Steve Shriner - Director, IR Jim Wells - CEO Mark Chancy - CFO Tom Freeman - Chief Risk and Credit Officer Eugene Kirby - Retail Lines of Business

Matthew O'Connor - UBS Mike Mayo - Deutsche Bank Nancy Bush - NAB Research Scott Valentin - FBR Capital Markets

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

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

Good morning, everyone. Glad you're with us this morning. There are few items that I would like to review with you that are captured on Slide 3 of the presentation deck. I will begin with a topic that I know is top of mind for everyone on the call, capital. At SunTrust, our Tier 1 capital level improved substantially as a result of the completion of the Coca-Cola stock transactions during the second quarter and in July. Tier 1 capital came in at an estimated 7.47% up 24 basis points from March 31. Portion of the Coca-Cola stock transactions were completed in July after our June 30th quarter end. If you apply the full benefit of the Coca-Cola stock transactions in aggregate, the resulting pro forma Tier 1 ratio was approximately 7.95%. Based on what we see today, we believe this position us appropriately for the future. Mark will provide greater detail on each of the three Coke transactions including their financial impact momentarily. Now moving on to another topic of considerable interest; credit. Our overall asset quality continued to deteriorate during the second quarter. Net charge-offs increased 9% from the first quarter of 2008 $323 million, and non-performing assets increased approximately 800 million or 35%. There were, however, some slightly more positive notes. Early stage delinquencies have remained stable in the 1.5% range for the last six months, and the additional provision expense required to increase the reserve declined by half. So, overall the credit message is mixed. Increased charge-offs and non-performing assets on one hand, point to higher losses of the short run. On the other hand, stable early stage delinquency and slower growth in reserve may suggest and result in a pace of deterioration that is slowing. In the very short run, charge-offs will grow and Tom Freeman is going to provide more detail later in the call. Visibility into the fourth quarter and beyond is limited. This is particularly true for non-real estate based consumer and commercial credit quality, as the outcome is fundamentally a macroeconomic question, and the outlook for 2009 is quite uncertain at this point. Based on what we know today, we believe the actions we have taken to manage risk, increase the reserve, bolster capital, and to improve core earnings will be sufficient to see us through the better times. Moving on to core earnings, specifically revenue as expected in the current market, core revenue generation was little soft. The softness was most apparent as volume decreased and affected mortgage revenues. However, there were a number of positives this quarter including a six basis point increase in the net interest margins, driven by deposit pricing changes and a shift in mix to lower cost categories. Steady growth also continued in a number of fee-related categories including service charges on deposits and card-related fees. On the expense side, we continue to tightly manage our core expenses. Growth over last year is in the low single digits after adjusting for non-core items despite credit related non- interest expenses more than doubling. Given the solid capital position and progress on core earnings I've just outlined, I'd like to reiterate that we do not anticipate modifying our current dividend at this time. While we recognized that the pay out is currently high relative to both our earnings and the long term goal of returning 60-80% of earnings to shareholders, we view the current earnings pressure is of shorter term and our dividend policy is longer term in nature. Of course, we will monitor all of these subjects closely but that's our intention based on what we know today. Before turning it over to Mark, I'll conclude by saying that we are acutely aware of the environment in which we're operating, and the uncertainty surrounding our industry and the economy. The operating environment certainly continues to be challenging and that being said, we remain committed to our existing business strategies and dedicated to executing initiatives related to deposits, to expenses and to managing risk. Our associates remain intensely focused on serving our clients and growing their business. Their efforts are driving tangible results that are positioning SunTrust for improved financial performance on the other side of this cycle. Now, let's turn it over to Mark. Mark?

