Steve Shriner – Director, Investor Relations James Wells – Chief Executive Officer Mark Chancy – Chief Financial Officer Tom Freeman – Chief Risk Officer

Matthew O'Connor – Deutsche Bank [Nancy Bush – NAB Research] [Craig Seigenthaler – Credit Suisse] Greg Ketron – Citigroup

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

Good morning. Welcome to SunTrust's second quarter earnings conference call. Thank you for joining us. In addition to the press release, we've also provided a presentation that covers the topics we plan to address during the call today. Slide 2 outlines the content which include the capital update, an overview of our financial results and an in-depth credit review. The press release presentation and detailed financial schedules are available on our website, www.suntrust.com. This information can be accessed by going to the investor relations section of the website. With me today, among other members of our executive management team, are Jim Wells, our Chief Executive Officer, Mark Chancy, our Chief Financial Officer and Tom Freeman, our Chief Risk Officer. Jim will start the call with an overview of the quarter, including details on our capital position. Mark with then discuss financial performance, and Tom will conclude with an in-depth review of asset quality. At the conclusion of the formal remarks, we'll open the session for questions. Before we get started, I need to remind you our comments today may include forward-looking statements. These statements are subject to risks and uncertainty and actual results could differ materially. We list the factors that might cause results to differ materially in our press release and SEC filings which are available on our website. Further, we do not intend to update any forward-looking statements to reflect circumstances or events that occur after the date the statements are made, and we disclaim any responsibility to do so. During the call, we'll discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release and on our website. Finally, SunTrust is not responsible for and does not edit, nor guarantee the accuracy of our earnings teleconference transcripts provided by third parties. The only authorized live webcasts are located on our website. With that, let me turn it over to Jim.

Good morning everyone. Thanks for being with us this morning. I'm going to begin on Slide 3 of the deck. Similar to last quarter, this quarter's story boils down to a few main themes, most evident obviously being we are still working through credit and earnings challenges as the weak economy continues to impact performance, yet we did see some positive trends during the quarter and preliminary signs of improvement in several areas. While we're obviously not pleased to report a loss for the quarter, we are encouraged by this quarter's results, specifically our strong deposit growth, increasing net interest margin, positive fee income growth within certain areas, strong expense management and lower early stage delinquency rates. Additionally, we further enhanced capital, improved liquidity and bolstered reserve. We have the strength and resources necessary to continue to manage through sustain economic weakness. As you know, we completed our capital actions and exceeded the government's capital requirement. I'll spend more time outlining those actions and their impact in a few moments. As I've said before, we are acutely focused here on the client, on improving service quality and front line execution, on controlling expenses and on managing risk and I believe we're doing a good job controlling what we can control and taking advantage of opportunities, the results of which are evidenced in many places in our core performance this quarter. However this positive underlying picture clearly is overshadowed by the impact of recession related pressures. We reported a loss of $0.41 per share this morning. This loss reflects cyclically high credit charges and soft revenue in certain areas. Although overall revenue remains depressed, second quarter results included increased net interest margin and capital markets revenue along with another strong quarter with mortgage related revenue. Expenses were well managed again this quarter; however, post cyclical FDIC pension and credit expenses continue to impact results, and though you've heard me say this many times before, it bears repeating because it's an important point. Expense control and vigilance is effectively engrained in this culture at SunTrust. Throughout the organization we are not only focused on managing expenses we can control, but we're also dedicated and working to uncover additional opportunities to improve efficiency and operating performance. I'm also tremendously pleased with the deposit generation progress we've made over the last several quarters. We reported another record for consumer and commercial deposits, reaching $114 billion at quarter end. While of course growth is industry wide, there are strong indications that part of the increase is SunTrust specific. This reflects favorably on the tremendous effort being put forth by our team to improve our deposit generation and retention capabilities. Overall asset quality deteriorated in the quarter as evidenced by higher charge offs and increasing non performing loan levels. Losses and risk remain largely concentrated in residential real estate secured portfolios and early stage delinquencies in those categories showed improvement. I will add that we are seeing increased strain in certain economically sensitive