Welcome to the SunTrust first quarter earnings conference call. (Operator instruction) I would like to introduce your speaker, Mr. Steve Shriner, the Director of Investor Relations.

Good morning, welcome to SunTrust’s first quarter earnings conference call. Thank you for joining us. In addition to the press release, we have also provided a presentation that covers the topics today. Slide two outlines the content, which includes an overview of the quarter, financial results discussion and a credit review. The press release presentation and detailed financial schedules are available on our website, which is 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, Mark will then discuss financial performance and Tom will conclude with the review of asset quality. At the conclusion of formal remarks, we will open the session for questions. Before we get started, I need to remind that 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 may cause actual results to differ materially in our press release and SEC filing, which are also 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 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 about the company’s performance. You can find the reconciliation of these measures to GAAP financial measures in our press release and on the 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, I will turn it over to Jim.

Good morning, everyone. Glad you are with us this morning. Our first quarter results improved to a loss of $0.46 versus a loss of $0.64 last quarter as earnings continued to be impacted by elevated credit costs. While overall home price depreciation slowed uncertainty remains around the direction of future home prices, especially in certain markets. Revenue remains soft driven by a decline in mortgage production volume coupled with mark to market losses on our fair value, publically held debt. Also, loan demand has yet to pick up as clients have focused on capital preservation and debt reduction and have accessed the debt markets in lieu of bank loans. However, as the economy has shown signs of improvement and so have our results. The most notable sign of improvement was in asset quality which resulted in the significant decrease in credit related costs compared to last quarter. Charge offs remain stable compared to the fourth quarter though if you exclude the actions that Tom Freeman will detail later in the call charge offs would have declined sequentially. Additionally, nonperforming assets, the allowance for loan losses and 90 plus delinquencies were all stable quarter to quarter while provision expense for nonperforming loans and early stage delinquencies all decreased. We believe this marks a continuation of improved asset quality trends as the improvements in charge offs and delinquencies were broad based among the portfolios and we experienced the second sequential quarter of overall positive asset quality metrics. In addition the apparent beginning of economic improvement, our client focused strategies, lower cost deposit mix and expense management discipline also contributed to encouraging operating trends. Favorable deposit mix trends continued this quarter with growth in money market balances and a decrease in higher cost time deposits. After an extended period of growth consumer and…

Thanks Jim and good morning everybody. I will begin my comments today on slide five of the earnings presentation with a summary income statement. For the quarter we posted a loss for common shareholders of $229 million or $0.46 per share. As has been the case in recent quarters the loss was driven by elevated charge offs, cyclically sensitive expenses and to a lesser extent soft revenue generation in certain units. The effects of the recession also continued to impact our results. Loan demand remained weak. Mortgage production volume declined significantly versus 2009 levels and noninterest income declined sequentially in a number of our larger line items. However, the amount of the reported loss declined significantly compared to last quarter. Improved results were largely due to lower provision and noninterest expenses, lower mortgage repurchase reserves and a stable net interest margin. Overall, the improvement in our results is occurring coincident with the recovering economy and some of the positive trends are primarily related to the environment. On the other hand we are directly driving the improvement in many areas. Notable and visible examples of our success include deposit mix and pricing, expense management and the impact of asset liability management actions on net interest margin. Less noticeable now but critically important to our future is our increasing success in attracting and retaining clients with improved service and innovative products and services. So with that brief summary of first quarter results I will now shift to slide 6 and a balance sheet review. Overall, average loan balances excluding nonaccruals declined 1% and 11% as compared to last quarter and last year respectively. The decline in balances in our higher risk categories continue. Construction balances continued their rapid decline, down another 14% in the current quarter and down 45% compared to last…