Thanks, Jim. I'll begin my comments today starting on slide four of the earnings presentation. I'm very pleased to report that we completed certain transactions related to our holdings of common stock of the Coca-Cola Company, and we received approval from the Federal Reserve to treat one of those transactions as Tier 1 capital. As a result, our Tier 1 capital ratio as of June 30th is estimated to be 7.47%, and including the benefit as Jim mentioned of these transactions that were completed in July, our pro forma June 30th Tier 1 ratio is 7.95%. These transactions reflect the completion of a thorough review of our longstanding Coke holdings, and they accomplish the goals and objectives that we set out at the outside of this outset of this process. I'll review each aspect of the transactions in detail in a moment. Given the uncertain outlook for macroeconomic conditions in general, and credit quality in particular, we believe maintaining a Tier 1 ratio in excess of our previously stated target of 7.5% is certainly prudent. In addition, we have approximately $500 million of capacity to issue additional Tier 1 qualified perpetual preferred securities, and if the capital markets improve, we may take the opportunity to further improve our capital position. I want to be very clear on this point. Given our current pro forma Tier 1 capital level of approximately 8%, our outlook does not suggest we need additional capital; however, uncertainty around the future environment suggest that a little additional regulatory capital on a cost effective basis would be a positive. In addition to the strong Tier 1 capital position, our other capital ratios remained very healthy at the end of the quarter. Specifically, our total capital ratio was 10.97%, and tangible equity to tangible assets was 6.21%, when you look at the numbers on a pro forma basis. Now, unrelated to the slide in the presentation, the topical in today's environment is our current liquidity position. As a result of the balance sheet restructuring in the first half of 2007, which resulted in a de-leveraging of our balance sheet by approximately $9 billion, SunTrust entered the market turmoil in the second half of last year in a very strong liquidity position. That position continues at quarter end at both the bank and the holding company. In fact, year-over-year, short-term brokered and foreign deposits were down $8.9 billion or 37%. Typically, on total assets of nearly $180 billion, we are borrowing only $6 billion to $8 billion overnight from wholesale sources. We have $9.9 billion of excess collateral at the home loan bank, $14.7 billion of collateral pledged at the federal discount window, and $8.1 billion of free investment securities. As a result, we are currently very comfortable with our liquidity position. Now, moving on to slide five and the details of the Coke transaction that I know that you're interested in. Subsequent to our second quarter 2007 sale of 4.5 million shares, approximately 43.6 million shares of Coke remain. We now have completed three separate and distinct transactions encompassing all of these shares. At a high level, the three transactions consisted of the out right sale of 10 million shares, a Tier 1 transaction involving 30 million shares, and the contribution of the remaining 3.6 million shares to a SunTrust charitable foundation. Transactions were split in this manner to accomplish a number of objectives, including regulatory capital formation, tax efficiency, expense efficiency, and the retention of both dividend income and Coke stock price appreciation potential on the majority of the shares. Sale of 10 million shares generated an after-tax gain of $345 million, an incremental Tier 1 capital of 20 basis points that is included in our estimated Tier 1 ratio at the end of the quarter. This transaction maximized the current period capital contribution of the shares, but was the least tax efficient as it created a current tax liability. The Tier 1 transaction involving 30 million shares provided $1.2 billion in cash, and $728 million in Tier 1 capital or an incremental estimated 44 basis points. This transaction was completed in July, and better enhances shareholder value versus an out right sale due to the deferral of taxes, price appreciation potential and dividend retention. I'll cover this transaction in more detail on the next slide. Charitable contribution of 3.6 million shares will provide a net income benefit in the third quarter of approximately $69 million or $.20 per share through the release of the entire deferred tax liability associated with these shares. This transaction is clearly the most tax efficient of the three, and additional benefits include a small capital impact via the increase in earnings, and our future ability to maintain community support while reducing the income statement impact of our ongoing charitable contributions by roughly $10 million annually. So, now let's move on to slide 6 and I'll give you a little bit more detail on the Tier 1 transaction. This is roughly a seven year duration transaction providing $728 million in Tier 1 capital as I mentioned, and $1.2 billion in cash. Appreciation potential on the 30 million shares and retention of tax favored dividends over the life of the transaction. Tier 1 capital is generated in the following way: The floor price of the shares is approximately $39 million, and this price times 30 million shares equals to $1.2 billion and unrestricted cash proceeds that SunTrust received in exchange for a note issued by us to the transaction counterparty. Federal Reserve has reviewed and ultimately granted us permission to include the after-tax value of the $1.2 billion floor value as Tier 1 capital. This amount is the $728 million that I have referenced, and the 44 basis points of Tier 1 capital. The transaction also includes derivative