Welcome to the SunTrust First Quarter 2011 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Kris Dickson, Director of Investor Relations. You may begin.

Thanks, Lindy, and good morning, everyone. Welcome to SunTrust's First Quarter Earnings Conference Call. Thanks for joining us today. In addition to the press release, we've also provided a presentation that covers the topics we plan to address during our call today. The press release presentation and detailed financial schedule 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; Bill Rogers; Mark Chancy and Tom Freeman. Jim will start the call with some opening remarks. Bill will then comment on TARP redemption and provide an overview of the quarter. Mark will discuss financial performance and review asset quality, and Bill will wrap up with operational highlights from our businesses. At the conclusion of the formal remarks, we'll open up 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 uncertainties, 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. 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 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 webcasts are located on our website. And with that, I'll turn it over to Jim.

Thanks, Kris. I think it's important to comment on the CEO leadership change that was announced this morning along with the earnings release. As you know, there is a tradition at SunTrust that CEOs retire by their 65th birthday, and for me, that's May 2011. As you also know, SunTrust and its board were on a robust succession management and development process, and that process has been in place and operative for some time for this particular succession. Bill Rogers is a deeply experienced banker and leader and has created great value for SunTrust over his long career. He's been the driving force behind our play to win growth and operating strategy that has helped drive the improvement in our performance in recent quarters. He has my respect as a leader and as a person, so not only due to the calendar, but also due to the fact that the financial services industry is now in the midst of a meaningful inflection point, we believe it's the appropriate time for this change. This point in time is also a particularly good one for the invigorated leadership team we've assembled over the past several years to guide SunTrust through the difficult economic, regulatory and political environments. As those environments continue through a period of radical and uncertain change, Bill and the team are well-positioned to ensure that SunTrust will compete and will win. I'm very proud of what has been accomplished at SunTrust broadly and in recent years. And I'm also very proud of the leadership team that is now in place, and I'm confident of what I know they will achieve. With that, I'll turn it over to Bill.

Jim, thank you. As anyone would imagine, I feel very fortunate to be in the position I find myself in today. I joined this company almost 31 years ago as a management trainee. I've seen virtually every area of the company and worked with and for some great leaders. I'm very excited about the opportunity and what our company can do in the future. After all, we've got a great brand, the best footprint in banking, the best-in-class client service, positive momentum in key areas and teammates focused on winning. And as Jim said, our key senior leadership team has never been stronger or more focused. Now at the same time, I'm also very proud of how our company has responded to the adversity of the recent past, and particularly, Jim, under your leadership. Thank you for your support. Thank you for leading by example. The impact of your contributions to this company over 43 years will be felt for a very long time to come. I also appreciate the courage, patience and strength of character you've shown and at possibly no time greater than you demonstrated during what I'll refer to as the TARP era, and leading up to our recent repurchase of government shares. So thank you. Now before we get into the financial results, I'd like to spend a moment on Slide 3 discussing our redemption TARP shares, which occurred at the end of the quarter. In mid-March, upon the completion of the Federal Reserve's review of our capital plan, submitted in connection with the CCAR, we took actions to facilitate the redemption of TARP shares. First, we conducted a successful $1 billion common stock offering. It was well received by the market, as evidenced by the pricing and oversubscription. Further, it had a follow to offer…

Thanks, Bill, and good morning, everybody. I'll begin my comments today with a high-level review of the income statement on Slide 6. As Bill noted, we posted net income to common shareholders of $38 million or $0.08 per share for the quarter. These results included a $74 million or approximately $0.14 per share noncash charge in conjunction with TARP redemption, which relates to the write-off of the unamortized discount on the TARP preferred shares. Adjusted for this charge, EPS was $0.22, which was relatively stable compared to the $0.23 reported in the fourth quarter. These results were driven by a lower loan loss provision and lower noninterest expenses in the quarter, offsetting a decline in fee income. All of which are consistent with the expectations that we outlined for you last month. Results in the current quarter compare very favorably to the prior year, driven by higher net interest income, a lower provision and higher fee income. I'll provide additional detail on our performance on subsequent slides, so let's turn to Page 7 and begin with the review of our loan balances. Now before discussing the trends in the loan balances, I'll first orient you with our loan segments, which were introduced in our 10-K in conjunction with new accounting guidance for the industry around disclosures of loan portfolios credit quality. Loans are now reported in three segments: Commercial, Residential and Consumer, and the bar chart on this page reflects these categorizations. You'll also find more granular detail about our sub-portfolios, also called Classes, as you review the balance sheet tables contained within our press release. The classes in our largest segment, which is Commercial, include CNI, Commercial Real Estate and Commercial Construction. I will point out that Commercial Real Estate reflects the income producing loans, while the owner occupied…

