SUNTRUST BANKS INC (Form: 10-Q, Received: 08/09/2011 14:04:00)

Large accelerated filer x

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company ¨

(Do not check if a smaller reporting company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

Commission File Number 001-08918

SUNTRUST BANKS, INC.

(Exact name of registrant as specified in its charter)

Georgia

58-1575035

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

303 Peachtree Street, N.E., Atlanta, Georgia 30308

(Address of principal executive offices) (Zip Code)

(404) 588-7711

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

At July 28, 2011, 536,877,003 shares of the Registrant’s Common Stock, $1.00 par value, were outstanding.

TABLE OF CONTENTS


			Page
Glossary of Defined Terms				i -iii

PART I FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)		1
		Consolidated Statements of Income/(Loss)		1
		Consolidated Balance Sheets		2
		Consolidated Statements of Shareholders’ Equity		3
		Consolidated Statements of Cash Flows		4
		Notes to Consolidated Financial Statements		5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		71
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		110
	Item 4.	Controls and Procedures		110

PART II OTHER INFORMATION

	Item 1.	Legal Proceedings		110
	Item 1A.	Risk Factors		110
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		110
	Item 3.	Defaults Upon Senior Securities		111
	Item 4.	(Removed and Reserved)		111
	Item 5.	Other Information		111
	Item 6.	Exhibits		111

SIGNATURE				113

PART I – FINANCIAL INFORMATION

The following unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary to comply with Regulation S-X have been included. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2011.

GLOSSARY OF DEFINED TERMS

ABS — Asset-backed securities.

AFS — Available for sale.

ALCO — Asset/Liability Management Committee.

ALLL — Allowance for loan and lease losses.

AOCI — Accumulated other comprehensive income.

ARS — Auction rate securities.

ASC —FASB Accounting Standard Codification.

ASU — Accounting standards update.

ATE — Additional termination event.

ATM — Automated teller machine.

Bank — SunTrust Bank.

BCBS — Basel Committee on Banking Supervision.

Board — The Company’s Board of Directors.

CCAR — Comprehensive Capital Analysis and Review.

CDO — Collateralized debt obligation.

CD — Certificate of deposit.

CDS — Credit default swaps.

CIB — Corporate and Investment Banking.

Class A shares — Visa Inc. Class A common stock.

Class B shares —Visa Inc. Class B common stock.

CLO — Collateralized loan obligation.

Coke —The Coca-Cola Company.

Company — SunTrust Banks, Inc.

CP — Commercial paper.

CPP — Capital Purchase Program.

CRE — Commercial Real Estate.

CSA — Credit support annex.

DBRS — Dun and Bradstreet, Inc.

Dodd-Frank Act — The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

EPS — Earnings per share.

ERISA — Employee Retirement Income Security Act of 1974.

Exchange Act — Securities Exchange Act of 1934.

FASB — Financial Accounting Standards Board.

FDIC — The Federal Deposit Insurance Corporation.

Federal Reserve — The Board of Governors of the Federal Reserve System.

Fed funds — Federal funds.

FFIEC — Federal Financial Institutions Examination Council

FHA — Federal Housing Administration.

FHLB — Federal Home Loan Bank.

FICO — Fair Isaac Corporation.

FINRA — Financial Industry Regulatory Authority.

Fitch — Fitch Ratings Ltd.

FTE — Fully taxable-equivalent.

FVO — Fair value option.

GB&T — GB&T Bancshares, Inc.

GSE — Government-sponsored enterprise.

IFRS — International Financial Reporting Standards.

IPO — Initial public offering.

IRLC — Interest rate lock commitments.

IRS — Internal Revenue Service.

ISDA — International Swaps and Derivatives Associations Master Agreement.

KBW Bank Sector Index — Keefe, Bruyette & Woods, Inc. Bank Sector Index.

LHFI — Loans held for investment.

LHFI-FV — Loans held for investment carried at fair value.

LHFS — Loans held for sale.

LIBOR —London InterBank Offered Rate.

LOCOM – Lower of cost or market.

LTI — Long-term incentive.

LTV — Loan to value.

MBS — Mortgage-backed securities.

MD&A — Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Moody’s — Moody’s Investors Service.

MSR — Mortgage servicing right.

MVE — Market value of equity.

NEO — Named executive officers.

NOW — Negotiable order of withdrawal account.

NPL — Nonperforming loan.

NSF — Non-sufficient funds.

OCI — Other comprehensive income.

OREO — Other real estate owned.

OTC — Over-the-counter.

OTTI — Other-than-temporary impairment.

Parent Company — Parent Company of SunTrust Banks, Inc. and subsidiaries.

QSPE — Qualifying special-purpose entity.

RidgeWorth — RidgeWorth Capital Management, Inc.

ROA — Return on average total assets.

ROE — Return on average common shareholders’ equity.

S&P — Standard and Poor’s.

SBA — Small Business Administration.

SEC — U.S. Securities and Exchange Commission.

SIV — Structured investment vehicles.

SPE — Special purpose entity.

STIS — SunTrust Investment Services, Inc.

STM — SunTrust Mortgage, Inc.

STRH — SunTrust Robinson Humphrey, Inc.

SunTrust — SunTrust Banks, Inc.

TARP — Troubled Asset Relief Program.

TDR — Troubled debt restructuring.

The Agreements — Equity forward agreements.

Three Pillars —Three Pillars Funding, LLC.

TRS — Total return swaps.

U.S. GAAP — Generally Accepted Accounting Principles in the United States.

U.S. Treasury — The United States Department of the Treasury.

UTB — Unrecognized tax benefits.

VA —Veteran’s Administration.

VAR —Value at risk.

VI — Variable interest.

VIE — Variable interest entity.

Visa —The Visa, U.S.A. Inc. card association or its affiliates, collectively.

W&IM — Wealth and Investment Management.

iii

Item 1. FINANCIAL STATEMENTS (UNAUDITED)

SunTrust Banks, Inc.

Consolidated Statements of Income/(Loss)

		000000		000000		000000		000000
	For the Three Months Ended				For the Six Months Ended
	June 30				June 30
(Dollars in millions and shares in thousands, except per share data) (Unaudited)	2011		2010		2011		2010
Interest Income
Interest and fees on loans		$1,299		$1,318		$2,613		$2,635
Interest and fees on loans held for sale		22		33		50		66
Interest and dividends on securities available for sale:
Taxable interest		177		167		342		343
Tax-exempt interest		6		9		11		18
Dividends ¹		21		19		41		38
Trading account interest		21		24		43		44

Total interest income		1,546		1,570		3,100		3,144

Interest Expense
Interest on deposits		162		225		331		458
Interest on funds purchased and securities sold under agreements to repurchase		1		2		2		3
Interest on trading liabilities		8		8		16		14
Interest on other short-term borrowings		3		3		6		6
Interest on long-term debt		113		154		237		313

Total interest expense		287		392		592		794

Net interest income		1,259		1,178		2,508		2,350
Provision for credit losses		392		662		839		1,524

Net interest income after provision for credit losses		867		516		1,669		826

Noninterest Income
Service charges on deposit accounts		170		208		333		404
Other charges and fees		130		133		256		262
Card fees		105		94		205		181
Trust and investment management income		135		127		270		249
Retail investment services		59		48		117		95
Mortgage production related income/(loss)		4		(16)		3		(47)
Mortgage servicing related income		72		88		144		158
Investment banking income		95		58		162		114
Trading account profits and commissions		53		109		105		102
Net securities gains ²		32		57		96		58
Other noninterest income		57		46		104		74

Total noninterest income		912		952		1,795		1,650

Noninterest Expense
Employee compensation		638		575		1,256		1,132
Employee benefits		110		107		246		242
Outside processing and software		162		158		320		307
Net occupancy expense		89		90		178		181
Regulatory assessments		81		65		152		129
Other real estate expense		64		87		133		133
Credit and collection services		60		66		111		140
Equipment expense		44		42		88		83
Marketing and customer development		46		44		84		78
Operating losses		62		16		89		30
Amortization of intangible assets		12		13		23		26
Net loss/(gain) on debt extinguishment		(1)		63		(2)		54
Other noninterest expense		175		177		329		329

Total noninterest expense		1,542		1,503		3,007		2,864

Income/(loss) before provision/(benefit) for income taxes		237		(35)		457		(388)
Provision/(benefit) for income taxes		58		(50)		91		(244)

Net income/(loss) including income attributable to noncontrolling interest		179		15		366		(144)
Net income attributable to noncontrolling interest		1		3		8		5

Net income/(loss)		$178		$12		$358		($149)

Net income/(loss) available to common shareholders		$174		($56)		$212		($285)

Net income/(loss) per average common share
Diluted ³		$0.33		($0.11)		$0.41		($0.58)
Basic		0.33		(0.11)		0.41		(0.58)
Dividends declared per common share		$0.01		$0.01		$0.02		$0.02
Average common shares - diluted		535,416		498,499		519,548		498,369
Average common shares - basic		531,792		495,351		515,819		495,112

¹	Includes dividends on common stock of The Coca-Cola Company of $14 million and $13 million during the three months ended June 30, 2011 and 2010, respectively, and $28 million and $26 million during the six months ended June 30, 2011 and 2010, respectively.

²	Includes credit-related other-than-temporary impairment losses of $1 million for the three months ended June 30, 2011 and 2010, and $2 million for the six months ended June 30, 2011 and 2010.

³	For earnings per share calculation purposes, the impact of dilutive securities are excluded from the diluted share count during periods that the Company has recognized a net loss available to common shareholders because the impact would be anti-dilutive.

See Notes to Consolidated Financial Statements (unaudited).

SunTrust Banks, Inc.

Consolidated Balance Sheets

		000000000000000		000000000000000
	As of
(Dollars in millions and shares in thousands) (Unaudited)	June 30, 2011		December 31, 2010
Assets
Cash and due from banks		$5,633		$4,296
Interest-bearing deposits in other banks		20		24
Funds sold and securities purchased under agreements to resell		1,134		1,058

Cash and cash equivalents		6,787		5,378
Trading assets		6,586		6,175
Securities available for sale		27,216		26,895
Loans held for sale ¹ (loans at fair value: $1,925 as of June 30, 2011 and $3,168 as of December 31, 2010)		2,052		3,501
Loans ² (loans at fair value: $449 as of June 30, 2011 and $492 as of December 31, 2010)		114,913		115,975
Allowance for loan and lease losses		(2,744)		(2,974)

Net loans		112,169		113,001
Premises and equipment		1,536		1,620
Goodwill		6,343		6,323
Other intangible assets (MSRs at fair value: $1,423 as of June 30, 2011 and $1,439 as of December 31, 2010)		1,539		1,571
Other real estate owned		483		596
Other assets		7,462		7,814

Total assets		$172,173		$172,874


Liabilities and Shareholders’ Equity
Noninterest-bearing consumer and commercial deposits		$30,591		$27,290
Interest-bearing consumer and commercial deposits		91,080		92,735

Total consumer and commercial deposits		121,671		120,025
Brokered deposits (CDs at fair value: $1,140 as of June 30, 2011 and $1,213 of December 31, 2010)		2,345		2,365
Foreign deposits		905		654

Total deposits		124,921		123,044
Funds purchased		939		951
Securities sold under agreements to repurchase		2,253		2,180
Other short-term borrowings		2,791		2,690
Long-term debt ³ (debt at fair value: $2,022 as of June 30, 2011 and $2,837 as of December 31, 2010)		13,693		13,648
Trading liabilities		3,026		2,678
Other liabilities		4,890		4,553

Total liabilities		152,513		149,744


Preferred stock, no par value		172		4,942
Common stock, $1.00 par value		550		515
Additional paid in capital		9,330		8,403
Retained earnings		8,745		8,542
Treasury stock, at cost, and other		(805)		(888)
Accumulated other comprehensive income, net of tax		1,668		1,616

Total shareholders’ equity		19,660		23,130

Total liabilities and shareholders’ equity		$172,173		$172,874


Common shares outstanding		536,907		500,436
Common shares authorized		750,000		750,000
Preferred shares outstanding		2		50
Preferred shares authorized		50,000		50,000
Treasury shares of common stock		13,014		14,231

¹ Includes loans held for sale, at fair value, of consolidated VIEs		$329		$316
² Includes loans of consolidated VIEs		2,896		2,869
³ Includes debt of consolidated VIEs ($289 and $290 at fair value at June 30, 2011 and December 31, 2010, respectively)		743		764

See Notes to Consolidated Financial Statements (unaudited).

SunTrust Banks, Inc.