contracts, which create the approximately $39 per share floor price I just mentioned, and an approximately $66 per share ceiling price. During the life of the transaction, SunTrust will continue to classify the shares as available for sale, and will account for the derivative contracts as cash flow hedges. The net change in value of both the derivatives and the 30 million Coke shares will generally flow through other comprehensive income or OCI on a quarterly basis. While the derivatives have been created to hedge the value of the Coke shares and thus mitigate the net change in value that will flow through OCI, we do expect some hedge in effectiveness. This transaction will conclude in approximately seven years. At that time, the derivatives will unwind. In connection with the settlement of the Ford agreement, SunTrust may deliver shares at a value between the floor and the cap. The gain and associated tax liability will be recognized upon the ultimate disposition of the shares, and we expect that all of the shares will ultimately be sold. Now there are many benefits to this transaction, while we could have generated some incremental capital from an out right sale, we carefully considered the benefits of price appreciation, tax deferral and tax-favored dividend income, and concluded that they significantly out weigh the small amount of additional capital that could have been generated today. While this is a little complicated, hopefully the information contained on these slides will provide sufficient clarity in conjunction with a slide included in the appendix, which details the balance sheet and income statement impacts. Now I'm going to move on to slide 7, where I'll begin our discussion of the second quarter financial results. Earnings per share in the second quarter were $1.53. This quarter’s results as you can see were impacted by a number of core as well as non-core items that I'll address in subsequent slides, but at a high level, let me give you a summary. Net interest income is down slightly versus prior periods, but up a little over 1% versus last quarter as net interest margin increased. Provision for loan losses remain cyclically high driven by residential real estate related charge-offs, and the need to build loan loss reserves; however, provision decline as compared to the first quarter as charge-offs increased less than we expected, and slowing deterioration in the portfolio necessitated a lower level of reserve building. Non-interest income was positively impacted by the sale of 10 million Coke shares, which is partially offset by $103 million write-down on our fair value debt and related hedges. Non-interest expense was negatively impacted by net non-core items as well as credit related expenses, and I'll give you details on that in just a minute. Overall, core operating income remain soft due to elevated charge-offs, reserve building, lower core mortgage-related revenue and higher credit-related expenses. So, with that as an overview, I'll briefly cover the key components of the income statement, starting with net interest margin on slide 8. Net interest margin reversed trend and increased six basis points over the first quarter. This result is better than our expectations a few months ago, but it is consistent with some of the early signs that I noted during the first quarter earnings call related to the improving deposit mix and deposit pricing. During the second quarter, we were able to reduce deposit rates while maintaining our competitive positioning. Additionally, non-interest bearing average deposits reversed trend and increased over 3% versus the first quarter and while some of this was related to anticipated tax payments; June average demand deposit balances remain roughly inline with the average for the quarter. Average loan growth compared to the first quarter excluding non-accruals was roughly 1% or 4% on an annualized basis. The source of the growth continues to be primarily commercial relationships, and this growth is offsetting the continued declines in construction and indirect auto that we also noted last quarter. Given the results I just noted, we currently expect loan and deposit trends to offset growing NPAs in support of a stable, slightly expanded margin during the second half of 2008. Now let me move on to slide 9, and I will briefly touch on provision expense as Tom Freeman will cover credit in detail in a few minutes. Total provision expense for the quarter of $448 million includes charge-offs equal to an annualized 104 basis points of loans, plus $125 million or 10 basis points added to the reserve. This resulted in provision expense declining by $112 million as compared to the first quarter. As expected and communicated during our first quarter earnings call, slowing growth and charge-offs and stable overall delinquencies required a lower level of reserve building than in the prior two quarters. You will note that the overall allowance for loan and lease losses increased to 1.46% of loans as the inclusion of GB&T, the acquisition that we recently completed also added $159 million to the reserve. Now on to slide 10, where I will provide some commentary on non-interest income. Non-interest income growth of 22% versus last year is largely driven by the gain on sale of the Coke stock in both periods, partially offset during the current quarter by a write-down of SunTrust debt carried at fair value. Excluding non-core items results in year-over-year growth of about 1%. And as expected, lower mortgage banking related income during the quarter combined with private equity gains, and an MSR sale in the second quarter of last year produced a net result on a year-over-year basis that masks steady performance in many fee categories. For example, service charges on deposits and card fees showed particularly good growth, while other categories