Company: TFC
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000092230-25-000020
Chunk: 377

Company: TRUIST FINANCIAL CORP
Filing Date: 2025-02-25
Form: 10-K
Item: Item 7A
Chunk 377
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 related to hedge effectiveness include (i) statistical regression analysis of changes in the cash flows of the actual derivative and hypothetical derivatives, or (ii) statistical regression analysis of changes in the fair values of the actual derivative and the hedged item.For designated hedging relationships, the Company generally performs subsequent assessments of hedge effectiveness using a qualitative approach.Below is a summary of the cash flow and fair value hedge programs utilized by Truist:Cash Flow HedgesFair Value HedgesRisk exposureVariability in cash flows of interest payments on floating rate loans, overnight funding, and various SOFR and other 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 objectiveHedge 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 periodChanges 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 terminatedHedge 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 through 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 thereafterHedge accounting ceases and any gain or loss in AOCI is recognized in earnings immediately.Not applicable

Truist Financial Corporation   105

Derivatives expose the Company to risk that the counterparty to the derivative contract does not perform as expected. The Company manages its exposures to counterparty credit risk associated with derivatives by entering into transactions with counterparties with defined exposure limits based on their credit quality and in accordance with established policies and procedures. All counterparties are reviewed