Consolidated Statements of Shareholders’ Equity


(Dollars and shares in millions, except per share data) (Unaudited)	Preferred Stock		Common Shares Outstanding		Common Stock		Additional Paid in Capital		Retained Earnings		Treasury Stock and Other ¹		Accumulated Other Comprehensive Income		Total

Balance, January 1, 2010		$4,917		499		$515		$8,521		$8,563		($1,055)		$1,070		$22,531
Net loss		-		-		-		-		(149)		-		-		(149)
Other comprehensive income:
Change in unrealized gains on securities, net of taxes		-		-		-		-		-		-		215		215
Change in unrealized gains on derivatives, net of taxes		-		-		-		-		-		-		377		377
Change related to employee benefit plans		-		-		-		-		-		-		83		83

Total comprehensive income																526
Common stock dividends, $0.02 per share		-		-		-		-		(10)		-		-		(10)
Series A preferred stock dividends, $2,022 per share		-		-		-		-		(4)		-		-		(4)
U.S. Treasury preferred stock dividends, $2,500 per share		-		-		-		-		(120)		-		-		(120)
Accretion of discount for preferred stock issued to U.S. Treasury		12		-		-		-		(12)		-		-		-
Stock compensation expense		-		-		-		11		-		-		-		11
Restricted stock activity		-		1		-		(69)		-		42		-		(27)
Amortization of restricted stock compensation		-		-		-		-		-		22		-		22
Issuance of stock for employee benefit plans and other		-		-		-		(18)		1		23		-		6
Fair value election of MSRs		-		-		-		-		89		-		-		89

Balance, June 30, 2010		$4,929		500		$515		$8,445		$8,358		($968)		$1,745		$23,024


Balance, January 1, 2011		$4,942		500		$515		$8,403		$8,542		($888)		$1,616		$23,130
Net income		-		-		-		-		358		-		-		358
Other comprehensive income:
Change in unrealized gains on securities, net of taxes		-		-		-		-		-		-		121		121
Change in unrealized gains on derivatives, net of taxes		-		-		-		-		-		-		(53)		(53)
Change related to employee benefit plans		-		-		-		-		-		-		(16)		(16)

Total comprehensive income																410
Change in noncontrolling interest		-		-		-		-		-		1		-		1
Common stock dividends, $0.02 per share		-		-		-		-		(11)		-		-		(11)
Series A preferred stock dividends, $2,022 per share		-		-		-		-		(4)		-		-		(4)
U.S. Treasury preferred stock dividends, $1,236 per share		-		-		-		-		(60)		-		-		(60)
Accretion of discount for preferred stock issued to U.S. Treasury		6		-		-		-		(6)		-		-		-
Repurchase of preferred stock issued to U.S. Treasury		(4,776)		-		-		-		(74)		-		-		(4,850)
Issuance of common stock		-		35		35		982		-		-		-		1,017
Stock compensation expense		-		-		-		7		-		-		-		7
Restricted stock activity		-		2		-		(54)		-		46		-		(8)
Amortization of restricted stock compensation		-		-		-		-		-		17		-		17
Issuance of stock for employee benefit plans and other		-		-		-		(8)		-		19		-		11

Balance, June 30, 2011		$172		537		$550		$9,330		$8,745		($805)		$1,668		$19,660

1	Balance at June 30, 2011 includes ($869) for treasury stock, ($67) for compensation element of restricted stock, and $131 for noncontrolling interest.

Balance at June 30, 2010 includes ($1,021) for treasury stock, ($55) for compensation element of restricted stock, and $108 for noncontrolling interest.

See Notes to Consolidated Financial Statements (unaudited).

SunTrust Banks, Inc.

Consolidated Statements of Cash Flows


	Six Months Ended June 30
(Dollars in millions) (Unaudited)	2011		2010
Cash Flows from Operating Activities:
Net income/(loss) including income attributable to noncontrolling interest		$366		($144)
Adjustments to reconcile net income/(loss) to net cash provided by operating activities:
Depreciation, amortization, and accretion		372		404
Origination of Mortgage Servicing Rights		(136)		(134)
Provisions for credit losses and foreclosed property		930		1,620
Amortization of restricted stock compensation		17		22
Stock option compensation		7		11
Net (gain)/loss on extinguishment of debt		(2)		54
Net securities gains		(96)		(58)
Net (gain)/loss on sale of assets		(141)		(218)
Net decrease in loans held for sale		1,718		1,045
Net increase in other assets		(358)		(406)
Net increase in other liabilities		421		170

Net cash provided by operating activities		3,098		2,366


Cash Flows from Investing Activities:
Proceeds from maturities, calls, and paydowns of securities available for sale		2,414		2,802
Proceeds from sales of securities available for sale		10,763		10,526
Purchases of securities available for sale		(12,603)		(12,677)
Proceeds from maturities, calls, and paydowns of trading securities		124		78
Proceeds from sales of trading securities		102		61
Net (increase)/decrease in loans including purchases of loans		(1,109)		31
Proceeds from sales of loans		287		600
Capital expenditures		(9)		(89)
Contingent consideration and other payments related to acquisitions		(18)		(4)
Proceeds from the sale of other assets		360		349

Net cash provided by investing activities		311		1,677


Cash Flows from Financing Activities:
Net increase/(decrease) in total deposits		1,877		(3,194)
Net increase/(decrease) in funds purchased, securities sold under agreements to repurchase, and other short-term borrowings		162		(1,135)
Proceeds from the issuance of long-term debt		1,039		500
Repayment of long-term debt		(1,170)		(2,283)
Proceeds from the issuance of common stock		1,017		-
Repurchase of preferred stock		(4,850)		-
Common and preferred dividends paid		(75)		(135)

Net cash used in financing activities		(2,000)		(6,247)

Net increase/(decrease) in cash and cash equivalents		1,409		(2,204)
Cash and cash equivalents at beginning of period		5,378		6,997

Cash and cash equivalents at end of period		$6,787		$4,793


Supplemental Disclosures:
Loans transferred from loans held for sale to loans		$46		$17
Loans transferred from loans to loans held for sale		198		238
Loans transferred from loans to other real estate owned		367		622
Accretion of discount for preferred stock issued to the U.S. Treasury		80		12
Total assets of newly consolidated VIEs at January 1, 2010		-		2,049

See Notes to Consolidated Financial Statements (unaudited).

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these financial statements, have been made.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could vary from these estimates. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

The Company evaluated subsequent events through the date its financial statements were issued.

These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. Except for accounting policies that have been modified or recently adopted as described below, there have been no significant changes to the Company’s accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are considered LHFI. The Company’s loan balance is comprised of loans held in portfolio, including commercial loans, consumer loans, and residential loans. Interest income on all types of loans, except those classified as nonaccrual, is accrued based upon the outstanding principal amounts using the effective yield method.

Commercial loans (commercial & industrial, commercial real estate, and commercial construction) are considered to be past due when payment is not received from the borrower by the contractually specified due date. The Company typically classifies commercial loans as nonaccrual when one of the following events occurs: (i) interest or principal has been past due 90 days or more, unless the loan is secured by collateral having realizable value sufficient to discharge the debt in full and the loan is in the legal process of collection; (ii) collection of recorded interest or principal is not anticipated; or (iii) income for the loan is recognized on a cash basis due to the deterioration in the financial condition of the debtor. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized after the principal has been reduced to zero. If and when commercial borrowers demonstrate the ability to repay a loan in accordance with the contractual terms of a loan classified as nonaccrual, the loan may be returned to accrual status.

Consumer loans (guaranteed student loans, other direct, indirect, and credit card) are considered to be past due when payment is not received from the borrower by the contractually specified due date. Other direct and indirect loans are typically placed on nonaccrual when payments have been past due for 90 days or more except when the borrower has declared bankruptcy, in which case, they are moved to nonaccrual status once they become 60 days past due. Credit card loans are never placed on nonaccrual status but rather are charged off once they are 180 days past due. Guaranteed student loans continue to accrue interest regardless of delinquency status because collection of principal and interest is reasonably assured. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized after the principal has been reduced to zero. Nonaccrual loans are typically returned to accrual status once they no longer meet the delinquency threshold that resulted in them initially being moved to nonaccrual status.

Residential loans (guaranteed residential mortgages, nonguaranteed residential mortgages, home equity products, and residential construction) are considered to be past due when a monthly payment is due and unpaid for one month. Nonguaranteed residential mortgages and residential construction loans are generally placed on nonaccrual when payments are 120 days past due. Home equity products are generally placed on nonaccrual when payments are 90 days past due. The exception for nonguaranteed residential mortgages, residential construction loans, and home equity products is when the borrower has declared bankruptcy, in which case, they are moved to nonaccrual status once they become 60 days past due. Guaranteed residential mortgages continue to accrue interest regardless of delinquency status because collection of principal and interest is reasonably assured. When a loan is placed on nonaccrual, unpaid interest is reversed against interest income. Interest income on nonaccrual loans, if recognized, is recognized on a cash basis. Nonaccrual loans are typically returned to accrual status once they no longer meet the delinquency threshold that resulted in them initially being moved to nonaccrual status.

Notes to Consolidated Financial Statements (Unaudited)-Continued

TDRs are loans in which the borrower is experiencing financial difficulty and the Company has granted an economic concession to the borrower. To date, the Company’s TDRs have been predominantly first and second lien residential mortgages and home equity lines of credit. Prior to modifying a borrower’s loan terms, the Company performs an evaluation of the borrower’s financial condition and ability to service under the potential modified loan terms. The types of concessions granted are generally interest rate reductions and/or term extensions. If a loan is accruing at the time of modification, the loan remains on accrual status and is subject to the Company’s charge-off and nonaccrual policies. See the “Allowance for Credit Losses” section within this Note for further information regarding these policies. If a loan is on nonaccrual before it is determined to be a TDR then the loan remains on nonaccrual. TDRs may be returned to accrual status if there has been at least a six month sustained period of repayment performance by the borrower. Consistent with regulatory guidance, upon sustained performance and classification as a TDR through the Company’s year end, the loan will be removed from TDR status as long as the modified terms were market-based at the time of modification. Generally, once a residential loan becomes a TDR, it is probable that the loan will likely continue to be reported as a TDR for the life of the loan. Interest income recognition on impaired loans is dependent upon nonaccrual status, TDR designation, and loan type as discussed above.

For loans accounted for at amortized cost, fees and incremental direct costs associated with the loan origination and pricing process, as well as premiums and discounts, are deferred and amortized as level yield adjustments over the respective loan terms. Premiums for purchased credit cards are amortized on a straight-line basis over one year. Fees received for providing loan commitments that result in funded loans are recognized over the term of the loan as an adjustment of the yield. If a loan is never funded, the commitment fee is recognized into noninterest income at the expiration of the commitment period. Origination fees and costs are recognized in noninterest income and expense at the time of origination for newly-originated loans that are accounted for at fair value. See Note 3, “Loans” for additional information.

Allowance for Credit Losses

The Allowance for Credit Losses is composed of the ALLL and the reserve for unfunded commitments. The Company’s ALLL is the amount considered adequate to absorb probable losses within the portfolio based on management’s evaluation of the size and current risk characteristics of the loan portfolio. In addition to the review of credit quality through ongoing credit review processes, the Company employs a variety of modeling and estimation techniques to measure credit risk and construct an appropriate and adequate ALLL. Numerous asset quality measures, both quantitative and qualitative, are considered in estimating the ALLL. Such evaluation considers numerous factors for each of the loan portfolio segments, including, but not limited to net charge-off trends, internal risk ratings, changes in internal risk ratings, loss forecasts, collateral values, geographic location, delinquency rates, nonperforming and restructured loan status, origination channel, product mix, underwriting practices, industry conditions, and economic trends. In addition to these factors, refreshed FICO scores are considered for consumer and residential loans and single name borrower concentration is considered for commercial loans. These credit quality factors are incorporated into various loss estimation models and analytical tools utilized in the ALLL process and/or are qualitatively considered in evaluating the overall reasonableness of the ALLL.

Large commercial (all loan classes) nonaccrual loans and certain consumer (other direct), residential (nonguaranteed residential mortgages, home equity products, and residential construction), and commercial (all classes) loans whose terms have been modified in a TDR are individually identified for evaluation of impairment. A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. If necessary, a specific allowance is established for individually evaluated impaired loans. The specific allowance established for these loans is based on a thorough analysis of the most probable source of repayment, including the present value of the loan’s expected future cash flows, the loan’s estimated market value, or the estimated fair value of the underlying collateral depending on the most likely source of repayment. Any change in the present value attributable to the passage of time is recognized through the provision for credit losses.