showed steady results. The reconciliation of adjustments is included in the appendix for your reference, and I have already commented on the Coke sale gain, so I will only provide additional detail on three items impacting the current quarter. The most significant is the $103 million write-down of our fair market value debt and related hedges. Our debt spreads tightened during April and we disclosed a potential $130 million impact in our first quarter 10-Q. This result didn't change much during May; however the markets deteriorated during June as spreads widened and the write-down was reduced to the $103 million level that we are now reporting. Second item of note is the approximately $30 million gain from the closing of a previously disclosed sale of First Mercantile, a retirement plan services subsidiary acquired with National Commerce. The only other item of note is approximately $12 million in Coke derivative related costs recorded in our trading income account. While not as robust in aggregate regarding fee growth that we reported last the quarter, which was up about 13% on an adjusted basis. We are not surprised or disappointed with our overall core non-interest income growth for the quarter or for the year-to-date period. And mow moving to slide 11, which shows our progress in substantially eliminating our risk associated with the securities that we acquired during the fourth quarter of 2007, from our RidgeWorth Money Management and Three Pillars commercial financing subsidiaries. I'm very pleased to report that during the second quarter, we reduced our exposure to these high risk securities by over 50%, bringing our overall exposure to under $800 million. While this exposure is down by almost 80% since we acquired the securities, we are specifically happy to report that we disposed of over $800 million of assets during the second quarter, while recording no further write-downs. In fact, we actually recorded a small net gain after selling over $600 million in securities and receiving over $200 million in payments. We expect progress slow regarding further reductions in our exposure, but our experience during the second quarter reinforces our belief that we have appropriately written these assets down to realizable market values. And while further losses are possible, we believe that the worst is clearly behind us relative to these securities. Now on a related note, we have received a number of inquiries about our exposure to Fannie Mae and Freddie Mac. The answer to that question is that we have no holdings of equity or preferred securities, and only roughly $10 million in senior debt. We do have approximately $10 billion of highly rated mortgage-backed securities issued by Fannie and Freddy, which are primarily classified as available for sale. Now moving to slide 12 and non-interest expense. We remain very pleased with the results of our E-squared initiative. Although it's pretty hard to see the impact given our reported results of 10% growth, so I want to make sure to take a minute to provide as much clarity as I can here. The list of non-core items this quarter is relatively short. We recorded a $45 million charge related to a customer intangible valued in 2004 in connection with an acquisition. The overall business is performing well; however the intangible write-down relates to clients present at the time of the acquisition, who are no longer customers. The other significant item relates to the elimination in the second quarter of 2007 of the FAS 91 expense deferrals related to mortgage production costs. But if you exclude these non-core items that are detailed in the appendix, our core expense growth was roughly 3% both year-over-year and sequential quarter. While 3% growth in core expense is not a bad result, it’s much higher than it would have been as the cyclically high cost of credit are masking the fundamental progress we've achieved in creating an organization that is sustainably more efficient. As noted on the slide, expenses would have decreased by $30 million if not for the change in the credit environment. This would equate to an expense decline of over 2%. A one item we have included in credit costs this quarter warrants some additional discussion. We recorded a $25 million expense increased the insurance reserve of our mortgage reinsurance subsidiary, Twin Rivers. Our current expectation is that mortgage defaults will continue at current or perhaps higher levels, and additional reserve increases will be required in the future. While difficult to predict for any certainty at this time, our current view is that the probable range of reserve increases during the second half of 2008 is $25 million to $50 million quarterly; however, we believe our total exposure over time is less than $200 million and the ultimate amount, and timing of recognition is uncertain. The non-interest expense is associated with the credit environment are clearly core expenses; however the point is that these cyclically high expenses will recede as the cycle turns, and we will be well positioned to produce positive operating leverage and earnings on the other side of the cycle. Now turning to slide 13, I will conclude with a few comments on our efficiency and productivity initiatives. E-squared savings for the second quarter were $135 million, up from $113 million in the first quarter. This level of savings annualizes to more than our 2008 goal of $500 million. Now rest assured that even though we are confident we will meet or exceed our 2008 goal, we continue to look for every opportunity to increase efficiency and savings. We are committed to producing ongoing and sustainable savings that will result in a more efficient organization, and one that is easier to do business with both internally and externally. With that let me turn it over to Tom to discuss our credit perspective. Tom?