industries within our commercial portfolios. Tom will provide more detail later on the call. Moving to Slide 4, as you are aware, we successfully completed our capital plan initiatives, thereby complying with the new Tier One common equity rule. We generated $2.3 billion of capital, or 106% of the $2.2 billion target established by the Federal Reserve under the supervisory capital assessment program, or SCAP. Our capital raising transactions raised Tier One common by $2.1 billion which included $1.8 billion of common equity issuance. At this time, we've completed all anticipated capital initiatives and believe that additional capital cushion will be created through a combination of lower losses and higher earnings than projected in SCAP. I'll take a brief moment to comment on the common equity components of the plan before moving on. The week after the SCAP results announcements, we laid out a framework for our capital generation plans and it included an after market common stock offering as well as the potential for internal actions, and a preferred for common exchange. During the 10 days that followed the announcement, we finalized our capital plans and raised $258 million net in capital via the at the market sale of 17.7 million shares at an average price of $14.58. During this time, we obtained approval to execute a cash tender for the preferred in lieu of the tender for common previously announced, conditioned on raising the cash in advance of the tender offer. We also received significant reverse inquiry for a market equity offering. The results of both of those matters and other matters of course, we decided to shift to a market offering of $1.4 billion on June 1. The transaction was exceedingly successful as evidenced by significant over subscription, price performance and the exercise by the underwriters within days of the offering. And while we're clearly disappointed that we had to raise common equity at arguably the nadir of a recession with near record low bank stock prices, we were quite pleased with the execution overall. Moving on to Slide 5 which illustrates our significant capital position, with or without TARP, the impact of the transactions I've just outlined on our capital position and our book value per share. During the quarter, our already strong regulatory capital position was enhanced. The collective impact of our capital initiatives was a net increase in Tier One common of 152 basis points to an estimated 7.35% and a Tier One ratio estimated to be 12.25%. Overall, the share count dilution reduced our book value per share by approximately $10.00 to $36.16 and our tangible common book ratio by $4.74 to $23.41. Moving to Slide 6, we are here showing our over capitalized status today and providing a review of December 2010 that utilizes government SCAP assumptions and the supposition of TARP preferred payment. In this illustration, we start by displaying our actual June 2009 capital levels and then show the future impact on our capital positions if the full two year SCAP more adverse scenario assumed earnings and charge offs are realized and TARP is repaid fully at the end of 2009. You'll note in this example, we've taken no credit for the lower than SCAP projected losses and higher than SCAP projection earnings that we recorded for the first half of the year. The SCAP pro rata projected charge off number for the first half of 2009 was nearly $3 billion versus our actual charge offs of $1.4 billion and this illustrative example, we've added a favorable variance of nearly $1.6 billion back to the next six quarters, increasing the projection quarterly loss to more than $1.7 billion per quarter. A key point of this slide is that we can mathematically repay TARP and remain at or above well capitalized thresholds even under the SCAP more adverse scenario. Now we'll point here that given our successful capital generation, TARP preferred is now excess expensive and inefficient capital. However, the point is not that we intend or expect to repay in full by the end of this year, although we certainly would like to do that. Our current belief is that the regulators will require a capital buffer greater than displayed here before approving forward payment and we do not intend to issue further common equity purely to enable repayment. We do however, expect that lower than SCAP projection losses to create additional capital cushion and believe full repayment will be enabled and improved when it becomes more readily apparent to regulators that loss levels of SCAP projected magnitude will not be realized. Before I turn the call over to Mark, I'll conclude by reiterating that our balance of client focused execution, risk mitigation and the long term economic prospects of our markets, position us well to deliver steadily improving returns as we come out of this cycle. Our performance on the other side of this will be driven in large part by those initiatives which are centered on growing revenue, improving expense efficiency, increasing the profitability of the balance sheet, investing for the future and prudently managing credit. The SunTrust team is in the market place every day capitalizing on growth opportunities by serving existing clients well, by attracting new ones and by doing all the things that make it possible to look beyond current pressures with a reasoned and realistic sense of confidence. We are encouraged by the strong foundation we are creating and the underlying progress reflected in the first half of this year. And now I'll turn it over to Mark.