General allowances are established for loans and leases grouped into pools based on similar characteristics. In this process, general allowance factors are based on an analysis of historical charge-off experience, portfolio trends, regional and national economic conditions, and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the ALLL after an assessment of internal and external influences on credit quality that are not fully reflected in the historical loss or other risk rating data. These influences may include elements such as changes in credit underwriting, concentration risk, macroeconomic conditions, and/or recent observable asset quality trends.

The Company’s charge-off policy meets or is more stringent than regulatory minimums. Losses on unsecured consumer loans are recognized at 90 days past due compared to the regulatory loss criteria of 120 days past due. Secured consumer loans, including residential real estate, are typically charged-off between 120 and 180 days past due, depending on the collateral type, in compliance with the FFIEC guidelines. Loans that have been partially charged-off remain on nonperforming status, regardless of collateral value, until specific borrower performance criteria are met.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The Company uses numerous sources of information in order to make an appropriate evaluation of a property’s value. Estimated collateral valuations are based on appraisals, broker price opinions, recent sales of foreclosed properties, automated valuation models, other property-specific information, and relevant market information, supplemented by the Company’s internal property valuation professionals. The value estimate is based on an orderly disposition and marketing period of the property. In limited instances, the Company adjusts externally provided appraisals for justifiable and well-supported reasons, such as an appraiser not being aware of certain property-specific factors or recent sales information. Appraisals generally represent the “as is” value of the property but may be adjusted based on the intended disposition strategy of the property.

For commercial real estate loans secured by property, acceptable third-party appraisal or other form of evaluation is obtained prior to the origination of the loan. Updated evaluations of the collateral’s value are obtained at least annually, or earlier if the credit quality of the loan deteriorates. In situations where an updated appraisal has not been received or a formal evaluation performed, the Company monitors factors that can positively or negatively impact property value, such as the date of the last valuation, the volatility of property values in specific markets, changes in the value of similar properties, and changes in the characteristics of individual properties. Changes in collateral value affect the ALLL through the risk rating or impaired loan evaluation process. Charge-offs are recognized when the amount of the loss is quantifiable and timing is known. The charge-off is measured based on the difference between the loan’s carrying value, including deferred fees, and the estimated net realizable value of the loan, net of estimated selling costs. When assessing property value for the purpose of determining a charge-off, a third-party appraisal or an independently derived internal evaluation is generally employed.

For mortgage loans secured by residential property where the Company is proceeding with a foreclosure action, a new valuation is obtained prior to the loan becoming 180 days past due and, if required, the loan is written down to net realizable value, net of estimated selling costs. In the event the Company decides not to proceed with a foreclosure action, the full balance of the loan is charged-off. If a loan remains in the foreclosure process for 12 months past the original charge-off, typically at 180 days past due, the Company obtains a new valuation and, if required, writes the loan down to the new valuation, less estimated selling costs. At foreclosure, a new valuation is obtained and the loan is transferred to OREO at the new valuation less estimated selling costs; any loan balance in excess of the transfer value is charged-off. Estimated declines in value of the residential collateral between these formal evaluation events are captured in the ALLL based on changes in the house price index in the applicable metropolitan statistical area or other market information.

In addition to the ALLL, the Company also estimates probable losses related to unfunded lending commitments, such as letters of credit and binding unfunded loan commitments. Unfunded lending commitments are analyzed and segregated by risk similar to funded loans based on the Company’s internal risk rating scale. These risk classifications, in combination with an analysis of historical loss experience, probability of commitment usage, existing economic conditions, and any other pertinent information, result in the estimation of the reserve for unfunded lending commitments. The reserve for unfunded lending commitments is reported on the Consolidated Balance Sheets in other liabilities and through the third quarter of 2009, the provision associated with changes in the unfunded lending commitment reserve was reported in the Consolidated Statements of Income/(Loss) in noninterest expense. Beginning in the fourth quarter of 2009, the Company began recording changes in the unfunded lending commitment reserve in the provision for credit losses. See Note 4, “Allowance for Credit Losses,” for additional information.

Accounting Policies Recently Adopted and Pending Accounting Pronouncements

In January 2010, the FASB issued ASU 2010-06, an update to ASC 820-10, “Fair Value Measurements.” This ASU requires the disclosure of transfers in and out of level 1 and 2 of the fair value hierarchy, along with the reasons for the transfers and a gross presentation of purchases and sales of level 3 instruments. Additionally, the ASU requires fair value measurement disclosures for each class of assets and liabilities and enhanced disclosures around level 2 valuation techniques and inputs. The Company adopted the disclosure requirements for level 1 and 2 transfers and the expanded fair value measurement and valuation disclosures effective January 1, 2010. The disclosure requirements for level 3 activities were effective for the interim reporting period ending March 31, 2011. The required disclosures are included in Note 12, “Fair Value Election and Measurement.” The adoption of these disclosure requirements had no impact on the Company’s financial position, results of operations, or EPS.

Notes to Consolidated Financial Statements (Unaudited)-Continued

In July 2010, the FASB issued ASU 2010-20, “Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.” The ASU requires more disclosures about the credit quality of financing receivables, which include loans, lease receivables, and other long-term receivables, and the credit allowances held against them. The disclosure requirements that were effective as of December 31, 2010 are included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses.” Disclosures about activity that occurs during a reporting period were effective for the interim reporting period ending March 31, 2011 are also included in Note 3, “Loans,” and Note 4, “Allowance for Credit Losses,”. The adoption of the ASU did not have an impact on the Company’s financial position, results of operations, or EPS.

In December 2010, the FASB issued ASU 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.” The update requires companies to perform step 2 of the goodwill impairment analysis if the carrying value of a reporting unit is zero or negative and it is more likely than not that goodwill for that reporting unit is impaired. The adoption of the ASU as of January 1, 2011 did not have an impact on the Company’s financial position, results of operations, or EPS.

In April 2011, the FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring.” The ASU provides additional guidance to assist creditors in determining whether a modification of a receivable meets the criteria to be considered a TDR, both for purposes of recognizing loan losses and additional disclosures regarding TDRs. A modification of a credit arrangement constitutes a TDR if it constitutes a concession and the debtor is experiencing financial difficulties. The clarifications for classification apply to all restructurings occurring on or after January 1, 2011. The measurement of impairment for those newly identified TDRs will be applied prospectively beginning on July 1, 2011. The related disclosures, which were previously deferred by ASU 2011-01, will be required for the interim reporting period ending September 30, 2011 and subsequent reporting periods. The adoption of the ASU is not expected to have a significant impact on the Company’s financial position, results of operations, or EPS. The Company’s level of TDRs increased by less than $100 million at the date of adoption.

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements.” A repurchase agreement is a transaction in which a company sells financial instruments to a buyer, typically in exchange for cash, and simultaneously enters into an agreement to repurchase the same or substantially the same financial instruments from the buyer at a stated price plus accrued interest at a future date. The determination of whether the transaction is accounted for as a sale or a collateralized financing is determined by assessing whether the seller retains effective control of the financial instrument. The ASU changes the assessment of effective control by removing the criterion that requires the seller to have the ability to repurchase or redeem financial assets with substantially the same terms, even in the event of default by the buyer and the collateral maintenance implementation guidance related to that criterion. The Company will apply the new guidance to repurchase agreements entered into or amended after January 1, 2012. The Company does not expect the ASU to have a significant impact on the Company’s financial position, results of operations, or EPS.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The primary purpose of the ASU is to conform the language in the fair value measurements guidance in U.S. GAAP and IFRS. The ASU also clarifies how to apply existing fair value measurement and disclosure requirements. Further, the ASU requires additional disclosures about transfers between level 1 and 2 of the fair value hierarchy, quantitative information for level 3 inputs, and the level of the fair value measurement hierarchy for items that are not measured at fair value in the statement of financial position but for which the fair value is required to be disclosed. The ASU is effective for the interim reporting period ending March 31, 2012. The Company is evaluating the impact of the ASU; however, it is not expected to have a significant impact on the Company’s financial position, results of operations, or EPS.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” The ASU requires presentation of the components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements. The update does not change the items presented in OCI and does not affect the calculation or reporting of EPS. The guidance is effective on January 1, 2012 and must be applied retrospectively for all periods presented. The Company is in the process of evaluating the presentation options; however, adoption of the ASU will not have an impact on the Company’s financial position, results of operations, or EPS.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Note 2 – Securities Available for Sale

Securities Portfolio Composition

		000000000000000		000000000000000		000000000000000		000000000000000
	June 30, 2011
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$730		$4		$8		$726
Federal agency securities		2,519		48		1		2,566
U.S. states and political subdivisions		499		19		2		516
MBS - agency		18,797		536		2		19,331
MBS - private		335		1		25		311
CDO securities		337		-		-		337
ABS		615		14		4		625
Corporate and other debt securities		54		3		1		56
Coke common stock		-		2,019		-		2,019
Other equity securities ¹		728		1		-		729

Total securities AFS		$24,614		$2,645		$43		$27,216


	December 31, 2010
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$5,446		$115		$45		$5,516
Federal agency securities		1,883		19		7		1,895
U.S. states and political subdivisions		565		17		3		579
MBS - agency		14,014		372		28		14,358
MBS - private		378		3		34		347
CDO securities		50		-		-		50
ABS		798		15		5		808
Corporate and other debt securities		464		19		1		482
Coke common stock		-		1,973		-		1,973
Other equity securities ¹		886		1		-		887

Total securities AFS		$24,484		$2,534		$123		$26,895

¹ At June 30, 2011, other equity securities included $205 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $132 million in mutual fund investments (par value). At December 31, 2010, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $197 million in mutual fund investments (par value).

Securities AFS that were pledged to secure public deposits, repurchase agreements, trusts, and other funds had a fair value of $4.5 billion and $6.9 billion as of June 30, 2011 and December 31, 2010, respectively. Further, under The Agreements, the Company pledged its shares of Coke common stock, which is hedged with derivative instruments, as discussed in Note 11, “Derivative Financial Instruments.” The Company has also pledged $1.1 billion of certain trading assets and cash equivalents to secure $1.0 billion of repurchase agreements as of June 30, 2011.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The amortized cost and fair value of investments in debt securities at June 30, 2011 by estimated average life are shown below. Actual cash flows may differ from estimated average lives and contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in millions)

1 Year
or Less

1-5
Years

5-10
Years

After 10
Years

Total

Distribution of Maturities:

Amortized Cost

U.S. Treasury securities

$214

$508

$730

Federal agency securities

2,010

414

2,519

U.S. states and political subdivisions

131

255

499

MBS - agency

778

11,566

1,105

5,348

18,797

MBS - private

300

335

CDO securities

150

187

337

ABS

386

223

615

Corporate and other debt securities

Total debt securities

$1,554

$14,759

$2,096

$5,477

$23,886

Fair Value

U.S. Treasury securities

$219

$499

$726

Federal agency securities

2,044

427

2,566

U.S. states and political subdivisions

135

269

516

MBS - agency

797

11,947

1,146

5,441

19,331

MBS - private

279

311

CDO securities

150

187

337

ABS

395

225

625

Corporate and other debt securities

Total debt securities

$1,583

$15,174

$2,143

$5,568

$24,468

Securities in an Unrealized Loss Position

The Company held certain investment securities having unrealized loss positions. Market changes in interest rates and credit spreads will result in temporary unrealized losses as the market price of securities fluctuates. As of June 30, 2011, the Company did not intend to sell these securities nor was it more likely than not that the Company would be required to sell these securities before their anticipated recovery or maturity. The Company has reviewed its portfolio for OTTI in accordance with the accounting policies outlined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Securities in a continuous unrealized loss position at June 30, 2011 and December 31, 2010 were as follows:



	June 30, 2011
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Temporarily impaired securities
U.S. Treasury securities		$499		$8		$-		$-		$499		$8
Federal agency securities		85		1		-		-		85		1
U.S. states and political subdivisions		9		-		34		2		43		2
MBS - agency		477		2		-		-		477		2
MBS - private		4		-		23		3		27		3
CDO securities		162		-		-		-		162		-
ABS		-		-		13		3		13		3
Corporate and other debt securities		-		-		3		1		3		1

Total temporarily impaired securities		1,236		11		73		9		1,309		20

Other-than-temporarily impaired securities ¹
MBS - private		19		1		241		21		260		22
ABS		2		-		3		1		5		1

Total other-than-temporarily impaired securities		21		1		244		22		265		23


Total impaired securities		$1,257		$12		$317		$31		$1,574		$43


	December 31, 2010
	Less than twelve months				Twelve months or longer				Total
(Dollars in millions)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Temporarily impaired securities
U.S. Treasury securities		$2,010		$45		$-		$-		$2,010		$45
Federal agency securities		1,426		7		-		-		1,426		7
U.S. states and political subdivisions		45		1		35		2		80		3
MBS - agency		3,497		28		-		-		3,497		28
MBS - private		18		-		17		3		35		3
ABS		-		-		14		4		14		4
Corporate and other debt securities		-		-		3		1		3		1

Total temporarily impaired securities		6,996		81		69		10		7,065		91

Other-than-temporarily impaired securities ¹
MBS - private		-		-		286		31		286		31
ABS		4		1		-		-		4		1

Total other-than-temporarily impaired securities		4		1		286		31		290		32


Total impaired securities		$7,000		$82		$355		$41		$7,355		$123

¹ Includes OTTI securities for which credit losses have been recorded in earnings in current or prior periods.