Thank, Mark. This morning, I am going to provide a detailed review of our credit situation, beginning with an overview of total portfolio metrics on slide 14 of the presentation. The overall pace of deterioration in the portfolio slowed in the second quarter; however, trends differed among products and I will provide details on each in subsequent slides. Period end loan balances increased on a sequential quarter basis with over half the growth due to the GB&T acquisition, and the remainder primarily from C&I loan relationships. Charge-offs increased 9% to 104 basis points annualized, while actual charge-offs were below the 15% to 20% outlook we provided in April, which was largely due to timing. Looking ahead we expect the third quarter charge-off rate will increase by 15% to 20% over second quarter charge-offs. Overall, combined charge-offs for the second and third quarters are consistent with our expectations at the end of the first quarter. Further, nothing we see today suggests that charge-offs will increase or decrease dramatically in fourth quarter versus the second and third quarter levels. Provision expense declined in the quarter to $448 million from $560 million in the first quarter. The loan loss reserve increased to 146 basis points on total loans due to $125 million net addition to reserves, and the inclusion of GB&T reserves in our reserve position. Our reserve expectation for the third quarter is a modest increase from the current levels given the slowed deterioration in our credit statistics. Non-performing assets increased $816 million during the quarter, to $3.1 billion. Excluding GB&T’s NPAs of $170 million, the increase of this quarter of $647 million was slightly less than last quarters $665 million increase. We noted the flattening of the trend in early stage delinquency in the first quarter presentation. This pattern continued into the second quarter, and the overall portfolio's 30 to 89 day delinquency rate has now been basically flat for six months. However, it is still early in the cycle we were seeing differing trends among the portfolios with some deteriorating and some showing signs of improvement. Next I will provide an overview of product performance on slide 15. The commercial and consumer portfolios comprised 52% of our loan book, and are performing well overall. Commercial portfolio continues to perform appropriately. You should also note that we have no material exposure funded or unfunded, syndicated leverage lending transactions awaiting distribution. Within the commercial portfolio, it was a $5 billion small business segment. Second quarter annualized charge-offs in this segment were respectable 1.8%. Product category commercial real estate is our non-residential commercial real estate book. It includes both owner occupied and income producing collateral with roughly two-thirds being owner occupied properties. Performance in this is pool is holding up nicely. Consumer portfolio, which includes direct, indirect, and a small credit type portfolio is also performing reasonably well given the current environment. Charge-offs moderated in these portfolios during the second quarter, but our expectation is this portfolio will continue to show slightly higher charge-offs in the third quarter. If you turn to slide 16 in deck, I will provide you with a view of non-accrual loan composition and trends. As you can see from the bar charts, residential mortgages which include home equity lines and loans, more than half of total non-accrual loan balances of $2.6 billion. Our residential non-accruals of over $1.3 billion are significant this potential losses to be recognized it is important. We have written down most of these loans to current market value less disposition cost. While mortgage non-accruals have been increasing over the past two quarters, construction non-accruals have also risen, and currently total over $700 million. We have specific reserve on a loan-by-loan basis for the majority of the construction non-accruals. I will talk about our loss mitigation activity in the construction book a little later. The last point to make on this slide is the GB&T acquisition added $170 million to the non-accruals this quarter. Please turn to slide 17 for discussion of the real estate books. Delinquencies overall were up modestly. For Alt-A, the high risk portion of our residential mortgages, balances declined, and credit performance ratios improved, which is notable given the shrinking denominator in the calculations. Balances are declining on each sub-portfolio except the core, which is primarily composed of prime loans. Decline is most notable in the home equity loan portfolio. This declined 17% versus last quarter due to repayments on lower production. Combined Alt-A balances declined by 6% in the quarter, while combined non-accruals are relatively stable and delinquency rates declined. Delinquency for the core portfolio increased by 13 basis points; however, the overall performance of this book remains good with the portfolio continuing to perform favorably compared to external indices for prime ARM portfolios. The last thing I would like to point out is what's not on the slide. There are no sub-prime loans. There are no option ARMs or other negative amortizing loan products in our portfolio. Next, I will update you on losses recognized and loss severity in the mortgage portfolio on slide 18. Our non-accrual balances are up versus last quarter, a portion of the balances that have been written down to realizable market value has risen to approximately 75% of non-performers, up from the 64% we recorded last quarter. This is important to remember when evaluating the commonly used allowance NPL ratio. In our case, 75% of our mortgage non-accruals have been through the review