I'll begin my comments today on Slide 7 of the earnings presentation, the summary income statement. For the quarter we posted a loss to common shareholders of $164 million or $0.41 per share and a loss of $2.77 per share year to date, or $0.86 per share excluding the impact of the first quarter good will charge. Our financial results continue to be dominated by asset quality, credit and other pro cyclical expenses and to a lesser extent, soft revenue generation. While we are by no means pleased with these results, the core earnings of the organization improved in several areas versus the first quarter. For example, margin and net interest income increased. Provision expense decreased. Expenses declined and higher capital markets revenue partially offset a decline in mortgage production income. I will cover each of these areas in more detail in just a minute. There were also a number of special items in the quarter that warrant review, both pluses and minuses. I'll discuss the more significant of these during this morning's call and we have provided details in the appendix of the presentation. Now, I'll shift to Slide 8 and the balance sheet summary. Overall, average loan balances depicted on this slide declined 2% and 3% as compared to last quarter and last year respectively. Total loans as reported in the tables accompanying the press release declined roughly 1% for both periods. The difference is that non performing loans have been excluded from this slide. Our aggressive effort to reduce exposure to construction lending is evident from the 13% balance decline versus last quarter and 44% decline compared to last year. Most other loan categories display small declines primarily driven by sluggish demand from credit worth commercial and consumer borrowers. Commercial real estate is an exception as many of the completed commercial construction projects migrate out of construction and into many term loans. This migration does not concern us as it is part of the normalized cycle of such projects. We typically underwrite commercial constructions projects to our portfolio credit standards that are more stringent that historic CMBS guidelines and the majority of the migration into commercial real estate is owner occupied. While still showing year over year growth, commercial loans declined again in the second quarter. This continued the trend of declining line of credit utilization among our mid size and larger corporate clients due to improved access to capital markets and lower working capital needs. However loan balances were augmented in the first quarter by over $1 billion due to disruption in the variable rate demand note market. We believe this situation is temporary and will therefore cause some additional downward pressure on loan balances for the next two quarters. Now moving on to deposits where the opposite trend is occurring as we are very pleased as Jim mentioned with both the pace of growth and the continued improvement in deposit mix. Average consumer and commercial deposits increased 6% relative to the first quarter of 2009 and are up 12% versus the second quarter of last year. All products showed some growth the demand deposits leading the way at 8% sequential quarter growth. Now, I'm going to elaborate on quarter deposit growth on the next slide, so the final point here is that the growth in client related deposits has enabled us to further reduce brokered and foreign deposits where balances are down over $8 billion or 56% compared to the same quarter last year. Moving to Slide 9 and some detail on deposit trends, during last quarter's call we noted significant deposit growth started late in the fourth quarter and accelerated during the first quarter. You can clearly this on the slide, but the trend continued during the second quarter, albeit at a somewhat slower pace. Average monthly core deposit balances increased 6.7% from December to March and 10% from December to June with the June monthly average hitting a new record $114 billion. In particular, demand deposits have increased the most rapidly, up over 19% from December to June. Another item to note here is that due to our increased liquidity, we have allowed CD balances to decline over the past three months. We readily acknowledge that a portion of the core deposit growth is related to industry wide flight to safety, seasonality and reduced client demand for sweep accounts due to the low rate requirement. However, as mentioned last quarter, we continue to believe that we are also benefiting from a number of actions taken to improve market place awareness and client service. The Live Solid, Bank Solid branding campaign for example, continues to be very well received and we believe it is helping drive client acquisition. We also continue to refine pricing tactics to be not only competitive but also to maintain deposit rates that are attractive to our clients. As Jim mentioned in his opening remarks, we have been intensely focused on improving execution and operational excellence. We are streamlining account opening process, reducing error rates, increasing training and employing many other tactics that are improving client experience and satisfaction, and resulting in an increased client acquisition and retention rates. All that being said, deposit growth did moderate somewhat in the second quarter. As we look forward, our expectation is that growth will moderate further