Truist Financial Corporation Annual Report 2020 Form 10-K (NYSE:TFC) Published: March 3rd, 2020 PDF generated by stocklight.com UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ FORM 10-K ____________________________________________________ ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 Commission File Number: 1-10853 TRUIST FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) North Carolina 56-0939887 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 214 North Tryon Street Charlotte, North Carolina 28202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (336) 733-2000 ______________________________ Securities registered pursuant to Section 12(b) of the Act: Trading Name of each exchange on which Title of each class Symbol registered Common Stock, $5 par value TFC New York Stock Exchange Depositary Shares each representing 1/1,000th interest in a share of Series F Non-Cumulative Perpetual Preferred Stock TFC.PF New York Stock Exchange Depositary Shares each representing 1/1,000th interest in a share of Series G Non-Cumulative Perpetual Preferred Stock TFC.PG New York Stock Exchange Depositary Shares each representing 1/1,000th interest in a share of Series H Non-Cumulative Perpetual Preferred Stock TFC.PH New York Stock Exchange Depositary Shares each representing 1/4,000th interest in a share of Series I Perpetual Preferred Stock TFC.PI New York Stock Exchange 5.853% Fixed-to-Floating Rate Normal Preferred Purchase Securities each representing 1/100th interest in a share of Series J Perpetual Preferred Stock TFC.PJ New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by references in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ At January 31, 2020, the Company had 1,342,769,369 shares of its common stock, $5 par value, outstanding. As of June 28, 2019, the aggregate market value of voting stock held by nonaffiliates of the Company was approximately $37.5 billion. Documents incorporated by reference: Portions of the definitive proxy statement relating to the registrant's 2020 annual meeting of stockholders are incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. TABLE OF CONTENTS TRUIST FINANCIAL CORPORATION FORM 10-K December 31, 2019 Page No. PART I Glossary of Defined Terms 1 Forward-Looking Statements 4 Item 1 Business 5 Item 1A Risk Factors 19 Item 1B Unresolved Staff Comments (None to be reported) Item 2 Properties 32 Item 3 Legal Proceedings (see Note 16) 126 Item 4 Mine Safety Disclosures (Not applicable) PART II Item 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6 Selected Financial Data 36 Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 37 Item 7A Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management) 64 Item 8 Financial Statements and Supplementary Data Quarterly Financial Summary 72 Report of Independent Registered Public Accounting Firm 79 Consolidated Balance Sheets 82 Consolidated Statements of Income 83 Consolidated Statements of Comprehensive Income 84 Consolidated Statements of Changes in Shareholders' Equity 85 Consolidated Statements of Cash Flows 86 Notes to Consolidated Financial Statements Note 1. Basis of Presentation 87 Note 2. Business Combinations 99 Note 3. Securities Financing Activities 103 Note 4. Investment Securities 104 Note 5. Loans and ACL 106 Note 6. Premises and Equipment 111 Note 7. Goodwill and Other Intangible Assets 111 Note 8. Loan Servicing 112 Note 9. Other Assets and Liabilities 114 Note 10. Deposits 115 Note 11. Borrowings 115 Note 12. Shareholders' Equity 116 Note 13. AOCI 118 Note 14. Income Taxes 119 Note 15. Benefit Plans 121 Note 16. Commitments and Contingencies 126 Note 17. Regulatory Requirements and Other Restrictions 130 Note 18. Fair Value Disclosures 131 Note 19. Derivative Financial Instruments 136 Note 20. Computation of EPS 140 Note 21. Operating Segments 140 Note 22. Parent Company Financial Information 144 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure (None to be reported) Item 9A Controls and Procedures 78 Item 9B Other Information (None to be reported) PART III Item 10 Directors, Executive Officers and Corporate Governance * Item 11 Executive Compensation * Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters * Item 13 Certain Relationships and Related Transactions, and Director Independence * Item 14 Principal Accounting Fees and Services * PART IV Item 15 Exhibits, Financial Statement Schedules Financial Statements (see Listing in Item 8 above) Exhibits 146 Financial Statement Schedules (None required) Item 16 Form 10-K Summary (None) * For information regarding executive officers, refer to "Executive Officers" in Part I. The other information required by Item 10 is incorporated herein by reference to the information that appears under the headings "Nominees for Election as Directors for a One-Year Term Expiring in 2021," "Nominating and Governance Committee Director Nominations," "Ethics at Truist," and "Audit Committee" in the Registrant's Proxy Statement for the 2020 Annual Meeting of Shareholders. The information required by Item 11 is incorporated herein by reference to the information that appears under the headings "Compensation Discussion and Analysis," "Compensation of Executive Officers," "Compensation and Human Capital Committee Report on Executive Compensation," "Compensation and Human Capital Committee Interlocks and Insider Participation" and "Compensation of Directors" in the Registrant's Proxy Statement for the 2020 Annual Meeting of Shareholders. For information regarding the registrant's securities authorized for issuance under equity compensation plans, refer to "Equity Compensation Plan Information" in Part II herein. The other information required by Item 12 is incorporated herein by reference to the information that appears under the heading "Stock Ownership Information" in the Registrant's Proxy Statement for the 2020 Annual Meeting of Shareholders. The information required by Item 13 is incorporated herein by reference to the information that appears under the headings "Director Independence" and "Related Person Transactions" in the Registrant's Proxy Statement for the 2020 Annual Meeting of Shareholders. The information required by Item 14 is incorporated herein by reference to the information that appears under the headings "Fees to Independent Registered Public Accounting Firm" and "Audit Committee Pre-Approval Policy" in the Registrant's Proxy Statement for the 2020 Annual Meeting of Shareholders. Glossary of Defined Terms The following terms may be used throughout this report, including the consolidated financial statements and related notes. Term Definition ACL Allowance for credit losses AFS Available-for-sale Agency MBS Mortgage-backed securities issued by a U.S. government agency or GSE ALLL Allowance for loan and lease losses ALM Asset/Liability management ARRC Alternative Reference Rates Committee of the FRB and the Federal Reserve Bank of New York AOCI Accumulated other comprehensive income (loss) Basel