 |
ACL | The ACL totaled $6.2 billion at December 31, 2020, compared to $1.9 billion at December 31, 2019. The increase in the allowance for credit losses was primarily due to the adoption of CECL. Upon adoption, the Company recorded a $3.1 billion increase in the allowance for credit losses, including $2.8 billion that was charged to retained earnings before tax, and $378 million related to the gross up for PCD loans. The remaining increase in the allowance for credit losses primarily reflects deteriorated economic conditions. As of December 31, 2020, the allowance for loan and lease losses was 1.95% of loans and leases held for investment. The allowance for credit losses includes $5.8 billion for loans and leases and $364 million for the reserve for unfunded commitments. At December 31, 2020, the allowance for loan and lease losses was 4.39 times nonperforming loans and leases held for investment, compared to 3.41 times at December 31, 2019. At December 31, 2020, the allowance for loan and lease losses was 5.21 times annualized net charge-offs, compared to 2.44 times at December 31, 2019.60 Truist Financial CorporationNet charge-offs during 2020 totaled $1.1 billion, up $485 million compared to the prior year. The increase in net charge-offs primarily reflects the Merger. As a percentage of average loans and leases, annualized net charge-offs were 0.36%, down four basis points compared to the prior year. Current year net charge-offs include $97 million of charge-offs related to the implementation of CECL, which required a gross-up of loan carrying values in connection with the establishment of an allowance on PCD loans. Management performed a comprehensive review of PCD assets during the year and concluded in certain situations that a charge-off was required. Excluding these additional charge-offs, net charge-offs would have been an annualized 0.33% of average loans and leases for 2020, down seven basis points compared to the prior year.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. |
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| Table 27: Activity in ACL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | | | | | | | |
| Balance, beginning of period | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | $ | 1,550 | | | | | | | | | | | | | |
| CECL adoption - impact to retained earnings before tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,762 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | |
| CECL adoption - reserves on PCD assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 378 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | |
| Provision for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,335 | | | | | | 615 | | | | | | 566 | | | | | | 547 | | | | | | 572 | | | | | | | | | | | | | | |
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| Charge-offs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (358) | | | | | | (90) | | | | | | (92) | | | | | | (95) | | | | | | (143) | | | | | | | | | | | | | | |
| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (78) | | | | | | (33) | | | | | | (10) | | | | | | (8) | | | | | | (8) | | | | | | | | | | | | | | |
| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (30) | | | | | | — | | | | | | (3) | | | | | | (2) | | | | | | (1) | | | | | | | | | | | | | | |
| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (54) | | | | | | (11) | | | | | | (4) | | | | | | (5) | | | | | | (6) | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (56) | | | | | | (21) | | | | | | (21) | | | | | | (47) | | | | | | (40) | | | | | | | | | | | | | | |
| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (231) | | | | | | (93) | | | | | | (79) | | | | | | (69) | | | | | | (61) | | | | | | | | | | | | | | |
| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (378) | | | | | | (370) | | | | | | (342) | | | | | | (355) | | | | | | (315) | | | | | | | | | | | | | | |
| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (60) | | | | | | (62) | | | | | | (49) | | | | | | (47) | | | | | | (51) | | | | | | | | | | | | | | |
| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (23) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | |
| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (182) | | | | | | (109) | | | | | | (76) | | | | | | (68) | | | | | | (61) | | | | | | | | | | | | | | |
| PCI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | (2) | | | | | | (1) | | | | | | (15) | | | | | | | | | | | | | | |
| Total charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,450) | | | | | | (789) | | | | | | (678) | | | | | | (697) | | | | | | (701) | | | | | | | | | | | | | | |
| Recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 92 | | | | | | 25 | | | | | | 39 | | | | | | 36 | | | | | | 44 | | | | | | | | | | | | | | |
| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 5 | | | | | | 3 | | | | | | 9 | | | | | | 9 | | | | | | | | | | | | | | |
| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11 | | | | | | 3 | | | | | | 5 | | | | | | 7 | | | | | | 10 | | | | | | | | | | | | | | |
| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | 1 | | | | | | 1 | | | | | | 2 | | | | | | 2 | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 3 | | | | | | | | | | | | | | |
| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 66 | | | | | | 30 | | | | | | 25 | | | | | | 27 | | | | | | 28 | | | | | | | | | | | | | | |
| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 87 | | | | | | 52 | | | | | | 49 | | | | | | 46 | | | | | | 44 | | | | | | | | | | | | | | |
| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23 | | | | | | 17 | | | | | | 13 | | | | | | 14 | | | | | | 11 | | | | | | | | | | | | | | |
| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | | | |
| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32 | | | | | | 20 | | | | | | 17 | | | | | | 17 | | | | | | 18 | | | | | | | | | | | | | | |
| Total recoveries | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 331 | | | | | | 155 | | | | | | 154 | | | | | | 160 | | | | | | 169 | | | | | | | | | | | | | | |
| Net charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,119) | | | | | | (634) | | | | | | (524) | | | | | | (537) | | | | | | (532) | | | | | | | | | | | | | | |
| Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (46) | | | | | | 257 | | | | | | — | | | | | | — | | | | | | 9 | | | | | | | | | | | | | | |
| Balance, end of period | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 6,199 | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ALLL (excluding PCD / PCI loans) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 5,668 | | | | | $ | 1,541 | | | | | $ | 1,549 | | | | | $ | 1,462 | | | | | $ | 1,445 | | | | | | | | | | | | | |
| ALLL for PCD / PCI loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 167 | | | | | | 8 | | | | | | 9 | | | | | | 28 | | | | | | 44 | | | | | | | | | | | | | | |
| RUFC | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 364 | | | | | | 340 | | | | | | 93 | | | | | | 119 | | | | | | 110 | | | | | | | | | | | | | | |
| Total ACL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 6,199 | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
ACL | Truist monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. Truist also receives notification when the first lien holder, whether Truist or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, Truist obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, Truist estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, Truist also provides additional reserves for second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December 31, 2020, Truist held or serviced the first lien on 30.6% of its second lien positions. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Table 28: Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | | | | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | | | 2016 | | | | | | | | |
| December 31,(Dollars in millions) | | | Amount | | | | | | | | | | | | % Loans in Each Category | | | | | | Amount | | | | | | | | | | | | % Loans in Each Category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | |
| Commercial and industrial | | | $ | 2,156 | | | | | | | | | | | 46.2 | | % | | | | $ | 560 | | | | | | | | | | | 43.4 | | % | | | | $ | 546 | | | | | | | | | | | 41.4 | | % | | | | $ | 522 | | | | | | | | | | | 41.1 | | % | | | | $ | 530 | | | | | | | | | | | 40.4 | | % |
| CRE | | | 573 | | | | | | | | | | | | 8.9 | | | | | | 150 | | | | | | | | | | | | 8.9 | | | | | | 142 | | | | | | | | | | | | 11.3 | | | | | | 118 | | | | | | | | | | | | 12.0 | | | | | | 120 | | | | | | | | | | | | 11.1 | | |
| Commercial construction | | | 81 | | | | | | | | | | | | 2.2 | | | | | | 52 | | | | | | | | | | | | 2.1 | | | | | | 48 | | | | | | | | | | | | 2.9 | | | | | | 42 | | | | | | | | | | | | 2.8 | | | | | | 25 | | | | | | | | | | | | 2.7 | | |
| Lease financing | | | 48 | | | | | | | | | | | | 1.7 | | | | | | 10 | | | | | | | | | | | | 2.0 | | | | | | 11 | | | | | | | | | | | | 1.4 | | | | | | 9 | | | | | | | | | | | | 1.3 | | | | | | 7 | | | | | | | | | | | | 1.2 | | |
| Residential mortgage | | | 368 | | | | | | | | | | | | 15.8 | | | | | | 176 | | | | | | | | | | | | 17.4 | | | | | | 232 | | | | | | | | | | | | 21.1 | | | | | | 209 | | | | | | | | | | | | 20.0 | | | | | | 227 | | | | | | | | | | | | 20.8 | | |
| Residential home equity and direct | | | 714 | | | | | | | | | | | | 8.7 | | | | | | 107 | | | | | | | | | | | | 9.0 | | | | | | 104 | | | | | | | | | | | | 7.9 | | | | | | 113 | | | | | | | | | | | | 8.4 | | | | | | 111 | | | | | | | | | | | | 8.6 | | |
| Indirect auto | | | 1,198 | | | | | | | | | | | | 8.7 | | | | | | 304 | | | | | | | | | | | | 8.2 | | | | | | 298 | | | | | | | | | | | | 7.6 | | | | | | 296 | | | | | | | | | | | | 8.1 | | | | | | 273 | | | | | | | | | | | | 9.3 | | |
| Indirect other | | | 208 | | | | | | | | | | | | 3.7 | | | | | | 60 | | | | | | | | | | | | 3.7 | | | | | | 58 | | | | | | | | | | | | 4.1 | | | | | | 52 | | | | | | | | | | | | 3.9 | | | | | | 54 | | | | | | | | | | | | 3.6 | | |
| Student | | | 130 | | | | | | | | | | | | 2.5 | | | | | | — | | | | | | | | | | | | 2.2 | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | | | | | | | | | | | — | | |
| Credit card | | | 359 | | | | | | | | | | | | 1.6 | | | | | | 122 | | | | | | | | | | | | 1.9 | | | | | | 110 | | | | | | | | | | | | 2.0 | | | | | | 101 | | | | | | | | | | | | 1.9 | | | | | | 98 | | | | | | | | | | | | 1.7 | | |
| PCI | | | — | | | | | | | | | | | | — | | | | | | 8 | | | | | | | | | | | | 1.2 | | | | | | 9 | | | | | | | | | | | | 0.3 | | | | | | 28 | | | | | | | | | | | | 0.5 | | | | | | 44 | | | | | | | | | | | | 0.6 | | |
| Total ALLL | | | 5,835 | | | | | | | | | | | | 100.0 | | % | | | | 1,549 | | | | | | | | | | | | 100.0 | | % | | | | 1,558 | | | | | | | | | | | | 100.0 | | % | | | | 1,490 | | | | | | | | | | | | 100.0 | | % | | | | 1,489 | | | | | | | | | | | | 100.0 | | % |
| RUFC | | | 364 | | | | | | | | | | | | | | | | | | 340 | | | | | | | | | | | | | | | | | | 93 | | | | | | | | | | | | | | | | | | 119 | | | | | | | | | | | | | | | | | | 110 | | | | | | | | | | | | | | |
| Total ACL | | | $ | 6,199 | | | | | | | | | | | | | | | | | $ | 1,889 | | | | | | | | | | | | | | | | | $ | 1,651 | | | | | | | | | | | | | | | | | $ | 1,609 | | | | | | | | | | | | | | | | | $ | 1,599 | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Deposits | Deposits totaled $381.1 billion at December 31, 2020, an increase of $46.4 billion from December 31, 2019. The growth in deposits reflects solid growth in all non-time deposit categories resulting from pandemic-related client behavior and government stimulus programs. Time deposits decreased primarily due to maturities of wholesale negotiable certificates of deposit and higher-cost personal and business accounts.62 Truist Financial CorporationThe following table presents average deposits for each of the last five quarters: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Table 30: Deposits as of Period End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | | | | $ | 127,629 | | | | | | | | | | | | | | | | | | | | | | | $ | 92,405 | | | | | $ | 53,025 | | | | | $ | 53,767 | | | | | $ | 50,697 | |
| Interest checking | | | | | | 105,269 | | | | | | | | | | | | | | | | | | | | | | | | 85,492 | | | | | | 28,130 | | | | | | 27,677 | | | | | | 30,263 | | |
| Money market and savings | | | | | | 126,238 | | | | | | | | | | | | | | | | | | | | | | | | 120,934 | | | | | | 63,467 | | | | | | 62,757 | | | | | | 64,883 | | |
| Time deposits | | | | | | 21,941 | | | | | | | | | | | | | | | | | | | | | | | | 35,896 | | | | | | 16,577 | | | | | | 13,170 | | | | | | 14,391 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | | | | $ | 381,077 | | | | | | | | | | | | | | | | | | | | | | | $ | 334,727 | | | | | $ | 161,199 | | | | | $ | 157,371 | | | | | $ | 160,234 | |
| TFC/10-K/0000092230-21-000032 |
Deposits | Average deposits for the fourth quarter of 2020 were $375.3 billion, an increase of $3.1 billion compared to the prior quarter. Average noninterest-bearing and interest checking deposit growth was strong for the fourth quarter of 2020 driven by anticipated seasonal inflows in addition to continued growth resulting from pandemic-related client behavior. Average time deposits decreased primarily due to maturity of wholesale negotiable certificates of deposit and higher-cost personal and business accounts.Average noninterest-bearing deposits represented 33.9% of total deposits for the fourth quarter of 2020, compared to 33.3% for the prior quarter. The cost of average total deposits was 0.07% for the fourth quarter, down three basis points compared to the prior quarter. The cost of average interest-bearing deposits was 0.11% for the fourth quarter, down four basis points compared to the prior quarter.The following table summarizes the maturities of time deposits above $100,000: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Table 31: Average Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended(Dollars in millions) | | | | | | Dec 31, 2020 | | | | | | Sep 30, 2020 | | | | | | Jun 30, 2020 | | | | | | Mar 31, 2020 | | | | | | Dec 31, 2019 | | |
| Noninterest-bearing deposits | | | | | | $ | 127,103 | | | | | $ | 123,966 | | | | | $ | 113,875 | | | | | $ | 93,135 | | | | | $ | 64,485 | |
| Interest checking | | | | | | 99,866 | | | | | | 96,707 | | | | | | 97,863 | | | | | | 85,008 | | | | | | 43,246 | | |
| Money market and savings | | | | | | 124,692 | | | | | | 123,598 | | | | | | 126,071 | | | | | | 120,936 | | | | | | 79,903 | | |
| Time deposits | | | | | | 23,605 | | | | | | 27,940 | | | | | | 33,009 | | | | | | 35,570 | | | | | | 23,058 | | |
| Foreign office deposits - interest-bearing | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 24 | | |
| Total average deposits | | | | | | $ | 375,266 | | | | | $ | 372,211 | | | | | $ | 370,818 | | | | | $ | 334,649 | | | | | $ | 210,716 | |
| TFC/10-K/0000092230-21-000032 |
Borrowings | At December 31, 2020, short-term borrowings totaled $6.1 billion, a decrease of $12.1 billion compared to December 31, 2019, due primarily to a decrease of $10.8 billion in short-term FHLB advances. These borrowing sources were replaced with deposit funding.Average short-term borrowings were $10.1 billion, or 2.4% of total funding for 2020, as compared to $8.5 billion, or 4.1% for the prior year. The increase in the average amount was due to the Merger. Average short-term borrowings decreased as a percentage of funding sources due to strong deposit growth.Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $39.6 billion at December 31, 2020, a decrease of $1.7 billion compared to December 31, 2019. During 2020, the Company issued $4.8 billion of senior notes with interest rates from 1.125% to 1.95% maturing in 2023 to 2030, $500 million in floating rate senior notes maturing in 2023 and $1.3 billion of subordinated notes with an interest rate of 2.25% maturing in 2030. These issuances were partially offset by the redemption of $4.6 billion of senior notes during 2020 and a decrease of $3.3 billion in long-term FHLB advances. FHLB advances represented 2.2% of total outstanding long-term debt at December 31, 2020, compared to 10.0% at December 31, 2019. The average cost of long-term debt was 1.75% for the year ended December 31, 2020, down 147 basis points compared to the same period in 2019. Truist entered into $20 billion of FHLB advances during 2020 to build liquidity and ensure the Company was able to meet the funding needs of its clients. As market conditions stabilized and deposits increased, these advances were repaid and the Company recognized a loss of $235 million on the early extinguishment of debt. The repayment of these advances improved net interest income, the net interest margin and the leverage ratios. |
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| Table 33: Short-Term Borrowings | | | | | | | | | | | | | | | | | | | | |
| As Of / For The Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Securities sold under agreements to repurchase: | | | | | | | | | | | | | | | | | | | | |
| Maximum outstanding at any month-end during the year | | | | | | $ | 2,348 | | | | | $ | 1,969 | | | | | $ | 836 | |
| Balance outstanding at end of year | | | | | | 1,221 | | | | | | 1,969 | | | | | | 270 | | |
| Average outstanding during the year | | | | | | 1,504 | | | | | | 826 | | | | | | 446 | | |
| Average interest rate during the year | | | | | | 0.64 | | % | | | | 2.01 | | % | | | | 1.35 | | % |