and possibly be flat to down as the macro economy changes. An improving economy, increasing short term interest rates and continued deposit pricing, particularly in CD pricing, will likely create a lower growth environment. However, increased core deposits, an improved overall mix and a continued focus on execution has created a solid foundation to drive margin and earnings in future periods. Now with all that said, let me take a minute to talk about margin on Slide 10. Margin reversed course this quarter, expanding 7 basis points to 2.94%. Lower deposit pricing and improved funding mix drover the expansion with increased core deposits facilitating a reduction as I mentioned a minute ago and higher cost deposits and long term debt. Our view of the risks and opportunities to margin in the third and fourth quarter is largely unchanged from last quarter. Loan and deposit pricing and deposit volume are the primary opportunities to generate additional margin expansion while the primary risks continue to relate to an expectation that MPA's will continue to rise and loan demand will be sluggish. Netting the pluses and minuses, our guidance on future net interest margin is also largely unchanged from last quarter. We believe margin will remain relatively stable in the short run and are optimistic that some additional expansion is possible during the remainder of the year. Now moving to Slide 11 and provision expense, Tom will cover credit in detail in a moment, so I'll be brief here. Total provision expense for the quarter was $962 million, down $32 million from the first quarter. Net charge offs increased to $801 million, up 31% from the first quarter level to 2.59% of loans. However, in our last earnings call, we noted that a classification change to report mortgage related borrower misrepresentations as charge offs, were expected to increase charge offs versus the first quarter by approximately $100 million. The actual increase was about $99 million and for comparative purposes, charge offs increased $92 million or 15% excluding this classification change. Provision of $161 million was recorded in excess of net charge offs in the quarter to build the loan loss reserve to 2.37% of loans. Excess provision to build the reserve is down $223 million compared to last quarter and it is down $50 million excluding the first quarter increase in reserves related to the classification change that I just mentioned as it relates to borrower misrepresentation and that dollar amount was $173 million during the first quarter. Now moving on to non interest income on Slide 12, reported non interest income growth in the quarter was down 5% and 24% as compared to last quarter and last year respectively. However, after adjustments for a number of items in each quarter, non interest income declined 10% and 3% respectively. We've provided detail underlying our non interest income adjustments in the appendix of today's presentation, and the largest adjustments of the second quarter results with $112 million gain from the sale of our Visa shares, a $96 million write down on our fair value debt and related hedges, and $157 million recovery of impairment on mortgage servicing rights carried at lower cost of market. As you may remember, the low MSR asset is primarily hedged using mortgage backed securities held as available for sale. This approach to hedging worked well in the fourth quarter of 2008 as we recognized gains from the sale of securities sufficient to offset the impairment of the asset. During the second quarter, we recognized approximately $20 million in losses on sales of securities designated for hedging the low comp MSR asset. Now the short answer for why we did not recognize greater securities losses against the impairment recovery, is that the hedge portfolio significantly outperformed the MSR asset, and we didn't have any material losses remaining in the mortgage backed securities portfolio to realize. At quarter end, securities we designated to hedge the assets had unrealized losses of effectively zero and the total agency NBS portfolio ended the quarter with a small net unrealized gain. Outside of these adjustments, we had a solid quarter of non interest income generation, particularly revenue from capital markets activities included in investment banking fees and trading income, was particularly notable with a record level of revenue generated in our corporate and investment banking segment. Performance in most other non interest income categories was acceptable with stable to higher revenues versus the first quarter reported in service charges, trust income and card fees. Mortgage production income for the second quarter remained very strong at $165 million, but it does warrant some additional discussion given that it declined versus the first quarter. The first thing to note is that the majority of revenue derived from originating a mortgage is recognized when clients lock in their rate, not when the loan is closed. This means that production income will precede reported mortgage originations about 30 to 60 days, so while our reported closed loan production volume increased 24% versus last quarter, the volume of locked loans in the second quarter actually decreased over 10%. Additionally, mortgage production margins declined by roughly 20% versus the historically high level in the first quarter, and mortgage repurchase reserves increased by $36 