Unrealized losses on securities that have been other-than-temporarily impaired are the result of factors other than credit and therefore are recorded in OCI. Losses related to credit impairment on these securities is determined through estimated cash flow analyses and have been recorded in earnings in current or prior periods. The unrealized OTTI loss relating to private MBS as of June 30, 2011, includes purchased and retained interests from 2007 vintage securitizations. The unrealized OTTI loss relating to ABS is related to three securities within the portfolio that are 2003 vintage home equity issuances. The expectation of cash flows for the previously impaired ABS securities has improved such that the amount of expected credit losses was reduced, and the expected increase in cash flows will be accreted into earnings as a yield adjustment over the remaining life of the securities.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Realized Gains and Losses and Other than Temporarily Impaired

Gross realized gains and losses on sales and OTTI on securities AFS during the periods were as follows:


	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2011		2010		2011		2010
Gross realized gains		$33		$62		$176		$77
Gross realized losses		-		(4)		(78)		(17)
OTTI		(1)		(1)		(2)		(2)

Net securities gains		$32		$57		$96		$58

The securities that gave rise to the credit impairment recognized during the six months ended June 30, 2011 consisted of private MBS with a fair value of $193 million at June 30, 2011. The securities impacted by credit impairment during the six months ended June 30, 2010, consisted of private MBS with a fair value of $1 million as of June 30, 2010. Credit impairment that is determined through the use of cash flow models is estimated using cash flows on security specific collateral and the transaction structure. Future expected credit losses are determined by using various assumptions, the most significant of which include current default rates, prepayment rates, and loss severities. For the majority of the securities that the Company has reviewed for credit-related OTTI, credit information is available and modeled at the loan level underlying each security, and the Company also considers information such as loan to collateral values, FICO scores, and geographic considerations such as home price appreciation/depreciation. These inputs are updated on a regular basis to ensure the most current credit and other assumptions are utilized in the analysis. If, based on this analysis, the Company does not expect to recover the entire amortized cost basis of the security, the expected cash flows are then discounted at the security’s initial effective interest rate to arrive at a present value amount. OTTI credit losses reflect the difference between the present value of cash flows expected to be collected and the amortized cost basis of these securities. During the six months ended June 30, 2011 and 2010, all OTTI recognized in earnings on private MBS have underlying collateral of residential mortgage loans securitized in 2007. The majority of the OTTI was taken on private MBS which were originated by the Company and, therefore, have geographic concentrations in the Company’s primary footprint. Additionally, the Company has not purchased new private MBS during the six months ended June 30, 2011, and continues to reduce existing exposure primarily through paydowns.


	Three Months Ended June 30				Six Months Ended June 30
	2011		2010		2011		2010

(Dollars in millions)	MBS - Private		MBS - Private		MBS - Private		MBS - Private
Total OTTI losses		$1		$1		$2		$2
Portion of losses recognized in OCI (before taxes) ¹		-		-		-		-

Net impairment losses recognized in earnings		$1		$1		$2		$2

¹ The initial OTTI amount represents the excess of the amortized cost over the fair value of AFS debt securities. For subsequent impairments of the same security, amount represents additional declines in the fair value subsequent to the previously recorded OTTI, if applicable, until such time the security is no longer in an unrealized loss position.

The following is a rollforward of credit losses recognized in earnings for the six months ended June 30, 2011 and 2010, related to securities for which some portion of the OTTI loss remains in AOCI:


(Dollars in millions)
Balance, as of January 1, 2010			$22
Additions/reductions ¹			-

Balance, as of June 30, 2010			$22


Balance, as of January 1, 2011			$20
Additions:
OTTI credit losses on previously impaired securities			2
Reductions:
Increases in expected cash flows recognized over the remaining life of the securities			(1)

Balance, as of June 30, 2011			$21

¹ During the six months ended June 30, 2010, the Company recognized $2 million of OTTI through earnings on debt securities in which no portion of the OTTI loss was included in OCI at any time during the period. OTTI related to these securities are excluded from this amount.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The following table presents a summary of the significant inputs used in determining the measurement of credit losses recognized in earnings for private MBS as of June 30, 2011 and December 31, 2010:


	June 30, 2011	December 31, 2010
Current default rate	4 - 8%	2 - 7%
Prepayment rate	12 - 22%	14 - 22%
Loss severity	39 - 44%	37 - 46%

Note 3 - Loans

Composition of Loan Portfolio


(Dollars in millions)	June 30, 2011		December 31, 2010
Commercial loans:
Commercial & industrial ¹		$45,922		$44,753
Commercial real estate		5,707		6,167
Commercial construction		1,740		2,568

Total commercial loans		53,369		53,488
Residential loans:
Residential mortgages - guaranteed		4,513		4,520
Residential mortgages - nonguaranteed ²		23,224		23,959
Home equity products		16,169		16,751
Residential construction		1,118		1,291

Total residential loans		45,024		46,521
Consumer loans:
Guaranteed student loans		4,620		4,260
Other direct		1,863		1,722
Indirect		9,630		9,499
Credit cards		407		485

Total consumer loans		16,520		15,966

LHFI		$114,913		$115,975

LHFS		$2,052		$3,501

¹ Includes $4 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

² Includes $445 million and $488 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

During the six months ended June 30, 2011, the Company transferred $198 million in LHFI to LHFS. Additionally, during the six months ended June 30, 2011, the Company sold $277 million in loans and leases that had been held for investment at December 31, 2010 for a gain of $10 million. There were no other material purchases or sales of LHFI during the period.

Credit Quality Evaluation

The Company evaluates the credit quality of its loan portfolio based on internal credit risk ratings using numerous factors, including consumer credit risk scores, rating agency information, LTV ratios, collateral, collection experience, and other internal metrics. For the commercial portfolio, the Company believes that the most appropriate credit quality indicator is the individual loan’s risk assessment expressed according to regulatory agency classification, pass or criticized. Loans are rated pass or criticized based on the borrower’s willingness and ability to contractually perform along with the estimated net losses the Company would incur in the event of default. Criticized loans have a higher probability of default. As a result, criticized loans are further categorized into accruing and nonaccruing, representing management’s assessment of the collectability of principal and interest. Ratings for loans are updated at least annually or more frequently if there is a material change in creditworthiness.

Notes to Consolidated Financial Statements (Unaudited)-Continued

For consumer and residential loans, the Company believes that consumer credit risk, as assessed by the FICO scoring method, is a relevant credit quality indicator. FICO scores are obtained at origination as part of the Company’s formal underwriting process, and refreshed FICO scores are obtained by the Company at least quarterly. However, for student loans which are guaranteed by a federal agency, the Company does not utilize FICO scores as the Company does not originate government guaranteed student loans. For guaranteed student loans, the Company monitors the credit quality based primarily on delinquency status, which it believes is the most appropriate indicator of credit quality. As of June 30, 2011 and December 31, 2010, 77% of the guaranteed student loan portfolio was current with respect to payments; however, the loss exposure to the Company was mitigated by the government guarantee.

LHFI by credit quality indicator are shown in the tables below.

Commercial & industrial

Commercial real estate

Commercial construction

(Dollars in millions)

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

Credit rating:

Pass

$43,551

$42,140

$3,941

$4,316

$641

$836

Criticized accruing

1,834

2,029

1,367

1,509

472

771

Criticized nonaccruing

537

584

399

342

627

961

Total

$45,922

$44,753

$5,707

$6,167

$1,740

$2,568

Residential mortgages -
nonguaranteed ²

Home equity products

Residential construction

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

Current FICO score range:

700 and above

$15,752

$15,920

$11,471

$11,673

$752

$828

620 - 699

4,226

4,457

2,862

2,897

219

258

Below 620 ¹

3,246

3,582

1,836

2,181

147

205

Total

$23,224

$23,959

$16,169

$16,751

$1,118

$1,291

Consumer - other direct ³

Consumer - indirect

Consumer - credit cards

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

June 30,
2011

December 31,
2010

Current FICO score range:

700 and above

$1,111

$973

$7,023

$6,780

$219

$258

620 - 699

237

231

1,822

1,799

123

149

Below 620 ¹

105

785

920

Total

$1,438

$1,309

$9,630

$9,499

$407

$485

¹ For substantially all loans with refreshed FICO scores below 620, the borrower’s FICO score at the time of origination exceeded 620 but has since deteriorated as the loan has seasoned.

² Excludes $4.5 billion at both June 30, 2011 and December 31, 2010 of federally guaranteed residential loans. At both June 30, 2011 and December 31, 2010, the vast majority of these loans had FICO scores of 700 and above.

³ Excludes $425 million and $413 million as of June 30, 2011 and December 31, 2010, respectively, of private-label student loans with third party insurance. At both June 30, 2011 and December 31, 2010, the vast majority of these loans had FICO scores of 700 and above.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The payment status for the LHFI portfolio at June 30, 2011 and December 31, 2010 is shown in the tables below:

Nonaccruing3

As of June 30, 2011

(Dollars in millions)

Accruing
Current

Accruing
30-89 Days
Past Due

Accruing
90+ Days
Past Due

Nonaccruing ³

Total

Commercial loans:

Commercial & industrial ¹

$45,271

$93

$21

$537

$45,922

Commercial real estate

5,291

399

5,707

Commercial construction

1,102

627

1,740

Total commercial loans

51,664

119

1,563

53,369

Residential loans:

Residential mortgages - guaranteed

3,408

163

942

4,513

Residential mortgages - nonguaranteed ²

21,448

336

1,412

23,224

Home equity products

15,601

233

335

16,169

Residential construction

825

266

1,118

Total residential loans

41,282

757

972

2,013

45,024

Consumer loans:

Guaranteed student loans

3,578

417

625

4,620

Other direct

1,834

1,863

Indirect

9,547

9,630

Credit cards

391

407

Total consumer loans

15,350

495

641

16,520

Total LHFI

$108,296

$1,371

$1,636

$3,610

$114,913

¹ Includes $4 million in loans carried at fair value.

² Includes $445 million in loans carried at fair value.

³ Total nonaccruing loans past due 90 days or more totaled $2.8 billion. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

		Nonaccruing3		Nonaccruing3		Nonaccruing3		Nonaccruing3		Nonaccruing3
	As of December 31, 2010
(Dollars in millions)	Accruing Current		Accruing 30-89 Days Past Due		Accruing 90+ Days Past Due		Nonaccruing ³		Total
Commercial loans:
Commercial & industrial ¹		$44,046		$111		$12		$584		$44,753
Commercial real estate		5,794		27		4		342		6,167
Commercial construction		1,595		11		1		961		2,568

Total commercial loans		51,435		149		17		1,887		53,488
Residential loans:
Residential mortgages - guaranteed		3,469		167		884		-		4,520
Residential mortgages - nonguaranteed ²		21,916		456		44		1,543		23,959
Home equity products		16,162		234		-		355		16,751
Residential construction		953		42		6		290		1,291

Total residential loans		42,500		899		934		2,188		46,521
Consumer loans:
Guaranteed student loans		3,281		383		596		-		4,260
Other direct		1,692		15		5		10		1,722
Indirect		9,400		74		-		25		9,499
Credit cards		460		12		13		-		485

Total consumer loans		14,833		484		614		35		15,966

Total LHFI		$108,768		$1,532		$1,565		$4,110		$115,975

¹ Includes $4 million in loans carried at fair value.

² Includes $488 million in loans carried at fair value.

³ Total nonaccruing loans past due 90 days or more totaled $3.3 billion. Nonaccruing loans past due fewer than 90 days include modified nonaccrual loans reported as TDRs.

