Welcome to SunTrust third quarter Earnings Call. (Operator Instructions) I'd like to introduce your first speaker, Mr. Steve Shriner, the Director of Investor Relations.

Welcome to SunTrust third quarter earnings conference call. Thanks for joining us. In addition to the press release, we've also provided a presentation that covers the topics we plan to address during our call today. Slide two outlines the content, which covers an overview of the quarter, financial results discussion and an in-depth credit review. Press release, presentation and financial schedules are available on our website. This information can be accessed by going to the Investor Relations section. 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, Mark will 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 that our comments today may include forward-looking statements. These statements are subject to risks and uncertainties 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 the 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 measures in our press release and on our website. Finally, SunTrust is not responsible for and does not edit or guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized live and archived webcast are located on our website which is www.suntrust.com. With that, I’ll turn it over to Jim.

Thanks for being with us this morning. The results we are going to discuss this morning continue to reflect the difficult operating environment faced by more traditional banks. Continued recession related earnings pressures, including higher credit costs and write downs, softer fee income and generally weak loan demand culminated in the $0.76 per share loss we reported this morning. I will point out that $0.16 of the per share loss is related to changes in the market valuation of SunTrust’s public debt as credit spreads narrowed, reflecting an improved [view] of SunTrust’s credit quality. We are not happy to report a loss, but much like last quarter, there is more in our earnings story. We are encouraged by some core business trends that have recently emerged as we look toward the prospect of an improving economy. Specifically, an expanded net interest margin, lower core operating expenses and importantly a decline in nonperforming loans and stable early stage loan delinquency levels, all give us reasons to be tentatively optimistic about the direction the operating environment is headed and what that might mean for our markets, for our borrowers and for our businesses. As is typical in a recession overall revenue remains soft with stable net interest income and lower noninterest income. Net interest income was stable as net interest margin expanded due to a significant increase in client deposits as well as an improved mix that enabled a reduction in higher cost sources of funding. Loans and earning assets declined more rapidly than in previous quarters, offsetting the benefit of the higher margin. What we are seeing is the sustained economic weakness has reduced the demand for loans as many clients have focused on capital preservation and debt reduction and many have also accessed the debt markets. Additionally, overall fee revenue…

I'll begin my comments today on slide five of the earnings presentation, with the summary income statement. For the quarter, we posted a loss in common shareholders of $377 million, or $0.76 per share. The reported results included $0.16 per share of market evaluation losses on our public debt, carried at fair value, as SunTrust debt spreads improved during the quarter. On a year-to-date basis, the loss to common shareholders is $3.41 per share and $1.69 if you exclude the impact of goodwill impairment which was reported in the first quarter of 2009. As Jim indicated, our financial results continue to be dominated by credit losses, per cyclical expenses and to a lesser extent soft revenue generation in certain units. While we are not satisfied with these results, there are some positive operating trends that I will point out. Margin and interest income increased, deposit mix continued to improve even as client deposit growth moderated and expenses declined. On the other hand, recessionary pressures continued to weigh on loan volumes and non-interest 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. We have provided schedules in the presentation and the appendix to simplify the review, and I'll discuss some of the more significant items in my remarks this morning. Now I'll shift to slide six and the balance sheet summary. Overall, as you can see, average loan balances excluding non-accruals declined 4% and 7%, as compared to last quarter and last year respectively. Our aggressive effort to reduce exposure to construction lending continued in the third quarter, as evidenced by the 16% decline in balances versus last quarter and the 48% decline compared to last year. The majority of the overall decline in…

