Welcome to the SunTrust second quarter earnings conference call. (Operator Instructions) I'd like to introduce your speaker, Mr. Steve Shriner, the Director of Investor Relations.

Good morning. Welcome to SunTrust's second quarter earnings conference call. Thank you for joining us. In addition to the press release, we've also provided a presentation that covers the topics we plan to address during the call today. Slide 2 outlines the content which include the capital update, an overview of our financial results and an in-depth credit review. The press release presentation and detailed financial schedules are available on our website, www.suntrust.com. This information can be accessed by going to the investor relations 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 Officer. Jim will start the call with an overview of the quarter, including details on our capital position. Mark with then discuss financial performance, and Tom will conclude with an in-depth review of asset quality. At the conclusion of the formal remarks, we'll open the session for questions. Before we get started, I need to remind you our comments today may include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause 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 the statements are made, and we disclaim any responsibility to do so. During the call, we'll discuss non-GAAP financial measures in talking 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 webcasts are located on our website. With that, let me turn it over to Jim.

Good morning everyone. Thanks for being with us this morning. I'm going to begin on Slide 3 of the deck. Similar to last quarter, this quarter's story boils down to a few main themes, most evident obviously being we are still working through credit and earnings challenges as the weak economy continues to impact performance, yet we did see some positive trends during the quarter and preliminary signs of improvement in several areas. While we're obviously not pleased to report a loss for the quarter, we are encouraged by this quarter's results, specifically our strong deposit growth, increasing net interest margin, positive fee income growth within certain areas, strong expense management and lower early stage delinquency rates. Additionally, we further enhanced capital, improved liquidity and bolstered reserve. We have the strength and resources necessary to continue to manage through sustain economic weakness. As you know, we completed our capital actions and exceeded the government's capital requirement. I'll spend more time outlining those actions and their impact in a few moments. As I've said before, we are acutely focused here on the client, on improving service quality and front line execution, on controlling expenses and on managing risk and I believe we're doing a good job controlling what we can control and taking advantage of opportunities, the results of which are evidenced in many places in our core performance this quarter. However this positive underlying picture clearly is overshadowed by the impact of recession related pressures. We reported a loss of $0.41 per share this morning. This loss reflects cyclically high credit charges and soft revenue in certain areas. Although overall revenue remains depressed, second quarter results included increased net interest margin and capital markets revenue along with another strong quarter with mortgage related revenue. Expenses were well managed again this…

I'll begin my comments today on Slide 7 of the earnings presentation, the summary income statement. For the quarter we posted a loss to common shareholders of $164 million or $0.41 per share and a loss of $2.77 per share year to date, or $0.86 per share excluding the impact of the first quarter good will charge. Our financial results continue to be dominated by asset quality, credit and other pro cyclical expenses and to a lesser extent, soft revenue generation. While we are by no means pleased with these results, the core earnings of the organization improved in several areas versus the first quarter. For example, margin and net interest income increased. Provision expense decreased. Expenses declined and higher capital markets revenue partially offset a decline in mortgage production income. I will cover each of these areas in more detail in just a minute. There were also a number of special items in the quarter that warrant review, both pluses and minuses. I'll discuss the more significant of these during this morning's call and we have provided details in the appendix of the presentation. Now, I'll shift to Slide 8 and the balance sheet summary. Overall, average loan balances depicted on this slide declined 2% and 3% as compared to last quarter and last year respectively. Total loans as reported in the tables accompanying the press release declined roughly 1% for both periods. The difference is that non performing loans have been excluded from this slide. Our aggressive effort to reduce exposure to construction lending is evident from the 13% balance decline versus last quarter and 44% decline compared to last year. Most other loan categories display small declines primarily driven by sluggish demand from credit worth commercial and consumer borrowers. Commercial real estate is an exception as many…

This morning I'm going to provide a review of our asset quality. I'll being on Slide 14 with a brief review of the credit losses projected by the government under the most adverse scenario SCAP. SunTrust absolutely lost rates under the government's stress test scenario. We're projected to be at the lower end of the banks in the studies. We believe that our mix of products, more stable geographies excepting Florida and conservative underwriting are the reasons for the difference. We believe the estimate is high as compared to our own scenario analysis, even under the more adverse economic scenario. To help illustrate the conservative nature of the government estimates, I will point out that the overall result was two year cumulative charge offs of $11.8 billion. Our first half 2009 actual charge offs were $1.4 billion. In order to recognize the remaining SCAP estimate of $10.4 billion over the next six quarters, charge offs would have to increase to over $1.7 billion in each of the next six quarters. This amount is more than two times our second quarter charge off level of $800 million and while I suppose that level of charge offs is possible, it certainly doesn't seem likely to us at this time. Turning to Slide 15, and the SCAP loss estimate by portfolio, the data on this slide provides further evidence of the conservative nature of our portfolio with no sub prime or option arms, a small credit card portfolio, only about $500 million in true consumer cards, and low levels of unsecured consumer and small business loans. In each category, you can see that the government's loss estimates for SunTrust are in the middle to low end of the range. Please turn to Slide 16, where I will provide a summary of our current…