Notes to Consolidated Financial Statements (Unaudited)-Continued

A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due, including principal and interest, according to the contractual terms of the agreement. Commercial nonaccrual loans greater than $4 million and certain consumer, residential, and commercial loans whose terms have been modified in a TDR are individually evaluated for impairment. Smaller-balance homogeneous loans that are collectively evaluated for impairment are not included in the following tables. Additionally, the tables below exclude student loans and residential mortgages that were guaranteed by government agencies and for which there was nominal risk of principal loss.

As of June 30, 2011

For the Three Months Ended
June 30, 2011

For the Six Months Ended
June 30, 2011

(Dollars in millions)

Unpaid
Principal
Balance

Amortized
Cost ¹

Related
Allowance

Average
Amortized
Cost

Interest
Income
Recognized ²

Average
Amortized
Cost

Interest
Income
Recognized ²

Impaired loans with no related allowance recorded:

Commercial loans:

Commercial & industrial

$109

$100

$102

$103

Commercial real estate

Commercial construction

102

Total commercial loans

258

213

264

268

Impaired loans with an allowance recorded:

Commercial loans:

Commercial & industrial

130

Commercial real estate

169

138

154

136

Commercial construction

394

300

104

321

356

Total commercial loans

660

524

165

563

622

Residential loans:

Residential mortgages - nonguaranteed

2,860

2,488

283

2,445

2,455

Home equity products

521

488

487

447

Residential construction

228

188

191

195

Total residential loans

3,609

3,164

397

3,123

3,097

Consumer loans:

Other direct

Total impaired loans

$4,540

$3,914

$564

$3,963

$31

$3,998

$62

¹ Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce the net book balance.

² Of the interest income recognized for the three and six months ended June 30, 2011, cash basis interest income was $7 million and $13 million, respectively.


	As of December 31, 2010
(Dollars in millions)	Unpaid Principal Balance		Amortized Cost ¹		Related Allowance
Impaired loans with no related allowance recorded:
Commercial loans:
Commercial & industrial		$86		$67		$-
Commercial real estate		110		86		-
Commercial construction		67		52		-

Total commercial loans		263		205		-
Impaired loans with an allowance recorded:
Commercial loans:
Commercial & industrial		123		96		18
Commercial real estate		103		81		19
Commercial construction		673		524		138

Total commercial loans		899		701		175
Residential loans:
Residential mortgages - nonguaranteed		2,785		2,467		309
Home equity products		503		503		93
Residential construction		226		196		26

Total residential loans		3,514		3,166		428
Consumer loans:
Other direct		11		11		2

Total impaired loans		$4,687		$4,083		$605

¹ Amortized cost reflects charge-offs that have been recognized plus other amounts that have been applied to reduce net book balance.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Included in the impaired loan balances above were $2.6 billion and $2.5 billion of accruing TDRs at June 30, 2011 and December 31, 2010, respectively, of which 86% and 85% were current, respectively. See Note 1, “Significant Accounting Policies,” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for further information regarding the Company’s loan impairment policy.

At June 30, 2011 and December 31, 2010, the Company had $21 million and $15 million, respectively, in commitments to lend additional funds to debtors owing receivables whose terms have been modified in a TDR.

Nonperforming assets at June 30, 2011 and December 31, 2010 are shown in the following table:


(Dollars in millions)	June 30, 2011		December 31, 2010
Nonperforming Assets
Nonaccrual/NPLs:
Commercial loans:

Commercial & industrial ¹		$537		$584
Commercial real estate		399		342
Commercial construction		627		961
Residential loans:

Residential mortgages - nonguaranteed ²		1,412		1,543
Home equity products		335		355
Residential construction		266		290
Consumer loans:
Other direct		9		10
Indirect		25		25

Total nonaccrual/NPLs		3,610		4,110

OREO ³		483		596
Other repossessed assets		11		52

Total nonperforming assets		$4,104		$4,758

¹ Includes $4 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

² Includes $23 million and $24 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

³ Does not include foreclosed real estate related to loans insured by the FHA or the VA. Proceeds due from the FHA and the VA are recorded as a receivable in other assets until the funds are received and the property is conveyed. The receivable amount related to proceeds due from FHA or the VA totaled $175 million and $195 million at June 30, 2011 and December 31, 2010, respectively.

Concentrations of Credit Risk

The Company does not have a significant concentration of risk to any individual client except for the U.S. government and its agencies. However, a geographic concentration arises because the Company operates primarily in the Southeastern and Mid-Atlantic regions of the U.S. SunTrust engages in limited international banking activities. The Company’s total cross-border outstanding loans were $383 million and $446 million at June 30, 2011 and December 31, 2010, respectively.

The major concentrations of credit risk for the Company arise by collateral type in relation to loans and credit commitments. The only significant concentration that exists is in loans secured by residential real estate. At June 30, 2011, the Company owned $45.0 billion in residential loans, representing 39% of total LHFI, and had $13.2 billion in commitments to extend credit on home equity lines and $7.2 billion in mortgage loan commitments. Of the residential loans owned at June 30, 2011, 10% were guaranteed by a federal agency or a GSE. At December 31, 2010, the Company owned $46.5 billion in residential real estate loans, representing 40% of total LHFI, and had $13.6 billion in commitments to extend credit on home equity lines and $9.2 billion in mortgage loan commitments. Of the residential loans owned at December 31, 2010, 10% were guaranteed by a federal agency or a GSE.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Included in the residential mortgage portfolio were $16.7 billion and $17.6 billion of mortgage loans at June 30, 2011 and December 31, 2010, respectively, that were not covered by mortgage insurance and whose terms, such as an interest only feature, a high LTV ratio, or a junior lien position, may increase the Company’s exposure to credit risk and result in a concentration of credit risk. Of these mortgage loans, $12.1 billion and $13.2 billion were interest only loans at origination, primarily with a ten year interest only period, including $1.9 billion and $2.0 billion, respectively, of loans that have since been modified into fully amortizing products.

Note 4 - Allowance for Credit Losses

The allowance for credit losses consists of the ALLL and the reserve for unfunded commitments. Activity in the allowance for credit losses is summarized in the table below:

2011

Three Months Ended
June 30

Six Months Ended
June 30

(Dollars in millions)

2011

2010

2011

2010

Balance at beginning of period

$2,908

$3,276

$3,032

$3,235

Provision for loan losses

395

702

846

1,579

Benefit for unfunded commitments

(3)

(40)

(7)

(55)

Loan charge-offs

(563)

(768)

(1,178)

(1,630)

Loan recoveries

102

Balance at end of period

$2,795

$3,216

$2,795

$3,216

Components:

ALLL

$2,744

$3,156

Unfunded commitments reserve ¹

Allowance for credit losses

$2,795

$3,216

¹ The unfunded commitments reserve is separately recorded in other liabilities in the Consolidated Balance Sheets.

Activity in the ALLL by segment is presented in the tables below:


	Three Months Ended June 30, 2011
(Dollars in millions)	Commercial		Residential		Consumer		Total
Balance at beginning of period		$1,255		$1,440		$159		$2,854
Provision for loan losses		124		252		19		395
Loan charge-offs		(220)		(303)		(40)		(563)
Loan recoveries		41		6		11		58

Balance at end of period		$1,200		$1,395		$149		$2,744


	Three Months Ended June 30, 2010
(Dollars in millions)	Commercial		Residential		Consumer		Total
Balance at beginning of period		$1,399		$1,590		$187		$3,176
Provision for loan losses		270		413		19		702
Loan charge-offs		(251)		(470)		(47)		(768)
Loan recoveries		29		5		12		46

Balance at end of period		$1,447		$1,538		$171		$3,156

Notes to Consolidated Financial Statements (Unaudited)-Continued

Six Months Ended June 30, 2011

(Dollars in millions)

Commercial

Residential

Consumer

Total

Balance at beginning of period

$1,303

$1,498

$173

$2,974

Provision for loan losses

232

574

846

Loan charge-offs

(405)

(688)

(85)

(1,178)

Loan recoveries

102

Balance at end of period

$1,200

$1,395

$149

$2,744

Six Months Ended June 30, 2010

(Dollars in millions)

Commercial

Residential

Consumer

Total

Balance at beginning of period

$1,353

$1,592

$175

$3,120

Provision for loan losses

485

1,014

1,579

Loan charge-offs

(443)

(1,078)

(109)

(1,630)

Loan recoveries

Balance at end of period

$1,447

$1,538

$171

$3,156

As further discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, the ALLL is composed of specific allowances for certain nonaccrual loans and TDRs and general allowances grouped into loan pools based on similar characteristics. No allowance is required for loans carried at fair value. Additionally, the Company does not record an allowance for loan products that are guaranteed by government agencies, as there is nominal risk of principal loss. The Company’s LHFI portfolio and related ALLL at June 30, 2011 and December 31, 2010, respectively, is shown in the tables below:

00000000

As of June 30, 2011

Commercial

Residential

Consumer

Total

(Dollars in millions)

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Individually evaluated

$737

$165

$3,164

$397

$13

$3,914

$564

Collectively evaluated

52,628

1,035

41,415

998

16,507

147

110,550

2,180

Total evaluated

53,365

1,200

44,579

1,395

16,520

149

114,464

2,744

LHFI at fair value

445

449

Total LHFI

$53,369

$1,200

$45,024

$1,395

$16,520

$149

$114,913

$2,744

As of December 31, 2010

Commercial

Residential

Consumer

Total

(Dollars in millions)

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Carrying
Value

Associated
ALLL

Individually evaluated

$906

$175

$3,166

$428

$11

$4,083

$605

Collectively evaluated

52,578

1,128

42,867

1,070

15,955

171

111,400

2,369

Total evaluated

53,484

1,303

46,033

1,498

15,966

173

115,483

2,974

LHFI at fair value

488

492

Total LHFI

$53,488

$1,303

$46,521

$1,498

$15,966

$173

$115,975

$2,974

Note 5 – Goodwill and Other Intangible Assets

Goodwill

Goodwill is required to be tested for impairment on an annual basis or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount or indicate that it is more likely than not that a goodwill impairment exists when the carrying amount of a reporting unit is zero or negative. No events have occurred or circumstances changed since the annual testing of the Company’s goodwill as of September 30, 2010 that caused interim testing of goodwill during the first six months of 2011.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The changes in the carrying amount of goodwill by reportable segment for the six months ended June 30 are as follows:


(Dollars in millions)	Retail & Commercial		Retail Banking		Diversified Commercial Banking		CIB		W&IM		Total
Balance, January 1, 2010		$5,739		$-		$-		$223		$357		$6,319
Intersegment transfers		(5,739)		4,854		928		(43)		-		-
Contingent consideration		-		-		-		-		4		4

Balance, June 30, 2010		$-		$4,854		$928		$180		$361		$6,323


Balance, January 1, 2011		$-		$4,854		$928		$180		$361		$6,323
Contingent consideration		-		-		-		-		1		1
Purchase of the assets of asset management business		-		-		-		-		19		19

Balance, June 30, 2011		$-		$4,854		$928		$180		$381		$6,343

Other Intangible Assets

Changes in the carrying amounts of other intangible assets for the six months ended June 30 are as follows:

		$1,439		$1,439		$1,439		$1,439		$1,439
(Dollars in millions)	Core Deposit Intangibles		MSRs LOCOM		MSRs Fair Value		Other		Total
Balance, January 1, 2010		$104		$604		$936		$67		$1,711
Designated at fair value (transfers from amortized cost)		-		(604)		604		-		-
Amortization		(19)		-		-		(7)		(26)
MSRs originated		-		-		134		-		134
Changes in fair value:
Due to fair value election		-		-		145		-		145
Due to changes in inputs or assumptions ¹		-		-		(402)		-		(402)
Other changes in fair value ²		-		-		(119)		-		(119)

Balance, June 30, 2010		$85		$-		$1,298		$60		$1,443


Balance, January 1, 2011		$67		$-		$1,439		$65		$1,571
Amortization		(16)		-		-		(7)		(23)
MSRs originated		-		-		136		-		136
Sale of MSRs		-		-		(7)		-		(7)
Changes in fair value:
Due to changes in inputs or assumptions ¹		-		-		(51)		-		(51)
Other changes in fair value ²		-		-		(94)		-		(94)
Other		-		-		-		7		7

Balance, June 30, 2011		$51		$-		$1,423		$65		$1,539

¹ Primarily reflects changes in discount rates and prepayment speed assumptions, due to changes in interest rates.

² Represents changes due to the collection of expected cash flows, net of accretion, due to passage of time.