Thank you, Mark. This morning I'm going to review our asset quality beginning on slide 12. Charge-offs increased by roughly $200 million to 26% compared to last quarter. Expected increases in the construction, mortgage and C&I portfolios drove the majority of the growth. Last quarter during the call, we noted some positive signs in certain areas. This quarter, in addition to early stage delinquency remaining stable, nonperforming loans and nonperforming assets declined slightly compared to last quarter. Nonperforming assets declined by $70 million dollars compared to an increase of $919 million last quarter. Decreases in most categories were partially offset by small increase in residential mortgage nonperformers, although we had an absolute decline in the dollar level of nonperforming loans and assets. The corresponding ratios to total loans increased due to a decline in loan balances. The denominator effect also tempered the early stage delinquency ratio. Overall dollars 30 to 89 days past due declined $124 million or 6.5%. The past due ratio to period end loans only decreased two basis points to 1.52%, as loan balances declined over 5%. If loan balances remained constant, the decrease in delinquency would have been eight basis points or 1.44% rate. We increased the allowance to 2.61% of period end loans in the quarter for an overall increase of 24 basis points. Provision exceeded net charge-offs by $128 million. This is the third consecutive quarter of a slowing pace of dollar increases to the reserve, and a trend that is likely to continue next quarter, as long as delinquency and NPL trends remain in place. Please turn to slide 13 for review of the loan portfolio. Asset quality issues remain primarily residential real estate related, including residential mortgages, home equity products, residential construction and construction to firm. Commercial charge-offs increased in the third…

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

(Operator Instructions) The first question is from Brian Foran from Goldman Sachs.

You mentioned Florida home prices and that you expect them to continue to fall. How much further are you expecting and is the recent improvement Case-Shiller data just a head fake in your opinion?

For our forecasting purposes, we generally use the Case-Shiller data, and so are expecting between 15% and 20% declines right now in the Florida market. That’s a really bad answer because there are five or six separate markets. Some of the northern and more central markets are showing much better performance with South Florida actually beginning to show some signs of improvement. We are seeing increasing home sales in Florida, and backlogs are reducing somewhat. However, the real answer is 15% to 20% is what's in our forecast.

And then on the NPA improvement, the dollars of NPA improvement, did you give or can you give a breakdown between inflows, pay downs, and any loans sales that happened in the quarter?

We don't disclose those individual flows. We still had clear inflows. Our ability to balance with better outflows this quarter was actually fairly significant. One thing I can share with you is that we managed the business on a statistic which is basically homes or properties available for sale. So, during the quarter, we are able to get through in 90 days, about 75% of the available for sale inventory on a rolling basis. That has been a significantly improving statistic for us. It’s helping us as we get better flow through the foreclosure process, specifically in Florida for rapid disposition of the assets and making sure we don't hold them for long periods of time on the balance sheet.

Thanks, Brian. One other point, this is Steve. We did not conduct any bulk or large sales of nonperforming or ORE this quarter, so normal course of business inflows and outflows.

The next question is from Craig Siegenthaler from Credit Suisse.

First just on the home equity portfolio. It’s looking like delinquencies are continuing to rise here. Can you talk about some of the drivers here? Any reason to think that this third quarter could have been the peak in home equity delinquencies? That was just my first question.

None of us feel comfortable telling you that things have peeked or that the world is rapidly getting better. The drivers in delinquencies, primarily in the home equity portfolio, really people who are stuck in this long and stayed with it, these are primarily folks who have lost their jobs or have been hit by one of the three Ds in the foreclosure process, which is death, disease or divorce, and that’s primarily what drives the increase in delinquency. The unemployment stuff correlates very strongly to the default rates.

Got it. Then we also saw that charge-offs came down in this bucket this quarter. Was it an unusual level in the second quarter? Is this kind of a good run rated for home equity or with rising delinquencies due to rising unemployment should we think this should go back up?

What we saw was stability in the rolls in the buckets and slight improvement in the ability to go from the short-term to current to the longer term delinquencies. So, my first look at it is, we are getting stability in the roll rates, which is really accounting for the modification in the charge off rates.

On page 17 of our presentation we give you some data that non-accrual loans overall in the home equity portfolio were down in terms of percentage as well as the charge-off data. So, we give you a little bit of a breakdown there if you want to go through the individual components.

Got it. I saw that. I just saw the delinquencies went up, too. But, yeah. Thank for answering my question.

You’ve got a denominator issue there too that you need to adjust for.

The next question is from Jefferson Harralson from KBW.

Thanks, guys. I wanted to ask a question on the performing, accruing TDRs. You mentioned it was better than the government numbers, but can you just talk about what percentage of these you think will go nonperforming overtime or what your experience has been with accruing TDRs?