We will begin taking questions in just a moment. First, in order to accommodate as many questions as possible, I would ask that you limit yourself to one question and one follow up please. Operator, we're ready for the first question.

(Operator Instructions) Your first question comes from Matthew O'Connor – Deutsche Bank. Matthew O'Connor – Deutsche Bank: I can appreciate there's a lot of moving pieces in the loan loss reserves in terms of what the real actual level should be and from the details on the write downs in the mortgage book are helpful here, but just in general when I step back and I look at the reserves, the charge off, the reserve MPA's on a different metric, it still seems lower than I would have thought at this point in the cycle, especially given your view that MPA's and charge offs are still going to rise from here. Maybe just give a little more color on how you think the reserve build will trend from here whether you expect it will be more going forward than we've seen thus far.

Our thought of the reserve build, the reserve build will be dictated in large part by what we see happening within I think the consumer part of the portfolio. If in fact that portfolio continues to stabilize, then the reserve build will slow. We see early signs of stabilization in terms of movement into delinquencies and therefore subsequent quarter's movement into non performing loans and therefore the charge offs. If in fact that trend happens the way we expect it to, I think you'll see the need for reserve build to begin to mitigate.

One of the things we try to do is provide the severity data by the various categories in terms of what losses we're actually realizing. We provide the information in the mortgage section. There's a chart that talks about severities and a lot of the growth in non performing loans at this point in the residential area is in the traditional core product as opposed to for example, Altay versus seconds which largely burn themselves out. And we're providing you loss severity information in there that's 20% to 30%. We provided you the FAS114 loss severity data. Tom mentioned there's some lumpiness as it relates to CIB but those numbers range in the 30% to 50%, so when you compare the coverage ratio that we noted after adjustment for the mortgage write downs and the FAS114's, you get a feel for coverage relative to the loss severities which as you know is the aspect for the reserve. Not just non performing coverage, but coverage of the expected losses on those non performers and those that we have already incurred a loss but haven't yet determined to be non performing. That's a least more data for you to chew on as it relates to getting comfortable with our current position. Matthew O'Connor – Deutsche Bank: I can see the comments related to the consumer side makes sense to me and we are seeing the early DQ's turning down here, but what about on the commercial side? It feels like we're just kind of in a cycle for C&I for commercial real estate outside of construction. None of us really know how painful it will be. Obviously you're MPA's are off a lot on a small base. Maybe you can give some color of how much reserve you have against the commercial books in general and why you're confident you won't have to build a lot there.

The way we build, first of all, I think we've gone back over in a lot of detail with our commercial real estate folks, the income, the non construction part of the portfolio. We've gone back over the individual credits. We are again doing a deep dive into all of the income producing credits. We try to make sure our assumptions and the statistics we've got here are correct and we have a detailed understanding of the value of the assets that we're financing and their cash flow generation capability. We saw a minor increase in delinquencies. We tracked those back to which segments of the portfolio they were coming out of and have gone back and looked real hard at that portfolio and while we're deeply concerned about what could potentially be going in in the overall commercial real estate industry, that seems to be centered much more in large projects and large commercial real estate development activity. Our portfolio is primarily smaller, regional real estate offerings with about 60% of the portfolio being lent to people who are doing owner occupied properties. We're seeing stability in that part of the portfolio so we're watching it carefully, but don't see signs of massive movement or massive problem in that portfolio at the moment. On the C&I side, what we're seeing is the cyclical industries that we identified probably two to three quarters ago, lots of this being media oriented, have worked through the work out cycle and are getting charge offs this quarter and next quarter. And we're seeing construction related industries showing some weakness and increase in delinquency, but general stabilization in the remainder of the C&I portfolio; some minor weakness but the remaining portfolio segments are doing okay.