million. Overall, we're reasonably satisfied with the non interest income given the solid quarter posted in our capital markets business, the increase in mortgage servicing related revenue, partially offsetting the decline in production income and the performance in certain other areas. Now let me turn to non interest expenses on Slide 13. On a reported basis, non interest expense increased 11% compared to the second quarter of 2008 but declined 29% in the first quarter of 2009. On this slide we have adjusted out good will and intangible write offs the FDIC special assessment and debt extinguishment gains and losses which are detailed in the appendix. Excluding these items, expenses are up 6% compared to last year and down 2% compared to the first quarter. However, there are a number of items impacting these adjusted numbers that warrant additional explanation. We provided the underlying drivers for the majority of the changes, so let me walk you through the schedule. The total year over year increase in adjusted expenses is $83 million. As you can see, the sum of the four lines below the $83 million is $134 million. What this means is that more than all of the increase over 160% in fact, was driven by credit costs, higher FDIC premiums, even excluding the special assessment, and pension costs. Said another way, this means that the net of all remaining expenses declined over $50 million or 3.8% year over year. For the sequential quarter decline in expenses, the same items listed explain nearly all the decline, meaning that all other expenses together were unchanged from last quarter. With that, I'll turn it over to Tom Freeman to review our asset quality results.

This morning I'm going to provide a review of our asset quality. I'll being on Slide 14 with a brief review of the credit losses projected by the government under the most adverse scenario SCAP. SunTrust absolutely lost rates under the government's stress test scenario. We're projected to be at the lower end of the banks in the studies. We believe that our mix of products, more stable geographies excepting Florida and conservative underwriting are the reasons for the difference. We believe the estimate is high as compared to our own scenario analysis, even under the more adverse economic scenario. To help illustrate the conservative nature of the government estimates, I will point out that the overall result was two year cumulative charge offs of $11.8 billion. Our first half 2009 actual charge offs were $1.4 billion. In order to recognize the remaining SCAP estimate of $10.4 billion over the next six quarters, charge offs would have to increase to over $1.7 billion in each of the next six quarters. This amount is more than two times our second quarter charge off level of $800 million and while I suppose that level of charge offs is possible, it certainly doesn't seem likely to us at this time. Turning to Slide 15, and the SCAP loss estimate by portfolio, the data on this slide provides further evidence of the conservative nature of our portfolio with no sub prime or option arms, a small credit card portfolio, only about $500 million in true consumer cards, and low levels of unsecured consumer and small business loans. In each category, you can see that the government's loss estimates for SunTrust are in the middle to low end of the range. Please turn to Slide 16, where I will provide a summary of our current asset quality metrics. Charge offs and non performing loans increased in the quarter. There were some positive signs in certain portfolio segments that I'll discuss in a moment. For now, please note the decline in early stage delinquency that you will see in more detail in subsequent slides. Charge offs increased to $801 million, up $191 million from last quarter. During last quarter's call, we projected $100 million increase in charge offs related to the classification change from operating to credit losses, for losses due to borrower misrepresentation. And in fact, this increase was $99 million. Excluding this amount, charge offs increased $92 million primarily in the residential mortgage and home equity line portfolios. Non performing assets increased $919 million during the quarter, or $6.2 billion or 5% of loans, and other repossessed assets. The rate of change in NPA's in the quarter of 18% is similar to the change last quarter. The growth was largely comprised of residential mortgages, home builders and a few larger C&I loans. We added $161 million to the allowance in the second quarter which raised our reserve to loans coverage ratio 16 basis points to 237 basis points. The slower growth in reserve as compared to the last two quarters is largely due to future quarters consumer related charge off projections. The clearest evidence of this is the continued improvement in early state delinquencies. Asset quality issues were primarily found in the residential real estate portfolios. This includes residential mortgages, home equity products, residential construction and construction to firm. The small decrease we noted in early state delinquency during the first quarter trended down further during the second quarter. The downward trend was broad based, occurring in most of the portfolios. Particularly notable are home equities and residential mortgages where early stage delinquencies decline meaningfully for the second straight quarter. Commercial charge offs increased