Truist Financial (TFC) Risk Factor Changes

In deciding whether to extend credit or enter into other transactions with clients and counterparties, Truist relies on the completeness and accuracy of representations made by and information furnished by or on behal…

Natural disasters, pandemics, extreme weather events, and other catastrophic events, as well as government actions or other restrictions in connection with such events, could adversely affect the Company’s financial c…

Additionally, the Company faces potential brand and stakeholder risks as a result of its practices related to climate change, including as a result of the Company’s direct or indirect involvement, or lack of involveme…

Physical, transition, and other risks associated with climate change, together with governmental responses to such risks, may negatively impact our business, financial condition, operations, reputation, and clients.

Increased and evolving activity perpetrated by bad actors intending to defraud, misappropriate property, or circumvent the law using different channels, products, and means may outpace and outmaneuver the Truist contr…

Truist’s ability to operate its businesses efficiently and profitably, to offer products and services that meet the expectations of its clients, and to maintain an effective risk management framework is highly depende…

The Company relies on its ability, and the ability of key external parties, to maintain appropriately staffed workforces and on the competence, trustworthiness, health, and safety of teammates.

The Company’s success depends, to a large degree, upon the continued services of executive officers and other key teammates who have extensive experience and expertise in the industry, and the Company’s ability to att…

Our efforts to identify, measure, and monitor brand and stakeholder risk and communicate, internally and externally, such risks to key stakeholders may be ineffective, untimely, or otherwise result in adverse effects…

The proliferation of social media and the speed at which information spreads on social media may increase the likelihood that negative public opinion from any real or perceived events relating to the Company could imp…

Negative public opinion, whether or not warranted, could damage the Company’s brand in the market and relationships with stakeholders, and adversely impact our business, financial condition, results of operations, and…

Truist employs estimates and assumptions to determine the value or amount of many of our assets and liabilities, and if these estimates or assumptions prove inaccurate, our business, financial condition, results of op…

Models involve significant judgment and have inherent limitations.

Truist has businesses other than banking that are subject to a variety of risks that may affect our financial condition and results of operations.

Whether such divestitures are completed or not, their pendency could have a number of negative effects on our current business, including potentially disrupting our regular operations and diverting the attention of ou…

•the inability to sell such businesses or assets at satisfactory prices and terms and in a timely manner, including potentially long and costly sales processes and unsuccessful attempts by a buyer to receive required…

Under the BHCA, a BHC may not directly or indirectly acquire ownership or control of more than 5% of the voting shares or substantially all of the assets of any BHC or bank or merge or consolidate with another BHC wit…

Acquisitions, mergers, and divestitures introduce a broad range of anticipated and unanticipated risks, including unforeseen or negative consequences from supervisory or regulatory action that may limit Truist’s abili…

The adoption of new technologies by competitors, including internet banking services, mobile applications, advanced ATM functionality, digital assets, tokenization, stablecoins and cryptocurrencies, and similar produc…

Truist also competes with nonbank companies and, in some cases, with companies other than those traditionally considered financial sector participants.

Truist operates in a highly competitive industry that is expected to become even more competitive with growth in areas such as digital financial service providers and other nonbank platforms.

Competition may reduce Truist’s client base or cause Truist to modify the pricing or other terms for products and services, or require significant investments to maintain competitiveness, which could have an adverse i…

There is no guarantee that our strategic initiatives, including initiatives to drive focused growth, deepen relationships with clients, increase client acquisition, and enhance digital engagement with clients, will be…

Ineffective execution of strategic initiatives could adversely affect investor sentiment and the Company’s business, financial condition, results of operations, prospects, and reputation.

Differences in, or changes to, regulation and supervision and industry disruption can affect the Company’s ability to compete effectively, which may adversely affect our business, financial condition, financial result…

In addition to the regulatory capital and liquidity requirements applicable to Truist and Truist Bank, the Company’s broker-dealer subsidiaries are subject to capital requirements established by the SEC.

Requirements to maintain specified levels of capital and liquidity and regulatory expectations as to the quality of the Company’s capital and liquidity may prevent the Company from taking advantage of opportunities in…

Regulatory capital and liquidity standards applicable to large banking organizations and future revisions to existing standards may negatively impact our business, financial results, financial condition, growth, profi…

Truist can also be subject to lawsuits, claims, and enforcement activity indirectly through its ownership of interests in other entities.