Okay. Thanks, Mark. And before we open the call up for Q&A, I'm going to spend a few minutes highlighting a selection of recent accomplishments. I want to share with you how we're aligning the company to deliver improved performance, as well as some of the progress that we've made today. Now as you'll recall from a number of our prior presentations, our three guiding principles for operating and growing our company are centered around one team, client first and focus on profitable growth. It's a pretty simple formula, but its results are powerful when executed correctly. One team can be exemplified by engaged teammates who are more passionate about their jobs. They understand the company's mission and their role in its application, and they provide better service to their clients. Well-served clients are more loyal, they're less likely to attrite and they offer a greater a share of their wallet, and, finally, they are a great source of referrals. And when all that occurs, we make more money for our shareholders. By focusing on these three core tenets, we're confident we can markedly move the needle on core performance. And today we've chosen to highlight a few key accomplishments in each of those areas. First and, we believe, foundational to our success in the other two areas, is our ability to work as one team. And we measure this very intently, and we're realizing positive improvements in virtually every area. We're listening to our teammates, and we're making the necessary changes to improve the experience of working for SunTrust. An engaged teammate, we believe, is a competitive advantage. One team also means working to ensure the entire bank has delivered to our clients seamlessly. Our improved cross-selling efforts and client penetration are testaments to our progress here. One example…

Thanks, Bill. Operator, we're now ready to begin the Q&A portion of the call. I'd like to ask the participants to please limit themselves to 1 primary question and 1 follow-up.

[Operator Instructions] Our first question today is from John Pancari from Evercore Partners.

You talked about your, the servicing, the MSR valuation, you mentioned that your assumption that costs related to servicing remain elevated -- are your assumptions for the MSR. So can you give us any help in trying to quantify what you mean by elevated and how the current assumption compares to the costs previously?

John, it's Bill. Let me just start with the presumption, and you've seen in our numbers, and we've been investing steadily in both people and technology related to the mortgage challenges for the past two years. So while we might see some modest increase in expenses from the consent order, I mean, I think we're still evaluating that full impact, and I think the cost of what we've been doing is included in that analysis. And you also have to consider the composition and performance of our portfolio and how it might differentiate from others. Did I get at it?

Yes, you did; that's helpful. The third-party review of your foreclosures process as required under the consent order, has that begun yet?

If you go over the order there -- it's Tom Freeman. Yes, it has begun. We have people in place. The evaluation is to go over right now how it's going to be conducted to make sure it's going to be done in conformance with what the authorities are looking for, but it's underway.

Our next question is from Matt O'Connor with Deutsche Bank.

I was wondering if you could talk a little bit about the loan pricing that you're seeing in Commercial? I've noticed that not only have you had pretty good growth but the yields are holding up. So I'm wondering both what kind of pricing are you getting and then what kind of impact from swaps might be in that average yield?

Okay. Matt, I'll take the first part of that; maybe I'll switch it to Mark to take the second part of that. We've had an intense focus, as you well know, on both the asset and liability pricing. We've put a great deal of discipline into the system, and we have been pleased that we've held up. I mean, we looked intently at how we're doing, not only relative to last quarter, but also relative to industry benchmarks. All that being said, and we're pleased with where we are, that's not to dismiss that there's a lot of price competition out there right now, and it's intense, and we're all focused on adding assets to the balance sheet. So while we've held up, we're in a pretty good headwind on pricing spread. And Mark, I'll turn it over to you if you want to talk about the swap.

Yes. Matt, we've had a good benefit, as you know, over the last several quarters from the Commercial Loans swaps. They still have about three years duration left, and the quarterly benefit is around $150 million. So I think as we move forward, you'll have a view on interest rates, if rates continue to stay low on the short end of the curve, we will continue to get a benefit for a period of time. That's certainly benefiting our overall commercial yields. We also did some securities portfolio repositioning in connection with the TARP repayment process during the quarter that also augmented our earning asset yields in the quarter.

And then Mark, just a follow-up question on the liability side. You've obviously have had this good remixing of your funding base, growing deposits, running off some of the long-term debt. Outside the debt issuance to repay TARP, do you think you can work down the long-term debt further from here?