Just one additional point, we certainly don't agree with all of the aspects of the SCAP process, but one thing that we do agree on relative to our peers, it did not surprise us that the expected C&I cumulative losses over the two year period was at the best in class level. So while that's not directly answering your question because that's under a more adverse than expected scenario and there's a lot of variables, it at least gives you a view of the third parties of our C&I book under a stress scenario. Matthew O'Connor – Deutsche Bank: Do you disclose the reserves allocated to the C&I book or the income book?

We do in the K. On an annual basis, there are segments of the allowance, probably not necessarily at the level of granularity that you're asking for, but in a couple of different levels that you can review.

Your next question comes from [Nancy Bush – NAB Research] [Nancy Bush – NAB Research]: Could you just clarify you commentary about exiting TARP by year end 2009. You said that, you showed us the impact if you did exit at year end, but I gather from the rest of you comments that you do not expect to. Can you clarify that a bit? And if you don't exit TARP by year end 2009, do you see any practical impact on company fundamentals?

The purpose of the illustration was to show that at the end of '09, we were at a base well capitalized levels in both Tier One and Tier One common. The rules keep changing as I said several times, and we don't quite know where the rules will go or when they go where they go. I also said as you noted, that I didn't anticipate, we weren't expecting to do that, but that we would like to. I think at this point, that's about all we know about what the rules may be and who will do what soon. Having said that, the TARP is a negative in my view, although not a great one in terms of all the things that our friends in Washington are trying to control and manage in detail from there. Some of the other things that our friends in Washington are doing are much more troublesome I might add than TARP. So we tried to give you a sense of where our capital position was even given the SCAP severities and the SCAP PP&R view, but I'm not predicting at this point when TARP repayment will occur. [Nancy Bush – NAB Research]: On the core ingredients of net interest margin, could you just speak to deposit pricing and loan pricing at this point and why you expect stability in the NIM?

We talked at the first quarter about the fact that with the sharp decline in interest rate at the end of the year, LIBOR based loans reset immediately as we entered 2009 and the deposit rates reset during the course of the quarter, and coupled with several other anomalies in the LIBOR market place, caused a significant drop in margin. We had expected that the liabilities would be re-pricing throughout the quarter which would provide some positive benefits to margin. That's clearly what we saw. You look at the various interest bearing deposit rates, money market, CD's, they did re-price. We also got substantial growth during the second quarter as it relates to the non interest bearing, the core low cost deposits, particularly demand deposits which is where the result of all the effort of the focus we have internally on deposit generation. So the combination of those two elements really were the core drivers of margin improvement. We are going through an additional period where we'll re-price certain client CD's through the course of the third and the fourth quarter, a significant change in rates. As you know, year over year that will provide some additional positive. While we have noted the moderation in deposit growth, we certainly aren't slowing down our efforts to further penetrate our geography and our client base, so our hope is to continue to drive deposits which will further enhance the margin. We do note that there are a couple of headwinds that relate to growing non performing assets and sluggish loan demand, so when you weigh those counter balance factors, we still believe that margin is likely to be relatively stable with some upside potential over the course of the next couple of quarters. [Nancy Bush – NAB Research]: Loan pricing, is there any competition for loans at this point or has everybody just sort of stepped back?

We've had an intense effort over the past year focusing on making sure that we are pricing the various loan categories both competitively and appropriately on a risk adjusted basis. We are seeing improvement in both our process and the results which is providing lift to the loan book as we are putting on a good loan spread in the way in which we look at risk adjusted return across a number of asset categories. So there is a significant amount of focus there. In aggregate, loan demand as we noted earlier is down for those credit worthy borrowers on a year over year basis, and so while we're getting lift in the book if you will, the fact that earning assets at least on the loan side are not growing robustly. You're not seeing that today translate into significant growth in net interest income, but I would tell you that all of the process, the focus and intensity within the company is certainly thee not only on the deposit side, but on the loan side as well.

Your next question comes from [Craig Seigenthaler – Credit Suisse] [Craig Seigenthaler – Credit Suisse]: Just a follow up on Matt's question about the reserve, and maybe thinking about it a different way, and I do appreciate the disclosure on Slide 21, but one point, if reserve coverage to annualize net charge offs declines to 1.9 years to 1.1 years which is last quarter, doesn't this imply the net charge offs will probably decline over the next few quarters just to justify the lighter reserve coverage?

