Welcome to the SunTrust Second Quarter Earnings Call. All participants have been placed on a listen-only mode until the question-and-answer session. (Operator Instructions) Today's call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the call over to Mr. Steve Shriner, Director of Investor Relations. Sir, you may begin.

Good morning. Welcome to SunTrust's second quarter 2008 Earnings Call. Thanks for joining us. In addition to the press release, we have also provided a presentation that covers the topics we plan to focus on during our call today. Slide 2 outlines the content, which includes an update on our regulatory capital and specific information on our completed Coke transaction, a review of our financial results, including an update on E-squared initiative, and an indepth credit overview. Press release, presentation and detailed financial schedules are available in our website www.suntrust.com. Information can be accessed directly today by using the quick link on the homepage entitled “Second Quarter Earnings Release” or by going to the Investor Relation section of the website. With me today, among other members of our Executive Management team are Jim Wells, our Chief Executive Officer, Mark Chancy, our Chief Financial Officer and Tom Freeman, our Chief Risk and Credit Officer. Jim will start the call with an overview of today's highlights. Mark will then detail financial performance and Tom will conclude with an indepth review of our risk and credit picture. At the conclusion of the formal remarks, we will open the session for questions. First I will remind you, our comments today may include forward-looking statements. These statements are subject to risk and uncertainty and actual results could differ materially. We list the factors that might cause actual results to differ materially in our press release and SEC filings, which are available on our website. Further, we do not intend to update any forward-looking statements to reflect circumstances or events that occur after the date forward-looking statements are made, and we disclaim any responsibility to do so. During the call, we will discuss non-GAAP financial measures in talking ability about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release and on our website. Finally, SunTrust is not responsible for and does not edit nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized live and archived webcast are located on our website. With that, let me turn it over to Jim.

Good morning, everyone. Glad you're with us this morning. There are few items that I would like to review with you that are captured on Slide 3 of the presentation deck. I will begin with a topic that I know is top of mind for everyone on the call, capital. At SunTrust, our Tier 1 capital level improved substantially as a result of the completion of the Coca-Cola stock transactions during the second quarter and in July. Tier 1 capital came in at an estimated 7.47% up 24 basis points from March 31. Portion of the Coca-Cola stock transactions were completed in July after our June 30th quarter end. If you apply the full benefit of the Coca-Cola stock transactions in aggregate, the resulting pro forma Tier 1 ratio was approximately 7.95%. Based on what we see today, we believe this position us appropriately for the future. Mark will provide greater detail on each of the three Coke transactions including their financial impact momentarily. Now moving on to another topic of considerable interest; credit. Our overall asset quality continued to deteriorate during the second quarter. Net charge-offs increased 9% from the first quarter of 2008 $323 million, and non-performing assets increased approximately 800 million or 35%. There were, however, some slightly more positive notes. Early stage delinquencies have remained stable in the 1.5% range for the last six months, and the additional provision expense required to increase the reserve declined by half. So, overall the credit message is mixed. Increased charge-offs and non-performing assets on one hand, point to higher losses of the short run. On the other hand, stable early stage delinquency and slower growth in reserve may suggest and result in a pace of deterioration that is slowing. In the very short run, charge-offs will grow and Tom…

Thanks, Jim. I'll begin my comments today starting on slide four of the earnings presentation. I'm very pleased to report that we completed certain transactions related to our holdings of common stock of the Coca-Cola Company, and we received approval from the Federal Reserve to treat one of those transactions as Tier 1 capital. As a result, our Tier 1 capital ratio as of June 30th is estimated to be 7.47%, and including the benefit as Jim mentioned of these transactions that were completed in July, our pro forma June 30th Tier 1 ratio is 7.95%. These transactions reflect the completion of a thorough review of our longstanding Coke holdings, and they accomplish the goals and objectives that we set out at the outside of this outset of this process. I'll review each aspect of the transactions in detail in a moment. Given the uncertain outlook for macroeconomic conditions in general, and credit quality in particular, we believe maintaining a Tier 1 ratio in excess of our previously stated target of 7.5% is certainly prudent. In addition, we have approximately $500 million of capacity to issue additional Tier 1 qualified perpetual preferred securities, and if the capital markets improve, we may take the opportunity to further improve our capital position. I want to be very clear on this point. Given our current pro forma Tier 1 capital level of approximately 8%, our outlook does not suggest we need additional capital; however, uncertainty around the future environment suggest that a little additional regulatory capital on a cost effective basis would be a positive. In addition to the strong Tier 1 capital position, our other capital ratios remained very healthy at the end of the quarter. Specifically, our total capital ratio was 10.97%, and tangible equity to tangible assets was 6.21%, when…