Yes, we have made a lot of steps here in the last couple of years in reducing our long-term debt, and it benefited dramatically, frankly, from the strong growth and improvement in market share in the deposits. We do have some additional room to go in terms of the liability management. There are also the trust preferreds that we will be evaluating as we move forward during the course of the year, depending upon the final capital rules that are proposed by the Federal Reserve, and so that's another area that we will be evaluating during 2011.

Okay. And I'm probably trying to squeeze in a third question, but it's a little bit related. I guess some banks swap out their long-term debt. It seems like you've chosen to put it more on the asset side because it doesn't look like you've swapped out the long-term debt. Is that -- is there a lot...

Let me say it this way, Matt: As of the end of the quarter, that's correct. We issued on a fixed rate basis. We will evaluate in the context of our overall balance sheet management and our asset liability management strategy whether or not to swap that issuance to floating rate and/or other similar actions.

Thank you. Our next question is from Todd Hagerman with Sterne Agee. Todd Hagerman - Sterne Agee & Leach Inc.: Just a question on the credit side. Mark and Tom, you've been talking now for several quarters about, just as we think about the outlook for charge-offs, more flattish, if you will, in Q2. But the question relates to, with $120 million in basically reserve release this quarter, the commercial past dues are basically half of what they were a year ago. The mortgage side is becoming more stable. So how should we kind of think about -- two parts: One, your assumption in terms of the ongoing kind of loss severity and your assumptions built into the reserves there on the mortgage side; and just ongoing reserve release given kind of the stabilization that we're now starting to see in the mortgage and kind of that flat outlook for charge-offs.

It's Tom. The indication -- I think of what's going on, I think you have to go back and go back through the chain again, and the chain starts with early stage delinquencies continuing to come down within early stage delinquencies coming down with the lag effect. I think that, that has implications for charge-offs later in the year and early next year in terms of a continued improvement in charge-off activity. And I think we're going to continue to work through, although it's hard work working through getting down our nonperforming loans. I think we're seeing a recurring downward trend in those activities as asset quality continues to improve, our need for reserves mitigates. Todd Hagerman - Sterne Agee & Leach Inc.: So if I hear you're right, there may be still more release to come on the reserve side, perhaps more so on as it ties to commercial. But we may not see a more tangible benefit until maybe later in the year or early next year, just based on where the delinquencies are trending?

This is Mark Chancy. We're at about a 2.5% reserve ratio versus about a 2% charge-off ratio in Q1. We had a pretty nice takedown, 8% sequential decline in net charge-offs, as you saw, and that was certainly a rationale for us, along with the delinquencies as Tom mentioned and the reduction in nonperforming loans. You'll see a reduction of about a similar magnitude that you've seen in the last couple of quarters in terms of the reserve. We're not providing any specific forward-looking guidance, but we are guiding you down on non-performers and relatively stable net charge-offs, at least in the second quarter, as we continue to have some higher levels of commercial real estate, which we have guided you to in the past couple of quarters. And as Tom mentioned, we see the further improvement in charge-offs in the consumer portfolio that correlates to the delinquency trends.

Our next question is from Gerard Cassidy with RBC.

Sticking with the nonperforming asset questions, do you guys have the inflow number that you report on your line 9? If you look at it, the last three quarters, the inflows of new nonaccruals have been running at about $1.2 billion. And tied to that, did your classified loans decline this quarter relative to the fourth quarter of last year?

Oh, classifieds came down nicely during the quarter, and we're continuing to see a path of slowing inflows in almost all of the loan categories into nonperformance.

On the classified decline, was that 5%, 10%?

I'm trying to think how to answer that. Classified declined; we don't report separately, I think.

Yes. Gerard, that'll come out... [indiscernible]

It'll come out more of queue 9, right now, if you could wait a couple of -- a few days.

Okay. And then on the net interest margin, if you assume that the fed funds rate stays around 25 basis points through the year-end and the yield curve is essentially where we are today, what would be the main driver of keeping it where it is? Will it be more the management using different derivatives or is it going to come from better loan growth, what should we focus on to see what this net interest margin could look like over the next nine months, assuming rates stay low and loan demand doesn't pick up dramatically?