Mortgage Servicing Rights

The Company retains MSRs from certain of its sales or securitizations of residential mortgage loans. MSRs on residential mortgage loans are the only servicing assets capitalized by the Company and are classified within intangible assets on the Company’s Consolidated Balance Sheets.

Income earned by the Company on its MSRs is derived primarily from contractually specified mortgage servicing fees and late fees, net of curtailment costs. Such income earned for the three months ended June 30, 2011 and 2010, was $94 million, and $100 million, respectively, and $186 million and $198 million for the six months ended June 30, 2011 and 2010, respectively. These amounts are reported in mortgage servicing related income in the Consolidated Statements of Income/(Loss).

Notes to Consolidated Financial Statements (Unaudited)-Continued

As of June 30, 2011 and December 31, 2010, the total unpaid principal balance of mortgage loans serviced was $162.9 billion and $167.2 billion, respectively. Included in these amounts were $131.5 billion and $134.1 billion as of June 30, 2011 and December 31, 2010, respectively, of loans serviced for third parties. During the six months ended June 30, 2011, the Company sold MSRs on residential loans with an unpaid principal balance of $1.7 billion. Because MSRs are reported at fair value, the sale did not have a material impact on mortgage servicing related income.

A summary of the key characteristics, inputs, and economic assumptions used to estimate the fair value of the Company’s MSRs as of June 30, 2011 and December 31, 2010, and the sensitivity of the fair values to immediate 10% and 20% adverse changes in those assumptions are shown in the table below.


(Dollars in millions)	June 30, 2011		December 31, 2010
Fair value of retained MSRs		$1,423		$1,439

Prepayment rate assumption (annual)		10 %		12 %
Decline in fair value from 10% adverse change		$63		$50
Decline in fair value from 20% adverse change		103		95
Discount rate (annual)		11 %		12 %
Decline in fair value from 10% adverse change		$67		$68
Decline in fair value from 20% adverse change		129		130
Weighted-average life (in years)		6.4		6.2
Weighted-average coupon		5.3 %		5.4 %

The above sensitivities are hypothetical and should be used with caution. As the amounts indicate, changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the retained interest is calculated without changing any other assumption. In reality, changes in one factor may result in changes in another, which might magnify or counteract the sensitivities. In addition, the sensitivities above do not include the effect of hedging activity undertaken by the Company to offset changes in the fair value of MSRs. See Note 11, “Derivative Financial Instruments,” for further information regarding these hedging transactions.

Note 6 - Certain Transfers of Financial Assets and Variable Interest Entities

Certain Transfers of Financial Assets and related Variable Interest Entities

The Company has transferred residential and commercial mortgage loans, student loans, commercial and corporate loans, and CDO securities in sale or securitization transactions in which the Company has, or had, continuing involvement. All such transfers have been accounted for as sales by the Company. The Company’s continuing involvement in such transfers includes owning certain beneficial interests, including senior and subordinate debt instruments as well as equity interests, servicing or collateral manager responsibilities, and guarantee or recourse arrangements. Except as specifically noted herein, the Company is not required to provide additional financial support to any of the entities to which the Company has transferred financial assets, nor has the Company provided any support it was not otherwise be obligated to provide. In accordance with the accounting guidance related to transfers of financial assets that became effective on January 1, 2010, upon completion of transfers of assets that satisfy the conditions to be reported as a sale, the Company derecognizes the transferred assets and recognizes at fair value any beneficial interests in the transferred financial assets such as trading assets or securities AFS, as well as, servicing rights retained and guarantee liabilities incurred. See Note 12, “Fair Value Election and Measurement,” for further discussion of the Company’s fair value methodologies.

When evaluating transfers and other transactions with VIEs for consolidation, the Company first determines if it has a VI in the VIE. A VI is typically in the form of securities representing retained interests in the transferred assets and, at times, servicing rights and collateral manager fees. If the Company has a VI in the entity, it then evaluates whether or not it has both (1) the power to direct the activities that most significantly impact the economic performance of the VIE, and (2) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE to determine if the Company should consolidate the VIE.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Below is a summary of transfers of financial assets to VIEs for which the Company has retained some level of continuing involvement.

Residential Mortgage Loans

The Company typically transfers first lien residential mortgage loans in conjunction with Ginnie Mae, Fannie Mae, and Freddie Mac securitization transactions whereby the loans are exchanged for cash or securities that are readily redeemed for cash proceeds and servicing rights. The securities issued through these transactions are guaranteed by the issuer and, as such, under seller/servicer agreements the Company is required to service the loans in accordance with the issuers’ servicing guidelines and standards. The Company sold residential mortgage loans to these entities, which resulted in pre-tax gains of $107 million and $137 million, including servicing rights, for the three months ended June 30, 2011 and 2010, respectively, and $118 million and $222 million for the six months ended June 30, 2011 and 2010, respectively. These gains are included within mortgage production related income/(loss) in the Consolidated Statements of Income/(Loss). These gains include the change in value of the loans as a result of changes in interest rates from the time the related IRLCs were issued to the borrowers but do not include the results of hedging activities initiated by the Company to mitigate this market risk. See Note 11, “Derivative Financial Instruments,” for further discussion of the Company’s hedging activities. As seller, the Company has made certain representations and warranties with respect to the originally transferred loans, including those transferred under Ginnie Mae, Fannie Mae, and Freddie Mac programs, which are discussed in Note 13, “Reinsurance Arrangements and Guarantees.”

In a limited number of securitizations, the Company has transferred loans to trusts, which previously qualified as QSPEs, sponsored by the Company. These trusts issue securities which are ultimately supported by the loans in the underlying trusts. In these transactions, the Company has received securities representing retained interests in the transferred loans in addition to cash and servicing rights in exchange for the transferred loans. The received securities are carried at fair value as either trading assets or securities AFS. As of June 30, 2011 and December 31, 2010, the fair value of securities received totaled $171 million and $193 million, respectively. At June 30, 2011, securities with a fair value of $153 million were valued using a third party pricing service. The remaining $18 million in securities consist of subordinate interests from a 2003 securitization of prime fixed and floating rate loans and were valued using a discounted cash flow model that uses historically derived prepayment rates and credit loss assumptions along with estimates of current market discount rates. The Company did not significantly modify the assumptions used to value these retained interests at June 30, 2011, from the assumptions used to value the interests at December 31, 2010. For both periods, analyses of the impact on the fair values of two adverse changes from the key assumptions were performed and the resulting amounts were insignificant for each key assumption and in the aggregate.

The Company evaluated these securitization transactions for consolidation under the VIE consolidation guidance. As servicer of the underlying loans, the Company is generally deemed to have power over the securitization. However, if a single party, such as the issuer or the master servicer, effectively controls the servicing activities or has the unilateral ability to terminate the Company as servicer without cause, then that party is deemed to have power. In almost all of its securitization transactions, the Company does not have power over the VIE as a result of these rights held by the master servicer. In certain transactions, the Company does have power as the servicer; however, the Company does not also have an obligation to absorb losses or the right to receive benefits that could potentially be significant to the securitization. The absorption of losses and the receipt of benefits would generally manifest itself through the retention of senior or subordinated interests. As of December 31, 2010, the Company determined that it was not the primary beneficiary of, and thus did not consolidate, any of these securitization entities. No events occurred during the six months ended June 30, 2011 that would change the Company’s previous conclusion that it is not the primary beneficiary of any of these securitization entities. Total assets as of June 30, 2011 and December 31, 2010 of the unconsolidated trusts in which the Company has a VI are $578 million and $651 million, respectively.

The Company’s maximum exposure to loss related to the unconsolidated VIEs in which it holds a VI is comprised of the loss of value of any interests it retains and any repurchase obligations it incurs as a result of a breach of its representations and warranties.

Commercial and Corporate Loans

In 2007, the Company completed a $1.9 billion structured sale of corporate loans to multi-seller CP conduits, which are VIEs administered by unrelated third parties, from which it retained a 3% residual interest in the pool of loans transferred, which does not constitute a VI in the third party conduits as it relates to the unparticipated portion of the loans. In conjunction with the transfer of the loans, the Company also provided commitments in the form of liquidity facilities to these conduits. In January 2010, the administrator of the conduits drew on these commitments in full, resulting in a funded loan to the conduits that was recorded on the Company’s Consolidated Balance Sheets. During the first quarter of 2011, the Company exercised its clean up call rights on the structured participation and repurchased the remaining corporate loans. In conjunction with the clean up call, the outstanding amount of the liquidity facilities and the residual interest were paid off. The exercise of the clean up call was not material to the Company’s financial condition, results of operations, or cash flows.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The Company has involvement with CLO entities that own commercial leveraged loans and bonds, certain of which were transferred by the Company to the CLOs. In addition to retaining certain securities issued by the CLOs, the Company also acts as collateral manager for these CLOs. The securities retained by the Company and the fees received as collateral manager represent a VI in the CLOs, which are considered to be VIEs.

The Company determined that it was the primary beneficiary of, and thus, would consolidate one of these CLOs as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses and the right to receive benefits from the entity that could potentially be significant to the CLO. In addition to fees received as collateral manager, including eligibility for performance incentive fees, and owning certain preference shares, the Company’s multi-seller conduit, Three Pillars, owns a senior interest in the CLO, resulting in economics that could potentially be significant to the VIE. On January 1, 2010, the Company consolidated $307 million in total assets and $279 million in net liabilities of the CLO entity. The Company elected to consolidate the CLO at fair value and to carry the financial assets and financial liabilities of the CLO at fair value subsequent to adoption. The initial consolidation of the CLO had a negligible impact on the Company’s Consolidated Statements of Shareholders’ Equity. Substantially all of the assets and liabilities of the CLO are loans and issued debt, respectively. The loans are classified within LHFS at fair value and the debt is included within long-term debt at fair value on the Company’s Consolidated Balance Sheets (see Note 12, “Fair Value Election and Measurement,” for a discussion of the Company’s methodologies for estimating the fair values of these financial instruments). At June 30, 2011, the Company’s Consolidated Balance Sheets reflected $329 million of loans held by the CLO and $289 million of debt issued by the CLO. The Company is not obligated, contractually or otherwise, to provide financial support to this VIE nor has it previously provided support to this VIE. Further, creditors of the VIE have no recourse to the general credit of the Company, as the liabilities of the CLO are paid only to the extent of available cash flows from the CLO’s assets.

For the remaining CLOs, which are also considered to be VIEs, the Company has determined that it is not the primary beneficiary as it does not have an obligation to absorb losses or the right to receive benefits from the entities that could potentially be significant to the VIE. The Company was able to liquidate a number of its positions in these CLO preference shares during 2010. Its remaining preference share exposure was valued at $2 million as of June 30, 2011 and December 31, 2010. Upon liquidation of the preference shares, the Company’s only remaining involvement with these VIEs was through its collateral manager role. The Company receives fees for managing the assets of these vehicles; these fees are considered adequate compensation and are commensurate with the level of effort required to provide such services. The fees received by the Company from these entities are recorded as trust and investment management income in the Consolidated Statements of Income/(Loss). Senior fees earned by the Company are generally not considered at risk; however, subordinate fees earned by the Company are subject to the availability of cash flows and to the priority of payments. The estimated assets and liabilities of these entities that were not included on the Company’s Consolidated Balance Sheets were $2.1 billion and $1.9 billion, respectively, at June 30, 2011, and $2.1 billion and $2.0 billion, respectively, at December 31, 2010. The Company is not obligated to provide any support to these entities, nor has it previously provided support to these entities. No events occurred during the six months ended June 30, 2011 that would change the Company’s previous conclusion that it is not the primary beneficiary of any of these securitization entities.

Student Loans

In 2006, the Company completed a securitization of government-guaranteed student loans through a transfer of loans to a securitization SPE, which previously qualified as a QSPE, and retained the related residual interest in the SPE. The Company, as master servicer of the loans in the SPE, has agreed to service each loan consistent with the guidelines determined by the applicable government agencies in order to maintain the government guarantee. The Company and the SPE have entered into an agreement to have the loans subserviced by an unrelated third party.