Thank, Mark. This morning, I am going to provide a detailed review of our credit situation, beginning with an overview of total portfolio metrics on slide 14 of the presentation. The overall pace of deterioration in the portfolio slowed in the second quarter; however, trends differed among products and I will provide details on each in subsequent slides. Period end loan balances increased on a sequential quarter basis with over half the growth due to the GB&T acquisition, and the remainder primarily from C&I loan relationships. Charge-offs increased 9% to 104 basis points annualized, while actual charge-offs were below the 15% to 20% outlook we provided in April, which was largely due to timing. Looking ahead we expect the third quarter charge-off rate will increase by 15% to 20% over second quarter charge-offs. Overall, combined charge-offs for the second and third quarters are consistent with our expectations at the end of the first quarter. Further, nothing we see today suggests that charge-offs will increase or decrease dramatically in fourth quarter versus the second and third quarter levels. Provision expense declined in the quarter to $448 million from $560 million in the first quarter. The loan loss reserve increased to 146 basis points on total loans due to $125 million net addition to reserves, and the inclusion of GB&T reserves in our reserve position. Our reserve expectation for the third quarter is a modest increase from the current levels given the slowed deterioration in our credit statistics. Non-performing assets increased $816 million during the quarter, to $3.1 billion. Excluding GB&T’s NPAs of $170 million, the increase of this quarter of $647 million was slightly less than last quarters $665 million increase. We noted the flattening of the trend in early stage delinquency in the first quarter presentation. This pattern continued into…

Thanks, Tom. We have covered a lot today, so before we take some questions I would like to quickly summarize key messages from the presentation that are included on slide 23. We completed the Coke transactions and improved regulatory capital as a result. Our core earnings approximated the dividend, margin expanded, fee income remains steady and expense discipline continues. Tom just went through, asset quality is deteriorating. The pace of deterioration is slowing and the allowance has been increased to 1.46% of loans. While deterioration is slowing in certain portfolios, we expect residential construction related NPLs and charge-offs to continue increasing over the next several quarters. Overall, our current expectation for the third quarter charge-offs is to increase 15% to 20% over the second quarter. Thank you all for listening this morning. Operator, we are now ready to take some questions.

(Operator Instructions) Our first question is from Matthew O'Connor. You may ask your question and please state your company name.

UBS, thank you. It seems like one of the side benefits of getting the Coke treatment into Tier 1 is that you now have some flexibility issue hybrids if the market improves. I was just wondering if that's what you're referring to, when you talked about issuing capital earlier if we do get some improvement in the capital window.

Hey, Matt, this is Mark Chancy. We have issued in the past the hybrid securities. I specifically referenced the preferred purchase securities, which is a transaction that we have done in the past, and so it's along those lines that we will evaluate the market as we move forward into the third quarter and fourth. We've been evaluating the market for the past several quarters and made the overt decision not to try to access the market given the volatility and the increasing spread, given that we knew that the Coke related transactions were imminent and we did not feel that we needed the incremental capital at this point. We decided to defer that decision to the second half of the year, with hopefully credit spreads will tighten for us in the industry.

Okay. I mean am I wrong in that you have about $400 million of the trust preferred capacity at this point, which is obviously a lot cheaper, at least in more normal environments than the regular preferred?