again in the second quarter. We are seeing some increased stress in our C&I portfolio which is still most evident in the more cyclically sensitive industries. Despite the difficult economic environment, the portfolio continues to perform reasonably well with early stage delinquencies also declining again in the quarter. The composition of the charge offs similar to last quarter, is primarily in the small business area and a hand full of larger loans to clients primarily engaged in more cyclical industries. Given the increase in MPL's this quarter, and the nature of these credits, we expect overall C&I charge offs to increase in the third quarter. As a side note, shared national credits represent less than one fourth of $38 billion C&I portfolio. Our commercial portfolio is well diversified by industry and geography, which we expect will help balance a negative impact from weaker industries. The commercial real estate portfolio also continues to perform reasonably well overall. While we did see some increase in early stage delinquencies, we are not experiencing any material deterioration in the portfolio at this time. The majority of this portfolio is secured by owner occupied properties which continue to positively impact credit performance. Charge offs in the consumer direct portfolio returned to fourth quarter levels after a seasonal decline in the first quarter. However, early stage delinquencies declined by a full percentage point. The indirect portfolio, which is largely indirect auto loans, performed very well in the second quarter. The charge off rate of 124 basis points is the lowest quarterly loss rate since the fourth quarter of 2007. We believe this portfolio is benefiting from lower fuel prices, stabilized used car values and the natural turnover of the book into newly underwritten vintages. Consumer real estate and construction related charge off rates increased in the second quarter. However, a noted a moment ago, all of these portfolios showed meaningful declines in early stage delinquencies. Next I will cover the residential mortgage portfolio on Slide 18. There are three important messages to take away from this slide. First, balances declined in all products except the core portfolio and they declined significantly in home equity loans, prime seconds and lot loans. The second take away is that the delinquencies improved for all products on the slide with the exception of lot loans and Altay seconds. For both of the exceptions, the actual count of loans in dollars delinquent declined, and the higher ratio results from lower product outstandings. The denominator is shrinking faster than the numerator which is what one would expect in run off portfolios. We are pleased with the improvement of delinquencies in the portfolios that make up the bulk of our residential mortgage loans, but given the instability in the market place, we are unwilling to call this a sustainable trend. The third point is that non accrual loans trended higher. This increase in non accruals and the increased charge offs that I mentioned on the previous slide, reflect the results of the increased delinquencies that occurred in the fourth quarter of 2008. The trend higher for residential mortgage MPL's also reflects our presence in Florida. As a reminder, Florida is a judicial foreclosure state and as a result of this, and high volumes in the Florida court system, we are experiencing extended time frames of more than 12 months from filing to foreclosure. In summary, while we are pleased with the decline in residential mortgage delinquency, higher non accruals and lower home values will continue to drive elevated losses over the near term. Now let's talk about home equity lines on Slide 19. Home equity credit performance is for the most part driven by the high risk segments in the portfolio. Lines originated by third parties and lines in Florida exceeding 80% combined loan to value. These two segments account for just 23% of our HELOC balances which underwrite 55% of our second quarter charge offs. From a future risk management perspective, there is virtually no line availability remaining on these two high risk segments or in the portfolio of non Florida equity lines over 90% combined loan to value. Two thirds of the HELOC portfolio, or $11 billion is exhibiting better although not acceptable performance. First, charge offs increased to 2.35% of loans this quarter which reflects the results of increased non accruals in prior quarters. Second, while non accruals increased in prior quarters, driving the higher charge offs this quarter, non accruals leveled out in the second quarter as compared to the first. Although past due's were not reference on the slide, I will point out that the consumer delinquency improvement I've already noted for residential mortgages also extends to the HELOC portfolio. This quarter we saw significant improvement in all early delinquency buckets up to an including 90 to 119 days past due and the positive trends appear to be continuing in July. Now if you turn to Slide 20, I'll talk about our construction portfolio. As expected, and continuing a multi quarter trend, constructions outstandings declined significantly in the second quarter and now stand at just over $8 billion. Balances dropped nearly 10% this quarter and construction loans now comprise less than 7% of total loans. The annualized net charge off ratio increased to 