| Average interest rate at end of year | | | | | | 0.13 | | | | | | 1.41 | | | | | | 1.59 | | |
| Federal funds purchased and short-term borrowed funds: | | | | | | | | | | | | | | | | | | | | |
| Maximum outstanding at any month-end during the year | | | | | | $ | 19,392 | | | | | $ | 14,493 | | | | | $ | 8,919 | |
| Balance outstanding at end of year | | | | | | 3,372 | | | | | | 14,493 | | | | | | 4,763 | | |
| Average outstanding during the year | | | | | | 6,951 | | | | | | 7,354 | | | | | | 5,341 | | |
| Average interest rate during the year | | | | | | 1.17 | | % | | | | 2.28 | | % | | | | 1.98 | | % |
| Average interest rate at end of year | | | | | | 0.20 | | | | | | 1.75 | | | | | | 2.49 | | |
| TFC/10-K/0000092230-21-000032 |
Interest Rate Market Risk | (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.Truist has established parameters related to interest rate sensitivity measures that prescribe a maximum impact on net interest income under different interest rate scenarios that would result in an escalation to the Board. The following parameters and interest rate scenarios are considered Truist's primary measures of interest rate risk:•Maximum impact on net interest income of 7.5% for the next 12 months assuming a 25 basis point change in interest rates each quarter for four quarters; and a•Maximum impact on net interest income of 10% for an immediate 100 basis point parallel change in rates.This interest rate shock analysis is designed to create an outer bound of acceptable interest rate risk.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 would increase interest-bearing funds to offset the loss of this advantageous funding source.The following table shows the results of Truist's interest-rate sensitivity position assuming the loss of demand deposits and an associated increase in managed rate deposits under various scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%. |
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| Table 34: Interest Sensitivity Simulation Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest Rate Scenario | | | | | | | | | | | | | | | | | | Annualized Hypothetical Percentage Change in Net Interest Income | | | | | | | | |
| Linear Change in Prime Rate (bps) | | | | | | Prime Rate | | | | | | | | | | | |
| | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | | | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | |
| Up 100 | | | | | | 4.25 | | % | | | | 5.75 | | % | | | | 4.18 | | % | | | | 0.95 | | % |
| Up 50 | | | | | | 3.75 | | | | | | 5.25 | | | | | | 3.24 | | | | | | 0.75 | | |
| No Change | | | | | | 3.25 | | | | | | 4.75 | | | | | | — | | | | | | — | | |
| Down 25 (1) | | | | | | 3.00 | | | | | | 4.50 | | | | | | (1.82) | | | | | | NA | | |
| Down 50 (1) | | | | | | 2.75 | | | | | | 4.25 | | | | | | (2.09) | | | | | | (1.18) | | |
| TFC/10-K/0000092230-21-000032 |
Interest Rate Market Risk | (1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at December 31, 2020 as presented in the preceding table.Truist also uses an EVE analysis to focus on longer-term projected changes in asset and liability values given potential changes in interest rates. This measure allows Truist to analyze interest rate risk that falls outside the net interest income simulation period. The EVE model is a discounted cash flow of the portfolio of assets, liabilities and derivative instruments. The difference in the present value of assets minus the present value of liabilities is defined as EVE.The following table shows the effect that the indicated changes in interest rates would have on EVE: |
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| Table 35: Deposit Mix Sensitivity Analysis | | | | | | | | | | | | | | | | | | | | |
| Linear Change in Rates (bps) | | | | | | Base Scenario at December 31, 2020 (1) | | | | | | Results Assuming a Decrease in Noninterest-Bearing Demand Deposits | | | | | | | | |
| | | | | | | $20 Billion | | | | | | $40 Billion | | |
| Up 100 | | | | | | 4.18 | | % | | | | 3.36 | | % | | | | 2.54 | | % |
| Up 50 | | | | | | 3.24 | | | | | | 2.64 | | | | | | 2.04 | | |
| TFC/10-K/0000092230-21-000032 |
Interest Rate Market Risk | 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. During October 2020, Truist initiated a new investment securities fair value hedging program, using fixed interest rate swaps to hedge prepayable securities. Truist also uses derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of December 31, 2020, Truist had derivative financial instruments outstanding with notional amounts totaling $322.9 billion, with an associated net fair value of $3.3 billion. See "Note 19. Derivative Financial Instruments" for additional disclosures.LIBOR in its current form was anticipated to no longer be available after 2021. For most tenors of U.S. dollar LIBOR, subject to the results of a consultation period ending January 2021, the administrator of LIBOR is considering extending publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR, are still anticipated to cease publication at December 31, 2021, based on this new guidance. Truist has U.S. dollar LIBOR-based contracts that extend beyond June 30, 2023. To prepare for the transition to an alternative reference rate, management has formed a cross-functional project team to address the LIBOR transition. The project team has performed an assessment to identify the potential risks related to the transition from LIBOR to a new index. The project team provides updates to Executive Leadership and the Board.Contract fallback language for existing loans and leases is under review and certain contracts will need updated provisions for the transition. Current fallback language used for new, renewed, and modified contracts is generally consistent with ARRC recommendations. Updates to current fallback language will be evaluated according to new regulatory guidance for the extension of timelines for the transition and expectations for production of U.S. dollar LIBOR contracts during 2021. 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 for the transition. Market risks associated with this change are dependent on the alternative reference rates available and market conditions at transition. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to the section titled "Item1A. Risk Factors." In 2020, Truist began offering SOFR-based lending solutions to wholesale and consumer clients, and entered into SOFR-based derivative contracts. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry. Truist continues to evaluate SOFR for additional product offerings and other alternative reference rates as replacements for LIBOR. |
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| Table 36: EVE Simulation Analysis | | | | | | | | | | | | | | |
| Change in Interest Rates (bps) | | | | | | | | | | | | Hypothetical Percentage Change in EVE | | | | | | | | |
| | | | | | | | | | | | | | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | |
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| Up 100 | | | | | | | | | | | | | | | | | | 3.9 | | % | | | | (2.9) | | % |
| No Change | | | | | | | | | | | | | | | | | | — | | | | | | — | | |
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| Down 100 | | | | | | | | | | | | | | | | | | (7.6) | | | | | | (3.0) | | |
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| TFC/10-K/0000092230-21-000032 |
Stressed VaR-based measures | The increase from the prior year in stressed VaR-based measures was due to the integration of heritage SunTrust trading business after the Merger and the market volatility due to the COVID-19 pandemic. |
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| Table 38: Stressed VaR-based Measures - 10 Day Holding Period | | | | | | | | | | | | | | | | | | | | |
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| Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | |
| Maximum | | | | | | | | | | | | | | | $ | 65 | | | | | $ | 33 | |
| Average | | | | | | | | | | | | | | | 33 | | | | | | 5 | | |
| Minimum | | | | | | | | | | | | | | | 13 | | | | | | 2 | | |
| Period-end | | | | | | | | | | | | | | | 28 | | | | | | 28 | | |
| TFC/10-K/0000092230-21-000032 |
Truist Bank | 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 various "stress" scenarios. Additionally, the plan provides a framework for management and other critical personnel 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. Management believes current sources of liquidity are adequate to meet Truist's current requirements and plans for continued growth. See "Note 9. Other Assets and Liabilities," "Note 11. Borrowings" and "Note 16. Commitments and Contingencies" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations. |
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| Table 39: Credit Ratings of Truist Financial Corporation and Truist Bank | | | | | | | | | | | | | | | | | | | | | | | |
| | | | S&P | | | | | | Moody's | | | | | | Fitch | | | | | | DBRS Morningstar | | |
| Truist Financial Corporation: | | | | | | | | | | | | | | | | | | | | | | | |
| Issuer | | | A- / A-2 | | | | | | A3 | | | | | | A+ / F1 | | | | | | AH / R-1L | | |
| Senior unsecured | | | A- | | | | | | A3 | | | | | | A | | | | | | AH | | |
| Subordinated | | | BBB+ | | | | | | A3 | | | | | | A- | | | | | | A | | |
| Preferred stock | | | BBB- | | | | | | Baa2(hyb) | | | | | | BBB | | | | | | BBBH | | |
| Truist Bank: | | | | | | | | | | | | | | | | | | | | | | | |
| Issuer | | | A / A-1 | | | | | | A2 | | | | | | A+ / F1 | | | | | | AAL / R-1M | | |
| Senior unsecured | | | A | | | | | | A2 | | | | | | A+ | | | | | | AAL | | |
| Deposits | | | NA | | | | | | Aa2 / P-1 | | | | | | AA- / F1+ | | | | | | AAL / R-1M | | |
| Subordinated | | | A- | | | | | | (P) A3 | | | | | | A | | | | | | AH | | |
| Ratings outlook: | | | | | | | | | | | | | | | | | | | | | | | |
| Credit trend | | | Stable | | | | | | Stable | | | | | | Negative | | | | | | Stable | | |
| TFC/10-K/0000092230-21-000032 |
Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements | (1)Amounts include imputed interest of $5 million related to finance leases.(2)Based on estimated payment dates.(3)Includes accrued interest and future contractual interest obligations. Variable rate payments are based upon the rate in effect at December 31, 2020.(4)Represents obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the table above based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in the table above.(5)Although technically unfunded plans, rabbi trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefit plan payments.Truist's commitments include investments in affordable housing projects throughout its market area, renewable energy credits, and private equity funds. Refer to "Note 1. Basis of Presentation" and "Note 16. Commitments and Contingencies" for further discussion of these commitments. In addition, Truist enters into derivative contracts to manage various financial risks. Further discussion of derivative instruments is included in "Note 1. Basis of Presentation" and "Note 19. Derivative Financial Instruments." Further discussion related to the nature of Truist's obligations is included in "Note 16. Commitments and Contingencies." Further discussion of Truist's commitments is included in "Note 16. Commitments and Contingencies" and "Note 18. Fair Value Disclosures." 76 Truist Financial Corporation |
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| Table 40: Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Total | | | | | | Less than 1 Year | | | | | | 1 to 3 Years | | | | | | 3 to 5 Years | | | | | | After 5 Years | | |
| Long-term debt (1) | | | $ | 39,602 | | | | | $ | 5,373 | | | | | $ | 14,375 | | | | | $ | 11,106 | | | | | $ | 8,748 | |
| Operating leases | | | 2,079 | | | | | | 361 | | | | | | 677 | | | | | | 468 | | | | | | 573 | | |
| Commitments to fund affordable housing investments | | | 1,057 | | | | | | 623 | | | | | | 364 | | | | | | 27 | | | | | | 43 | | |
| Renewable energy, private equity and certain other equity method investment commitments (2) | | | 547 | | | | | | 284 | | | | | | 145 | | | | | | 74 | | | | | | 44 | | |
| Time deposits | | | 21,941 | | | | | | 17,438 | | | | | | 3,860 | | | | | | 593 | | | | | | 50 | | |
| Contractual interest payments (3) | | | 3,723 | | | | | | 1,012 | | | | | | 1,407 | | | | | | 838 | | | | | | 466 | | |
| Purchase obligations (4) | | | 2,020 | | | | | | 705 | | | | | | 739 | | | | | | 401 | | | | | | 175 | | |
| Nonqualified benefit plan obligations (5) | | | 1,914 | | | | | | 22 | | | | | | 54 | | | | | | 53 | | | | | | 1,785 | | |
| Total contractual cash obligations | | | $ | 72,883 | | | | | $ | 25,818 | | | | | $ | 21,621 | | | | | $ | 13,560 | | | | | $ | 11,884 | |
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| TFC/10-K/0000092230-21-000032 |
Capital | (1)The Truist targets are subject to revision based on finalization of pending regulatory guidance and other strategic factors.(2)Truist's goal is to maintain capital levels above all regulatory minimums.(3)Reflects a SCB of 270 basis points for Truist.During the first quarter of 2020, as market conditions evolved, Truist received Board approval to establish new interim operating targets that provide for sufficient capital levels while allowing the company to support clients through the economic downturn. These interim operating targets will be evaluated as economic conditions evolve.While nonrecurring events or management decisions may result in the Company temporarily falling below its operating targets for one or more of these ratios, it is management's intent to return to these operating targets within a reasonable period of time through capital planning. Such temporary decreases below the operating minimums shown above are not considered an infringement of Truist's overall capital policy, provided a return above the minimums is forecasted to occur within a reasonable time period.In August 2020, the Federal Reserve informed Truist of its SCB of 270 basis points for risk-based capital ratios. This buffer was determined based on stress testing results developed by the Federal Reserve and is effective from October 1, 2020 through September 30, 2021, at which point a revised SCB will be calculated and provided to Truist. Consistent with the Federal Reserve’s mandate across the industry, Truist resubmitted its capital plan in November 2020 to reflect changes in financial markets and the macroeconomic outlook. Truist’s review of the results of the 2020 CCAR supervisory stress test notes that the modeled outcomes shown by the FRB differ from those calculated by the Company. Truist believes those differences are attributable in part to the application of purchase accounting associated with the Merger. Purchase accounting adjustments could result in a reduction in provision expense and an increase in pre-provision net revenue. These differences could result in higher capital ratios than were reflected in the CCAR results.In December 2020, the Board of Directors authorized the repurchase of up to $2.0 billion of the Company’s common stock beginning in the first quarter of 2021, as well as certain other actions to optimize Truist’s capital position. Management’s intention is to maintain an approximate 10% Common Equity Tier 1 ratio after considering strategic actions such as non-bank acquisitions or stock repurchases, as well as changes in risk-weighted assets. Any stock repurchase activity will be informed by economic and regulatory considerations as well as Truist’s capital position, earnings outlook, and capital deployment priorities.Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company's double leverage ratio (investments in subsidiaries as a percentage of shareholders' equity). The active management of the subsidiaries' equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of Truist's capital position.Management intends to maintain capital at Truist Bank at levels that will result in classification as "well-capitalized" for regulatory purposes. Secondarily, it is management's intent to maintain Truist Bank's capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile. If the capital levels of Truist Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.Management's capital deployment plan in order of preference is to focus on (i) organic growth, (ii) dividends, and (iii) strategic opportunities and/or share repurchases depending on opportunities in the marketplace and Truist's interest and ability to proceed with acquisitions.Truist Bank's capital ratios are presented in the following table: |
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| Table 41: Capital Requirements and Targets | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Minimum Capital | | | | | | Well Capitalized | | | | | | | | | Minimum Capital Plus Stress Capital Buffer (3) | | | | | | Truist Targets (1) | | | | | |
| | | | | | | Truist | | | Truist Bank | | | | | | | | | Interim Operating (2) | | | | | | Stressed | | |
| CET1 | | | 4.5 | | % | | | | NA | | | 6.5 | | % | | | | 7.2 | | % | | | | 8.0 | | % | | | | 7.2 | | % |
| Tier 1 capital | | | 6.0 | | | | | | 6.0 | | | 8.0 | | | | | | 8.7 | | | | | | 9.3 | | | | | | 8.7 | | |
| Total capital | | | 8.0 | | | | | | 10.0 | | | 10.0 | | | | | | 10.7 | | | | | | 11.3 | | | | | | 10.7 | | |
| Leverage ratio | | | 4.0 | | | | | | NA | | | 5.0 | | | | | | NA | | | | | | 7.5 | | | | | | 7.0 | | |
| Supplementary leverage ratio | | | 3.0 | | | | | | NA | | | NA | | | | | | NA | | | | | | 6.5 | | | | | | 6.0 | | |