Thanks Mark. This morning I am going to review our asset quality beginning on slide 13. As Mark and Jim noted earlier in the call asset quality continued to improve this quarter. Provision expense, nonperforming loans, nonperforming assets and early state delinquencies all decreased. Additionally, charge offs, the allowance for loan losses and 90 plus delinquencies were all stable quarter to quarter. A couple of numbers on this slide were influenced by actions we took in the quarter related to nonperforming loans. While overall charge offs were flat quarter-over-quarter at $821 million the base level of charge offs was lower. Added to this lower base were incremental charge offs on aged residential mortgage nonperformers resulting from a change in policy. We also decided to sell a portfolio of mortgage loans and as a result reduced nonperforming loans and recorded an incremental charge off. I will address these actions in more detail later in the presentation. Please turn to slide 14 for a review of the loan portfolio. This portfolio review of asset quality illustrates broad based improvement in early stage delinquencies among the consumer portfolios. This is the fourth consecutive quarter of improvement in early stage delinquencies. Overall, charge offs remain stable at $821 million with the charge off ratio increasing due purely to a reduction in loan balances. As in past quarter absolute asset quality issues remain centered in the residential real estate related portfolios including residential mortgages, home equity products, land and residential construction. The commercial portfolio continues to perform well overall. Commercial loan charge offs and early stage delinquencies were stable in the quarter and nonperforming loans declined by over $100 million for the third quarter in a row. We continue to see some potential for volatility in more cyclically sensitive industries. However, our view is that…

Thanks Tom. Before we take questions I am going to wrap up with some key takeaways from today’s call. We posted a loss in the quarter driven largely by elevated credit costs and soft revenue generation particularly related to loan demand and certain noninterest income items. As you know the impact of the recession on our asset quality and earnings will take awhile to recede. However, the process of improvement now appears to have clearly begun. Asset quality improved again this quarter and leading indicators suggest further improvement during the remainder of the year. Our capital position remains solid. We believe that we have strong capital today and enough capital to leverage for growth as the economy strengthens tomorrow. Liquidity and funding have been well managed as have expenses. Perhaps most importantly we have made a lot of little changes that have improved daily execution, increased accountability and enhanced products and services. We have more work to do here but these actions are gaining momentum and improving client satisfaction. Taken all together these things give us confidence that our earnings power is well leveraged to economic recovery. We are ready to begin taking questions now. In order to accommodate as many as possible I would ask that you limit yourself to one question and one follow-up. Operator, we are ready for the first question.

(Operator Instructions) The first question comes from the line of Craig Siegenthaler - Credit Suisse.

It sounds like in your commentary on charge offs the range we should really think about for next quarter is between the base level which was about 639 and a reported level of 821. Is that correct? Would you expect charge offs to really trend closer to the bottom part of that range or the top part of that range given your guidance today?

I have trouble with Steve in even defining a range specifically for this reason. I think it will be within the range. I think it has a lot to do with some of the residential restructures we are doing specifically on the homebuilder side and whether or not the opportunity to take any other actions depending upon the secondary markets we are currently seeing out there for the potential sale of further assets. I feel pretty comfortable within the range, but trying to pick where in the range we are going to do is going to depend on what the markets look like over the quarter.

But you hear, to define that question a little better, on the bottom of slide 12 you point out the run rate of base charge offs is expected to be stable to slightly up. That would be off the base of 639. Should we expect another significant level of kind of non-base charge offs related to acceleration of held-for-sale residential mortgages?

Really the statement itself in Tom’s prepared comments were designed to kind of focus you on a base rate of charge offs that is stable to slightly up, we have not completed the transaction related to the NPLs and the reason the range is large is we are leaving some optionality for ourselves if that transaction goes well to come back in the market with a second transaction. Does that help?

The next question comes from the line of Matt O’Connor – Deutsche Bank. Matt O’Connor – Deutsche Bank : Your [inaudible] margin isn’t improving as much as some other banks we are seeing. I would just point out on page 7 of the deck here your securities book is more liquid than others and it does seem like you are shortening it. It feels like there is some dry powder and I guess if you could just help us put all of this together, when rates start to rise how much leverage is there in the [inaudible] margin? Then take a stab at what a more normal NIM would look like.