4.2% driven by the drop in outstandings as dollar net charge offs remained fairly stable. However, 30 plus delinquencies declined meaningfully in most portfolio segments. Construction to firm loans continued to decline and the portfolios are stabilizing. Compared to the first quarter, balances, delinquency and the charge off ratio all decreased while the level of non performers remained stable. Credit performance in the commercial construction portfolio remains solid overall. Charge offs declined in the quarter and a small number of projects comprised the bulk of the non performing loans. While the total non performing balances remains small, you can see that most are in Florida. The residential portion of the portfolio continues to be the most problematic. Early stage delinquencies are down from first quarter; however, charge offs have increased in the construction and land categories, in particular, as more problem loans get through the work out process. We believe we will continue to see elevated charge offs in the residential construction portfolio as we continue to work out process with the builders. 42% of the residential construction MPL's are in Florida where the judicial foreclosure process is extended as compared to the rest of our markets. Please turn to Slide 21 for a review of allowance of non performing loans. We have discussed in previous calls that our reserve methodology is fundamentally focused on estimating incurred losses across all portfolios and not non performing loans. Each quarter, we also provide a slide highlighting a portion of our residential mortgage non accruals that have been written down to expected recoverable value. As a reminder, we write down residential mortgages at 180 days past due to current market value less a 15% hair cut to arrive at the expected recoverable value. This slide is new this quarter and incorporates the analysis of residential mortgage MPL's into a framework that includes our FAS114 reserves. FAS114 reserves are loan loss reserves established on a loan by loan basis for larger loans that are deemed to be impaired. The result of this analysis is that our allowance coverage of non performing loans, increases from 54% to nearly 100% when you factor the impact of mortgages that have been written down and loans with specific reserves. Tables on the FAS114 reserves by business is also included on the slide. For each of the businesses, we have provided the balance of the loans with specific reserves, the amount of reserves carried against those balances and the charge offs that have already been taken against those same loans. The result in the far right column is the implied loss severity for those specific loans which averages 34%. The lowest loss severity displayed is for our commercial business at 25%. These are typically secured loans to mid sized businesses and real estate developers. The highest implied loss severity is from our corporate and investment banking business segment and is a weighted average of 62%. The simple average severity for this segment would be 47%. The implied severity on these loans is influenced upward by two factors. The first is that we have fewer large impaired credits in this business so the FAS114 reserves and applied severities can be very lumpy. The second, is that the specific credit included in the FAS114 reserves at this time are cyclical industries and the loss severities are being driven upward by expected debt for equities swap work downs. Let me summarize today's credit discussion before turning the call over to Steve. Please turn to Slide 22. Overall, the basic credit themes we talked about last quarter remained in quarter in the second quarter. Credit performance weakened with the deterioration most evident in residential real estate related charge offs and MPL growth. In the second quarter the decline in early stage delinquencies were significant and broad based, particularly in consumer and mortgage loan products. We are seeing some weakening in the C&I book, notably in industry sectors most impacted by the residential construction decline, and by reductions in consumer spending. But overall, the C&I portfolio is well diversified and performance is in line with our expectations given the recessionary environment. Residential mortgage delinquencies and balances and certain larger and higher risk portfolios declined meaningfully while non accrual balances trended higher in the portfolio. Less than a quarter of the home equity portfolio continued to drive more than half the charge offs. The two-thirds of the portfolio that is of better quality, exhibited higher charge offs and stable non accruals. The construction portfolio continued to track as balance declined. Performance of the construction product has stabilized. Residential construction remained weak and commercial construction continued to perform well. We believe credit loss and non performing loans will increase in the third quarter given our expectation for weakness in the residential real estate related and cyclically sensitive commercial exposures. Delinquency trends, particularly in consumer are encouraging relative to the potential loss rates in the fourth quarter and beyond while we are still anxious as to the direction of the economy. With that, I'll turn it over to Steve.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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