| TFC/10-K/0000092230-21-000032 |
Capital | (1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist Bank became subject to the supplementary leverage ratio as of January 1, 2020. Truist's capital ratios are presented in the following table: |
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| Table 42: Capital Ratios - Truist Bank | | | | | | | | | | | | | | |
| December 31, | | | | | | 2020 | | | | | | 2019 | | |
| CET1 to risk-weighted assets | | | | | | 11.0 | | % | | | | 10.6 | | % |
| Tier 1 capital to risk-weighted assets | | | | | | 11.0 | | | | | | 10.6 | | |
| Total capital to risk-weighted assets | | | | | | 13.0 | | | | | | 12.0 | | |
| Leverage ratio (1) | | | | | | 8.7 | | | | | | 14.5 | | |
| Supplementary leverage ratio (2) | | | | | | 7.5 | | | | | | NA | | |
| TFC/10-K/0000092230-21-000032 |
Capital | (1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist became subject to the supplementary leverage ratio as of January 1, 2020. (3)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 improved compared to year-end 2020, due to growth in CET1 capital, partially offset by higher risk-weighted assets. Truist's capital levels remain strong compared to the regulatory levels for well capitalized banks at December 31, 2020. Truist’s other capital measures also improved as Truist issued various capital instruments to strengthen its capital position. Truist issued $3.5 billion of preferred stock and redeemed $500 million of Series K preferred stock during 2020. In addition, Truist issued $1.3 billion of subordinated debt. During 2020,Truist paid $2.4 billion in common stock dividends or $1.80 per share, which resulted in a total payout ratio of 58.0% for the year.78 Truist Financial Corporation |
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| Table 43: Capital Ratios - Truist Financial Corporation | | | | | | | | | | | | | | |
| December 31,(Dollars in millions, except per share data, shares in thousands) | | | | | | 2020 | | | | | | 2019 | | |
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| Risk-based: | | | | | | | | | | | | | | |
| CET1 capital to risk-weighted assets | | | | | | 10.0 | | % | | | | 9.5 | | % |
| Tier 1 capital to risk-weighted assets | | | | | | 12.1 | | | | | | 10.8 | | |
| Total capital to risk-weighted assets | | | | | | 14.5 | | | | | | 12.6 | | |
| Leverage ratio (1) | | | | | | 9.6 | | | | | | 14.7 | | |
| Supplementary leverage ratio (2) | | | | | | 8.7 | | | | | | NA | | |
| Non-GAAP capital measure (3): | | | | | | | | | | | | | | |
| Tangible common equity per common share | | | | | | $ | 26.78 | | | | | $ | 25.93 | |
| Calculation of tangible common equity (3): | | | | | | | | | | | | | | |
| Total shareholders' equity | | | | | | $ | 70,912 | | | | | $ | 66,558 | |
| Less: | | | | | | | | | | | | | | |
| Preferred stock | | | | | | 8,048 | | | | | | 5,102 | | |
| Noncontrolling interests | | | | | | 105 | | | | | | 174 | | |
| Goodwill and intangible assets, net of deferred taxes | | | | | | 26,629 | | | | | | 26,482 | | |
| Tangible common equity | | | | | | $ | 36,130 | | | | | $ | 34,800 | |
| Risk-weighted assets | | | | | | $ | 379,153 | | | | | $ | 376,056 | |
| Common shares outstanding at end of period | | | | | | 1,348,961 | | | | | | 1,342,166 | | |
| TFC/10-K/0000092230-21-000032 |
Capital | (1)Loans and leases are net of unearned income and include LHFS. |
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| Table 44: Quarterly Financial Summary – Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | |
| (Dollars in millions, except per share data) | | | Fourth Quarter | | | | | | Third Quarter | | | | | | Second Quarter | | | | | | First Quarter | | | | | | Fourth Quarter | | | | | | Third Quarter | | | | | | Second Quarter | | | | | | First Quarter | | |
| Consolidated summary of operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | | $ | 3,611 | | | | | $ | 3,623 | | | | | $ | 3,888 | | | | | $ | 4,426 | | | | | $ | 2,812 | | | | | $ | 2,218 | | | | | $ | 2,206 | | | | | $ | 2,173 | |
| Interest expense | | | 245 | | | | | | 261 | | | | | | 440 | | | | | | 776 | | | | | | 585 | | | | | | 518 | | | | | | 516 | | | | | | 477 | | |
| Provision for credit losses | | | 177 | | | | | | 421 | | | | | | 844 | | | | | | 893 | | | | | | 171 | | | | | | 117 | | | | | | 172 | | | | | | 155 | | |
| Noninterest income | | | 2,285 | | | | | | 2,210 | | | | | | 2,423 | | | | | | 1,961 | | | | | | 1,398 | | | | | | 1,303 | | | | | | 1,352 | | | | | | 1,202 | | |
| Noninterest expense | | | 3,833 | | | | | | 3,755 | | | | | | 3,878 | | | | | | 3,431 | | | | | | 2,575 | | | | | | 1,840 | | | | | | 1,751 | | | | | | 1,768 | | |
| Provision for income taxes | | | 311 | | | | | | 255 | | | | | | 191 | | | | | | 224 | | | | | | 153 | | | | | | 218 | | | | | | 234 | | | | | | 177 | | |
| Net income | | | 1,330 | | | | | | 1,141 | | | | | | 958 | | | | | | 1,063 | | | | | | 726 | | | | | | 828 | | | | | | 885 | | | | | | 798 | | |
| Noncontrolling interest | | | 1 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 5 | | | | | | 3 | | | | | | (1) | | | | | | 6 | | |
| Preferred stock dividends | | | 101 | | | | | | 70 | | | | | | 53 | | | | | | 74 | | | | | | 19 | | | | | | 90 | | | | | | 44 | | | | | | 43 | | |
| Net income available to common shareholders | | | $ | 1,228 | | | | | $ | 1,068 | | | | | $ | 902 | | | | | $ | 986 | | | | | $ | 702 | | | | | $ | 735 | | | | | $ | 842 | | | | | $ | 749 | |
| Basic EPS | | | $ | 0.91 | | | | | $ | 0.79 | | | | | $ | 0.67 | | | | | $ | 0.73 | | | | | $ | 0.76 | | | | | $ | 0.96 | | | | | $ | 1.10 | | | | | $ | 0.98 | |
| Diluted EPS | | | $ | 0.90 | | | | | $ | 0.79 | | | | | $ | 0.67 | | | | | $ | 0.73 | | | | | $ | 0.75 | | | | | $ | 0.95 | | | | | $ | 1.09 | | | | | $ | 0.97 | |
| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | | $ | 503,181 | | | | | $ | 500,826 | | | | | $ | 514,720 | | | | | $ | 477,550 | | | | | $ | 302,059 | | | | | $ | 232,420 | | | | | $ | 229,249 | | | | | $ | 225,573 | |
| Securities, at amortized cost | | | 102,053 | | | | | | 79,828 | | | | | | 75,159 | | | | | | 75,701 | | | | | | 60,699 | | | | | | 48,900 | | | | | | 46,115 | | | | | | 46,734 | | |
| Loans and leases (1) | | | 308,188 | | | | | | 315,691 | | | | | | 326,435 | | | | | | 307,748 | | | | | | 193,641 | | | | | | 152,042 | | | | | | 151,557 | | | | | | 148,790 | | |
| Total earning assets | | | 438,666 | | | | | | 435,394 | | | | | | 446,825 | | | | | | 413,533 | | | | | | 263,115 | | | | | | 203,408 | | | | | | 200,839 | | | | | | 197,721 | | |
| Deposits | | | 375,266 | | | | | | 372,211 | | | | | | 370,818 | | | | | | 334,649 | | | | | | 210,716 | | | | | | 161,992 | | | | | | 159,891 | | | | | | 160,045 | | |
| Short-term borrowings | | | 6,493 | | | | | | 6,209 | | | | | | 8,998 | | | | | | 18,900 | | | | | | 11,489 | | | | | | 8,307 | | | | | | 8,367 | | | | | | 5,624 | | |
| Long-term debt | | | 40,284 | | | | | | 40,919 | | | | | | 55,537 | | | | | | 46,547 | | | | | | 29,888 | | | | | | 22,608 | | | | | | 23,233 | | | | | | 23,247 | | |
| Total interest-bearing liabilities | | | 294,940 | | | | | | 295,373 | | | | | | 321,478 | | | | | | 306,961 | | | | | | 187,608 | | | | | | 140,407 | | | | | | 138,811 | | | | | | 136,633 | | |
| Shareholders' equity | | | 70,145 | | | | | | 69,634 | | | | | | 66,863 | | | | | | 65,412 | | | | | | 41,740 | | | | | | 32,744 | | | | | | 31,301 | | | | | | 30,541 | | |
| TFC/10-K/0000092230-21-000032 |
NPAs | (1)Loans may be returned to performing status when (i) the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments, (ii) management concludes that all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment, and (iii) there is a sustained period of repayment performance, generally a minimum of six months.(2)Or when it is probable that principal or interest is not fully collectible, whichever occurs first.(3)Depends on product type, loss mitigation status, status of the government guaranty, if applicable, and certain other product-specific factors.(4)Student loans are not placed in nonperforming status, which reflects consideration of governmental guarantees or accelerated charge-off policies related to certain non-guaranteed portfolios.(5)Claims related to government guaranteed loans may be filed once the loans reach 270 days past due. The non-guaranteed balance, which ranges from 2-3%, is charged off once the claim proceeds related to the guaranteed portion have been received.(6)Credit cards are generally not placed on nonperforming status, but are fully charged off at specified delinquency dates consistent with regulatory guidelines. |
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| (number of days) | | | | | | Placed on Nonperforming (1) | | | | | | | | | | | | Evaluated for Charge-off | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |
| CRE | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |
| Commercial construction | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |
| Lease financing | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage (3) | | | | | | 90 | | | to | | | 180 | | | | | | 90 | | | to | | | 210 | | |
| Residential home equity and direct (3) | | | | | | 90 | | | to | | | 120 | | | | | | 90 | | | to | | | 180 | | |
| Indirect auto (3) | | | | | | 90 | | | | | | | | | | | | 120 | | | | | | | | |
| Indirect other (3) | | | | | | 90 | | | to | | | 120 | | | | | | 120 | | | to | | | 180 | | |
| Student (4) (5) | | | | | | NA | | | | | | | | | | | | 120 | | | to | | | 180 | | |
| Credit card (6) | | | | | | NA | | | | | | | | | | | | 90 | | | to | | | 180 | | |
| TFC/10-K/0000092230-21-000032 |
Commercial | Loans are generally pooled one level below the portfolio segment for the collectively calculated ALLL based on factors such as business sector, project and property type, line of business, collateral, loan type, obligor exposure, and risk grade or score. Commercial loss forecasting models are expected loss frameworks that use macroeconomic forecast data across scenarios and current portfolio attributes as inputs. The models forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The primary macroeconomic drivers for the commercial portfolios include unemployment trends, U.S. real GDP, corporate credit spreads, rental rates and property values.Truist's policy is to review and individually evaluate the reserve for all nonperforming lending relationships and TDRs with an outstanding balance of $5 million or more, as such lending relationships do not typically share similar risk characteristics with others. Individually evaluated reserves are based on current forecasts, the present value of expected cash flows discounted at the loan's effective interest rate or the value of collateral, which is generally based on appraisals, recent sales of foreclosed properties and/or relevant property-specific market information. Truist has elected to measure expected credit losses on collateral-dependent loans based on the fair value of the collateral. Loans are considered collateral dependent when it is probable that Truist will be unable to collect principal and interest according to the contractual terms of the agreement and repayment is expected to be provided substantially by the sale or continued operation of the underlying collateral. Commercial loans are typically secured by real estate, business equipment, inventories and other types of collateral. |
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| Risk Rating | | | Description | | |
| Pass | | | Loans not considered to be problem credits | | |
| Special Mention | | | Loans that have a potential weakness deserving management's close attention | | |
| Substandard | | | Loans for which a well-defined weakness has been identified that may put full collection of contractual cash flows at risk | | |
| Nonperforming | | | Loans for which full collection of principal and interest is not considered probable | | |
| TFC/10-K/0000092230-21-000032 |
Derivative Financial Instruments | 102 Truist Financial Corporation |
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| | | | Cash Flow Hedges | | | Fair Value Hedges | | | | | |
| Risk exposure | | | Variability in cash flows of interest payments on floating rate loans, overnight funding and various LIBOR and successor rate funding instruments. | | | Changes in value on fixed rate long-term debt, FHLB advances, loans and AFS securities due to changes in interest rates. | | | | | |
| Risk management objective | | | Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest due to changes in the contractually specified interest rate. | | | Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps. | | | | | |
| Treatment during the hedge period | | | Changes in value of the hedging instruments are recognized in AOCI until the related cash flows from the hedged item are recognized in earnings. The amount reclassified to earnings is recorded in the same line item as the earnings effect of the hedged item. | | | Changes in value of both the hedging instruments and the assets or liabilities being hedged are recognized in the income statement line item associated with the asset or liability being hedged. | | | | | |
| Treatment if hedge ceases to be highly effective or is terminated | | | Hedge is dedesignated. Changes in value recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. | | | If hedged item remains outstanding, the basis adjustment that resulted from hedging is amortized into earnings over the designated hedged period or the maturity date of the instrument, and cash flows from terminated hedges are reported in the same category as the cash flows from the hedged item. | | | | | |
| Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter | | | Hedge accounting ceases and any gain or loss in AOCI is recognized in earnings immediately. | | | Not applicable | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 2. Business Combinations | The following is a description of the methods used to determine the fair values of significant assets and liabilities.Cash and cash equivalents; Interest-bearing deposits with banks, and Federal Funds sold and securities purchased under resale agreements: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets. |
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| (Dollars in millions) | | | UPB | | | | | | Fair Value | | |
| Fair value of Merger consideration | | | | | | | | | $ | 33,547 | |
| Assets | | | | | | | | | | | |
| Cash and due from banks | | | | | | | | | 1,621 | | |
| Interest-bearing deposits with banks | | | | | | | | | 4,668 | | |
| Securities borrowed or purchased under resale agreements | | | | | | | | | 1,191 | | |
| Trading assets | | | | | | | | | 5,710 | | |
| AFS securities | | | | | | | | | 30,986 | | |
| LHFS | | | | | | | | | 3,752 | | |
| Loans and leases: | | | | | | | | | | | |
| Commercial and industrial | | | $ | 68,687 | | | | | 67,101 | | |
| CRE | | | 9,509 | | | | | | 9,357 | | |
| Commercial Construction | | | 2,136 | | | | | | 2,096 | | |
| Commercial Leases | | | 3,967 | | | | | | 3,743 | | |
| Mortgage Loans | | | 28,191 | | | | | | 27,180 | | |
| Home Equity and Direct Lending | | | 15,917 | | | | | | 15,628 | | |
| Indirect Auto | | | 12,373 | | | | | | 12,203 | | |
| Indirect Other | | | 4,678 | | | | | | 4,445 | | |
| Student Lending | | | 6,867 | | | | | | 6,657 | | |
| Credit Card | | | 2,518 | | | | | | 2,497 | | |
| PCI | | | 3,652 | | | | | | 3,126 | | |
| Total loans and leases | | | $ | 158,495 | | | | | 154,033 | | |
| Premises and equipment | | | | | | | | | 1,496 | | |
| CDI and other intangible assets | | | | | | | | | 2,734 | | |
| MSRs | | | | | | | | | 1,605 | | |
| Other assets | | | | | | | | | 13,646 | | |
| Total assets | | | | | | | | | 221,442 | | |
| Liabilities and Equity | | | | | | | | | | | |
| Deposits | | | | | | | | | (170,633) | | |
| Short-term borrowings | | | | | | | | | (6,837) | | |
| Long-term debt | | | | | | | | | (19,484) | | |
| Other liabilities | | | | | | | | | (5,011) | | |
| Total liabilities | | | | | | | | | (201,965) | | |
| Noncontrolling interest | | | | | | | | | (108) | | |
| Less: Net assets | | | | | | | | | 19,369 | | |
| Goodwill | | | | | | | | | $ | 14,178 | |
| TFC/10-K/0000092230-21-000032 |
NOTE 3. Securities Financing Activities | 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 16. Commitments and Contingencies" for additional information related to pledged securities. Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company’s related activity, by collateral type and remaining contractual maturity: |
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| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |
| Securities purchased under resale agreements | | | | | | $ | 1,158 | | | | | $ | 986 | |
| Securities borrowed | | | | | | 587 | | | | | | 431 | | |
| Total securities borrowed or purchased under resale agreements | | | | | | $ | 1,745 | | | | | $ | 1,417 | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 3. Securities Financing Activities | There were no securities financing transactions subject to legally enforceable master netting arrangements that were eligible for balance sheet netting for the periods presented. |
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| December 31, (Dollars in millions) | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | |
| Overnight and Continuous | | | | | | Up to 30 days | | | | | | | | | | | | Total | | | | | | Overnight and Continuous | | | | | | Up to 30 days | | | | | | 30-90 days | | | | | | Total | | |