Matt, the number that I have in front of me is that we have about $0.5 billion dollars of the EPS capacity. I don't have the specific capacity level for the hybrids, but that would obviously be something that we would also evaluate. Matthew O'Connor – UBS: Okay. Then just separately, the credit related expenses, those are going up at a pretty high clip here, and I guess even if we back off this $25 million of the mortgage insurance reserve, the $45 million year-over-year increase seems pretty big. Do you think you're trying to catch up to, where some other banks are? We're just not seeing that magnitude increase in some other places.

Let me start and then maybe Tom Freeman will pile on. What I’d say is that, we have been aggressively adding to staff in both our mortgage and consumer lines of business in the collections area and related activities from a systems’ standpoint, etcetera to make sure that we are well position to manage the increasing level of non-performing assets and to maximize the return on the investment in those assets that we have. That process has ramped up as you would expect in the second half. It started back, probably late '06, but really has accelerated in the second half of 2007, and into 2008, and that's why when you look on a year-over-year basis, the increase is significant. We also have OREO related costs that are also affecting that dollar amount, and the OREO costs back in the second quarter of '07, were not at the same levels that we're experiencing today. We are pleased that the average, when we dispose of a mortgage in connection with the foreclosure, and ultimate disposition process, our charge-off expectation that we take at the time it goes 180 days past due is relatively close to that ultimate disposition value, and the differential has been, 4%, 5%, and that cost is being born through the OREO line as opposed through the charge-offs, and that's one of the primary reasons for the large uptick along with the mortgage insurance cost that you referenced. With that let me stop for a second and see if Tom has anything to add.

I think we've made a very strong determination that we need to make sure we get as far out ahead of the credit related issues, specifically trying to make sure we have the right staff, doing the right things; that we move the credits to work out areas as quickly as we possibly can, which is really forced us to add significant resources on the collections and loss mitigation side.. And additionally, we've added substantial amounts of people in doing the commercial work out to make sure we work through those, which is much alacrity is possible. So, we believe, relatively early here, and have been spending what is necessary to make sure that we identify our problems and work through them aggressively.

Okay. Thank you.

Thank you. Mike Mayo, you may ask your question and please state your company name.

Deutsche Bank. Good morning.

Good morning, Mike.

Your guidance for loan losses was higher than, where you came in at. So, which areas that better than you expected? If you can just elaborate more on what you're saying with the fourth quarter, that should be consistent with the past couple quarters or you just don't know?

The couple of areas where we had better than expected charge-offs is in the consumer area, our charge-offs were not, came in at less than what we expected. And in our commercial real estate area, we've had a couple of charge-offs which basically, we think will happen later this quarter rather in the third quarter rather than happened in the second quarter. Those were the two primary areas where charge-offs came in lower than expected.

So, timing issue on the commercial side, but on the consumer side, why did it come in less?

Actually, I believe a lot of it has to do with some of our loss mitigation efforts in terms of how we've gotten in, made sure that we had clarity in terms of where the charge-offs were coming from, the timing of the charge-offs and making sure that the charge-offs were taken in when they need to be taken plus, we've actually had some pretty good success in doing restructuring of some of our mortgage and home equity products during the last quarter, and I think that has had a mitigating effect on some of the charge-offs specifically on the consumer side of that.

What do you mean by restructuring or what are you doing?

These are our efforts to make sure that, where we have a borrower, who wants to stay in their home that we work with them to the best of our ability to put together either an extension in term, a modification in terms of mortgage payments, and just making sure that we restructure the mortgage facilities, whether they be first or second mortgages, in a way that is affordable to the customer and protects the interest of the bank.

Would that typical loan be a non-performer?

Actually, what happens is, if we significantly modify or take a write-down on the loan, in fact is a non-performer. We had, I believe, like about $130 million worth of that activity in the last quarter, so, we made modifications on those types of loans. We also, where we were able to keep those trouble debt restructures on an accruing basis, we also had about $115 million worth of them, which were non-accruals, and then we routinely do work with modification renewals and extensions against our customer base.

So, it's not that much though?

Well, it's 1900 loans. I think for the clients, that's a relatively significant number and some real significant activity for them.