and write-down process. As a reminder, we write-down based upon updated collateral valuations at 180 days past due for consumer loans, insured by residential real estate as required by the FFIEC rules. Only loans, which are well secured relative to realizable value or have private mortgage insurance do not require a write-down. The 180 days we recorded charge-off to reduce the balance to level expected, can we realized through the foreclosure process as prescribed by FFIEC. Generally the write-down approximates 85% of current estimated disposition value as compared to the loan balance. Loss severities are also illustrated on this slide by subset, and they remain at levels consistent with our expectations, given original LTVs and declining market prices for real estate. Loss severities have increased versus last quarter, but not meaningfully. The last point on this slide is, if there are $284 million in loan balances of non-accruals not yet reviewed for possible write-down. This will be the primary pool of mortgages, which will have write-downs during the third quarter, and they shrunk meaningful from the $380 million balance reported last quarter. Summarize, the residential mortgage portfolio discussion today, the portfolio experienced an uptick in delinquency, troublesome Alt-A portfolio performance appears to be stabilizing, and we have appropriately written-down majority of our mortgage NPLs. Moving to slide 19 in the home equity line of credit portfolio. Home equity lines of credit non-accruals and charge-offs continued at elevated levels in the second quarter. However, we did experience a moderation in charge-offs. We expect the third quarter charge-off level to be similar to the level in the first quarter. While we continue to enhance our collections and default management processes, and have increased staffing levels. We expect home equity lines to continue to show elevated charge-off levels, through the end of the year and into 2009. We have also implemented line reduction programs throughout our home equity portfolio, where appropriate. You will note that portfolio balances have increased quarter-over-quarter. I want to specifically point out that the growth is in our lowest risk segment, and primarily results from expected line utilization and lines originated in the 2007 vintage, under substantially more conservative underwriting guidelines. The last portfolio I am going to cover today is construction, which begins on slide 20. We previously cited the construction portfolio is an area of increasing risk and focused risk mitigation activities. We have worked on these portfolios starting in 2006. Our actions have resulted in declining exposures and outstandings. Nonetheless, charge-offs and NPLs have increased. Overall, construction balances excluding GB&T declined by 6.5% versus last quarter declines of 17% in Construction-to-Perm and 19% in raw land are particularly notable. Commercial purpose construction portfolio represents roughly one-third of the total construction portfolio, and is performing very well. On the next slide, I will focus on the higher risk Construction-to-Perm and residential construction loans, as we have been aggressively managing our risk and exposure to these subsets of the overall portfolio. Slide 21 highlights a significantly reduced level of risk resulting from aggressively managing our construction exposure. The Construction-to-Perm line availability, the difference between outstanding loan balances and total commitments is down 60% as compared to last June. Our savings were down 30% over the same time period. 20% of current outstanding balances have been originated since September of 2007 under significantly more restrictive underwriting guidelines. It’s a troublesome portions of this portfolio are down 78% in availability and 45% in outstanding over the past year. Further, we expect the Construction-to-Perm balances to continue to decline rapidly as many of the remaining loans mature during the third and fourth quarters, and clients will be moved into permanent financing products. In residential construction, availability of credit has been reduced by 35% for construction and 50% for acquisition and development over the last 12 months. Outstanding balances are down 25% and 13% respectively over the same timeframe. Importantly, over 60% of these reductions have occurred in the Florida and Atlanta markets. These portfolios have been and continue to be subject to intensive relationship and project level credit reviews to identify weakening relationships and to establish client-by-client strategies to reduce risk to SunTrust. Slide 22 contains a brief summary of key takeaways from today's credit discussion. Asset quality continues to weaken, although at a slower pace overall. The commercial real estate and consumer portfolios continue to perform well. Credit issues remain largely confined to the residential real estate segments of the portfolio, and we continue to aggressively manage this risk. Over half of our non-accruals are residential mortgages, and all the 25% of those have been reviewed and written down to realizable current market values as appropriate. We expect increasing NPLs and charge-offs in the construction portfolio through at least early 2009. We are pleased with the progress we have made in reducing our overall exposure during last year. We expect total charge-offs to increase by 15% to 20% in the third quarter over the second quarter. There is a less visibility in the fourth quarter; however at this point, we don't see anything that suggests charge-offs be dramatically higher or lower in the fourth quarter. Finally, we expect that our reserve level will continue to build modestly in the third quarter. With that, I will turn it over to Steve.