Since we're not forecasting and don't forecast what our charge off levels are going to be, I'm not exactly sure how to answer your question thoughtfully. I would however point you back to our guidance around the falling early stage delinquencies over the past couple of quarters. What we look at is the aberration in the fourth quarter of the increase in delinquencies, we think driven primarily by election rhetoric at that point in time with the consumer, and if delinquencies keep coming down, it stages out three quarters later. The more delinquencies fall, the more charge offs and non performers will fall during that period of time. That's not a direct answer, but about the best I can do for you. [Craig Seigenthaler – Credit Suisse]: Is there any reason why you think that metric may not be a fair judge of your loan book and your loss case versus other metrics.

I'm sorry, which metric? [Craig Seigenthaler – Credit Suisse]: The reserve to net charge offs.

The reserves is a forward-looking expectation of losses and not a backward looking expectation, so what it does is it is based upon loss content within the portfolios going forward and not necessarily a coverage looking backwards.

The other thing to note here is, in a given quarter when you annualize charge offs, you're going to get a level that may not be representative of run rate over the forward-looking 12 months. And so when you're comparing in on an adequacy basis to the aggregate reserve, you have to take into consideration that one quarter's results which for us could be lumpy for example as it relates to how CIB charge offs come through, and what the expectation which is embedded in the reserve process over the forward-looking 12 month period. As you get towards just generically, as you get towards the peak in the charge off cycle, the phenomenon that you just described is exactly what you would expect because the reserve won't move hopefully in this cycle immediately down as it relates to the recession ending and credit improving. You're going to have a period where a quarterly charge off number and the reserve should be in keeping with one another on a one to one basis. So I want to make sure as you look at the quarter numbers as opposed to the full year forecast, which we're not providing in this discussion, just a generic comment about the fact that this is a trend that you ought to see as we're reaching a point in the cycle where we're starting to peak in charge offs. [Craig Seigenthaler – Credit Suisse]: How do you think we should view the sustainability of the really strong earnings you're getting in your investment banking and also your mortgage banking operation right now relative to maybe a second quarter or even a run rate next year?

We have a number of units within the corporate investment banking division that are performing very well. The business as you know, does have cyclicality to it, but I would say that a lot of this business is core, that we believe there have been opportunities for us to gain market share as a result of some of the disruption that's taken place in the industry over the last year to year and a half. We've been making investment in selected sectors that are paying dividends for us. We think we're well positioned as a franchise to offer a broad array of products and services at a very high quality level to our clients, and as a result this is an area as we look out over the course of the next year where we have high expectations for, maybe not continued record level each quarter, but very strong performance in a number of areas within CIB. Now, with all that said, we're also seeing rising non performing loans in the larger corporate segment which is overall a negative to the earnings stream of that division. You can see that in the quarterly tables, so while we had record revenues during the quarter, we also had a significant increase in charge offs, and Tom talked about our expectation in certain cyclical industries where we are expecting an increasing trend in non performers here in the short run. So I don't want to just, we're talking about revenue. We're also looking at profitability during the course of the year and profitability will certainly be under pressure in that division as a result of an expectation of growing non performers and likely charge offs.

Your next question comes from Greg Ketron – Citigroup. Greg Ketron – Citigroup: Back to the commercial non performing loan build, that increased over $300 million from last quarter, we've heard a couple of other banks talk about the shared national credit review being somewhat influential in terms of MPL build, and I was wondering if that may have had some influence over the increase. As I look at that, and look at Slide 21 in the deck, which by the way I really appreciate that being provided now, when you look at commercial investment banking and in commercial look at the implied severity and then look at the amount of commercial non accrual loans in expected severity, what kind of color could you provide around that in terms of expectations?

Let's start with the shared national credit. As you know, we are required to do our own rating, our own evaluation and our own controls around all of the credits whether they're shared credits or not. I will tell you that our results in the second quarter reflected any knowledge we had of any regulatory action at any of the banks that were agenting the credits. So we don't expect that this will be third quarter event. We've adjusted for everything we know as well as I believe our credit process conforms pretty well to what we saw the results coming out of the shared credit so we don't wait for the regulators to push us on our loan grades or our performing/non performing characteristics. The second part of it is, I believe the loss severity you see in the charts we provided on that slide are indicative of a couple of very large charge offs in terms of loss severity having to do with the media industry where in fact the losses coming out of the media side are much more robust than we would have expected and has a lot to do with the debt for equity swap versus debt restructuring that would have traditionally gone on there. We in our modeling expect some place in the 45% to 55% range severity for those types of C&I credits. Thank you everybody. Appreciate it.