In the ordinary course of its business, the Company is subject to lawsuits, claims, and formal and informal enforcement activity, including regulatory investigations, either directly or indirectly through our ownershi…

The Company is regularly subject to regulatory investigations, examinations, and other initiatives by governmental authorities that, if adversely determined against the Company, may subject us to litigation, settlemen…

Federal and state law grants substantial enforcement and supervisory powers to federal and state regulators and law enforcement agencies if they determine that regulated entities have failed to comply with applicable…

Truist’s compliance risks relate to a wide variety of statutes, rules, regulations, and other laws spanning its lines of business, corporate functions, and jurisdictions, including risks related to financial products…

The Company may incur damages, fines, and penalties and face other negative consequences from supervisory actions and regulatory or other legal violations, including inadvertent or unintentional violations.

Truist expects to remain subject to extensive regulation and supervision.

Financial regulators’ prudential and supervisory authority gives them broad power and discretion to direct Truist’s actions, and they have assumed an active oversight, examination, and enforcement role across the fina…

The regulation and supervision of Truist significantly affects the way that we conduct our business and operations.

The banking and financial services industries are highly regulated.

A material breach of the Company’s obligations as servicer may result in contract termination if the breach is not cured within a specified period of time following notice, causing the Company to lose servicing income.

The Company acts as servicer for a range of assets, primarily loans in securitizations and unsecuritized loans owned by investors.

The ability to manage these risks is expected to affect whether Truist sells and securitizes loans and receivables in the future.

When loans are sold or securitized, including to GSEs, it is customary to make representations and warranties to the purchaser about the loans—including their quality, the manner in which they were originated and unde…

Truist is subject to risks related to originating and selling loans, including repurchase and indemnification obligations, which may adversely affect our business, results of operations, and financial condition.

When Truist launches a new product or service (including digital offerings), introduces a new platform for the delivery or distribution of products or services (including mobile connectivity, electronic trading, and c…

Truist has policies, processes, and procedures intended to identify, assess, monitor, and mitigate risks impacting the Company and to evaluate mitigating controls in place.

The Company is not insured against all types of losses as a result of third-party-related failures, and the insurance coverage that does exist may be inadequate to protect the Company from all resulting losses, includ…

Third parties support key components of the Company’s business and operational infrastructure, including certain aspects of our technology functions, and while we have implemented a third-party risk management program…

Truist relies on third parties to support key components of the Company’s business and operational infrastructure, and their failure to perform to our standards or our failure to appropriately assess and manage these…

In recent years, well-publicized incidents involving the inappropriate disclosure, collection, use, sharing, storage, and other processing of personal information have led to expanded governmental scrutiny of practice…

Additional risks could arise from the failure of the Company or third parties to provide adequate disclosure or transparency to the Company’s clients about the personal information collected from them and the use of s…

A successful penetration or circumvention of the security for our applications, operating systems, or infrastructure or those of third parties could cause serious negative consequences, including loss of clients and b…

Cybersecurity risks for financial institutions have significantly increased in recent years and will likely continue to increase, in part because of the proliferation of new technologies to facilitate and conduct fina…

In addition, Truist’s clients, regulators, and other third parties, including other financial institutions and companies engaged in data processing, have been subject to and will continue to be the target of cyber-att…

The Company’s applications, operating systems, and infrastructure and those of its clients, suppliers, service providers, and other third parties are continuously targeted in cyber-attacks and vulnerable to damage or…

The Company and its clients, suppliers, service providers, and other third parties face a wide array of cybersecurity risks, which could result in the loss, alteration, or disclosure of confidential, proprietary, pers…

Our use of systems and other technologies also depends on rights or interests in the underlying intellectual property, which we or our service providers may own or license.

The Company’s continued success depends, in part, upon its ability to use technology to provide products and services that satisfy client needs and preferences, including demands for faster, simpler, more cost-effecti…

Truist expects to make additional investments in innovation and technology to address technological disruption in the industry, improve client offerings and service, and streamline and automate operations.

The financial services industry is undergoing rapid technological change with frequent introductions of new technology-driven products and services, including those related to AI and cloud migration as well as blockch…

Truist is heavily reliant on technology, and a failure to effectively anticipate, develop, and implement new or enhanced technology could negatively impact our financial results, business, operations, security, or abi…

In addition, as a result of increasing consolidation, interconnectivity, and complexity of financial entities and operating systems and infrastructure, a technology failure that significantly degrades, deletes, or com…

The potential for operational risk exposure exists throughout the Company and, because of the Company’s interactions with and reliance on third parties, is not limited to the Company’s own internal operational functions.

The Company’s ability to perform and succeed depends on applications, operating systems, and infrastructure, including computer systems and networks, software, security systems, data management, and internal processes.

The Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.

Truist may be impacted by the actual or perceived soundness of other financial institutions, including as a result of the financial or operational failure of a major financial institution or concerns about the creditw…

The Parent Company relies upon capital markets access and dividends from subsidiaries for funding and has less access to contingent funding sources than Truist Bank.