This is kind of a difficult area to talk about because there are no standards out there, and while we are working with not only the regulatory agencies to get transparency around this, there are four or five different measures, all of which are confusing as to term to re-default and what the default looks like and ever delinquent statistics. So, it's really difficult for us to quote you a set of numbers, but with each one of the statistics we find, we find that we are a little better than I think what the statistics show. We are also pretty aggressive when we do one of these restructures and making sure we qualify the borrowers to ensure they have enough money not only to meet their mortgage payments but to meet their other obligations and enough cash flow to live on. So, our recidivism rates I think are a little better than what the industry statistics show because our willingness just to do overall blanket restructures isn't very high. We really want to know what the clients are doing, what their income levels are, and making sure that we are doing something that's in everybody's best interest.

Can you talk about your restructuring efforts in commercial real estate? How successful you guys have been in getting additional collateral in exchange for additional [length] at maturity, or is that an effort you guys are actively doing?

What we are doing in the commercial real estate book. There are two parts of the commercial real estate book. The first part of the commercial real estate book is really the homebuilders’ portfolio which we have been talking to you for five or six quarters now about our active efforts to mitigate the losses in that portfolio, work with the developers when it is possible and liquidate the assets as quickly as we possibly can. That is more of a liquidation mode around many of them. Although we do have a fairly large number of the developers that still have recurring cash flow and the capability to continue see this through we think for the next three or four years. So we have a workout group, a very large group of people working on that. In terms of the income producing portfolios, we regularly review all of the loans in the portfolio, their cash flows, their borrowers, what's going on in the portfolios, and we'll work through modifications, renewals, extensions, depending upon current restructuring activity, or what's going on within the marketplace. We are actively working the portfolio all the time. If you take a look at the delinquency and nonperforming statistics, you'll see that we have been pretty successful in continuing to work with our clients and avoiding the deep problem and I think Central City sort of activities you are seeing pop-up around the system at the moment.

The next question is from Terry McEvoy from Oppenheimer. Terry McEvoy – Oppenheimer: Look at your slide 15, the breakdown of the commercial real estate portfolio. Could you maybe separate the owner-occupied from the investor-owned commercial real estate loans or nonperforming assets of around $302 million? I'm guessing there is more in that investor-owned bucket. The second part of that question is, geographically speaking does the Florida group contribute a greater share of those nonperforming loans?

In the investor-owned portfolio, I believe if you take a look at couple of the slides, you'll see what the delinquency rates are in the investor-owned portfolio, because the nonperformers are primarily comprised of the construction part of the portfolio, and so most of our delinquencies in this area really are coming in the investor-owned portion of the portfolio, but primarily in the homebuilder part of the portfolio. I think that was the first part of the question.

Terry, I think your question was focused particularly on the investor-owned commercial real estate line. Terry McEvoy – Oppenheimer: That's correct.

We want to make sure we don't confuse you here. Construction is some place else. Terry McEvoy – Oppenheimer: Yes, I was looking at slide 15.

We haven't provided a public breakdown of the performer and nonperformer split. Off the top of my head, I don't have that information. I'll look around and I've got a couple of members of management teams here. If anybody has it, we'll provide it, but I don't know that number.

Yeah, the $300 million I would say in the portfolio, about $200 million dollars of it comes out of the income portion of the portfolio.

The amount of stuff that's in Florida is not consequential and isn't showing to perform worse than the rest of the portfolios.

The next question is from Bob Patton from Morgan Keegan.

Most my questions have been asked. A real quick question on FDIC transactions. How do you think you guys are positioned relative to starting to look more progressively at the FDIC activity?

This is Jim. We are fully capable and willing to assist when asked to do so. As I have said several times, our position basically is we don't feel the need to do that. Our organic growth is going nicely and our organic growth prospects are going nicely. It is frequently diverting, but should an occasion arise if we would be asked to be help, we would of course are going to do that.

Do you sense the activity is picking up in your market?

In our market it has been picked up, I guess is the way I would describe that. You have the same statistics we do about the FDIC's list of problem institutions and those sorts of things. It is not really broken down geographically as far as I remember, anyway. But the reality is in troubled markets and we have some on our footprint, I would expect the activity to pick up, but there is no way to know that.

And then to Mark, are you going to hold the balance sheet stable or do you see continued shrinkage and sort of that run rate and what are the drivers?