During the year ended December 31, 2010, the Company determined that this securitization of government-guaranteed student loans (the “Student Loan entity”) should be consolidated. Accordingly, the Company consolidated the Student Loan entity at its unpaid principal amount as of September 30, 2010, resulting in incremental total assets and total liabilities of approximately $490 million, and an immaterial impact on shareholders’ equity. The consolidation of the Student Loan entity had no impact on the Company’s earnings or cash flows that results from its involvement with this VIE. The primary balance sheet impacts from consolidating the Student Loan entity were increases in LHFI, the related ALLL, and long-term debt. In addition, the Company’s ownership of the residual interest in the SPE, previously classified in trading assets, was eliminated upon consolidation and the assets and liabilities of the Student Loan entity are recorded on a cost basis. At June 30, 2011 and December 31, 2010, the Company’s Consolidated Balance Sheets reflected $459 million and $479 million, respectively, of assets held by the Student Loan entity and $454 million and $474 million, respectively, of debt issued by the Student Loan entity.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Payments from the assets in the SPE must first be used to settle the obligations of the SPE, with any remaining payments remitted to the Company as the owner of the residual interest. To the extent that losses occur on the SPE’s assets, the SPE has recourse to the federal government as the guarantor up to a maximum guarantee amount of 97%. Losses in excess of the government guarantee reduce the amount of available cash payable to Company as the owner of the residual interest. To the extent that losses result from a breach of the master servicer’s servicing responsibilities, the SPE has recourse to the Company; the SPE may require the Company to repurchase the loan from the SPE at par value. If the breach was caused by the subservicer, the Company has recourse to seek reimbursement from the subservicer up to the guaranteed amount. The Company’s maximum exposure to loss related to the SPE is represented by the potential losses resulting from a breach of servicing responsibilities. To date, all loss claims filed with the guarantor that have been denied due to servicing errors that have either been cured or reimbursement has been provided to the Company by the subservicer. The Company is not obligated to provide any noncontractual support to this entity, and it has not provided any such support.

CDO Securities

The Company has transferred bank trust preferred securities in securitization transactions. The majority of these transfers occurred between 2002 and 2005 with one transaction completed in 2007. The Company retained equity interests in certain of these entities and also holds certain senior interests that were acquired during 2008 in conjunction with its acquisition of assets from the ARS transactions discussed in Note 14, “Contingencies.” The assumptions and inputs considered by the Company in valuing this retained interest include prepayment speeds, credit losses, and the discount rate. While all the underlying collateral is currently eligible for repayment by the obligor, given the nature of the collateral and the current repricing environment, the Company assumed no prepayment would occur before the final maturity, which is approximately 23 years on a weighted average basis. Due to the seniority of the interests in the structure, current estimates of credit losses in the underlying collateral could withstand a 20% adverse change in the default assumption without the securities incurring a valuation loss assuming all other assumptions remain constant. Therefore, the key assumption in valuing these securities was the assumed discount rate, which was estimated to range from 8% to 10% over LIBOR at June 30, 2011 compared to 14% to 16% over LIBOR at December 31, 2010. This significant change in the discount rate was supported by a return to liquidity in the market for similar interests. At June 30, 2011, and December 31, 2010, a 20% adverse change in the assumed discount rate results in declines of approximately $7 million and $5 million, respectively, in the fair value of these securities. Although the impact of each assumption change in isolation is minimal, the underlying collateral of the VIEs is highly concentrated and as a result, the default or deferral of certain large exposures may have a more dramatic effect on the discount rate than the 20% discussed above. Due to this, we estimate that each of the retained positions could experience a single deferral or default of an underlying collateral obligation that would result in a decline in valuation of the retained ARS ranging from $4 million to $15 million.

The Company is not obligated to provide any support to these entities and its maximum exposure to loss at June 30, 2011 and December 31, 2010 includes current senior interests held in trading securities, which had a fair value of $42 million as of June 30, 2011 and $25 million as of December 31, 2010. In addition, the Company settled an ARS claim in the second quarter of 2011 to purchase additional ARS in the VIEs. The fair value of ARS subject to the settlement was $7 million at June 30, 2011 and the purchases were completed in July 2011. The total assets of the trust preferred CDO entities in which the Company has remaining exposure to loss was $1.2 billion at June 30, 2011 and $1.3 billion at December 31, 2010. The Company determined that it was not the primary beneficiary of any of these VIEs, as the Company lacks the power to direct the significant activities of any of the VIEs. No events occurred during the six months ended June 30, 2011 that changed either the Company’s sale accounting or the Company’s conclusions that it is not the primary beneficiary of these VIEs.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The following tables present certain information related to the Company’s asset transfers in which it has continuing economic involvement for the three and six months ended June 30:


	Three Months Ended June 30, 2011
(Dollars in millions)	Residential Mortgage Loans		Commercial and Corporate Loans		Student Loans		CDO Securities		Total
Cash flows on interests held		$13		$1		$-		$-		$14
Servicing or management fees		1		2		-		-		3

	Three Months Ended June 30, 2010
(Dollars in millions)	Residential Mortgage Loans		Commercial and Corporate Loans		Student Loans		CDO Securities		Total
Cash flows on interests held		$13		$1		$1		$-		$15
Servicing or management fees		1		4		-		-		5

	Six Months Ended June 30, 2011
(Dollars in millions)	Residential Mortgage Loans		Commercial and Corporate Loans		Student Loans		CDO Securities		Total
Cash flows on interests held		$28		$1		$-		$1		$30
Servicing or management fees		2		5		-		-		7

	Six Months Ended June 30, 2010
(Dollars in millions)	Residential Mortgage Loans		Commercial and Corporate Loans		Student Loans		CDO Securities		Total
Cash flows on interests held		$28		$2		$3		$1		$34
Servicing or management fees		2		7		-		-		9

Portfolio balances and delinquency balances based on accruing loans 90 days or more past due and all nonaccrual loans as of June 30, 2011 and December 31, 2010, and net charge-offs related to managed portfolio loans (both those that are owned or consolidated by the Company and those that have been transferred) for three and six months ended June 30, 2011 and 2010 are as follows:


	Principal Balance				Past Due				Net Charge-offs
									For the Three Months Ended				For the Six Months Ended
(Dollars in millions)	June 30 2011		December 31 2010		June 30 2011		December 31 2010		June 30				June 30
(Dollars in millions)	June 30 2011		December 31 2010		June 30 2011		December 31 2010		2011		2010		2011		2010
Type of loan:
Commercial		$53,369		$53,488		$1,586		$1,904		$179		$222		$335		$391
Residential		45,024		46,521		2,985		3,122		297		465		677		1,068
Consumer		16,520		15,966		675		649		29		35		64		84

Total loan portfolio		114,913		115,975		5,246		5,675		505		722		1,076		1,543
Managed securitized loans
Commercial		2,051		2,244		41		44		-		22		-		22
Residential		120,875		120,429		3,053		3,497		15		11		27		22

Total managed loans		$237,839		$238,648		$8,340		$9,216		$520		$755		$1,103		$1,587

Servicing fees received by the Company were $90 million and $94 million during the three months ended June 30, 2011 and 2010, respectively, and $176 million and $187 million during the six months ended June 30, 2011 and 2010, respectively.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Other Variable Interest Entities

In addition to the Company’s involvement with certain VIEs related to transfers of financial assets, which is discussed above, the Company also has involvement with VIEs from other business activities.

Three Pillars Funding, LLC

SunTrust assists in providing liquidity to select corporate clients by directing them to a multi-seller CP conduit, Three Pillars. Three Pillars provides financing for direct purchases of financial assets originated and serviced by SunTrust’s corporate clients by issuing CP.

The Company has determined that Three Pillars is a VIE as Three Pillars has not issued sufficient equity at risk. In accordance with the VIE consolidation guidance, the Company has determined that it is the primary beneficiary of Three Pillars, as certain subsidiaries have both the power to direct the significant activities of Three Pillars and own potentially significant VIs, as discussed further herein. The assets and liabilities of Three Pillars were consolidated by the Company at their unpaid principal amounts at January 1, 2010; upon consolidation, the Company recorded an allowance for loan losses on $1.7 billion of secured loans that were consolidated at that time, resulting in an immaterial transition adjustment, which was recorded in the Company’s Consolidated Statements of Shareholders’ Equity.

The Company’s involvement with Three Pillars includes the following activities: services related to the administration of Three Pillars’ activities and client referrals to Three Pillars; the issuing of letters of credit, which provide partial credit protection to the CP holders; and providing liquidity arrangements that would provide funding to Three Pillars in the event it can no longer issue CP or in certain other circumstances. The Company’s activities with Three Pillars generated total revenue for the Company, net of direct salary and administrative costs, of $16 million and $15 million for the three months ended June 30, 2011 and 2010, respectively, and $32 million and $30 million for the six months ended June 30, 2011 and 2010, respectively.

At June 30, 2011 and December 31, 2010, the Company’s Consolidated Balance Sheets reflected approximately $2.5 billion and $2.4 billion, respectively, of secured loans held by Three Pillars, which are included within commercial loans, and $35 million and $99 million, respectively, of CP issued by Three Pillars, excluding intercompany liabilities, which is included within other short-term borrowings; other assets and liabilities were de minimis to the Company’s Consolidated Balance Sheets. No losses on any of Three Pillars’ assets were incurred during the three and six months ended June 30, 2011 and 2010.

Funding commitments extended by Three Pillars to its customers totaled $4.0 billion with outstanding receivables totaling $2.5 billion at June 30, 2011; the majority of which generally carry initial terms of one to three years and may be repaid or refinanced at any time. At December 31, 2010, Three Pillars had funding commitments and outstanding receivables totaling $4.1 billion and $2.4 billion, respectively. The majority of the commitments are backed by trade receivables and commercial loans that have been originated by companies operating across a number of industries. Trade receivables and commercial loans collateralize 38% and 20%, respectively, of the outstanding commitments, as of June 30, 2011, compared to 48% and 14%, respectively, as of December 31, 2010. Total assets supporting outstanding commitments have a weighted average life of 2.9 years and 2.3 years at June 30, 2011 and December 31, 2010, respectively.

Each transaction added to Three Pillars is typically structured to a minimum implied A/A2 rating according to established credit and underwriting policies as approved by credit risk management and monitored on a regular basis to ensure compliance with each transaction’s terms and conditions. Typically, transactions contain dynamic credit enhancement features that provide increased credit protection in the event asset performance deteriorates. If asset performance deteriorates beyond predetermined covenant levels, the transaction could become ineligible for continued funding by Three Pillars. This could result in the transaction being amended with the approval of credit risk management, or Three Pillars could terminate the transaction and enforce any rights or remedies available, including amortization of the transaction or liquidation of the collateral. In addition, Three Pillars has the option to fund under the liquidity facility provided by the Bank in connection with the transaction and may be required to fund under the liquidity facility if the transaction remains in breach. In addition, each commitment renewal requires credit risk management approval. The Company is not aware of unfavorable trends related to Three Pillars’ assets for which the Company expects to suffer material losses.

Notes to Consolidated Financial Statements (Unaudited)-Continued

At June 30, 2011, Three Pillars’ outstanding CP used to fund its assets had remaining weighted average lives of 11 days and maturities through August 1, 2011. The assets of Three Pillars generally provide the sources of cash flows for the CP. However, the Company has issued commitments in the form of liquidity facilities and other credit enhancements to support the operations of Three Pillars. Due to the Company’s consolidation of Three Pillars as of January 1, 2010, these commitments are eliminated in consolidation for U.S. GAAP purposes. The liquidity commitments are revolving facilities that are sized based on the current commitments provided by Three Pillars to its customers. The liquidity facilities may generally be used if new CP cannot be issued by Three Pillars to repay maturing CP. However, the liquidity facilities are available in all circumstances, except certain bankruptcy-related events with respect to Three Pillars. Draws on the facilities are subject to the purchase price (or borrowing base) formula that, in many cases, excludes defaulted assets to the extent that they exceed available over-collateralization in the form of non-defaulted assets, and may also provide the liquidity banks with loss protection equal to a portion of the loss protection provided for in the related securitization agreement. Additionally, there are transaction specific covenants and triggers that are tied to the performance of the assets of the relevant seller/servicer that may result in a transaction termination event, which, if continuing, would require funding through the related liquidity facility. Finally, in a termination event of Three Pillars, such as if its tangible net worth falls below $5,000 for a period in excess of 15 days, Three Pillars would be unable to issue CP, which would likely result in funding through the liquidity facilities. Draws under the credit enhancement are also available in all circumstances, but are generally used to the extent required to make payment on any maturing CP if there are insufficient funds from collections of receivables or the use of liquidity facilities. The required amount of credit enhancement at Three Pillars will vary from time to time as new receivable pools are purchased or removed from its asset portfolio, but is generally equal to 10% of the aggregate commitments of Three Pillars.

