Welcome to the SunTrust Third Quarter Earnings Conference Call.All participants have been placed on a listen-only mode until theQuestion-and-Answer Session. (Operator Instructions) Today's conference isbeing recorded. If you have any objections, please disconnect at this time. I would now like to turn the call over to Mr. Steve Shriner,Director of Investor Relations. Sir, you may begin.

Good morning, and welcome to SunTrust third quarter 2007 earningsconference call. Thanks for joining us. In addition to the press release, wehave also provided a presentation that covers the focus of our call today. Youwill hear an overview of the financial results, including market impacts, an updateon our shareholder value initiatives, including our efficiency and productivityprogram, and a detailed view of our credit picture. The press release, presentation, and detailed financialschedules, are available on our website www.suntrust.com. Information can beaccessed directly today by using the quick link on the suntrust.com homepageentitled Third Quarter Earnings Release or by going to the Investor Relationssection of the website. With me today, among members of our executive Managementteam, are Jim Wells, our Chief Executive Officer and Mark Chancy, our ChiefFinancial Officer. Jim will start the call with an overview of the quarter and discussionregarding our progress on the shareholder value initiatives. Mark will becovering financial topics and will provide an in-depth overview of credit, and thenwe will open the session for questions. First, I will remind you that our comments today may includeforward-looking statements. These statements are subject to risks anduncertainties and actual results could differ materially. We list the factorsthat might cause actual results to differ materially in our press release andSEC filings, which are available on our website. Further, we do not intend to update any forward-lookingstatements to reflect circumstances or events that occur after the dateforward-looking statements are made, and we disclaim any responsibility to doso. We’ve detailed the forward-looking statements made inconjunction with today’s earnings release in the Appendix of our 3Q earningspresentation. During the call we will discuss some non-GAAP financialmeasures in talking about the Company's performance. You can find thereconciliation of these measures to your GAAP financial measures in our pressrelease and on our website. Finally, SunTrust is not responsible for, and does not edit,or guarantee the accuracy of our earnings teleconference transcripts providedby third parties. The only authorized live and archived webcasts are located onour website. With that let me turn it over to Jim.

Thanks. Good morning, everyone. Glad you are with us. As yousaw on our press release this morning we reported earnings per share for thethird quarter of a $1.18. Our results included a $0.28 per share negativeimpact on net valuation losses attributable to the recent disruptions of creditand capital markets, and a $45 million or $0.08 per share negative impact of severanceexpenses related to our ongoing E-Square Efficiency and Productivity Program. Clearly we were not immune to the deterioration in thehousing market and the related turmoil in the capital markets, as well as thechange on the credit side. However, based on what we have seen so far, we wereimpacted to a lesser extent than many other institutions. It is disappointing,however, that the positive impact of the continuing progress we have made onour initiatives driving net shareholder value was overshadowed by the difficultmarket conditions. In a few moments Mark will detail the impacts of thisenvironment and what it has done to our results this quarter. On a positive note regarding our financials, the netinterest income was up 4% over the same quarter last year, but was flat overthe prior quarter. The net interest margin increased 8 basis points from thesecond quarter making this the third consecutive quarter an 8 basis pointmargin expansion. This continued improvement is a direct result of theshareholder value initiatives, in particular, the balance sheet managementstrategies we have recently implemented. Notwithstanding our strong creditculture, we did experience higher net charge-offs of 34 basis points, principallyas a result of the change in the credit cycle, and particularly in the consumerportfolio, and we have increased our provision and reserves. We will expand onthis discussion later on the call this morning. Non-interest income was down 5% from the same quarter lastyear. As I mentioned, we had a negative impact of a $161…

Thanks Jim, and good morning. Given the difficultenvironment that we are operating in, I am going to be providing near-termguidance regarding certain key metrics in my comments, and for your reference,we've included in the appendix a summary of the forward-looking statements thatI plan to make. I'll begin the discussion outlining the key drivers of ourthird quarter results, before spending time discussing the credit environmentin some level of detail. As Jim noted and as outlined on page 5 of our earningspresentation, we reported net interest margin of 3.18, our third consecutive 8basis point margin increase. Margin improvement was a direct result of thebalance sheet management strategies that we've implemented in connection withour shareholder value initiatives in 2007. We would also expect this positive trend in margin tocontinue in the fourth quarter. I'll remind you that we were slightly liabilitysensitive, and as such lower short-term rates and a more steeply sloped yieldcurve creating an environment conducive to maintaining or growing our netinterest margin. As we remain focused on maximizing the value of our balancesheet, we will continue to be selective in the businesses and the assets thatwe are likely to grow. Average loans for the third quarter of 2007 wereapproximately $120 billion, down 1% from the third quarter of last year. Thedecline was due to the balance sheet management strategies implemented sincethe second quarter of 2006, and which accelerated in the first half of 2007. Strategies resulted in the sale of nearly $10 billion inloans over the past year primarily comprise of mortgage, student and corporateloans. Taking into account these loan sales the company actually had underlyingloan growth across most categories, and compared to the second quarter of 2007,average loans were up $1.4 billion or 5% on a sequential annualized basis,primarily driven by commercial loan growth. And with regard to loan growth,…

Thank you. (Operator Instructions) Our first question todayis from Gary Townsend. You may ask your question and please state your companyname.