As you saw during the course of the third quarter, we did increase the securities portfolio as the loan balances decline. We evaluate the addition of securities and other earning assets in regard to a number of factors as you expect. The interest rate sensitivity, our liquidity position, the overall duration of the balance sheet. We are also asset sensitive, but it currently has a view the fed is unlikely to increase rates in the near term and we are at a very strong liquidity position. With the decline in loans we have added to the portfolio and we are likely to do so in the near term. We have replaced some of the mortgage-backed securities that were sold at the end of the quarter, as I mentioned earlier here in the early part of October. We do think it's important to retain maximum flexibility with the securities that we purchase, and as a result, we have invested in low credit risks and highly liquid securities and you should expect that to continue.

What is the percentage of loans on floors at Sun Trust?

You had your one and your two.

The next question is from Greg Ketron from Citigroup.

Thomas this question probably goes to you and I know you probably are getting tired of answering the credit questions, but in terms of reserve build, you had a decline this quarter. Is there any read-through or implications on that in terms of the underlying credit quality of the overall portfolio? Is this something we may see going forward, as you have seen early stage delinquencies stabilize NPL influence or the net NPLs were stabilized going forward?

The two components of losses, Greg, as you well know are frequency and severity. What we are seeing across many of the portfolio is the level of individual defaults, especially in the mortgage portfolios and on the retail side of the house is improving delinquencies in comps and dollars. The one mitigating factor for that is really what's going to go on in the housing markets, and specifically the largest housing market we have to be concerned with is Florida. The rest of our housing markets are showing stability, really the fallen value seem to have mitigated and some of them more in fact are showing increasing positive value growth within the market segments that we are struck with. The need to build because we are getting, increasing frequency of loss seems to be mitigating and really any need to grow at the moment, given what's going on in the marketplace, it could all change tomorrow, it has to do with making sure we've got a good handle on the severities.

If I can do a follow-up question on the mortgage repurchase reserve, is there any color you can give on the potential size of that or where you may be in that process in terms of needing to continue to recognize expenses associated with that?

Similar to what other companies are experiencing, but I think ours has been proportional and it is sort of all over the board. So, if you think June and July were sort of high, August was down; September was down, October sort of there. So, I think what you'll see is relative to the past, you know, a year ago, it will continue to be at some high levels, relative to this quarter. I think through the next few quarters in 2010, we should see this coming down as some of the earlier winnings sort of work their way through.

The next question is from Kevin Fitzsimmons from Sandler O'Neill.

On slide 11, when you talk about credit related costs, the $215 million, I'm assuming the bulk of that is OREO expenses. Is that something you breakout anywhere just in terms of what to expect from a run rate would we expect that kind of pace going forward?

If you flip back to page 25 in the appendix where we breakdown the $215 million into one, two, three, five components, I think your answer is there. If I got the question right?

It certainly is. Thank you very much. Just one additional one for Mark. The trading account write-downs, this is obviously an item that fluctuates quarter-to-quarter. Any sense based on what you are seeing today, how we should look at it? I know it’s tough to talk in terms of run rate for that line item, but how we should look at that going forward?

Kevin, if you go back to the end of 2007, we acquired about $3.5 billion worth of securities. We are down below $200 million at this point. Many of the residual securities during the course of the third quarter actually had modest write-ups, and so the risk associated with that trading portfolio has largely been recognized and we are managing through that residual portfolio. We also have the auction rate securities that we acquired back a little over a year ago. We have marked them appropriately at the time and we’ve had some modest write-ups since then. So, I think on balance, that's not one of the core risks to SunTrust as we move forward.

Kevin, this is Steve. If you think about the trading activity in the quarter, we were a little soft on equity derivatives and fixed income trading. So, it was a little softer than the last quarter in the trading line. It has had some volatility on an adjusted basis. It’s been probably $50 million, $60 million. Kind of each of the past couple of quarters and then trended down some, and that’s just kind of core client business activity. As you know, it is fairly hard to predict.

Right. However, obviously in this quarter the big item was the debt, right, the debt write-down.

Even after you adjust for that, you would still see that, what's left after the adjustments I gave you in the appendix, even after you do that, you'll see the trading was a little soft this quarter. It really was kind of core client activity.

A very strong trading activity in the SunTrust Robinson Humphrey on a year over year basis, but down sequentially coming off a record quarter in the second quarter.

Thank you, everybody. I appreciate your attendance at this morning's call.

That concludes today’s conference. You may disconnect at this time.