| U.S. Treasury | | | $ | 305 | | | | | $ | 31 | | | | | | | | | | | $ | 336 | | | | | $ | 115 | | | | | $ | 35 | | | | | $ | — | | | | | $ | 150 | |
| GSE | | | 45 | | | | | | 9 | | | | | | | | | | | | 54 | | | | | | 87 | | | | | | 37 | | | | | | — | | | | | | 124 | | |
| Agency MBS - residential | | | 442 | | | | | | 6 | | | | | | | | | | | | 448 | | | | | | 928 | | | | | | 41 | | | | | | 100 | | | | | | 1,069 | | |
| Corporate and other debt securities | | | 204 | | | | | | 179 | | | | | | | | | | | | 383 | | | | | | 310 | | | | | | 316 | | | | | | — | | | | | | 626 | | |
| Total securities sold under agreements to repurchase | | | $ | 996 | | | | | $ | 225 | | | | | | | | | | | $ | 1,221 | | | | | $ | 1,440 | | | | | $ | 429 | | | | | $ | 100 | | | | | $ | 1,969 | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 4. Investment Securities | Certain securities issued by FNMA and FHLMC exceeded 10% of shareholders' equity at December 31, 2020. The FNMA investments had total amortized cost and fair value of $28.5 billion and $29.0 billion, respectively. The FHLMC investments had total amortized cost and fair value of $29.0 billion and $29.4 billion, respectively. |
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| December 31, 2020(Dollars in millions) | | | | | | Amortized Cost | | | | | | Gross Unrealized | | | | | | | | | | | | Fair Value | | | | | |
| | | | | | | Gains | | | | | | Losses | | | | | | | | |
| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | $ | 1,721 | | | | | $ | 25 | | | | | $ | — | | | | | $ | 1,746 | | | | |
| GSE | | | | | | 1,840 | | | | | | 77 | | | | | | — | | | | | | 1,917 | | | | | |
| Agency MBS - residential | | | | | | 111,589 | | | | | | 1,975 | | | | | | 23 | | | | | | 113,541 | | | | | |
| Agency MBS - commercial | | | | | | 2,987 | | | | | | 72 | | | | | | 2 | | | | | | 3,057 | | | | | |
| States and political subdivisions | | | | | | 447 | | | | | | 47 | | | | | | 1 | | | | | | 493 | | | | | |
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| Other | | | | | | 34 | | | | | | — | | | | | | — | | | | | | 34 | | | | | |
| Total AFS securities | | | | | | $ | 118,618 | | | | | $ | 2,196 | | | | | $ | 26 | | | | | $ | 120,788 | | | | |
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| December 31, 2019(Dollars in millions) | | | | | | Amortized Cost | | | | | | Gross Unrealized | | | | | | | | | | | | Fair Value | | | | | |
| | | | | | | Gains | | | | | | Losses | | | | | | | | |
| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | $ | 2,275 | | | | | $ | 7 | | | | | $ | 6 | | | | | $ | 2,276 | | | | |
| GSE | | | | | | 1,847 | | | | | | 34 | | | | | | — | | | | | | 1,881 | | | | | |
| Agency MBS - residential | | | | | | 67,983 | | | | | | 411 | | | | | | 158 | | | | | | 68,236 | | | | | |
| Agency MBS - commercial | | | | | | 1,335 | | | | | | 13 | | | | | | 7 | | | | | | 1,341 | | | | | |
| States and political subdivisions | | | | | | 557 | | | | | | 34 | | | | | | 6 | | | | | | 585 | | | | | |
| Non-agency MBS | | | | | | 190 | | | | | | 178 | | | | | | — | | | | | | 368 | | | | | |
| Other | | | | | | 40 | | | | | | — | | | | | | — | | | | | | 40 | | | | | |
| Total AFS securities | | | | | | $ | 74,227 | | | | | $ | 677 | | | | | $ | 177 | | | | | $ | 74,727 | | | | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 4. Investment Securities | 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: |
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| | | | Amortized Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Due in one year or less | | | | | | Due after one year through five years | | | | | | Due after five years through ten years | | | | | | Due after ten years | | | | | | Total | | | | | | Due in one year or less | | | | | | Due after one year through five years | | | | | | Due after five years through ten years | | | | | | Due after ten years | | | | | | Total | | | | | | | | |
| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | $ | 253 | | | | | $ | 1,468 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,721 | | | | | $ | 254 | | | | | $ | 1,492 | | | | | $ | — | | | | | $ | — | | | | | $ | 1,746 | | | | | | | |
| GSE | | | 282 | | | | | | 1,487 | | | | | | — | | | | | | 71 | | | | | | 1,840 | | | | | | 288 | | | | | | 1,553 | | | | | | — | | | | | | 76 | | | | | | 1,917 | | | | | | | | |
| Agency MBS - residential | | | — | | | | | | 1 | | | | | | 427 | | | | | | 111,161 | | | | | | 111,589 | | | | | | — | | | | | | 1 | | | | | | 441 | | | | | | 113,099 | | | | | | 113,541 | | | | | | | | |
| Agency MBS - commercial | | | — | | | | | | 1 | | | | | | 9 | | | | | | 2,977 | | | | | | 2,987 | | | | | | — | | | | | | 2 | | | | | | 10 | | | | | | 3,045 | | | | | | 3,057 | | | | | | | | |
| States and political subdivisions | | | 29 | | | | | | 128 | | | | | | 100 | | | | | | 190 | | | | | | 447 | | | | | | 29 | | | | | | 132 | | | | | | 115 | | | | | | 217 | | | | | | 493 | | | | | | | | |
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| Other | | | 1 | | | | | | 7 | | | | | | — | | | | | | 26 | | | | | | 34 | | | | | | 1 | | | | | | 7 | | | | | | — | | | | | | 26 | | | | | | 34 | | | | | | | | |
| Total AFS securities | | | $ | 565 | | | | | $ | 3,092 | | | | | $ | 536 | | | | | $ | 114,425 | | | | | $ | 118,618 | | | | | $ | 572 | | | | | $ | 3,187 | | | | | $ | 566 | | | | | $ | 116,463 | | | | | $ | 120,788 | | | | | | | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 4. Investment Securities | At December 31, 2020, no ACL was established for AFS securities. Substantially all of the unrealized losses on the securities portfolio were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans. The majority of the unrealized loss on states and political subdivisions securities was the result of fair value hedge basis adjustments that are a component of amortized cost. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | Less than 12 months | | | | | | | | | | | | 12 months or more | | | | | | | | | | | | Total | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | |
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| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | $ | 17 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 17 | | | | | $ | — | |
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| Agency MBS - residential | | | 4,028 | | | | | | 21 | | | | | | 203 | | | | | | 2 | | | | | | 4,231 | | | | | | 23 | | |
| Agency MBS - commercial | | | 463 | | | | | | 2 | | | | | | 4 | | | | | | — | | | | | | 467 | | | | | | 2 | | |
| States and political subdivisions | | | 20 | | | | | | — | | | | | | 32 | | | | | | 1 | | | | | | 52 | | | | | | 1 | | |
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| Other | | | 6 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6 | | | | | | — | | |
| Total | | | $ | 4,534 | | | | | $ | 23 | | | | | $ | 239 | | | | | $ | 3 | | | | | $ | 4,773 | | | | | $ | 26 | |
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| | | | Less than 12 months | | | | | | | | | | | | 12 months or more | | | | | | | | | | | | Total | | | | | | | | |
| December 31, 2019(Dollars in millions) | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | |
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| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | $ | 702 | | | | | $ | 6 | | | | | $ | — | | | | | $ | — | | | | | $ | 702 | | | | | $ | 6 | |
| GSE | | | 6 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6 | | | | | | — | | |
| Agency MBS - residential | | | 20,328 | | | | | | 145 | | | | | | 1,326 | | | | | | 13 | | | | | | 21,654 | | | | | | 158 | | |
| Agency MBS - commercial | | | 545 | | | | | | 5 | | | | | | 124 | | | | | | 2 | | | | | | 669 | | | | | | 7 | | |
| States and political subdivisions | | | 65 | | | | | | 1 | | | | | | 144 | | | | | | 5 | | | | | | 209 | | | | | | 6 | | |
| Total | | | $ | 21,646 | | | | | $ | 157 | | | | | $ | 1,594 | | | | | $ | 20 | | | | | $ | 23,240 | | | | | $ | 177 | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 4. Investment Securities | For 2020, the realized gains primarily relate to the sales of non-agency and agency MBS in the second and third quarter, respectively. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Gross realized gains | | | | | | | | | | | | | | | | | | $ | 404 | | | | | $ | 47 | | | | | $ | 4 | |
| Gross realized losses | | | | | | | | | | | | | | | | | | (2) | | | | | | (163) | | | | | | (1) | | |
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| Securities gains (losses), net | | | | | | | | | | | | | | | | | | $ | 402 | | | | | $ | (116) | | | | | $ | 3 | |
| TFC/10-K/0000092230-21-000032 |
NOTE 5. Loans and ACL | The following table presents the amortized cost basis of loans by origination year and credit quality indicator: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | Accruing | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | | | | Current | | | | | | 30-89 Days Past Due | | | | | | 90 Days Or More Past Due | | | | | | Nonperforming | | | | | | Total | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | $ | 137,726 | | | | | $ | 83 | | | | | $ | 13 | | | | | $ | 532 | | | | | $ | 138,354 | |
| CRE | | | | | | 26,506 | | | | | | 14 | | | | | | — | | | | | | 75 | | | | | | 26,595 | | |
| Commercial construction | | | | | | 6,472 | | | | | | 5 | | | | | | — | | | | | | 14 | | | | | | 6,491 | | |
| Lease financing | | | | | | 5,206 | | | | | | 6 | | | | | | — | | | | | | 28 | | | | | | 5,240 | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | 45,333 | | | | | | 782 | | | | | | 841 | | | | | | 316 | | | | | | 47,272 | | |
| Residential home equity and direct | | | | | | 25,751 | | | | | | 98 | | | | | | 10 | | | | | | 205 | | | | | | 26,064 | | |
| Indirect auto | | | | | | 25,498 | | | | | | 495 | | | | | | 2 | | | | | | 155 | | | | | | 26,150 | | |
| Indirect other | | | | | | 11,102 | | | | | | 68 | | | | | | 2 | | | | | | 5 | | | | | | 11,177 | | |
| Student | | | | | | 5,823 | | | | | | 618 | | | | | | 1,111 | | | | | | — | | | | | | 7,552 | | |
| Credit card | | | | | | 4,759 | | | | | | 51 | | | | | | 29 | | | | | | — | | | | | | 4,839 | | |
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| Total | | | | | | $ | 294,176 | | | | | $ | 2,220 | | | | | $ | 2,008 | | | | | $ | 1,330 | | | | | $ | 299,734 | |
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| | | | | | | 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 | |
| TFC/10-K/0000092230-21-000032 |
NOTE 5. Loans and ACL | (1)Includes certain deferred fees and costs, unapplied payments and other adjustments. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2020(Dollars in millions) | | | Amortized Cost Basis by Origination Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revolving Credit | | | | | | Loans Converted to Term | | | | | | Other (1) | | | | | | | | | | | |
| 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | Prior | | | | | | | | | | | | | | | Total | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | $ | 34,858 | | | | | $ | 18,881 | | | | | $ | 13,312 | | | | | $ | 7,713 | | | | | $ | 5,174 | | | | | $ | 8,888 | | | | | $ | 42,780 | | | | | $ | 231 | | | | | $ | (579) | | | | | $ | 131,258 | | | | |
| Special mention | | | 471 | | | | | | 434 | | | | | | 343 | | | | | | 98 | | | | | | 120 | | | | | | 157 | | | | | | 1,808 | | | | | | 5 | | | | | | (1) | | | | | | 3,435 | | | | | |
| Substandard | | | 461 | | | | | | 445 | | | | | | 339 | | | | | | 121 | | | | | | 144 | | | | | | 256 | | | | | | 1,353 | | | | | | 12 | | | | | | (2) | | | | | | 3,129 | | | | | |
| Nonperforming | | | 38 | | | | | | 92 | | | | | | 48 | | | | | | 29 | | | | | | 25 | | | | | | 61 | | | | | | 233 | | | | | | 4 | | | | | | 2 | | | | | | 532 | | | | | |
| Total | | | 35,828 | | | | | | 19,852 | | | | | | 14,042 | | | | | | 7,961 | | | | | | 5,463 | | | | | | 9,362 | | | | | | 46,174 | | | | | | 252 | | | | | | (580) | | | | | | 138,354 | | | | | |
| CRE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | 4,563 | | | | | | 6,600 | | | | | | 4,427 | | | | | | 2,752 | | | | | | 1,473 | | | | | | 2,096 | | | | | | 617 | | | | | | — | | | | | | (69) | | | | | | 22,459 | | | | | |
| Special mention | | | 171 | | | | | | 599 | | | | | | 585 | | | | | | 116 | | | | | | 77 | | | | | | 141 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,689 | | | | | |
| Substandard | | | 410 | | | | | | 776 | | | | | | 438 | | | | | | 281 | | | | | | 182 | | | | | | 280 | | | | | | 5 | | | | | | — | | | | | | — | | | | | | 2,372 | | | | | |
| Nonperforming | | | 1 | | | | | | 15 | | | | | | 1 | | | | | | 9 | | | | | | 6 | | | | | | 43 | | | | | | — | | | | | | — | | | | | | — | | | | | | 75 | | | | | |
| Total | | | 5,145 | | | | | | 7,990 | | | | | | 5,451 | | | | | | 3,158 | | | | | | 1,738 | | | | | | 2,560 | | | | | | 622 | | | | | | — | | | | | | (69) | | | | | | 26,595 | | | | | |
| Commercial construction: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | 1,052 | | | | | | 2,141 | | | | | | 1,889 | | | | | | 232 | | | | | | 27 | | | | | | 110 | | | | | | 534 | | | | | | — | | | | | | 2 | | | | | | 5,987 | | | | | |
| Special mention | | | — | | | | | | 108 | | | | | | 64 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | — | | | | | | 175 | | | | | |
| Substandard | | | 70 | | | | | | 106 | | | | | | 73 | | | | | | 59 | | | | | | 6 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | — | | | | | | 315 | | | | | |
| Nonperforming | | | 1 | | | | | | 3 | | | | | | — | | | | | | 7 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3 | | | | | | — | | | | | | 14 | | | | | |
| Total | | | 1,123 | | | | | | 2,358 | | | | | | 2,026 | | | | | | 299 | | | | | | 33 | | | | | | 111 | | | | | | 536 | | | | | | 3 | | | | | | 2 | | | | | | 6,491 | | | | | |
| Lease financing: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | | 1,377 | | | | | | 1,139 | | | | | | 775 | | | | | | 746 | | | | | | 241 | | | | | | 760 | | | | | | — | | | | | | — | | | | | | 27 | | | | | | 5,065 | | | | | |
| Special mention | | | 1 | | | | | | 39 | | | | | | 20 | | | | | | 5 | | | | | | — | | | | | | 7 | | | | | | — | | | | | | — | | | | | | — | | | | | | 72 | | | | | |
| Substandard | | | — | | | | | | 34 | | | | | | 3 | | | | | | 4 | | | | | | 3 | | | | | | 31 | | | | | | — | | | | | | — | | | | | | — | | | | | | 75 | | | | | |
| Nonperforming | | | 2 | | | | | | 5 | | | | | | 3 | | | | | | 9 | | | | | | 4 | | | | | | 5 | | | | | | — | | | | | | — | | | | | | — | | | | | | 28 | | | | | |
| Total | | | 1,380 | | | | | | 1,217 | | | | | | 801 | | | | | | 764 | | | | | | 248 | | | | | | 803 | | | | | | — | | | | | | — | | | | | | 27 | | | | | | 5,240 | | | | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing | | | 8,197 | | | | | | 6,729 | | | | | | 3,735 | | | | | | 4,374 | | | | | | 5,424 | | | | | | 18,333 | | | | | | — | | | | | | — | | | | | | 164 | | | | | | 46,956 | | | | | |
| Nonperforming | | | 3 | | | | | | 13 | | | | | | 16 | | | | | | 13 | | | | | | 14 | | | | | | 257 | | | | | | — | | | | | | — | | | | | | — | | | | | | 316 | | | | | |
| Total | | | 8,200 | | | | | | 6,742 | | | | | | 3,751 | | | | | | 4,387 | | | | | | 5,438 | | | | | | 18,590 | | | | | | — | | | | | | — | | | | | | 164 | | | | | | 47,272 | | | | | |
| Residential home equity and direct: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing | | | 4,513 | | | | | | 3,126 | | | | | | 1,416 | | | | | | 481 | | | | | | 214 | | | | | | 557 | | | | | | 13,886 | | | | | | 1,619 | | | | | | 47 | | | | | | 25,859 | | | | | |
| Nonperforming | | | 1 | | | | | | 4 | | | | | | 2 | | | | | | 1 | | | | | | 1 | | | | | | 7 | | | | | | 87 | | | | | | 101 | | | | | | 1 | | | | | | 205 | | | | | |
| Total | | | 4,514 | | | | | | 3,130 | | | | | | 1,418 | | | | | | 482 | | | | | | 215 | | | | | | 564 | | | | | | 13,973 | | | | | | 1,720 | | | | | | 48 | | | | | | 26,064 | | | | | |
| Indirect auto: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing | | | 10,270 | | | | | | 7,436 | | | | | | 4,015 | | | | | | 2,401 | | | | | | 1,220 | | | | | | 506 | | | | | | — | | | | | | — | | | | | | 147 | | | | | | 25,995 | | | | | |
| Nonperforming | | | 13 | | | | | | 50 | | | | | | 44 | | | | | | 27 | | | | | | 15 | | | | | | 12 | | | | | | — | | | | | | — | | | | | | (6) | | | | | | 155 | | | | | |
| Total | | | 10,283 | | | | | | 7,486 | | | | | | 4,059 | | | | | | 2,428 | | | | | | 1,235 | | | | | | 518 | | | | | | — | | | | | | — | | | | | | 141 | | | | | | 26,150 | | | | | |
| Indirect other: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing | | | 4,433 | | | | | | 3,019 | | | | | | 1,706 | | | | | | 826 | | | | | | 431 | | | | | | 718 | | | | | | — | | | | | | — | | | | | | 39 | | | | | | 11,172 | | | | | |
| Nonperforming | | | 1 | | | | | | 1 | | | | | | 1 | | | | | | — | | | | | | — | | | | | | 2 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | |
| Total | | | 4,434 | | | | | | 3,020 | | | | | | 1,707 | | | | | | 826 | | | | | | 431 | | | | | | 720 | | | | | | — | | | | | | — | | | | | | 39 | | | | | | 11,177 | | | | | |
| Student: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performing | | | 22 | | | | | | 110 | | | | | | 95 | | | | | | 81 | | | | | | 64 | | | | | | 7,185 | | | | | | — | | | | | | — | | | | | | (5) | | | | | | 7,552 | | | | | |
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| Credit card | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,802 | | | | | | 37 | | | | | | — | | | | | | 4,839 | | | | | |