Hi, this is Gary Townsend with Friedman, Billings. Good morning Mark and Jim. Markcould you discuss in the home equity portfolio the issues of severity versusfrequency? And, if you could also focus it on, has there been, as we have seenin other companies, a concentration, as I would presume, in correspondentdelivered or wholesale purchase loans?

We have Tom Freeman, our Chief Credit Risk Officer with usthis morning, so I am going to ask him to address that question.

I think severity versus frequency was the first part of thequestion, if you look at the charts that were provided, and we are reallytrying to go over a thought process in terms of the home equity loans, is thatwe are actually seeing most of our charge-offs and problems in that portfoliocoming through a relatively small portion of the portfolio, which is the highloan-to-value and the low FICO score portfolio. Now the portfolios weregenerated with our general profile of strong FICO scores, but we did, in fact,have some that we generated loan-to-values in excess of 90%. It is a relativelysmall number of the portfolio, and it is generating a significant amount ofwhere the losses are coming from. In terms of channels, most of our channel, if you take alook at this, comes out of primarily bank originated loan activity, but I thinkwe would be disingenuous if we didn't say that those loans generated out of ourwholesale channels where we are buying loans from the marketplace, perform inan inferior manner to our core originated portfolios.

I am sorry, did I understand you, probably to say that thewholesale originated is performing equally to what you --?

No. It's performing poor than our core originated portfoliosout of our branches itself.

Okay. Thank you for comment.

This is Eugene Kirby, and we have made a number of changesin our origination. It's around the wholesale segment, significantly increasingour pricing and tightening up on our credit standards. And have basically movedto a pass that, by the end of this quarter heading into the fourth quarter wewill have no loans over 90% LTV coming through the wholesale channel and have asignificant reduction in the overall production in that channel, because it hasperformed at a level that we are not happy with compared to the core bank.

Thank you for your comment.

Thank you, Gary.

Thank you. Our next question comes from Matthew O'Connor.You may ask your question, and please state your company name.

Yes, UBS. Jim, earlier this year, you had said there were nosacred cows, as you look to evaluate the businesses and the balance sheet mixthat you have. Given the macro environments, it’s probably going to be lot moredifficult than we would have thought both for capital markets and credit. Areyou going to take a kind of a double look at some of the businesses andconsider downsizing or exiting some of them?

Yeah, Matt, as you know, I remain in my no-sacred cowsposition, and we are re-looking at the sub-lines of business actively to seewhat is going on there, what the future potential is, and if we see things outof that work that leads us to conclude the risk is not worth the reward we'llcertainly deal with.

Okay. And can you give us a sense of what areas you might belooking at and the timing of when a decision might be made?

I would actually care not to until the work is done, Matt,if you don't mind. You could imagine what they would be based on what's goingon in the market, I think.

Okay. How about on the timing side?

We are looking at it, we constantly look at the sub-lines ofbusiness and I would expect that some of that are getting a re-look, you willsee some activity in over the next month or two or three.

Okay. And then, just a question for Mark, obviously, a lotof moving pieces here, care to take an estimate of what run rate earnings mightbe, as we go into 4Q and beyond?

You know, Matt, I am going to leave that to you and yourcolleagues. We have tried to be very clear about the items that have, you know,affected our earnings. We’ve talked about severance specifically, we’ve talkedabout the mark-to-market adjustments, the early extinguishment of our legacytrust preferred securities as part of our capital optimization strategy of acouple of cents. We also were very explicit about the benefits that we receivedin connection with the termination of the REIT related transaction. So, I'llleave that to you’ll discretion in terms of determining the run rate.

Okay. And then, just lastly, I am sorry, I missed it, but interms of provisions versus charge-offs going forward, would you expect, can youbuild to the extent that we saw this quarter?

No. Like we, in terms of the valuation of the allowance, wefeel comfortable based on the data that we have, and our current loan portfoliothat the allowance adequately stated. It will depend on a variety of factors;it will depend on loan growth, the type of growth that we get in the loan book,whether or not we have improvement or deterioration in the existing portfolios,what the level of charge-offs are. So, there are a lot of factors that go intothe determination of what the provision will be in a given period, as you know,and I won't speculate on how all those different variables are going to reflectin the next quarter's results.

