Company: TFC
Filing Date: 2025-02-25
Form Type: 10-K
Source: 0000092230-25-000020
Chunk: 23

Company: TRUIST FINANCIAL CORP
Filing Date: 2025-02-25
Form: 10-K
Item: Item 3
Chunk 23
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 that are, in form or substance, written guarantees; specifically, risk participations, TRS, and credit default swaps. The Company accounts for these contracts as derivatives.Truist has entered into risk participation agreements to share the credit exposure with other financial institutions on client-related interest rate derivative contracts. Under these agreements, the Company has guaranteed payment to a dealer counterparty in the event the counterparty experiences a loss on the derivative due to a failure to pay by the counterparty’s client. The Company manages its payment risk on its risk participations by monitoring the creditworthiness of the underlying client through the normal credit review process that the Company would have performed had it entered into a derivative directly with the obligors. At December 31, 2024, the remaining terms on these risk participations ranged from less than one year to 10 years. The potential future exposure represents the Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on scenario simulations and assuming 100% default by all obligors on the maximum value.The Company has also entered into TRS contracts on loans and bonds. To mitigate its credit risk, the Company typically receives initial margin from the counterparty upon entering into the TRS and variation margin if the fair value of the underlying reference assets deteriorates. For additional information on the Company’s TRS contracts, see “Note 16. Commitments and Contingencies.”The Company enters into credit default swaps to hedge credit risk associated with certain loans and leases. The Company accounts for these contracts as derivatives, and accordingly, recognizes these contracts at fair value.The following table presents additional information related to interest rate derivative risk participation agreements and total return swaps:(Dollars in millions)Dec 31, 2024Dec 31, 2023Risk participation agreements:Maximum potential amount of exposure$381 $520 Total return swaps:Cash received for variation margin25 41 Cash and other collateral received for initial margin329 396 The following table summarizes collateral positions with counterparties, excluding cash and other collateral received for total return swaps’ initial margin:(Dollars in millions)Dec 31, 2024Dec 31, 2023Dealer and other counterparties:Cash and other collateral received from counterparties$450 $609 Derivatives in a net gain position secured by collateral received539 735 Unsecured positions in a net gain with counterparties after collateral postings89 126 Cash collateral posted to counterparties1