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

(Operator Instructions) Our first question is from Matthew O'Connor. You may ask your question and please state your company name. Matthew O'Connor - UBS: UBS, thank you. It seems like one of the side benefits of getting the Coke treatment into Tier 1 is that you now have some flexibility issue hybrids if the market improves. I was just wondering if that's what you're referring to, when you talked about issuing capital earlier if we do get some improvement in the capital window.

Hey, Matt, this is Mark Chancy. We have issued in the past the hybrid securities. I specifically referenced the preferred purchase securities, which is a transaction that we have done in the past, and so it's along those lines that we will evaluate the market as we move forward into the third quarter and fourth. We've been evaluating the market for the past several quarters and made the overt decision not to try to access the market given the volatility and the increasing spread, given that we knew that the Coke related transactions were imminent and we did not feel that we needed the incremental capital at this point. We decided to defer that decision to the second half of the year, with hopefully credit spreads will tighten for us in the industry. Matthew O'Connor - UBS: Okay. I mean am I wrong in that you have about $400 million of the trust preferred capacity at this point, which is obviously a lot cheaper, at least in more normal environments than the regular preferred?

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

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

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

Thank you. Mike Mayo, you may ask your question and please state your company name. Mike Mayo - Deutsche Bank: Deutsche Bank. Good morning.

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

The couple of areas where we had better than expected charge-offs is in the consumer area, our charge-offs were not, came in at less than what we expected. And in our commercial real estate area, we've had a couple of charge-offs which basically, we think will happen later this quarter rather in the third quarter rather than happened in the second quarter. Those were the two primary areas where charge-offs came in lower than expected. Mike Mayo - Deutsche Bank: So, timing issue on the commercial side, but on the consumer side, why did it come in less?

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

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

Actually, what happens is, if we significantly modify or take a write-down on the loan, in fact is a non-performer. We had, I believe, like about $130 million worth of that activity in the last quarter, so, we made modifications on those types of loans. We also, where we were able to keep those trouble debt restructures on an accruing basis, we also had about $115 million worth of them, which were non-accruals, and then we routinely do work with modification renewals and extensions against our customer base. Mike Mayo - Deutsche Bank: So, it's not that much though?

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

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

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

Okay, Mike. Thanks.

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

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

Hi, Nancy. The competitive environment has gotten intense, but we have been able to hold our pricing and specifically target each region looking at the market conditions and have been able to manage our deposit pricing very effectively, and I think that people are shopping around today. I think we're seeing a lot of activity in the branches as people are concerned about the safety and soundness of other institutions, and in fact we're seeing very strong performance in some of our branches even without matching those rates. We do have the ability on a case-by-case basis to make decisions at the local level, when it's appropriate to compete, but on a portfolio level, we've been able to see our deposit rates actually come down and the mix shift as CDs have matured and a lot of our clients have actually moved out of CDs into either money-market or NOW accounts. Nancy Bush - NAB Research: And also along the same line, I think you said last quarter that you were beginning to deemphasize or lessen the marketing on My Cause and I'm just wondering how that product is doing and what your attitude toward it is right now?

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

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

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

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

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

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

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

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

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

Okay. Thank you.

Okay. Thank you.

Okay. Thank you very much.

Thank you everyone for joining us this morning.

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