Okay. But just in general assuming your charge-offs fallingin that 35 to 45 basis point range for the next few quarters?

You know Matt, if you assume all of being equal that loanscontinue to grow, then by default, you will expect some level of increase inthe provision relative to charge-offs. How about that?

Okay.

Thank you for your questions.

Okay, thanks.

Thank you. Our next question comes from Christopher Marinac.You may ask your question, and please state your company name.

Hi, Fig Partners in Atlanta.This question is for, if I guess, for Mark, but also for Jim as well. You areall aware that there is some practice in the industry of building interestreserves for construction loans and also making loan modification as thingschange. To what extent is SunTrust doing that or what is your policy ascustomers go through changes?

Perhaps, it’s Tom Freeman again, and maybe I will wait inhere and I have Walt Mercer with me who runs our commercial real estatebusiness here at the bank. Our policy is, of course, as you know that interestreserves are in fact an inherent part of what we are doing, doing constructionactivity, because one can't be in construction activity without making surethere are adequate interest reserves. We re-evaluate our construction loans ona rolling ongoing basis. We evaluate monthly, whether or not the interestreserves are appropriate, and are more than willing to press for incrementalreserves, if in fact we think that they are required. We have a very rigorous review process, and we also have thesupport of, I think, some very good systems in knowing the construction progress,the progress of sales activity under the individual loans, and therefore, kindof, what do we need, and in terms of interest reserves to the sell-out periods.I will also speak to the fundamental underwriting, which is pretty downrigorous in terms of with whom we do business, making sure that they havesubstantial liquidity, and are they sorts of borrowers, who during difficultperiods can afford to extend and ride through difficult periods within themarkets. So, yes, we do have interest reserves, yes they are rigorouslyapplied, and yes we look at them constantly.

Okay. Great. That’s helpful, Tom, and just a follow-up. Arethere any markets on the construction side where you are not taking newconstruction customers on the commercial construction?

Maybe Walt will answer that for us.

Hi. Well, we look across the whole footprint sort ofcustomers, there are a number of areas especially in residential real estate.We were looking carefully at the portfolios, especially in South Florida right now, and given the housing market there, we are notpicking on a lot of new construction.

Okay. But will South Floridabe the only example or are there others?

I think that's a primary example right now, we are lookingat the whole portfolio very rigorously, monthly, given the current economicenvironment.

Okay. Great. Thank you very much.

Thank you. Our next question comes from Kevin St. Pierre.You may ask your question and please state your company name.

SanfordBernstein. Good morning. The loan-to-value ratios, average loan-to-value ratioswhich you have given us on a few of the portfolios are at origination. Ipresume, you have done some analysis to estimate what current loan-to-valuesmight be, I was wondering if you could perhaps share some of that with us?

We have an ongoing evaluation process upon renewal or in anyof the lending activity, where we believe that there is any sort of restrictionin value, and as anyone who can read the literature knows that we have hadshrinkage in value. We have seen shrinkage in value most aggressive in South Florida. We have seen minor shrinkage in value interms of single-family housing prices, pretty much across the portfolio. Butyou got to remember that in some of these instances we get amortization on theportfolios. We have extensions and repayments on the commercial side and we dokeep a very clear set of rebalancing initiatives during the renewal periods orre-negotiation periods in any of the lot.

Yeah, but can you share with us any stats on whatloan-to-value might be on the core mortgage portfolio based on what you expecttheir current values?

The answer is no. I mean, we are keeping at it. We have seensome increase in the loan-to-value since the origination, which you got toremember that parts of the portfolio are in the average life of the portfolioapproaches 3 years, which means that large parts of the portfolio are 5 yearsor 6 years old and older and wherefrom the initial origination actively towhere it is now. We still see shrinking loan-to-values in terms of some of thatstuff given the progress of loans through the loan lifecycle.

Okay. Thank you very much.

We’ve offsetting characteristics here.

Thank you.

Thank you. Mike Holton, you may ask your question and pleasestate your company name.

Merrill Lynch Strategic Investment Group. I appreciate theadditional disclosure on the construction portfolio, and my question there is,given the NPAs, I guess, about doubled from June to September, Mark, you eludedto them probably going higher in the future, can you guys kind of provide arange on how much of an increase we might see there, maybe over the next two tothree quarters?