I think you have it right. We have a fair amount of dry powder. We have reduced our securities portfolio by a couple of billion dollars and our liquidity position is outstanding as we ended the first quarter. Actually a little better, as we said in the prepared remarks, than anticipated given the deposits have maintained their levels and the mix further improved. So we are evaluating the rate environment. We are seeing the economy improve and there is a translation as to when that will affect longer term rates. We are using both on balance sheet securities as well as off balance sheet opportunities like interest rate swaps to manage the duration of the balance sheet. So we will use all of those types of tools to try and manage through what is likely to be a rising rate environment. I will remind you the nonperforming loans affect margin currently by a little over 20 basis points. So that is one element that is a significant headwind that that we are working our way through with current margin around 3.25% to 3.30%. Matt O’Connor – Deutsche Bank : Any more detail on how you are positioned right now? Are you asset sensitive? If rates were to go up would it be listed in NIM?

When you look at the various analyses we are relatively neutral. We don’t have any significant asset or liability sensitivities but one of the things we are doing is we are maintaining a very liquid balance sheet to be able to move as the environment changes and in anticipation of a rising rate.

The next question comes from the line of Nancy Bush - NAB Research.

A quick question on your initial commentary I think on page 3 about uncovering opportunities across the company. Can you just give us some color on that? Is that expense? Is that certain revenue initiatives?

Actually both. The expense side is we are doing a lot of front to back re-engineering of processes. I think in the mortgage business or several other places that are longer time consumers than some of the shorter term things we have done in the last year or so. We have also done a lot of research and product development sort of work that is going on that we think will enhance revenues. The basic issue obviously is whether or not C&I loan growth or any other sort of loan growth shows up and when does it show up. As a general proposition we have been investing all through this thing both on the expense side in terms of cutting costs and increasing productivity as well as on the revenue side with new products, training and those kinds of expenses. Actually that answer is both.

I would ask as an add-on I was in College Park recently and was astonished to see a new SunTrust branch there. What are the branch development or branch opening plans around Atlanta and is there a number of branches and an expense level we can look at there this year?

I don’t remember the numbers exactly but over the last 5-6 years we have probably averaged 30-40 or some 50 branches opened and 20-30 closed. So we are constantly dealing with the network to make sure it is in the right places and the mix is in stores of traditional freestanding and store front and what not is proper. We don’t really have a target. We are trying to be opportunistic about this sort of thing. We don’t really have a goal as some people have stated of building X branches over the next year or two. It is not time to think that way I don’t believe.

The next question comes from the line of Betsy Grasek – Morgan Stanley. Betsy Grasek – Morgan Stanley: Could you talk a little bit about where you anticipate your normalized NIM and ROA/ROE kind of settling out?

Mark I think has covered the normalized NIM pretty well. Basically we think it is going to be 3.25 or above, maybe a little below depending on what the asset mix becomes. The ROA issue is traditionally over the decades SunTrust has been sort of a 110 ROA mix of business. My own view is that it is certainly larger than one barring some unforeseen burden placed on us either regulatorily or politically. The, I think, reality is it will be from 1-1.25 for awhile and then we will have to see how it shakes out. ROE, you tell me what the capital ratio is and I will tell you what the ROE is. If you want to tell me I will give you some math here and tell you. Betsy Grasek – Morgan Stanley: I suppose the questions to follow-up on ROA is the kind of expense ratios you are anticipating and the timeframe to get there.

It is hard to say because obviously the mix is shifting inside the various businesses which has a great deal to do with an efficiency ratio analysis. The reality is, if you look at the fact for some number of quarters, 4 or 6 or 8 or something like that, we have shown core deposit declines year-over-year each quarter and I think you can assume of the days of the low 60’s efficiency ratio are gone. I think you can also assume we are investing in productivity and efficiency as well as the culture shift that has occurred over the last couple of three years. So I don’t know whether it is mid 50’s or around there somewhere but it is probably something like that. I think we are going to have to shift out some of the mix issues and see where we go. Betsy Grasek – Morgan Stanley: So that is over the next couple of years? That kind of timeframe?

It is just like I said about equity. If you can tell me what normal looks like I could answer that but probably.

The next question comes from the line of Meredith Whitney – Meredith Whitney Advisory Group. Meredith Whitney – Meredith Whitney Advisory Group: I was curious to see your experience in terms of offloading your foreclosure mix because that was the most interesting part of the quarter to me. What is the foreclosure environment in for specifically? Anecdotal evidence would say it has been very slow and when you talk about testing the market in terms of moving things from foreclosure actually into the market or actually from nonaccrual into foreclosure what are those tests going to be like? Can you provide more color?