The Parent Company relies on dividends from Truist Bank for its liquidity needs, the payment of which is limited by statutes and regulations, and the Parent Company could have less access to funding sources and its li…

Credit ratings are influenced by many factors, including the Company’s profitability, asset quality, capital levels, liquidity, business mix, operations, and risk management practices.

Proposals are presented from time to time to reform the housing finance market in the U.S., including the role of the GSEs in the housing finance market.

Truist sells a portion of the mortgage loans that it originates to reduce the Company’s retained credit risk and to provide funding capacity for originating additional loans.

Liquidity is the ability to fund increases in assets and meet obligations as they come due, all without incurring unacceptable costs.

Deposits are a relatively low cost and stable source of funding.

The Company’s credit risk and credit losses can increase if the Company’s loans are concentrated in borrowers engaged in the same or similar activities or in borrowers who as a group may be uniquely or disproportionat…

The Company could have more credit risk and higher credit losses if our underwriting standards and practices are inadequate, we adopt more liberal underwriting standards for competitive or other reasons, information p…

Credit losses may exceed the amount of the Company’s reserves due to changing economic conditions, falling collateral values, falling commodity prices, higher unemployment, losses on a client or sector where Truist ha…

Truist incurs credit risk, which is the risk to current or anticipated earnings or capital arising when a borrower, obligor, issuer, or counterparty has a decline in creditworthiness or does not meet its financial obl…

The Company’s hedging strategies may not be successful in mitigating our interest rate, foreign exchange, and market risks, which could adversely affect our results of operations and financial condition.

The levels of and changes in market interest rates, and the related risks and uncertainties, are beyond our control.

We are highly dependent on net interest income, which is the difference between interest income on earning assets, such as loans and investments, and interest expense on deposits and borrowings.

Geopolitical conditions, including tensions in foreign relations of the U.S., the outbreak or escalation of hostilities between countries or within a country or region, and acts or threats of terrorism, could have an…

In addition, the large bank failures in 2023 focused market attention on the industry’s interest rate and deposit risks due to rapidly rising interest rates in an inflationary environment, which, among other things, r…

A weakening or deterioration of economic conditions has in the past and may in the future adversely affect financial results for the Company’s fee-based businesses.

Our financial results, the value of loans and debt securities we hold, and lending and other business activities have in the past, and may in the future, be adversely affected by weak or deteriorating economic conditi…

A fractious or volatile political environment in the U.S., including any related social unrest, could negatively impact business and market conditions, economic growth, financial stability, and business, consumer, inv…

•Significantly impact the cost of funds and, the return on assets, both of which can have an impact on interest income;

Changes in monetary and fiscal policies, including monetary policies established by the Federal Reserve System and other central banks, and uncertainty concerning the future path of interest rates, government shutdown…

The following discussion sets forth material risk factors that could affect Truist’s financial condition, results of operations, business, or prospects.

•Physical, transition, and other risks associated with climate change, together with governmental responses to such risks, may negatively impact our business, financial condition, operations, reputation, and clients.

•The Company relies on its ability, and the ability of key external parties, to maintain appropriately staffed workforces and on the competence, trustworthiness, health, and safety of teammates.

•Negative public opinion, whether or not warranted, could damage the Company’s brand in the market and relationships with stakeholders, and adversely impact our business, financial condition, results of operations, an…

•Truist employs estimates and assumptions to determine the value or amount of many of our assets and liabilities, and if these estimates or assumptions prove inaccurate, our business, financial condition, results of o…

•Truist has businesses other than banking that are subject to a variety of risks that may affect our financial condition and results of operations.

•Acquisitions, mergers, and divestitures introduce a broad range of anticipated and unanticipated risks, including unforeseen or negative consequences from supervisory or regulatory action that may limit Truist’s abil…

•Competition may reduce Truist’s client base or cause Truist to modify the pricing or other terms for products and services, or require significant investments to maintain competitiveness, which could have an adverse…

•Ineffective execution of strategic initiatives could adversely affect investor sentiment and the Company’s business, financial condition, results of operations, prospects, and reputation.

•Differences in, or changes to, regulation and supervision and industry disruption can affect the Company’s ability to compete effectively, which may adversely affect our business, financial condition, financial resul…

•Regulatory capital and liquidity standards applicable to large banking organizations and future revisions to existing standards may negatively impact our business, financial results, financial condition, growth, prof…

•The Company may incur damages, fines, and penalties and face other negative consequences from supervisory actions and regulatory or other legal violations, including inadvertent or unintentional violations.

•Truist is subject to risks related to originating and selling loans, including repurchase and indemnification obligations, which may adversely affect our business, results of operations, and financial condition.

•Truist relies on third parties to support key components of the Company’s business and operational infrastructure, and their failure to perform to our standards or our failure to appropriately assess and manage these…