We are really not going to get into forecasting the rangesrelated to NPAs and NPLs, I guess, our point in the detailed discussion was toknow where the NPLs are coming from, what the characteristics of thoseportfolios are, so that you can get a better understanding of potential lossseverity, and, of course, find out both to the charge-off levels, as well as,the adequacy of the reserve. Now that's probably as far as we want to go interms of providing you with forward-looking information. We have said beforethat we would expect some keeping of the NPAs, particularly related to ourAlt-A portfolio is probably going to be a little bit later than we had hoped,which was in the third and fourth quarter, it will probably be in early 2008.Now that's our current expectation, but that's probably the only incrementaldata point that I am going to provide you.

Okay. Let me ask one, I guess, backward looking question,and of the $158 million in construction NPAs, how much of that is raw land?

I am sorry, could you repeat your question?

Right. You had a $158 million in construction NPAs in thequarter and within the construction portfolio you pointed out that there isabout $1 billion of raw land?

Correct.

How much is on NPA status?

It's a de minimus amount.

Okay, thanks.

Thanks. Time for one more question?

Thank you. Our final question is from John McDonald. You mayask your question and please state your company name.

Hi, it's Banc of America Securities. You gave some helpfulstab at what the charge-offs might do in the first half of '08. You mentionedmargins in the fourth quarter and early '08 today? Sorry, if I missed it, didyou give any quantification mark of how much the margin could benefit in thefourth quarter and into the first half of '08?

Yes John, this is Steve. We expect the margin trend that yousee on page 5 of the presentation to continue into the fourth quarter, and havenot provided any additional guidance beyond that for a quarter period.

Okay, meaning that you are kind of up 8 basis point, andquarter-to-quarter you could have a similar jump in the fourth quarter?

Yeah, we're just commenting that the trend that you haveseen, you can see here over the last three quarters…

Okay.

It is likely to continue on a positive note.

Okay.

But we are not going to get into the specifics of what thattarget should be for the quarter.

Okay. And is this some continued pull through of the balancesheet positioning, and as a function of the fact that -- has the curve rate andyield curves done a little better?

Yeah, that's exactly right.

Okay. And in '08, you are saying, we should get some benefitthere, you are saying also in '08 this trend should continue?

Well, that would depend on interest rates and the slow bookto curve and a variety of other factors. In the short run, we see continuedimprovement. Beyond that, it’s kind of hard to tell, and also it would bedependent upon loan growth, deposit growth and other factors.

Sure. Okay, that's fair. And then just a quick question ifyou could, could you just kind of give us a little flavor for theconsiderations that are applied as you think through the Coke decision?Obviously, you get something through it, but what are the factors there that,you know, will drive your decision, and if you do end up selling some of theCoke stock, would you likely have to replace it with some other form ofcapital. Well, early in the year when you sold your Coke stock, you couldbuyback SunTrust shares, does the equation become a little different goingforward?

Sure, John, that evaluation does continue. We obviously havea capital that is in our tangible equity-to-assets. It's in our total capital,but it’s not in our Tier 1 capital, based on the regulatory framework. So,considerations include our long-term Tier 1 target, our relationships and thecapital level relative to the rest of our businesses as it's evaluated by therating agencies. Opening up a decision process around structure of our holdingswill be predicated on an evaluation of how that Coke in its current form oralternative form, fits into our long-term capital strategy and it’s evaluatedbetween regulatory, our safety and soundness review, as well as, the ratingagencies. And, we plan to be completed with that review by the end ofthe year. We obviously have a significant embedded gain in the Coke Holdings,that’s a consideration. So, it’s around the optimization of our capitalstructure as we have set our target. One of the things we are clearly doing isevaluating the Tier 1 target in the context of how we might manage the Coke stockgoing forward. So, it’s a variety of factors that are at play here, and it'sobviously a complicated set of issues, and we are going to come back andexplain to you where we are at some point later in the quarter.

Okay. One quick follow-up there, Mark did you mentionanything outside of that about if you are in a position, you kind of be doingbuybacks in the fourth quarter?

Yeah, John we are right at our Tier 1 capital target at 745versus the 750, obviously the decision process around the Coke holdings, aswell as, the growth in Tier 1 capital during the quarter will dictate whetheror not we have incremental flexibility. And so we will be evaluating thatthroughout the quarter. I wouldn’t expect a significant share repurchase in thefourth quarter, again aside from any Coke related decisions, although theremaybe some modest repurchases based on the growth of the balance sheet and ourearnings.

Okay.

Given the level of repurchase that we’ve had, through theyear-to-date period, we anticipate that we’ll meet the guidance that weprovided earlier in the year in terms of return of capital to shareholders,both through a combination of dividends and share repurchase.

Okay. Thanks.

Thank you. And that concludes the third quarter earningscall. Thank you very much.

Thank you. This concludes today's conference. Thank you for yourparticipating. You may disconnect at this time.