Yeah, Mike, to your point, I think it's timing of recognition between second and third quarter and that's what we're trying to provide clarity on in terms of the increase on a quarter-over-quarter basis of 15% to 20% that we're expecting in the third quarter coming in a little bit lower than the expectation in the current quarter, and some of those being recognized here in July and August.

And then the fourth quarter?

Yeah, as it relates to the fourth quarter, what we've said is that we don't expect charge-offs to be significantly higher or lower than that third quarter level at this point. So, we also indicate the visibility out beyond the quarter is challenging as you would expect.

Okay. Alright, thanks.

Okay, Mike. Thanks.

Thank you. Our next question is from Nancy Bush. You may ask your question and please state your company name.

Yes, it’s NAB Research. Good morning, guys. You've got a couple of very high rate payers in the southeast right now and indeed one of them nationally. There is a 4.25% 12 month CD out there then I'm sure you're well aware of. Just wondered how you're responding to this particularly in light of your comments about deposit pricing actually getting a bit better?

Thanks, Nancy, it's a good question. Eugene Kirby who overseas our Retail Lines of Business will answer for you.

Hi, Nancy. The competitive environment has gotten intense, but we have been able to hold our pricing and specifically target each region looking at the market conditions and have been able to manage our deposit pricing very effectively, and I think that people are shopping around today. I think we're seeing a lot of activity in the branches as people are concerned about the safety and soundness of other institutions, and in fact we're seeing very strong performance in some of our branches even without matching those rates. We do have the ability on a case-by-case basis to make decisions at the local level, when it's appropriate to compete, but on a portfolio level, we've been able to see our deposit rates actually come down and the mix shift as CDs have matured and a lot of our clients have actually moved out of CDs into either money-market or NOW accounts.

And also along the same line, I think you said last quarter that you were beginning to deemphasize or lessen the marketing on My Cause and I'm just wondering how that product is doing and what your attitude toward it is right now?

We've actually, Nancy, seen continued, very strong performance with My Cause and have continued that, and have intentions to continue that into the third and possibly into the fourth quarter. We have seen very, very strong growth in our core consumer checking households and our net new checking account, significantly outperforming the growth of the market in general and have been very pleased with that. We're focused now really on taking advantage of all of these new households that we've acquired through targeted cross-selling efforts, but it has been a very successful campaign and we have decided to continue.

Thank you.

Thanks, everyone. We have time for one more question.

Thank you. Our final question is from Scott Valentin. You may ask your question and please state your company name.

FBR Capital Markets. Thanks for taking my question. Just real quick, I was trying to reconcile a pretty sharp growth in non-performing loans, while net charge-offs remained relatively stable link quarter, and you went through your charge-off policy, maybe just a case that you guys are fair valuing the assets pretty quickly. Can you give more color on that, why NPLs increased so much while charge-offs were relatively stable?

FBR Capital Markets. Thanks for taking my question. Just real quick, I was trying to reconcile a pretty sharp growth in non-performing loans, while net charge-offs remained relatively stable link quarter, and you went through your charge-off policy, maybe just a case that you guys are fair valuing the assets pretty quickly. Can you give more color on that, why NPLs increased so much while charge-offs were relatively stable?

I think if you take a look at one of our slides, where we were going over the reconciliation of where our charge-offs are going on. The charge-offs are really a flow item for the new non-performers coming in, and what we charge-off on a quarter to quarter basis. And while you seeing an increase in non-performers, the flow in during the quarter was fairly stable quarter-to-quarter and that's why the charge-offs are relatively stable over that same period of time.

Okay and just a quick follow-up. In the appendix section, total securities gains were $550 million. Is that all of the Coke transaction?

Okay and just a quick follow-up. In the appendix section, total securities gains were $550 million. Is that all of the Coke transaction?

Yes. Largely speaking, there maybe some very small incremental, but the bulk of that is the Coca-Cola transaction.

Okay. Thank you.

Okay. Thank you.

Okay. Thank you very much.

Thank you everyone for joining us this morning.

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