| Total | | | $ | 70,929 | | | | | $ | 51,905 | | | | | $ | 33,350 | | | | | $ | 20,386 | | | | | $ | 14,865 | | | | | $ | 40,413 | | | | | $ | 66,107 | | | | | $ | 2,012 | | | | | $ | (233) | | | | | $ | 299,734 | | | | |
| TFC/10-K/0000092230-21-000032 |
ACL | (1)Includes amounts assumed in the Merger.(2)Balance is prior to the adoption of CECL.(3)Includes the adoption of CECL, the ALLL for PCD acquisitions and other activity. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in millions) | | | | | | Balance at Jan 1, 2020 (2) | | | | | | | | | | | | Charge-Offs | | | | | | Recoveries | | | | | | Provision (Benefit) | | | | | | Other (3) | | | | | | Balance at Dec 31, 2020 | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | $ | 560 | | | | | | | | | | | $ | (358) | | | | | $ | 92 | | | | | $ | 958 | | | | | $ | 904 | | | | | $ | 2,156 | |
| CRE | | | | | | 150 | | | | | | | | | | | | (78) | | | | | | 5 | | | | | | 414 | | | | | | 82 | | | | | | 573 | | |
| Commercial construction | | | | | | 52 | | | | | | | | | | | | (30) | | | | | | 11 | | | | | | 32 | | | | | | 16 | | | | | | 81 | | |
| Lease financing | | | | | | 10 | | | | | | | | | | | | (54) | | | | | | 4 | | | | | | (6) | | | | | | 94 | | | | | | 48 | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | 176 | | | | | | | | | | | | (56) | | | | | | 10 | | | | | | (27) | | | | | | 265 | | | | | | 368 | | |
| Residential home equity and direct | | | | | | 107 | | | | | | | | | | | | (231) | | | | | | 66 | | | | | | 318 | | | | | | 454 | | | | | | 714 | | |
| Indirect auto | | | | | | 304 | | | | | | | | | | | | (378) | | | | | | 87 | | | | | | 367 | | | | | | 818 | | | | | | 1,198 | | |
| Indirect other | | | | | | 60 | | | | | | | | | | | | (60) | | | | | | 23 | | | | | | 35 | | | | | | 150 | | | | | | 208 | | |
| Student | | | | | | — | | | | | | | | | | | | (23) | | | | | | 1 | | | | | | 23 | | | | | | 129 | | | | | | 130 | | |
| Credit card | | | | | | 122 | | | | | | | | | | | | (182) | | | | | | 32 | | | | | | 212 | | | | | | 175 | | | | | | 359 | | |
| PCI | | | | | | 8 | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | (8) | | | | | | — | | |
| ALLL | | | | | | 1,549 | | | | | | | | | | | | (1,450) | | | | | | 331 | | | | | | 2,326 | | | | | | 3,079 | | | | | | 5,835 | | |
| RUFC | | | | | | 340 | | | | | | | | | | | | — | | | | | | — | | | | | | 9 | | | | | | 15 | | | | | | 364 | | |
| ACL | | | | | | $ | 1,889 | | | | | | | | | | | $ | (1,450) | | | | | $ | 331 | | | | | $ | 2,335 | | | | | $ | 3,094 | | | | | $ | 6,199 | |
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| TFC/10-K/0000092230-21-000032 |
Nonperforming and Impaired Loans | The following table includes 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. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | | | Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2020(Dollars in millions) | | | Without an ALLL | | | | | | With an ALLL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | $ | 82 | | | | | $ | 450 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CRE | | | 63 | | | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial construction | | | — | | | | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Lease financing | | | — | | | | | | 28 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | 4 | | | | | | 312 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential home equity and direct | | | 2 | | | | | | 203 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Indirect auto | | | 1 | | | | | | 154 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Indirect other | | | — | | | | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Total | | | $ | 152 | | | | | $ | 1,178 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| TFC/10-K/0000092230-21-000032 |
TDRs | The primary reason loan modifications were classified as 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. |
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| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |
| Performing TDRs: | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | |
| Commercial and industrial | | | $ | 78 | | | | | $ | 47 | |
| CRE | | | 47 | | | | | | 6 | | |
| Commercial construction | | | — | | | | | | 37 | | |
| Lease financing | | | 60 | | | | | | — | | |
| Consumer: | | | | | | | | | | | |
| Residential mortgage | | | 648 | | | | | | 470 | | |
| Residential home equity and direct | | | 88 | | | | | | 51 | | |
| Indirect auto | | | 392 | | | | | | 333 | | |
| Indirect other | | | 6 | | | | | | 5 | | |
| Student | | | 5 | | | | | | — | | |
| Credit card | | | 37 | | | | | | 31 | | |
| Total performing TDRs | | | 1,361 | | | | | | 980 | | |
| Nonperforming TDRs | | | 164 | | | | | | 82 | | |
| Total TDRs | | | $ | 1,525 | | | | | $ | 1,062 | |
| ALLL attributable to TDRs | | | $ | 260 | | | | | $ | 132 | |
| TFC/10-K/0000092230-21-000032 |
TDRs | 118 Truist Financial Corporation |
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| December 31, 2020(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |
| | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |
| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 49 | | | | | $ | 93 | | | | | $ | 173 | | | | | $ | 14 | |
| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 39 | | | | | | 13 | | | | | | 45 | | | | | | 6 | | |
| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | 1 | | | | | | — | | |
| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 70 | | | | | | 71 | | | | | | 4 | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 374 | | | | | | 112 | | | | | | 493 | | | | | | 21 | | |
| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 37 | | | | | | 34 | | | | | | 70 | | | | | | 2 | | |
| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 129 | | | | | | 85 | | | | | | 223 | | | | | | 26 | | |
| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 5 | | | | | | — | | |
| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | 6 | | | | | | 6 | | | | | | — | | |
| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 29 | | | | | | — | | | | | | 28 | | | | | | 10 | | |
| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 41 | | | | | | 22 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
TDRs | 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 $93 million, $78 million and $76 million for the years ended December 31, 2020, 2019 and 2018, respectively. Payment default is defined as movement of the TDR to nonperforming status, foreclosure or charge-off, whichever occurs first. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| December 31, 2019(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |
| | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |
| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 56 | | | | | $ | 11 | | | | | $ | 61 | | | | | $ | 8 | |
| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | 4 | | | | | | — | | |
| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | 36 | | | | | | — | | | | | | 36 | | | | | | 7 | | |
| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 224 | | | | | | 27 | | | | | | 254 | | | | | | 19 | | |
| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 3 | | | | | | 9 | | | | | | 1 | | |
| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 209 | | | | | | 8 | | | | | | 226 | | | | | | 44 | | |
| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | — | | | | | | 4 | | | | | | — | | |
| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 24 | | | | | | — | | | | | | 18 | | | | | | 9 | | |
| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 53 | | | | | | 23 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2018(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |
| | | | | | | | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |
| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 74 | | | | | $ | 62 | | | | | $ | 126 | | | | | $ | 8 | |
| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 31 | | | | | | 2 | | | | | | 26 | | | | | | 1 | | |
| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | 2 | | | | | | — | | |
| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 250 | | | | | | 30 | | | | | | 280 | | | | | | 22 | | |
| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 2 | | | | | | 6 | | | | | | 1 | | |
| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 191 | | | | | | 4 | | | | | | 183 | | | | | | 39 | | |
| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | — | | | | | | 3 | | | | | | 1 | | |
| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 18 | | | | | | — | | | | | | 18 | | | | | | 8 | | |
| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 120 | | | | | | 15 | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NPAs | (1) Beginning January 1, 2020, nonperforming loans and leases include certain assets previously classified as PCI. |
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | | | |
| Nonperforming loans and leases HFI (1) | | | $ | 1,330 | | | | | $ | 454 | | | | | | | |
| Nonperforming LHFS | | | 5 | | | | | | 107 | | | | | | | | |
| Foreclosed real estate | | | 20 | | | | | | 82 | | | | | | | | |
| Other foreclosed property | | | 32 | | | | | | 41 | | | | | | | | |
| Total nonperforming assets | | | $ | 1,387 | | | | | $ | 684 | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Residential mortgage loans in the process of foreclosure | | | $ | 140 | | | | | $ | 409 | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 7. Goodwill and Other Intangible Assets | The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Dollars in millions) | | | CB&W | | | | | | C&CB | | | | | | IH | | | | | | Total | | | | | | | | | | | | | | |
| Goodwill, January 1, 2018 | | | $ | 3,907 | | | | | $ | 3,938 | | | | | $ | 1,773 | | | | | $ | 9,618 | | | | | | | | | | | | | |
| Mergers and acquisitions | | | — | | | | | | — | | | | | | 201 | | | | | | 201 | | | | | | | | | | | | | | |
| Adjustments and other | | | (1) | | | | | | — | | | | | | — | | | | | | (1) | | | | | | | | | | | | | | |
| Goodwill, December 31, 2018 | | | 3,906 | | | | | | 3,938 | | | | | | 1,974 | | | | | | 9,818 | | | | | | | | | | | | | | |
| Mergers and acquisitions | | | 10,134 | | | | | | 4,187 | | | | | | 21 | | | | | | 14,342 | | | | | | | | | | | | | | |
| Adjustments and other | | | — | | | | | | — | | | | | | (6) | | | | | | (6) | | | | | | | | | | | | | | |
| Goodwill, December 31, 2019 | | | 14,040 | | | | | | 8,125 | | | | | | 1,989 | | | | | | 24,154 | | | | | | | | | | | | | | |
| Mergers and acquisitions | | | — | | | | | | — | | | | | | 450 | | | | | | 450 | | | | | | | | | | | | | | |
| Adjustments and other | | | 1,801 | | | | | | (1,958) | | | | | | — | | | | | | (157) | | | | | | | | | | | | | | |
| Goodwill, December 31, 2020 | | | $ | 15,841 | | | | | $ | 6,167 | | | | | $ | 2,439 | | | | | $ | 24,447 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 7. Goodwill and Other Intangible Assets | The estimated amortization expense of identifiable intangibles for the next five years and thereafter is presented as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| | | | Weighted Average Remaining Amortization Period | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | Gross Carrying Amount | | | | | | Accumulated Amortization | | | | | | Net Carrying Amount | | | | | | Gross Carrying Amount | | | | | | Accumulated Amortization | | | | | | Net Carrying Amount | | |
| CDI | | | 8.8 years | | | $ | 2,600 | | | | | $ | (852) | | | | | $ | 1,748 | | | | | $ | 2,474 | | | | | $ | (365) | | | | | $ | 2,109 | |
| Other, primarily client relationship intangibles | | | 12.3 years | | | 2,217 | | | | | | (981) | | | | | | 1,236 | | | | | | 1,808 | | | | | | (775) | | | | | | 1,033 | | |
| Total | | | | | | $ | 4,817 | | | | | $ | (1,833) | | | | | $ | 2,984 | | | | | $ | 4,282 | | | | | $ | (1,140) | | | | | $ | 3,142 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 7. Goodwill and Other Intangible Assets | 120 Truist Financial Corporation |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 2021 | | | | | | 2022 | | | | | | 2023 | | | | | | 2024 | | | | | | 2025 | | | | | | Thereafter | | | | | |
| Estimated amortization expense | | | $ | 584 | | | | | $ | 471 | | | | | $ | 392 | | | | | $ | 330 | | | | | $ | 273 | | | | | $ | 934 | | | | |
| TFC/10-K/0000092230-21-000032 |
Residential Mortgage Activities | The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| UPB of residential mortgage loan servicing portfolio | | | | | | $ | 239,034 | | | | | $ | 279,558 | | | | | $ | 118,605 | | | | |
| UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate | | | | | | 188,341 | | | | | | 219,347 | | | | | | 87,270 | | | | | |
| Mortgage loans sold with recourse | | | | | | 328 | | | | | | 371 | | | | | | 419 | | | | | |
| Maximum recourse exposure from mortgage loans sold with recourse liability | | | | | | 201 | | | | | | 212 | | | | | | 223 | | | | | |
| Indemnification, recourse and repurchase reserves | | | | | | 93 | | | | | | 44 | | | | | | 24 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| As of / For the Year Ended December 31, (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | |
| UPB of residential mortgage loans sold from LHFS | | | | | | $ | 48,366 | | | | | $ | 16,646 | | | | | $ | 10,094 | | | | |
| Pre-tax gains recognized on mortgage loans sold and held for sale | | | | | | 1,034 | | | | | | 122 | | | | | | 116 | | | | | |
| Servicing fees recognized from mortgage loans serviced for others | | | | | | 630 | | | | | | 265 | | | | | | 256 | | | | | |
| Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others | | | | | | 0.32 | | % | | | | 0.31 | | % | | | | 0.28 | | % | | | |
| Weighted average interest rate on mortgage loans serviced for others | | | | | | 3.84 | | | | | | 4.04 | | | | | | 4.04 | | | | | |
| TFC/10-K/0000092230-21-000032 |
Residential Mortgage Activities | The sensitivity of the fair value of the Company's residential MSRs to changes in key assumptions is presented in the following table: |
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Residential MSRs, carrying value, January 1 | | | | | | $ | 2,371 | | | | | $ | 957 | | | | | 914 | | |
| Merger | | | | | | — | | | | | | 1,506 | | | | | | — | | |
| Additions | | | | | | 653 | | | | | | 171 | | | | | | 116 | | |
| Change in fair value due to changes in valuation inputs or assumptions: | | | | | | | | | | | | | | | | | | | | |
| Prepayment speeds | | | | | | (572) | | | | | | (131) | | | | | | (12) | | |
| OAS | | | | | | 75 | | | | | | 32 | | | | | | 57 | | |
| Servicing costs | | | | | | — | | | | | | — | | | | | | 22 | | |
| Realization of expected net servicing cash flows, passage of time and other | | | | | | (749) | | | | | | (164) | | | | | | (140) | | |
| Residential MSRs, carrying value, December 31 | | | | | | $ | 1,778 | | | | | $ | 2,371 | | | | | $ | 957 | |
| | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Residential Mortgage Activities | 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 18. Fair Value Disclosures" for additional information on the valuation techniques used. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | Range | | | | | | | | | | | | Weighted Average | | | | | | Range | | | | | | | | | | | | Weighted Average | | |
| Min | | | | | | Max | | | | | | | | | Min | | | | | | Max | | | | | |
| Prepayment speed | | | 12.8 | | % | | | | 30.8 | | % | | | | 15.4 | | % | | | | 8.4 | | % | | | | 18.6 | | % | | | | 9.6 | | % |
| Effect on fair value of a 10% increase | | | | | | | | | | | | | | | $ | (89) | | | | | | | | | | | | | | | | | $ | (102) | |
| Effect on fair value of a 20% increase | | | | | | | | | | | | | | | (171) | | | | | | | | | | | | | | | | | | (195) | | |
| OAS | | | 3.5 | | % | | | | 13.7 | | % | | | | 7.3 | | % | | | | 4.0 | | % | | | | 13.5 | | % | | | | 6.7 | | % |
| Effect on fair value of a 10% increase | | | | | | | | | | | | | | | $ | (45) | | | | | | | | | | | | | | | | | $ | (54) | |
| Effect on fair value of a 20% increase | | | | | | | | | | | | | | | (88) | | | | | | | | | | | | | | | | | | (106) | | |
| Composition of loans serviced for others: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed-rate residential mortgage loans | | | | | | | | | | | | | | | 98.8 | | % | | | | | | | | | | | | | | | | 98.5 | | % |
| Adjustable-rate residential mortgage loans | | | | | | | | | | | | | | | 1.2 | | | | | | | | | | | | | | | | | | 1.5 | | |
| Total | | | | | | | | | | | | | | | 100.0 | | % | | | | | | | | | | | | | | | | 100.0 | | % |
| Weighted average life | | | | | | | | | | | | | | | 4.8 years | | | | | | | | | | | | | | | | | | 5.4 years | | |
| TFC/10-K/0000092230-21-000032 |
Commercial Mortgage Activities | In the third quarter of 2020, the Company transferred certain servicing activities involving cancellable servicing rights to third parties, resulting in a decrease in the UPB of CRE mortgages serviced for others. This transfer did not materially impact commercial MSRs. |
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | |
| | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |
| UPB of CRE mortgages serviced for others | | | $ | 36,670 | | | | | $ | 70,404 | |
| CRE mortgages serviced for others covered by recourse provisions | | | 9,019 | | | | | | 8,676 | | |
| Maximum recourse exposure from CRE mortgages sold with recourse liability | | | 2,624 | | | | | | 2,479 | | |
| Recorded reserves related to recourse exposure | | | 18 | | | | | | 13 | | |
| CRE mortgages originated during the year-to-date period | | | 6,739 | | | | | | 8,062 | | |
| Commercial MSRs at fair value | | | 245 | | | | | | 247 | | |
| | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Lessor Operating Leases | (1) Includes certain land parcels subject to operating leases that have indefinite lives. |
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | | | | 2020 | | | | | | 2019 | | |
| Assets held under operating leases (1) | | | | | | | | | $ | 2,144 | | | | | $ | 2,236 | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| Accumulated depreciation | | | | | | | | | (517) | | | | | | (391) | | |
| Net | | | | | | | | | $ | 1,627 | | | | | $ | 1,845 | |
| TFC/10-K/0000092230-21-000032 |
NOTE 10. Deposits | The following table presents time deposits maturities: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | | | | |
| Noninterest-bearing deposits | | | | | | $ | 127,629 | | | | | $ | 92,405 | | | | | | | | | | | | | | | | |
| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest checking | | | | | | 105,269 | | | | | | 85,492 | | | | | | | | | | | | | | | | | |
| Money market and savings | | | | | | 126,238 | | | | | | 120,934 | | | | | | | | | | | | | | | | | |
| Time deposits | | | | | | 21,941 | | | | | | 35,896 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total deposits | | | | | | $ | 381,077 | | | | | $ | 334,727 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Time deposits greater than $250,000 | | | | | | $ | 3,296 | | | | | $ | 9,362 | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 11. Borrowings | The following table presents a summary of long-term debt: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Federal funds purchased | | | | | | $ | 79 | | | | | | | | | | | $ | 259 | | | | | | | | | | |
| Securities sold under agreements to repurchase | | | | | | 1,221 | | | | | | | | | | | | 1,969 | | | | | | | | | | | |
| FHLB advances | | | | | | 2,649 | | | | | | | | | | | | 13,480 | | | | | | | | | | | |
| Collateral in excess of derivative exposures | | | | | | 385 | | | | | | | | | | | | 682 | | | | | | | | | | | |
| Master notes | | | | | | 621 | | | | | | | | | | | | 493 | | | | | | | | | | | |
| Other short-term borrowings | | | | | | 1,137 | | | | | | | | | | | | 1,335 | | | | | | | | | | | |
| Total short-term borrowings | | | | | | $ | 6,092 | | | | | | | | | | | $ | 18,218 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 11. Borrowings | (1)Includes the impact of debt issuance costs and purchase accounting, and excludes hedge accounting impacts.(2)Subordinated 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 finance leases, tax credit investments, and other.(5)Includes debt associated with structured real estate leases. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | |
| December 31,(Dollars in millions) | | | | | | | | | | | | | | | Stated Rate | | | | | | | | | | | | Effective Rate (1) | | | | | | Carrying Amount | | | | | | Carrying Amount | | |
| Maturity | | | | | | | | | | | | Min | | | | | | Max | | | | | | | | | | | |
| Truist Financial Corporation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate senior notes | | | 2021 | | | to | | | 2030 | | | | | | 1.13 | | % | | | | 6.00 | | % | | | | 2.52 | | % | | | | $ | 15,984 | | | | | $ | 14,431 | |
| Floating rate senior notes | | | 2021 | | | | | | 2022 | | | | | | 0.43 | | | | | | 0.88 | | | | | | 0.64 | | | | | | 900 | | | | | | 1,749 | | |
| Fixed rate subordinated notes (2) | | | 2022 | | | | | | 2029 | | | | | | 3.88 | | | | | | 6.00 | | | | | | 3.78 | | | | | | 1,283 | | | | | | 1,227 | | |
| Capital notes | | | 2027 | | | | | | 2028 | | | | | | 0.87 | | | | | | 1.21 | | | | | | 1.69 | | | | | | 615 | | | | | | 611 | | |
| Structured notes (3) | | | 2021 | | | | | | 2026 | | | | | | | | | | | | | | | | | | | | | | | | 108 | | | | | | 112 | | |
| Truist Bank: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fixed rate senior notes | | | 2021 | | | | | | 2025 | | | | | | 1.25 | | | | | | 4.05 | | | | | | 2.10 | | | | | | 11,907 | | | | | | 11,560 | | |
| Floating rate senior notes | | | 2022 | | | | | | 2037 | | | | | | 0.80 | | | | | | 0.83 | | | | | | 0.70 | | | | | | 1,567 | | | | | | 1,554 | | |
| Fixed rate subordinated notes (2) | | | 2025 | | | | | | 2030 | | | | | | 2.25 | | | | | | 3.80 | | | | | | 3.03 | | | | | | 5,142 | | | | | | 3,872 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| FHLB advances | | | 2021 | | | | | | 2034 | | | | | | — | | | | | | 5.36 | | | | | | 5.32 | | | | | | 878 | | | | | | 4,141 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other long-term debt (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,014 | | | | | | 1,133 | | |
| Nonbank subsidiaries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other long-term debt (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 199 | | | | | | 949 | | |
| Total long-term debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 39,597 | | | | | $ | 41,339 | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 11. Borrowings | (1)Amounts include imputed interest of $5 million related to finance leases. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
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| Year Ended December 31,(Dollars in millions) | | | | | | 2021 | | | | | | 2022 | | | | | | 2023 | | | | | | 2024 | | | | | | 2025 | | | | | | Thereafter | | |
| Future debt maturities (1) | | | | | | $ | 5,373 | | | | | $ | 9,236 | | | | | $ | 5,139 | | | | | $ | 5,309 | | | | | $ | 5,797 | | | | | $ | 8,748 | |
| TFC/10-K/0000092230-21-000032 |
Preferred Stock | (1)Converted security from previously issued SunTrust preferred stock.(2)Dividend rate is the greater of 4.00% or 3-month LIBOR plus 0.530%.(3)Dividend rate is the greater of 4.00% or 3-month LIBOR plus 0.645%.(4)Fixed dividend rate will reset on June 15, 2022, then dividend rate will be 3-month LIBOR plus 3.102%.(5)Fixed dividend rate will reset on December 15, 2027, then dividend rate will be 3-month LIBOR plus 2.786%.(6)Fixed dividend rate will reset on September 1, 2024, and on each following fifth anniversary of the reset date to the five-year U.S. Treasury rate plus 3.003%.(7)Fixed dividend rate will reset on December 1, 2025, and on each following fifth anniversary of the reset date to the five-year U.S. Treasury rate plus 4.605%.(8)Fixed dividend rate will reset on September 1, 2030, and on each following tenth anniversary of the reset date to the ten-year U.S. Treasury rate plus 4.349%.(9)Dividend payments become quarterly beginning on September 15, 2022.(10)Dividend payments become quarterly after dividend rate reset. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Preferred Stock Issue(Dollars in millions) | | | Issuance Date | | | | | | | | | Earliest Redemption Date | | | | | | Liquidation Amount | | | | | | Carrying Amount | | | | | | Dividend Rate | | | | | | | | | Dividend Payments | | | | | |
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| Series F | | | 10/31/2012 | | | | | | | | | 11/1/2017 | | | | | | $ | 450 | | | | | $ | 437 | | | | | 5.200 | | % | | | | | | | Quarterly | | | | | |
| Series G | | | 5/1/2013 | | | | | | | | | 6/1/2018 | | | | | | 500 | | | | | | 486 | | | | | | 5.200 | | | | | | | | | Quarterly | | | | | |
| Series H | | | 3/9/2016 | | | | | | | | | 6/1/2021 | | | | | | 465 | | | | | | 451 | | | | | | 5.625 | | | | | | | | | Quarterly | | | | | |
| Series I | | | 12/6/2019 | | | (1) | | | | | | 12/15/2024 | | | | | | 173 | | | | | | 168 | | | | | | 4.000 | | | (2) | | | | | | Quarterly | | | | | |
| Series J | | | 12/6/2019 | | | (1) | | | | | | 12/15/2024 | | | | | | 103 | | | | | | 92 | | | | | | 4.000 | | | (3) | | | | | | Quarterly | | | | | |
| Series L | | | 12/6/2019 | | | (1) | | | | | | 12/15/2024 | | | | | | 750 | | | | | | 766 | | | | | | 5.050 | | | (4) | | | | | | Semi-annually | | | (9) | | |
| Series M | | | 12/6/2019 | | | (1) | | | | | | 12/15/2027 | | | | | | 500 | | | | | | 516 | | | | | | 5.125 | | | (5) | | | | | | Semi-annually | | | (10) | | |
| Series N | | | 7/29/2019 | | | | | | | | | 9/1/2024 | | | | | | 1,700 | | | | | | 1,683 | | | | | | 4.800 | | | (6) | | | | | | Semi-annually | | | | | |
| Series O | | | 5/27/2020 | | | | | | | | | 6/1/2025 | | | | | | 575 | | | | | | 559 | | | | | | 5.250 | | | | | | | | | Quarterly | | | | | |
| Series P | | | 6/1/2020 | | | | | | | | | 12/1/2025 | | | | | | 1,000 | | | | | | 992 | | | | | | 4.950 | | | (7) | | | | | | Semi-annually | | | | | |
| Series Q | | | 6/19/2020 | | | | | | | | | 9/1/2030 | | | | | | 1,000 | | | | | | 992 | | | | | | 5.100 | | | (8) | | | | | | Semi-annually | | | | | |
| Series R | | | 8/3/2020 | | | | | | | | | 9/1/2025 | | | | | | 925 | | | | | | 906 | | | | | | 4.750 | | | | | | | | | Quarterly | | | | | |
| Total | | | | | | | | | | | | | | | | | | $ | 8,141 | | | | | $ | 8,048 | | | | | | | | | | | | | | | | | | | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 14. Income Taxes | A reconciliation of the provision for income taxes at the statutory federal income tax rate to the Company’s actual provision for income taxes and actual effective tax rate is presented in the following table: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Current expense: | | | | | | | | | | | | | | | | | | | | |
| Federal | | | | | | $ | 979 | | | | | $ | 357 | | | | | $ | 629 | |
| State | | | | | | 155 | | | | | | 97 | | | | | | 151 | | |
| Total current expense | | | | | | 1,134 | | | | | | 454 | | | | | | 780 | | |
| Deferred expense: | | | | | | | | | | | | | | | | | | | | |
| Federal | | | | | | (131) | | | | | | 290 | | | | | | 26 | | |
| State | | | | | | (22) | | | | | | 38 | | | | | | (3) | | |
| Total deferred expense | | | | | | (153) | | | | | | 328 | | | | | | 23 | | |
| Provision for income taxes | | | | | | $ | 981 | | | | | $ | 782 | | | | | $ | 803 | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 14. Income Taxes | 128 Truist Financial Corporation |
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| | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | | | | | 2018 | | | | | | | | |
| Year Ended December 31,(Dollars in millions) | | | Amount | | | | | | % of Income Before Taxes | | | | | | Amount | | | | | | % of Income Before Taxes | | | | | | Amount | | | | | | % of Income Before Taxes | | |
| Federal income taxes at statutory rate | | | $ | 1,149 | | | | | 21.0 | | % | | | | $ | 844 | | | | | 21.0 | | % | | | | $ | 853 | | | | | 21.0 | | % |
| Increase (decrease) in provision for income taxes as a result of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| State income taxes, net of federal tax benefit | | | 105 | | | | | | 1.9 | | | | | | 107 | | | | | | 2.7 | | | | | | 117 | | | | | | 2.9 | | |
| Income tax credits, net of amortization | | | (178) | | | | | | (3.3) | | | | | | (86) | | | | | | (2.1) | | | | | | (57) | | | | | | (1.4) | | |
| Tax-exempt interest | | | (99) | | | | | | (1.8) | | | | | | (69) | | | | | | (1.8) | | | | | | (90) | | | | | | (2.2) | | |
| Federal tax reform impact | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (27) | | | | | | (0.7) | | |
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| Other, net | | | 4 | | | | | | 0.1 | | | | | | (14) | | | | | | (0.3) | | | | | | 7 | | | | | | 0.2 | | |
| Provision for income taxes | | | $ | 981 | | | | | 17.9 | | | | | | $ | 782 | | | | | 19.5 | | | | | | $ | 803 | | | | | 19.8 | | |
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| TFC/10-K/0000092230-21-000032 |
NOTE 14. Income Taxes | The DTAs include Federal and state NOLs and other state carryforwards that will expire, if not utilized, in varying amounts from 2021 to 2040. The Company had a valuation allowance recorded against its state carryforwards and certain state DTAs of $123 million and $130 million at December 31, 2020 and 2019, respectively. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |
| DTAs: | | | | | | | | | | | | | | |
| ALLL | | | | | | $ | 1,376 | | | | | $ | 366 | |
| Employee compensation and benefits | | | | | | 698 | | | | | | 721 | | |
| Loans | | | | | | 369 | | | | | | 753 | | |
| Operating lease liability | | | | | | 469 | | | | | | 225 | | |
| Accruals and reserves | | | | | | 305 | | | | | | 322 | | |
| Federal and state NOLs and other carryforwards | | | | | | 149 | | | | | | 156 | | |
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| Net unrealized losses in AOCI | | | | | | — | | | | | | 257 | | |
| Other | | | | | | 57 | | | | | | 77 | | |
| Total gross DTAs | | | | | | 3,423 | | | | | | 2,877 | | |
| Valuation allowance | | | | | | (123) | | | | | | (130) | | |
| Total DTAs net of valuation allowance | | | | | | 3,300 | | | | | | 2,747 | | |
| DTLs: | | | | | | | | | | | | | | |
| Pension | | | | | | 1,299 | | | | | | 1,167 | | |
| Goodwill and other intangible assets | | | | | | 688 | | | | | | 694 | | |
| Equipment and auto leasing | | | | | | 599 | | | | | | 932 | | |
| MSRs | | | | | | 459 | | | | | | 491 | | |
| ROU assets | | | | | | 327 | | | | | | 146 | | |
| Net unrealized gains in AOCI | | | | | | 222 | | | | | | — | | |
| Premises and equipment | | | | | | 147 | | | | | | 162 | | |
| Partnerships | | | | | | 84 | | | | | | 23 | | |
| Other | | | | | | 48 | | | | | | 144 | | |
| | | | | | | | | | | | | | | |
| Total DTLs | | | | | | 3,873 | | | | | | 3,759 | | |
| Net DTL | | | | | | $ | (573) | | | | | $ | (1,012) | |
| TFC/10-K/0000092230-21-000032 |
NOTE 14. Income Taxes | The amount of UTBs that would favorably affect the Company's effective tax rate, if recognized, was $100 million and $99 million at December 31, 2020 and 2019, respectively. Interest and penalties related to UTBs are recorded in the Provision for income taxes in the Consolidated Statement of Income. The Company had a gross liability of $12 million and $11 million for interest and penalties related to its UTBs at December 31, 2020 and 2019, respectively. The amount of gross expense related interest and penalties on UTBs was immaterial.The Company files U.S. federal, state and local income tax returns. The Company's federal income tax returns are no longer subject to examination by the IRS for taxable years prior to 2017. With limited exceptions, the Company is no longer subject to examination by state and local taxing authorities for taxable years prior to 2013. It is reasonably possible that the liability for unrecognized tax benefits could decrease by as much as $15 million during the next 12 months due to completion of tax authority examinations and the expiration of statutes of limitations. It is uncertain how much, if any, of this potential decrease will impact the Company’s effective tax rate. |
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| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |
| Balance, January 1 | | | | | | $ | 127 | | | | | $ | 2 | |
| Increases in UTBs related to prior years | | | | | | 4 | | | | | | 120 | | |
| Decreases in UTBs related to prior years | | | | | | (1) | | | | | | — | | |
| Increases in UTBs related to the current year | | | | | | 18 | | | | | | 6 | | |
| Decreases in UTBs related to settlements | | | | | | (13) | | | | | | (1) | | |
| Decreases in UTBs related to lapse of the applicable statues of limitations | | | | | | (2) | | | | | | — | | |
| Balance, December 31 | | | | | | $ | 133 | | | | | $ | 127 | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, Truist considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in the Company's Investment Policy Statement. For 2021, the expected rate of return on plan assets is 6.7%. |
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| Year Ended December 31,(Dollars in millions) | | | Location | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Net periodic pension cost: | | | | | | | | | | | | | | | | | | | | | | | |
| Service cost | | | Personnel expense | | | | | | $ | 518 | | | | | $ | 214 | | | | | $ | 238 | |
| Interest cost | | | Other expense | | | | | | 313 | | | | | | 233 | | | | | | 201 | | |
| Estimated return on plan assets | | | Other expense | | | | | | (866) | | | | | | (480) | | | | | | (448) | | |
| Net amortization and other | | | Other expense | | | | | | 76 | | | | | | 111 | | | | | | 81 | | |
| Net periodic benefit cost | | | | | | | | | 41 | | | | | | 78 | | | | | | 72 | | |
| Pre-tax amounts recognized in OCI: | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Net actuarial loss (gain) | | | | | | | | | (244) | | | | | | 34 | | | | | | 289 | | |
| Net amortization | | | | | | | | | (77) | | | | | | (110) | | | | | | (81) | | |
| Net amount recognized in OCI | | | | | | | | | (321) | | | | | | (76) | | | | | | 208 | | |
| Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax | | | | | | | | | $ | (280) | | | | | $ | 2 | | | | | $ | 280 | |
| Weighted average assumptions used to determine net periodic pension cost: | | | | | | | | | | | | | | | | | | | | | | | |
| Discount rate | | | | | | | | | 3.45 | | % | | | | 4.43 | | % | | | | 3.79 | | % |
| Expected long-term rate of return on plan assets | | | | | | | | | 6.90 | | | | | | 7.00 | | | | | | 7.00 | | |
| Assumed long-term rate of annual compensation increases | | | | | | | | | 4.50 | | | | | | 4.50 | | | | | | 4.50 | | |
| Weighted average assumptions used to determine net periodic pension cost for SunTrust plans prior to being combined: | | | | | | | | | | | | | | | | | | | | | | | |
| Discount rate | | | | | | | | | NA | | | | | | 3.22 | | % | | | | NA | | |
| Expected long-term rate of return on plan assets | | | | | | | | | NA | | | | | | 6.90 | | | | | | NA | | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | (1)The assumed rate for qualified and nonqualified plans is 3.50% in 2021 and increases to 4.50% thereafter. |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Year Ended December 31,(Dollars in millions) | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |
| 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |
| Projected benefit obligation, January 1 | | | $ | 8,819 | | | | | $ | 4,697 | | | | | $ | 557 | | | | | $ | 386 | |
| Service cost | | | 479 | | | | | | 199 | | | | | | 39 | | | | | | 15 | | |
| Interest cost | | | 294 | | | | | | 216 | | | | | | 19 | | | | | | 17 | | |
| Actuarial loss | | | 985 | | | | | | 1,042 | | | | | | 68 | | | | | | 79 | | |
| Benefits paid | | | (300) | | | | | | (135) | | | | | | (22) | | | | | | (13) | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| Projected benefit obligation from Merger | | | — | | | | | | 2,800 | | | | | | — | | | | | | 72 | | |
| Special termination benefits | | | — | | | | | | — | | | | | | — | | | | | | 1 | | |
| Projected benefit obligation, December 31 | | | $ | 10,277 | | | | | $ | 8,819 | | | | | $ | 661 | | | | | $ | 557 | |
| Accumulated benefit obligation, December 31 | | | $ | 9,044 | | | | | $ | 7,859 | | | | | $ | 503 | | | | | $ | 432 | |
| Weighted average assumptions used to determine projected benefit obligations: | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average assumed discount rate | | | 2.94 | | % | | | | 3.45 | | % | | | | 2.94 | | % | | | | 3.45 | | % |
| Assumed rate of annual compensation increases (1) | | | 3.50 | | | | | | 4.50 | | | | | | 3.50 | | | | | | 4.50 | | |
| Weighted average assumptions used to determine projected benefit obligations for SunTrust plans prior to being combined: | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted average assumed discount rate | | | NA | | | | | | 3.22 | | % | | | | NA | | | | | | 3.22 | | % |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | The following are the pre-tax amounts recognized in AOCI: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended December 31,(Dollars in millions) | | | | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |
| | | | 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |
| Fair value of plan assets, January 1 | | | | | | $ | 12,398 | | | | | $ | 5,968 | | | | | $ | — | | | | | $ | — | |
| Actual return on plan assets | | | | | | 2,164 | | | | | | 1,566 | | | | | | — | | | | | | — | | |
| Employer contributions | | | | | | 373 | | | | | | 1,696 | | | | | | 22 | | | | | | 13 | | |
| Benefits paid | | | | | | (300) | | | | | | (135) | | | | | | (22) | | | | | | (13) | | |
| Fair value of plan assets from Merger | | | | | | — | | | | | | 3,303 | | | | | | — | | | | | | — | | |
| Fair value of plan assets, December 31 | | | | | | $ | 14,635 | | | | | $ | 12,398 | | | | | $ | — | | | | | $ | — | |
| Funded status, December 31 | | | | | | $ | 4,358 | | | | | $ | 3,579 | | | | | $ | (661) | | | | | $ | (557) | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2021: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Year Ended December 31,(Dollars in millions) | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |
| 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |
| Prior service credit (cost) | | | $ | (90) | | | | | $ | (114) | | | | | $ | 77 | | | | | $ | 96 | |
| Net actuarial loss | | | (858) | | | | | | (1,218) | | | | | | (263) | | | | | | (217) | | |
| Net amount recognized | | | $ | (948) | | | | | $ | (1,332) | | | | | $ | (186) | | | | | $ | (121) | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | Truist makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. Truist made discretionary contributions of $387 million during the first quarter of 2021. Management may make additional contributions in 2021. For the nonqualified plans, the employer contributions are based on benefit payments. |
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in millions) | | | Qualified Plan | | | | | | Nonqualified Plans | | |
| Net actuarial loss | | | $ | — | | | | | $ | (28) | |
| Prior service credit (cost) | | | (25) | | | | | | 19 | | |
| Net amount expected to be amortized | | | $ | (25) | | | | | $ | (9) | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | The Company's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the ERISA. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.Truist periodically reviews its asset allocation and investment policy and makes changes to its target asset allocation. Truist has established guidelines within each asset category to ensure the appropriate balance of risk and reward. The following table presents the fair values of the qualified pension plan assets by asset category: |
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in millions) | | | | | | Qualified Plan | | | | | | Nonqualified Plans | | |
| 2021 | | | | | | $ | 305 | | | | | $ | 22 | |
| 2022 | | | | | | 324 | | | | | | 23 | | |
| 2023 | | | | | | 342 | | | | | | 31 | | |
| 2024 | | | | | | 360 | | | | | | 26 | | |
| 2025 | | | | | | 381 | | | | | | 27 | | |
| 2026-2030 | | | | | | 2,205 | | | | | | 160 | | |
| TFC/10-K/0000092230-21-000032 |
Defined Benefit Retirement Plans | (1)The plan may hold up to 10% of its assets in Truist common stock. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31,(Dollars in millions) | | | Target Allocation | | | | | | | | | | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |
| Min | | | | | | Max | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | |
| Cash and cash-equivalents | | | | | | | | | | | | | | | $ | 290 | | | | | $ | 290 | | | | | $ | — | | | | | $ | 295 | | | | | $ | 295 | | | | | $ | — | |
| U.S. equity securities (1) | | | 30 | | % | | | | 50 | | % | | | | 6,587 | | | | | | 3,531 | | | | | | 3,056 | | | | | | 5,336 | | | | | | 3,629 | | | | | | 1,707 | | |
| International equity securities | | | 11 | | | | | | 18 | | | | | | 1,614 | | | | | | 360 | | | | | | 1,254 | | | | | | 1,752 | | | | | | 328 | | | | | | 1,424 | | |
| Fixed income securities | | | 35 | | | | | | 53 | | | | | | 5,368 | | | | | | 11 | | | | | | 5,357 | | | | | | 4,629 | | | | | | 11 | | | | | | 4,618 | | |
| Total | | | | | | | | | | | | | | | $ | 13,859 | | | | | $ | 4,192 | | | | | $ | 9,667 | | | | | $ | 12,012 | | | | | $ | 4,263 | | | | | $ | 7,749 | |
| TFC/10-K/0000092230-21-000032 |
Equity-Based Compensation Plans | The following table presents a summary of selected data related to equity-based compensation costs: |
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2020 | | | | | | | | | | | | | | |
| Shares available for future grants (in thousands) | | | | | | 19,815 | | | | | | | | |
| Vesting period, minimum | | | | | | 1.0 year | | | | | | | | |
| Vesting period, maximum | | | | | | 5.0 years | | | | | | | | |
| | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Equity-Based Compensation Plans | The following table presents the activity related to awards of RSUs, PSUs and restricted shares: |
| | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| As of / For the Year Ended December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Equity-based compensation expense | | | $ | 353 | | | | | $ | 165 | | | | | $ | 141 | |
| Income tax benefit from equity-based compensation expense | | | 84 | | | | | | 38 | | | | | | 34 | | |
| Intrinsic value of options exercised, and RSUs and PSUs that vested during the year | | | 412 | | | | | | 216 | | | | | | 260 | | |
| Grant date fair value of equity-based awards that vested during the year | | | 420 | | | | | | 134 | | | | | | 139 | | |
| Unrecognized compensation cost related to equity-based awards | | | 234 | | | | | | 274 | | | | | | 135 | | |
| Weighted-average life over which compensation cost is expected to be recognized | | | 2.3 years | | | | | | 2.3 years | | | | | | 2.4 years | | |
| TFC/10-K/0000092230-21-000032 |
Tax Credit and Certain Equity Investments | The following table presents a summary of tax credits and amortization associated with the Company's tax credit investment activity: |
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | Balance Sheet Location | | | 2020 | | | | | | 2019 | | |
| Investments in affordable housing projects: | | | | | | | | | | | | | | |
| Carrying amount | | | Other assets | | | $ | 3,823 | | | | | $ | 3,684 | |
| Amount of future funding commitments included in carrying amount | | | Other liabilities | | | 1,057 | | | | | | 1,271 | | |
| Lending exposure | | | NA | | | 546 | | | | | | 647 | | |
| | | | | | | | | | | | | | | |
| Renewable energy investments: | | | | | | | | | | | | | | |
| Carrying amount | | | Other assets | | | 167 | | | | | | 81 | | |
| Amount of future funding commitments not included in carrying amount | | | NA | | | 76 | | | | | | 246 | | |
| Private equity and certain other equity method investments: | | | | | | | | | | | | | | |
| Carrying amount | | | Other assets | | | 1,574 | | | | | | 1,556 | | |
| Amount of future funding commitments not included in carrying amount | | | NA | | | 471 | | | | | | 331 | | |
| TFC/10-K/0000092230-21-000032 |
Letters of Credit and Financial Guarantees | 134 Truist Financial Corporation |
| | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |
| Commitments to extend, originate or purchase credit | | | $ | 186,731 | | | | | $ | 177,598 | |
| Residential mortgage loans sold with recourse | | | 328 | | | | | | 371 | | |
| CRE mortgages serviced for others covered by recourse provisions | | | 9,019 | | | | | | 8,676 | | |
| Letters of credit | | | 5,066 | | | | | | 5,181 | | |
| | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
NOTE 17. Regulatory Requirements and Other Restrictions | (1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist became subject to the supplementary leverage ratio as of January 1, 2020. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |
| | | | Ratio | | | | | | Amount | | | | | | | | | | | | | | | | | | Ratio | | | | | | Amount | | | | | | | | | | | | | | |
| Truist Financial Corporation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CET1 | | | | | | 10.0 | | % | | | | $ | 37,869 | | | | | | | | | | | | | | | | | 9.5 | | % | | | | $ | 35,643 | | | | | | | | | | | | | |
| Tier 1 capital | | | | | | 12.1 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | 10.8 | | | | | | 40,743 | | | | | | | | | | | | | | |
| Total capital | | | | | | 14.5 | | | | | | 55,011 | | | | | | | | | | | | | | | | | | 12.6 | | | | | | 47,511 | | | | | | | | | | | | | | |
| Leverage (1) | | | | | | 9.6 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | 14.7 | | | | | | 40,743 | | | | | | | | | | | | | | |
| Supplementary leverage (2) | | | | | | 8.7 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | NA | | | | | | NA | | | | | | | | | | | | | | |
| Truist Bank | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| CET1 | | | | | | 11.0 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 10.6 | | | | | | 38,739 | | | | | | | | | | | | | | |
| Tier 1 capital | | | | | | 11.0 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 10.6 | | | | | | 38,739 | | | | | | | | | | | | | | |
| Total capital | | | | | | 13.0 | | | | | | 47,882 | | | | | | | | | | | | | | | | | | 12.0 | | | | | | 43,984 | | | | | | | | | | | | | | |
| Leverage (1) | | | | | | 8.7 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 14.5 | | | | | | 38,739 | | | | | | | | | | | | | | |
| Supplementary leverage (2) | | | | | | 7.5 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | NA | | | | | | NA | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Recurring Fair Value Measurements | 138 Truist Financial Corporation |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2020(Dollars in millions) | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Level 3 | | | | | | Netting Adjustments (1) | | |
| Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | $ | 793 | | | | | $ | — | | | | | $ | 793 | | | | | $ | — | | | | | $ | — | |
| GSE | | | | | | 164 | | | | | | — | | | | | | 164 | | | | | | — | | | | | | — | | |
| Agency MBS - residential | | | | | | 599 | | | | | | — | | | | | | 599 | | | | | | — | | | | | | — | | |
| Agency MBS - commercial | | | | | | 21 | | | | | | — | | | | | | 21 | | | | | | — | | | | | | — | | |
| States and political subdivisions | | | | | | 34 | | | | | | — | | | | | | 34 | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Corporate and other debt securities | | | | | | 545 | | | | | | — | | | | | | 545 | | | | | | — | | | | | | — | | |
| Loans | | | | | | 1,586 | | | | | | — | | | | | | 1,586 | | | | | | — | | | | | | — | | |
| Other | | | | | | 130 | | | | | | 123 | | | | | | 7 | | | | | | — | | | | | | — | | |
| Total trading assets | | | | | | 3,872 | | | | | | 123 | | | | | | 3,749 | | | | | | — | | | | | | — | | |
| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | 1,746 | | | | | | — | | | | | | 1,746 | | | | | | — | | | | | | — | | |
| GSE | | | | | | 1,917 | | | | | | — | | | | | | 1,917 | | | | | | — | | | | | | — | | |
| Agency MBS - residential | | | | | | 113,541 | | | | | | — | | | | | | 113,541 | | | | | | — | | | | | | — | | |
| Agency MBS - commercial | | | | | | 3,057 | | | | | | — | | | | | | 3,057 | | | | | | — | | | | | | — | | |
| States and political subdivisions | | | | | | 493 | | | | | | — | | | | | | 493 | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Other | | | | | | 34 | | | | | | — | | | | | | 34 | | | | | | — | | | | | | — | | |
| Total AFS securities | | | | | | 120,788 | | | | | | — | | | | | | 120,788 | | | | | | — | | | | | | — | | |
| LHFS at fair value | | | | | | 4,955 | | | | | | — | | | | | | 4,955 | | | | | | — | | | | | | — | | |
| MSRs at fair value | | | | | | 2,023 | | | | | | — | | | | | | — | | | | | | 2,023 | | | | | | — | | |
| Other assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivative assets | | | | | | 3,837 | | | | | | 752 | | | | | | 4,903 | | | | | | 186 | | | | | | (2,004) | | |
| Equity securities | | | | | | 1,054 | | | | | | 996 | | | | | | 58 | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | | | | | $ | 136,529 | | | | | $ | 1,871 | | | | | $ | 134,453 | | | | | $ | 2,209 | | | | | $ | (2,004) | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivative liabilities | | | | | | $ | 555 | | | | | $ | 386 | | | | | $ | 3,263 | | | | | $ | 14 | | | | | $ | (3,108) | |
| Securities sold short | | | | | | 1,115 | | | | | | 3 | | | | | | 1,112 | | | | | | — | | | | | | — | | |
| Total liabilities | | | | | | $ | 1,670 | | | | | $ | 389 | | | | | $ | 4,375 | | | | | $ | 14 | | | | | $ | (3,108) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| TFC/10-K/0000092230-21-000032 |
Recurring Fair Value Measurements | (1)Refer to "Note 19. Derivative Financial Instruments" for additional discussion on netting adjustments. |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2019(Dollars in millions) | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Level 3 | | | | | | Netting Adjustments (1) | | |
| Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | $ | 227 | | | | | $ | — | | | | | $ | 227 | | | | | $ | — | | | | | $ | — | |
| GSE | | | | | | 296 | | | | | | — | | | | | | 296 | | | | | | — | | | | | | — | | |
| Agency MBS - residential | | | | | | 497 | | | | | | — | | | | | | 497 | | | | | | — | | | | | | — | | |
| Agency MBS - commercial | | | | | | 68 | | | | | | — | | | | | | 68 | | | | | | — | | | | | | — | | |
| States and political subdivisions | | | | | | 82 | | | | | | — | | | | | | 82 | | | | | | — | | | | | | — | | |
| Non-agency MBS | | | | | | 277 | | | | | | — | | | | | | 277 | | | | | | — | | | | | | — | | |
| Corporate and other debt securities | | | | | | 1,204 | | | | | | — | | | | | | 1,204 | | | | | | — | | | | | | — | | |
| Loans | | | | | | 2,948 | | | | | | — | | | | | | 2,948 | | | | | | — | | | | | | — | | |
| Other | | | | | | 134 | | | | | | 90 | | | | | | 44 | | | | | | — | | | | | | — | | |
| Total trading assets | | | | | | 5,733 | | | | | | 90 | | | | | | 5,643 | | | | | | — | | | | | | — | | |
| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Treasury | | | | | | 2,276 | | | | | | — | | | | | | 2,276 | | | | | | — | | | | | | — | | |
| GSE | | | | | | 1,881 | | | | | | — | | | | | | 1,881 | | | | | | — | | | | | | — | | |
| Agency MBS - residential | | | | | | 68,236 | | | | | | — | | | | | | 68,236 | | | | | | — | | | | | | — | | |
| Agency MBS - commercial | | | | | | 1,341 | | | | | | — | | | | | | 1,341 | | | | | | — | | | | | | — | | |
| States and political subdivisions | | | | | | 585 | | | | | | — | | | | | | 585 | | | | | | — | | | | | | — | | |
| Non-agency MBS | | | | | | 368 | | | | | | — | | | | | | — | | | | | | 368 | | | | | | — | | |
| Other | | | | | | 40 | | | | | | — | | | | | | 40 | | | | | | — | | | | | | — | | |
| Total AFS securities | | | | | | 74,727 | | | | | | — | | | | | | 74,359 | | | | | | 368 | | | | | | — | | |
| LHFS | | | | | | 5,673 | | | | | | — | | | | | | 5,673 | | | | | | — | | | | | | — | | |
| MSRs | | | | | | 2,618 | | | | | | — | | | | | | — | | | | | | 2,618 | | | | | | — | | |
| Other assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivative assets | | | | | | 2,053 | | | | | | 606 | | | | | | 3,620 | | | | | | 34 | | | | | | (2,207) | | |
| Equity securities | | | | | | 817 | | | | | | 815 | | | | | | 2 | | | | | | — | | | | | | — | | |
| Private equity investments | | | | | | 440 | | | | | | — | | | | | | — | | | | | | 440 | | | | | | — | | |
| Total assets | | | | | | $ | 92,061 | | | | | $ | 1,511 | | | | | $ | 89,297 | | | | | $ | 3,460 | | | | | $ | (2,207) | |
| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivative liabilities | | | | | | $ | 366 | | | | | $ | 204 | | | | | $ | 3,117 | | | | | $ | 15 | | | | | $ | (2,970) | |