As I mentioned earlier, we've been getting a significant amount of improvement in the margin that's come from the deposit mix that continues to be favorable in terms of growth at the low-cost accounts like DDA and money market. That's been a real driver for us in the past year, particularly when you look year-over-year, where those lower costs deposit categories have grown double digits while time deposits have shrunk. And the repayment of the debt, as we talked about a few minutes ago. We have some additional liability management strategies that we can employ that will continue to support and/or augment the margin. But one of the things that we've said consistently in the past year is, as the economy improves, we are expecting commercial deposits to decline somewhat as loan growth accelerates. So far, that hasn't happened at the pace because the economic environment hasn't picked up to the level that we had all hoped. And so at this point, we're continuing to benefit significantly from the higher level of deposits. As the curve has steepened, so new CDs become a little bit more expensive and so we're going to evaluate that in the context of the continued growth strategy that we have in growing core households. So all that mixed together, we've given you guidance that we think is relatively stable in the near-term.

Yes, and I'll just add onto that, we're continuing to maybe surprise ourselves by the ability on the liability side to continue to wring a couple of basis points with a variety of different strategies, as Mark elaborated. And then we'll have to see on what happens on the asset growth side. I mean, I think we've got some good signs in a couple of key areas related to asset growth, but that'll clearly be dependent upon some continued and improved economic recovery during the latter part of the year.

Thank you. Our next question is from Marty Mosby with Guggenheim.

I wanted to ask you about the restructuring. We moved a little more than $5 billion of treasuries over to agencies. What was the pickup in yield, and what kind of duration did you put that into?

Marty, this is Aleem Gillani, the treasurer. We picked up about 30 basis points in excess yield on those, and we put those -- we put the new funds into a mix of agency bullets and into MBS. Average duration of the new funds would be on the order of about 4 years.

And was that pretty consistent with the treasuries that you were coming out of? So did you shift any of your positioning at all?

The last set of treasuries that we were in just before we sold them off in order to repay the TARP were 5-year treasuries.

Yes, our overall buck [ph] securities portfolio duration is still around low 3, 3.3 years. But not a significant shift. We do have a view that interest rates on the short end are going to continue to stay relatively low through the end of the year given the continued weakness, particularly in the housing markets. And we have the balance sheet postured with that view in mind.

Okay. And excess cash on the balance sheet seems to be or may be around $2 billion. Is that a decent approximation?

A little higher than that, it's in terms of the amount at quarter end. We've been fluctuating in and out of basically $2 billion to $4 billion of excess cash.

Thank you. Our next question is from Ken Usdin with Jefferies. Kenneth Usdin - Jefferies & Company, Inc.: Just to extend on Gerard's question. Mark, to your point about currently getting a nice benefit in the NIM from the swap position, and that would continue as long as rates remain low, can you just walk us through and remind us what happens when rates start to move higher? Do you expect you can keep the margin just kind of flattened as those two things trade off? Higher rates, but then the swap income comes down?

Yes, let me just comment. When we do our asset and liability simulation analysis, we are basically neutral to a rising rate scenario, whether you shock it and/or you do a gradual ramp of rates. And so what I was trying to say is, as it relates to the commercial loan swap position, if rates continue to stay low, we get the full benefit of the differential between that received fixed payment and the floating payment that we made and we're getting a significant amount of net interest income coming off of those, that swap, which, the last number I have in my head is around $16 billion in aggregate notional. So on a go-forward basis, as rates rise, we are in a relatively neutral posture overall as a company. Kenneth Usdin - Jefferies & Company, Inc.: Okay, so the delta to rates would then really be just your ability to grow loans and keep deposit costs low?

Yes. Kenneth Usdin - Jefferies & Company, Inc.: Okay. And my second question is just on the loan portfolio, I heard clearly where you're expecting to see growth over time, and I'm just wondering, as far as some of the portfolios that are just continuing to shrink or in kind of net runoff mode, at what points could you expect to see whether it's the CRE portfolio, the Home Equity portfolio, Commercial and Construction? Any signs that those portfolios get close to bottoming at some point this year, or is it just going to be a continuously kind of downward trail?

I think, clearly, for this year, we're on a continual decline because, as you might imagine, there's not a lot of opportunity to replace those assets and we're on a $1 billion a quarter kind of trail from last quarter, and we don't have that kind of good asset opportunity in those categories. Kenneth Usdin - Jefferies & Company, Inc.: And then my last final follow up on that is just then, how are you approaching just the CRE market generally speaking from the terms of a capacity to look for opportunities when they come? And also, what pockets, if any, do you expect to see improvement? Are there any signals at all whatsoever?

Yes, there are a few, and we're clearly being selective. We're working with long-standing clients. We look at our heat map, so to speak, of our franchise and where we see opportunities. And you, as you might imagine, multifamily would be one of those examples where you see some opportunities in select markets that will follow our clients. There are some industrial opportunity in some markets. Again, we'll follow our clients into well-structured deals. So selective, in the market with our clients around specific asset classes and specific markets.