Let me make sure I understand the question so I am not answering something different from what you are asking. Are you interested in our experience and the timeframe and difficulty of foreclosures in Florida? Is that the first part of the question? Meredith Whitney – Meredith Whitney Advisory Group: Yes.

It has been very extended. Initially one would expect and we find in almost all jurisdictions we are able to resolve foreclosure issues within a 12 month timeframe. In Florida it is extended to almost 2 years on average and continues to extend as we do that. That being said, with stability in home prices beginning to show up all over Florida and in fact some increasing markets, the market out there looks to be for early stage foreclosures with some of the buyers out there in the marketplace which is an interesting comment I believe upon expectations for house prices within the Florida market.

Just to add on, the action we took has to do with nonperforming loans that are in the process of foreclosure. Meredith Whitney – Meredith Whitney Advisory Group: I am not [sure] I understand they have been in the process for obviously an extended period of time right?

These were primarily early stage foreclosures that we sold. Meredith Whitney – Meredith Whitney Advisory Group: So what happens if more people go to market because anecdotally you heard this quarter more people in Florida are actually moving properties on the market and there is the supply jam that disrupts pricing. Did you then sort of halt that process or suspend that process to wait for a better time? How does that work?

One of the reasons we were anxious to do it this quarter is we saw some real stability between supply and demand in the marketplace at the current time. People looked at it and there was demand for purchase of a product. We will continue to be evaluating what is going on in the market. What we don’t want to do is over a longer period of time is impair the value of these loans to our shareholders by simply dumping them out in the marketplace. Meredith Whitney – Meredith Whitney Advisory Group: Could you comment on the growth in your mortgage portfolio? Do you expect your mortgage originations to be in line with the industry this year? Also the growth in your credit card portfolio which has been nice relative to the rest of the market.

I am sorry, we have to move onto the next caller please.

The next question comes from the line of Ed Najarian – ISI Group. Ed Najarian – ISI Group : A quick question for Jim I guess. In your opening remarks you talked about the repayment of TARP at the appropriate time. Could you give us any sense of when the appropriate time is in your mind?

I have talked about this for months and months and I will repeat what I have said if that is useful to you. I am not sure it should be but it is. The reality is we are very sensitive about the dilution that might be required, and I say might because I don’t know, were we to repay TARP say now for example. What we are trying to do is to balance our devotion to our existing shareholders and the dilutive effect that might occur with potential increases in stock price or reduced requirements or whatever. What we are doing is we are running a balancing act here we think is benefiting everybody and certainly has so far. Ed Najarian – ISI Group : So your sense would be you are waiting for your stock price to be higher, therefore your potential shares you would issue would be less diluted?

What I said specifically was we are trying to balance our inherent disinclination to further dilute our shareholders with the need to and obviously our core capability of having liquidity and what not to repay TARP. That is all I am going to say about it. I think that is pretty clear. If it isn’t clear call Steve up and we will say it again I guess. Ed Najarian – ISI Group : I will use my one follow-up to…

You have had it Ed. Over. Ed Najarian – ISI Group : What is that?

You have had your follow-up. It is over.

The next question comes from the line of Brian Foran - Goldman Sachs.

Is the CD repricing tailwind over with the total CD book now around $25 billion and at 2% cost or is that still a modest benefit going forward? Two, I apologize if I missed if but could you remind us of the Florida home price assumption embedded in all of your credit commentary?

I think your presumption on the CD repricing the big benefit is basically over where we had some things that were at a poor [handle] have sort of rolled off. Now it is more of an incremental view that we are working around the edges. The runoff in CDs now is at a more normalized level than it was previously.

The house prices, we used as a base for our forecast Case-Shiller indices and are running off of those. Our experience however with the Case-Shiller data over the past several quarters has been the expectation is for the actual declines have been less than what Case-Shiller has been done but we are using the Case-Shiller indices as the foundation for our forecast.

With that thank you all for joining us.

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