| Securities sold short | | | | | | 1,074 | | | | | | 18 | | | | | | 1,056 | | | | | | — | | | | | | — | | |
| Total liabilities | | | | | | $ | 1,440 | | | | | $ | 222 | | | | | $ | 4,173 | | | | | $ | 15 | | | | | $ | (2,970) | |
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| TFC/10-K/0000092230-21-000032 |
Recurring Fair Value Measurements | During 2020, Truist sold non-agency MBS previously categorized as Level 3 that represented ownership interests in various tranches of Re-REMIC trusts. The Re-REMIC tranches did not have an active market and therefore were categorized as Level 3.During 2020, as a result of a change in control of the funds’ manager, the Company deconsolidated certain SBIC funds for which it had previously concluded that it was the primary beneficiary. Following the deconsolidation, the investments in SBIC funds are valued based on net asset value per unit, as provided by the fund manager as a practical expedient, which approximates the fair value, and have not been classified in the fair value hierarchy. The SBIC funds in which the Company invests primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates over the next 10 years, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes among others. As of December 31, 2020, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority of members or general partner approval for transfer of ownership. These investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. Refer to "Note 8. Loan Servicing" for additional information on valuation techniques and inputs for MSRs. |
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| (Dollars in millions) | | | Trading Assets | | | | | | Non-agency MBS | | | | | | MSRs | | | | | | Net Derivatives | | | | | | Private Equity Investments | | |
| Balance at January 1, 2018 | | | $ | — | | | | | $ | 432 | | | | | $ | 1,056 | | | | | $ | 3 | | | | | $ | 404 | |
| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Included in earnings | | | — | | | | | | 9 | | | | | | 71 | | | | | | 11 | | | | | | 66 | | |
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| Purchases | | | 5 | | | | | | — | | | | | | — | | | | | | — | | | | | | 91 | | |
| Issuances | | | — | | | | | | — | | | | | | 152 | | | | | | 24 | | | | | | — | | |
| Sales | | | (2) | | | | | | — | | | | | | — | | | | | | — | | | | | | (112) | | |
| Settlements | | | — | | | | | | (50) | | | | | | (171) | | | | | | (26) | | | | | | (56) | | |
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| Balance at December 31, 2018 | | | 3 | | | | | | 391 | | | | | | 1,108 | | | | | | 12 | | | | | | 393 | | |
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| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Included in earnings | | | — | | | | | | 13 | | | | | | (105) | | | | | | 63 | | | | | | 47 | | |
| Included in unrealized net holding gains (losses) in OCI | | | — | | | | | | 4 | | | | | | — | | | | | | — | | | | | | — | | |
| Purchases | | | 23 | | | | | | — | | | | | | 31 | | | | | | (1) | | | | | | 137 | | |
| Issuances | | | — | | | | | | — | | | | | | 170 | | | | | | 63 | | | | | | — | | |
| Sales | | | (26) | | | | | | — | | | | | | (27) | | | | | | — | | | | | | (91) | | |
| Settlements | | | — | | | | | | (40) | | | | | | (164) | | | | | | (118) | | | | | | (46) | | |
| Transfers into Level 3 | | | — | | | | | | — | | | | | | — | | | | | | (10) | | | | | | — | | |
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| Merger additions | | | — | | | | | | — | | | | | | 1,605 | | | | | | 10 | | | | | | — | | |
| Balance at December 31, 2019 | | | — | | | | | | 368 | | | | | | 2,618 | | | | | | 19 | | | | | | 440 | | |
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| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Included in earnings | | | — | | | | | | 306 | | | | | | (550) | | | | | | 467 | | | | | | 2 | | |
| Included in unrealized net holding gains (losses) in OCI | | | — | | | | | | (178) | | | | | | — | | | | | | — | | | | | | — | | |
| Purchases | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 27 | | |
| Issuances | | | — | | | | | | — | | | | | | 711 | | | | | | 780 | | | | | | — | | |
| Sales | | | — | | | | | | (481) | | | | | | — | | | | | | — | | | | | | — | | |
| Settlements | | | — | | | | | | (15) | | | | | | (756) | | | | | | (1,094) | | | | | | (21) | | |
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| Transfers out of level 3 and other | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (448) | | |
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| Balance at December 31, 2020 | | | $ | — | | | | | $ | — | | | | | $ | 2,023 | | | | | $ | 172 | | | | | $ | — | |
| Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at December 31, 2020 | | | $ | — | | | | | $ | — | | | | | $ | (535) | | | | | $ | 179 | | | | | $ | — | |
| Primary income statement location of realized gains (losses) included in earnings | | | Net interest income | | | | | | Gain on sale of securities | | | | | | Residential mortgage income and Commercial real estate related income | | | | | | Residential mortgage income and Commercial real estate related income | | | | | | Other income | | |
| TFC/10-K/0000092230-21-000032 |
Nonrecurring Fair Value Measurements | LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at the lower of cost or market. LHFS as of December 31, 2020 includes the small ticket loan and lease portfolio. The table above excludes $125 million of LHFS carried at cost at December 31, 2020 that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value. Excluding government guaranteed loans, the Company held $5 million in nonperforming LHFS at December 31, 2020 and $107 million of nonperforming LHFS at December 31, 2019. LHFS that were 90 days or more past due and still accruing interest were not material at December 31, 2020. Loans and leases are primarily collateral dependent and may be subject to liquidity adjustments. Refer to "Note 1. Basis of Presentation" 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 future sublease income. The remaining assets are measured at the lower of cost or fair value less costs to sell. |
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| | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |
| As of / For The Year Ended December 31,(Dollars in millions) | | | | | | Carrying Value | | | | | | Valuation Adjustments | | | | | | Carrying Value | | | | | | Valuation Adjustments | | |
| LHFS | | | | | | $ | 979 | | | | | $ | (101) | | | | | $ | 2,700 | | | | | $ | (17) | |
| Loans and leases | | | | | | 142 | | | | | | (52) | | | | | | 95 | | | | | | (23) | | |
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| Other | | | | | | 92 | | | | | | (175) | | | | | | 84 | | | | | | (253) | | |
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| TFC/10-K/0000092230-21-000032 |
Financial Instruments Not Recorded at Fair Value | The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was $364 million and $373 million at December 31, 2020 and December 31, 2019, respectively. Prior to the adoption of CECL, the carrying value includes deferred fees. |
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| December 31,(Dollars in millions) | | | | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |
| Fair Value Hierarchy | | | | | | Carrying Amount | | | | | | Fair Value | | | | | | Carrying Amount | | | | | | Fair Value | | |
| Financial assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Loans and leases HFI, net of ALLL | | | Level 3 | | | | | | $ | 293,899 | | | | | $ | 295,461 | | | | | $ | 298,293 | | | | | $ | 298,586 | |
| Financial liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Time deposits | | | Level 2 | | | | | | 21,941 | | | | | | 22,095 | | | | | | 35,896 | | | | | | 35,885 | | |
| Long-term debt | | | Level 2 | | | | | | 39,597 | | | | | | 40,864 | | | | | | 41,339 | | | | | | 42,051 | | |
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| TFC/10-K/0000092230-21-000032 |
Impact of Derivatives on the Consolidated Balance Sheets | 144 Truist Financial Corporation |
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| | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |
| December 31,(Dollars in millions) | | | Notional Amount | | | | | | Fair Value | | | | | | | | | | | | Notional Amount | | | | | | Fair Value | | | | | | | | |
| | | | Gain | | | | | | Loss | | | | | | | | | Gain | | | | | | Loss | | |
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| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Swaps hedging long-term debt | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 23,701 | | | | | $ | 113 | | | | | $ | (25) | |
| Options hedging long-term debt | | | — | | | | | | — | | | | | | — | | | | | | 3,407 | | | | | | — | | | | | | (2) | | |
| Swaps hedging commercial loans | | | — | | | | | | — | | | | | | — | | | | | | 44 | | | | | | — | | | | | | — | | |
| Swaps hedging AFS securities | | | 17,765 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
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| Total | | | 17,765 | | | | | | — | | | | | | — | | | | | | 27,152 | | | | | | 113 | | | | | | (27) | | |
| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Swaps | | | 156,338 | | | | | | 3,399 | | | | | | (862) | | | | | | 144,473 | | | | | | 1,817 | | | | | | (673) | | |
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| Options | | | 25,386 | | | | | | 45 | | | | | | (18) | | | | | | 25,938 | | | | | | 28 | | | | | | (19) | | |
| Forward commitments | | | 4,847 | | | | | | 9 | | | | | | (11) | | | | | | 7,907 | | | | | | 6 | | | | | | (7) | | |
| Other | | | 2,573 | | | | | | — | | | | | | — | | | | | | 1,807 | | | | | | — | | | | | | — | | |
| Equity contracts | | | 31,152 | | | | | | 1,856 | | | | | | (2,297) | | | | | | 38,426 | | | | | | 1,988 | | | | | | (2,307) | | |
| Credit contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans and leases | | | 1,056 | | | | | | — | | | | | | (5) | | | | | | 894 | | | | | | — | | | | | | (34) | | |
| Risk participation agreements | | | 7,802 | | | | | | 1 | | | | | | (13) | | | | | | 6,696 | | | | | | — | | | | | | (2) | | |
| Total return swaps | | | 1,296 | | | | | | 13 | | | | | | (33) | | | | | | 2,531 | | | | | | 27 | | | | | | (11) | | |
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| Foreign exchange contracts | | | 12,066 | | | | | | 189 | | | | | | (219) | | | | | | 12,986 | | | | | | 144 | | | | | | (164) | | |
| Commodity | | | 2,872 | | | | | | 130 | | | | | | (124) | | | | | | 2,659 | | | | | | 67 | | | | | | (65) | | |
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| Total | | | 245,388 | | | | | | 5,642 | | | | | | (3,582) | | | | | | 244,317 | | | | | | 4,077 | | | | | | (3,282) | | |
| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Swaps | | | 687 | | | | | | — | | | | | | — | | | | | | 535 | | | | | | — | | | | | | — | | |
| Interest rate lock commitments | | | 8,609 | | | | | | 186 | | | | | | (3) | | | | | | 4,427 | | | | | | 34 | | | | | | (2) | | |
| When issued securities, forward rate agreements and forward commitments | | | 11,691 | | | | | | 6 | | | | | | (73) | | | | | | 11,997 | | | | | | 10 | | | | | | (18) | | |
| Other | | | 466 | | | | | | — | | | | | | — | | | | | | 603 | | | | | | 2 | | | | | | — | | |
| Total | | | 21,453 | | | | | | 192 | | | | | | (76) | | | | | | 17,562 | | | | | | 46 | | | | | | (20) | | |
| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Swaps | | | 36,161 | | | | | | — | | | | | | (5) | | | | | | 19,196 | | | | | | — | | | | | | — | | |
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| Options | | | 101 | | | | | | — | | | | | | — | | | | | | 1,519 | | | | | | 22 | | | | | | (2) | | |
| When issued securities, forward rate agreements and forward commitments | | | 1,314 | | | | | | 7 | | | | | | — | | | | | | 5,560 | | | | | | 2 | | | | | | (5) | | |
| Other | | | 760 | | | | | | — | | | | | | — | | | | | | 567 | | | | | | — | | | | | | — | | |
| Total | | | 38,336 | | | | | | 7 | | | | | | (5) | | | | | | 26,842 | | | | | | 24 | | | | | | (7) | | |
| Total derivatives not designated as hedges | | | 305,177 | | | | | | 5,841 | | | | | | (3,663) | | | | | | 288,721 | | | | | | 4,147 | | | | | | (3,309) | | |
| Total derivatives | | | $ | 322,942 | | | | | 5,841 | | | | | | (3,663) | | | | | | $ | 315,873 | | | | | 4,260 | | | | | | (3,336) | | |
| Gross amounts in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Amounts subject to master netting arrangements | | | | | | | | | (1,561) | | | | | | 1,561 | | | | | | | | | | | | (1,708) | | | | | | 1,708 | | |
| Cash collateral (received) posted for amounts subject to master netting arrangements | | | | | | | | | (443) | | | | | | 1,547 | | | | | | | | | | | | (499) | | | | | | 1,262 | | |
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| Net amount | | | | | | | | | $ | 3,837 | | | | | $ | (555) | | | | | | | | | | | $ | 2,053 | | | | | $ | (366) | |
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| TFC/10-K/0000092230-21-000032 |
Impact of Derivatives on the Consolidated Balance Sheets | The following table presents the carrying value of hedged items in fair value hedging relationships: |
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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2020(Dollars in millions) | | | Gross Amount | | | | | | Amount Offset | | | | | | Net Amount in Consolidated Balance Sheets | | | | | | Held/Pledged Financial Instruments | | | | | | Net Amount | | |
| Derivative assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives subject to master netting arrangement or similar arrangement | | | $ | 4,383 | | | | | $ | (1,618) | | | | | $ | 2,765 | | | | | $ | (2) | | | | | $ | 2,763 | |
| Derivatives not subject to master netting arrangement or similar arrangement | | | 705 | | | | | | — | | | | | | 705 | | | | | | (1) | | | | | | 704 | | |
| Exchange traded derivatives | | | 753 | | | | | | (386) | | | | | | 367 | | | | | | — | | | | | | 367 | | |
| Total derivative assets | | | $ | 5,841 | | | | | $ | (2,004) | | | | | $ | 3,837 | | | | | $ | (3) | | | | | $ | 3,834 | |
| Derivative liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives subject to master netting arrangement or similar arrangement | | | $ | (3,103) | | | | | $ | 2,722 | | | | | $ | (381) | | | | | $ | 35 | | | | | $ | (346) | |
| Derivatives not subject to master netting arrangement or similar arrangement | | | (174) | | | | | | — | | | | | | (174) | | | | | | — | | | | | | (174) | | |
| Exchange traded derivatives | | | (386) | | | | | | 386 | | | | | | — | | | | | | — | | | | | | — | | |
| Total derivative liabilities | | | $ | (3,663) | | | | | $ | 3,108 | | | | | $ | (555) | | | | | $ | 35 | | | | | $ | (520) | |
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| December 31, 2019(Dollars in millions) | | | Gross Amount | | | | | | Amount Offset | | | | | | Net Amount in Consolidated Balance Sheets | | | | | | Held/Pledged Financial Instruments | | | | | | Net Amount | | |
| Derivative assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives subject to master netting arrangement or similar arrangement | | | $ | 3,516 | | | | | $ | (2,003) | | | | | $ | 1,513 | | | | | $ | (17) | | | | | $ | 1,496 | |
| Derivatives not subject to master netting arrangement or similar arrangement | | | 138 | | | | | | — | | | | | | 138 | | | | | | (1) | | | | | | 137 | | |
| Exchange traded derivatives | | | 606 | | | | | | (204) | | | | | | 402 | | | | | | — | | | | | | 402 | | |
| Total derivative assets | | | $ | 4,260 | | | | | $ | (2,207) | | | | | $ | 2,053 | | | | | $ | (18) | | | | | $ | 2,035 | |
| Derivative liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Derivatives subject to master netting arrangement or similar arrangement | | | $ | (2,939) | | | | | $ | 2,761 | | | | | $ | (178) | | | | | $ | 22 | | | | | $ | (156) | |
| Derivatives not subject to master netting arrangement or similar arrangement | | | (193) | | | | | | 5 | | | | | | (188) | | | | | | 11 | | | | | | (177) | | |
| Exchange traded derivatives | | | (204) | | | | | | 204 | | | | | | — | | | | | | — | | | | | | — | | |
| Total derivative liabilities | | | $ | (3,336) | | | | | $ | 2,970 | | | | | $ | (366) | | | | | $ | 33 | | | | | $ | (333) | |
| TFC/10-K/0000092230-21-000032 |
Derivatives Designated as Hedging Instruments under GAAP | The following table summarizes the impact on net interest income related to fair value hedges: |
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| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |
| Pre-tax gain (loss) recognized in OCI: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Deposits | | | | | | | | | | | | | | | $ | — | | | | | $ | (42) | | | | | $ | 15 | |
| Short-term borrowings | | | | | | | | | | | | | | | — | | | | | | 2 | | | | | | (3) | | |
| Long-term debt | | | | | | | | | | | | | | | — | | | | | | (76) | | | | | | 57 | | |
| Total | | | | | | | | | | | | | | | $ | — | | | | | $ | (116) | | | | | $ | 69 | |
| Pre-tax gain (loss) reclassified from AOCI into interest expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| Deposits | | | | | | | | | | | | | | | $ | (8) | | | | | $ | (1) | | | | | $ | (1) | |
| Short-term borrowings | | | | | | | | | | | | | | | (19) | | | | | | (10) | | | | | | 1 | | |
| Long-term debt | | | | | | | | | | | | | | | (21) | | | | | | (14) | | | | | | (12) | | |
| Total | | | | | | | | | | | | | | | $ | (48) | | | | | $ | (25) | | | | | $ | (12) | |
| TFC/10-K/0000092230-21-000032 |