Thank you. Our next question is from Christopher Marinac with FIG partners.

I had a question on the mortgage prepurchases back on Slide 12. Is there any, I guess, background on the small increase we've seen from 2011 vintage?

2011 vintage? It's coming off of a very small base, so when you look at it that way, there's nothing of any significance there, Chris.

Okay, very well. And just a question for Tom, is there anything geographically you're seeing on classifieds? Will they be following across the board by region as well?

It goes into the spread of asset classes that we're in. The C&I stuff just continues to improve, I think across the board in all of our geographies. And the commercial real estate, because of our concentration in Florida, I think is most affected, both residentially and commercially, by continued weakness in the Florida market place.

Thank you. Our next question is from Kevin Fitzsimmons with Sandler O'Neill.

Bill, I was wondering if you could give us your sense on how you look at expansion through M&A? I know SunTrust has been through, is back to profitability now. You've paid back the TARP. I know there's a lot of work to do internally, and you often refer to the franchise strength. But just trying to gauge -- there's been a lot of discussion about consolidation in the space, at the same time, new organic growth just really doesn't seem to be that abundant. Is that something you have an appetite for, or below a certain size is it just not worth the effort, if you can just elaborate on that?

Yes, I think we've been sort of fairly consistent on that front. I mean, we've looked at opportunities. I mean, we're skilled in the process, and what you've seen from us in the past other than maybe a few small acquisitions in the Wealth and Investment Management area, we haven't found anything that was particularly attractive or accretive to the franchise. I think going forward, we would still be primarily an end-market type look and things that round out our franchise in areas where we have opportunity. But it would have to be geographically accretive to what we're trying to do and financially a smart deal. And in your question, I mean, some of the small things we've seen today just don't really fit into that category.

Thank you. Our final question today is from Jefferson Harralson with KBW. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc.: I want to ask you about the quarter-to-quarter movement and that mortgage production revenue line item, and particularly the game piece of it. It does seem like that decrease was more than what we've seen from other banks. I'm just wondering if you can just talk about that quarter-to-quarter move and kind of what we can expect going forward or how we should think about it going forward.

Let me take a first shot at it. We were down 34% in closed loans, applications down about 16% and the gain on sale margin was tightened. I don't -- it would be confusing to me that we would be any particularly different from anybody else as it relates to that. Now all that being said, starting 18-months-plus ago, I mean, we're tight on credit, so we're maintaining to maybe in some quarter or not, maybe giving up a little market share to ensure that we've really got a tightness around the quality of the assets. On a go-forward basis, clearly, refinances is waning. It's about 40% of the volume in the quarter and has been going down pretty substantially. March was a little better month on the purchase side. We're starting to see some uptick in early application volume, and we'll have to see what happens on the purchase side going forward. I mean, it'll clearly be a purchase-driven market for the rest of this year.

And Jefferson, to your question also, you got to remember that the repurchase costs are a net against net production income, and we had about an $80 million addition to the reserve or impact to the income statement down from the last couple of quarters in that $85 million to $95 million range, but we've been hovering in that level. As that works itself through, that will be a reduction of a headwind, if you will, to net mortgage production income that we'll be able to post. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc.: And one follow up on the mortgage repurchase request. It would seem like that the requests are coming in sequentially, and we felt like they were getting closer to the end because we were doing more 2008, 2009 possibly requests. And what I hear you saying is that the '07 vintage requests have increased, is, was the feeling of sequentiality, if you will, incorrect, or do you think the sequential piece of it is out the window or is still kind of happening sequentially? Or just how should we think about the increase in the '07 vintage?

Yes, I mean, the bottom line is that we continue to have some variability on a quarter-over-quarter basis, particularly with one of the agencies as it relates to their processes and then what we should expect in terms of file requests, and ultimately, repurchase requests. I think what you can take from our reserving process is that while we did have a slight uptick in the reserve that correlated to the higher repurchase demands during the quarter, that at a high level, we are tracking, and based on the delinquency levels that we see and the expected burnout in some of those higher request vintages of '06 and '07, that we should continue to see improvement as we work ourselves throughout 2011 with repurchase requests. We made a statement earlier that we expected the net impact of the income statement to be down relative to 2010. And, but we're going to have some variability on a quarter-over-quarter basis.

Very good. Everybody, this concludes our call for the day. I want to thank you for joining us, and please feel free to contact the Investor Relations department if you have any other questions.

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