Due to the consolidation of Three Pillars, the Company’s maximum exposure to potential loss was $4.1 billion and $4.2 billion as of June 30, 2011 and December 31, 2010, respectively, which represents the Company’s exposure to the lines of credit that Three Pillars had extended to its clients. The Company did not recognize any liability on its Consolidated Balance Sheets related to the liquidity facilities and other credit enhancements provided to Three Pillars as of June 30, 2011 or December 31, 2010, as no amounts had been drawn, nor were any draws probable to occur, such that a loss should have been accrued.

Total Return Swaps

The Company has had involvement with various VIEs related to its TRS business, which recommenced during 2010. Under the matched book TRS business model, the VIEs purchase assets (typically loans) from the market, which are identified by third party clients, that serve as the underlying reference assets for a TRS between the VIE and the Company and a mirror TRS between the Company and its third party clients. The TRS contracts between the VIEs and the Company hedge the Company’s exposure to the TRS contracts with its third party clients. These third parties are not related parties to the Company, nor are they and the Company de facto agents of each other. In order for the VIEs to purchase the reference assets, the Company provides senior financing, in the form of demand notes, to these VIEs. The TRS contracts pass through interest and other cash flows on the assets owned by the VIEs to the third parties, along with exposing the third parties to depreciation on the assets and providing them with the rights to appreciation on the assets. The terms of the TRS contracts require the third parties to post initial collateral, in addition to ongoing margin as the fair values of the underlying assets change. Although the Company has always caused the VIEs to purchase a reference asset in response to the addition of a reference asset by its third party clients, there is no legal obligation between the Company and its third party clients for the Company to purchase the reference assets or for the Company to cause the VIEs to purchase the assets.

The Company considered the VIE consolidation guidance, which requires an evaluation of the substantive contractual and non-contractual aspects of transactions involving VIEs established subsequent to January 1, 2010. The Company and its third party clients are the only VI holders. As such, the Company evaluated the nature of all VIs and other interests and involvement with the VIEs, in addition to the purpose and design of the VIEs, relative to the risks they were designed to create. The purpose and design of a VIE are key components of a consolidation analysis and any power should be analyzed based on the substance of that power relative to the purpose and design of the VIE. The VIEs were designed for the benefit of the third parties and would not exist if the Company did not enter into the TRS contracts with the third parties. The activities of the VIEs are restricted to buying and selling reference assets with respect to the TRS contracts entered into between the Company and its third party clients and the risks/benefits of any such assets owned by the VIEs are passed to the third party clients via the TRS contracts. The TRS contracts between the Company and its third party clients have a substantive effect on the design of the overall transaction and the VIEs. Based on its evaluation, the Company has determined that it is not the primary beneficiary of the VIEs, as the design of the TRS business results in the Company having no substantive power to direct the significant activities of the VIEs.

Notes to Consolidated Financial Statements (Unaudited)-Continued

At June 30, 2011 and December 31, 2010, the Company had $1.1 billion and $972 million, respectively, in senior financing outstanding to VIEs, which were classified within trading assets on the Consolidated Balance Sheets and carried at fair value. These VIEs had entered into TRS contracts with the Company with outstanding notional amounts of $1.1 billion and $969 million at June 30, 2011 and December 31, 2010, respectively, and the Company had entered into mirror TRS contracts with its third parties with the same outstanding notional amounts. At June 30, 2011, the fair values of these TRS assets and liabilities were $22 million and $19 million, respectively, and at December 31, 2010, the fair values of these TRS assets and liabilities were $34 million and $32 million, respectively, reflecting the pass-through nature of these structures. The notional amounts of the TRS contracts with the VIEs represent the Company’s maximum exposure to loss, although such exposure to loss has been mitigated via the TRS contracts with the third parties. The Company has not provided any support to the VIE that it was not contractually obligated to for the six months ended June 30, 2011 or during the year ended December 31, 2010. For additional information on the Company’s TRS with these VIEs, see Note 11, “Derivative Financial Instruments.”

Community Development Investments

As part of its community reinvestment initiatives, the Company invests almost exclusively within its footprint in multi-family affordable housing developments and other community development entities as a limited and/or general partner and/or a debt provider. The Company receives tax credits for its partnership investments. The Company has determined that these partnerships are VIEs. During 2011 and 2010, the Company did not provide any financial or other support to its consolidated or unconsolidated investments that it was not previously contractually required to provide.

For partnerships where the Company operates strictly as the general partner, the Company consolidates these partnerships on its Consolidated Balance Sheets. As the general partner, the Company typically guarantees the tax credits due to the limited partner and is responsible for funding construction and operating deficits. As of June 30, 2011 and December 31, 2010, total assets, which consist primarily of fixed assets and cash attributable to the consolidated partnerships, were $8 million, and total liabilities, excluding intercompany liabilities, were $1 million. Security deposits from the tenants are recorded as liabilities on the Company’s Consolidated Balance Sheets. The Company maintains separate cash accounts to fund these liabilities and these assets are considered restricted. The tenant liabilities and corresponding restricted cash assets were de minimis as of June 30, 2011 and December 31, 2010. While the obligations of the general partner are generally non-recourse to the Company, as the general partner, the Company may from time to time step in when needed to fund deficits. During 2011 and 2010, the Company did not provide any significant amount of funding as the general partner or to cover any deficits the partnerships may have generated.

For other partnerships, the Company acts only in a limited partnership capacity. The Company has determined that it is not the primary beneficiary of these partnerships and accounts for its limited partner interests in accordance with the accounting guidance for investments in affordable housing projects. The general partner or an affiliate of the general partner provides guarantees to the limited partner, which protects the Company from losses attributable to operating deficits, construction deficits and tax credit allocation deficits. Partnership assets of $1.1 billion in these partnerships were not included in the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010. These limited partner interests had carrying values of $198 million and $202 million at June 30, 2011 and December 31, 2010, respectively, and are recorded in other assets on the Company’s Consolidated Balance Sheets. The Company’s maximum exposure to loss for these limited partner investments totaled $430 million and $458 million at June 30, 2011 and December 31, 2010, respectively. The Company’s maximum exposure to loss would be borne by the loss of the limited partnership equity investments along with $204 million and $222 million of loans issued by the Company to the limited partnerships at June 30, 2011 and December 31, 2010, respectively. The difference between the maximum exposure to loss and the investment and loan balances is primarily attributable to the unfunded equity commitments. Unfunded equity commitments are amounts that the Company has committed to the partnerships upon the partnerships meeting certain conditions. When these conditions are met, the Company will invest these additional amounts in the partnerships.

When the Company owns both the limited partner and general partner interests or acts as the indemnifying party, the Company consolidates the partnerships. As of June 30, 2011 and December 31, 2010, total assets, which consist primarily of fixed assets and cash, attributable to the consolidated, non-VIE partnerships were $383 million and $394 million, respectively, and total liabilities, excluding intercompany liabilities, primarily representing third party borrowings, were $109 million and $123 million, respectively. See Note 12, “Fair Value Election and Measurement,” for further discussion on the impact of impairment charges on affordable housing partnership investments.

Registered and Unregistered Funds Advised by RidgeWorth

RidgeWorth, a registered investment advisor and majority owned subsidiary of the Company, serves as the investment advisor for various private placement, common and collective funds, and registered mutual funds (collectively the “Funds”). The Company evaluates these Funds to determine if the Funds are VIEs. In February 2010, the FASB issued guidance that defers the application of the existing VIE consolidation guidance for investment funds meeting certain criteria. All of the registered and unregistered Funds advised by RidgeWorth meet the scope exception criteria and thus are not evaluated for consolidation under the guidance. Accordingly, the Company continues to apply the consolidation guidance in effect prior to the issuance of the existing guidance to interests in funds that qualify for the deferral.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The Company has concluded that some of the Funds are VIEs. However, the Company has concluded that it is not the primary beneficiary of these funds as the Company does not absorb a majority of the expected losses nor expected returns of the funds. The Company’s exposure to loss is limited to the investment advisor and other administrative fees it earns and if applicable, any equity investments. The total unconsolidated assets of these funds as of June 30, 2011 and December 31, 2010 were $1.4 billion and $1.9 billion, respectively.

The Company does not have any contractual obligation to provide monetary support to any of the Funds. The Company did not provide any significant support, contractual or otherwise, to the Funds during the six months ended June 30, 2011 or during the year ended December 31, 2010.

Note 7 – Net Income/(Loss) Per Share

Equivalent shares of 32 million related to common stock options and common stock warrants outstanding as of June 30, 2011 and 2010 were excluded from the computations of diluted income/(loss) per average common share because they would have been anti-dilutive. Further, for EPS calculation purposes, during the three and six months ended June 30, 2010, the impact of dilutive securities were excluded from the diluted share count because the Company recognized a net loss available to common shareholders and the impact would have been anti-dilutive.

A reconciliation of the difference between average basic common shares outstanding and average diluted common shares outstanding for the three and six months ended June 30, 2011 and 2010 is included below. Additionally, included below is a reconciliation of net income/(loss) to net income/(loss) available to common shareholders.


	Three Months Ended				Six Months Ended
	June 30				June 30
(In millions, except per share data)	2011		2010		2011		2010
Net income/(loss)		$178		$12		$358		($149)
Series A preferred dividends		(2)		(2)		(4)		(4)
Dividends and accretion of discount on preferred stock issued to the U.S. Treasury		-		(66)		(66)		(132)
Accelerated accretion for repurchase of preferred stock issued to the U.S. Treasury		-		-		(74)		-
Dividends and undistributed earnings allocated to unvested shares		(2)		-		(2)		-

Net income/(loss) available to common shareholders		$174		($56)		$212		($285)


Average basic common shares		532		495		516		495
Effect of dilutive securities:
Stock options		1		1		2		1
Restricted stock		2		2		2		2

Average diluted common shares		535		498		520		498


Net income/(loss) per average common share - diluted		$0.33		($0.11)		$0.41		($0.58)

Net income/(loss) per average common share - basic		$0.33		($0.11)		$0.41		($0.58)

Note 8 – Long-Term Debt and Capital

In March 2011, the Federal Reserve completed its review of the Company’s capital plan in connection with the CCAR. Upon completion of the review, the Federal Reserve did not object to the Company’s capital plan as originally submitted in December 2010. As a result, during the first quarter of 2011, the Company completed a $1.0 billion common stock offering and a $1.0 billion senior debt offering, which pays 3.60% interest and is due in 2016. The Company subsequently used the proceeds from these offerings as well as from other available funds to repurchase, on March 30, 2011, $3.5 billion of Fixed Rate Cumulative Preferred Stock, Series C, and $1.4 billion of Fixed Rate Cumulative Preferred Stock, Series D that was issued to the U.S. Treasury under the TARP’s CPP. As a result of the repurchase of Series C and D preferred stock, the Company incurred a one-time non-cash charge to net income/(loss) available to common shareholders of $74 million during the first quarter of 2011, related to accelerating the outstanding discount accretion on the Series C and D preferred stock. The U.S. Treasury continues to hold warrants to purchase 11,891,280 shares of SunTrust common stock at an exercise price of $44.15 per share and 6,008,902 shares of SunTrust common stock at an exercise price of $33.70 per share.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The Company’s long-term debt increased from $13.6 billion at December 31, 2010 to $13.7 billion at June 30, 2011. The change was primarily as a result of the $1.0 billion senior debt offering described above, offset by $852 million subordinated debt that matured in the second quarter of 2011 and the repurchase of $220 million of fixed rate senior and junior subordinated notes that were due in 2011 and 2036.

As a result of the common stock offering, the Company’s common equity increased by $1.0 billion, net of issuance costs, and approximately 35 million new common shares were added to the Company’s outstanding common shares. Conversely, Consolidated Shareholders’ Equity decreased by $3.5 billion from December 31, 2010 primarily as a result of the repurchase of the Series C and D preferred stock, offset by the new common share issuance. The Company’s capital ratios as of June 30, 2011 and December 31, 2010 are noted below.

June 30, 2011

December 31, 2010

(Dollars in millions)

Amount

Ratio

Amount

Ratio

SunTrust Banks, Inc.

Tier 1 common

$11,994

9.22

$10,737

8.08

Tier 1 capital

14,446

11.11

18,156

13.67

Total capital

18,230

14.01

21,967

16.54

Tier 1 leverage

8.92

10.94

SunTrust Bank

Tier 1 capital

$13,650

10.67

$13,120

10.05

Total capital

16,927

13.23

16,424

12.58

Tier 1 leverage

8.66

8.33

Note 9 - Income Taxes

The provision for income taxes was $58 million and a benefit of $50 million for the three months ended June 30, 2011 and 2010, respectively, representing effective tax rates of 24.5% and (133.1%), respectively, during those periods. The provision for income taxes was $91 million and a benefit of $244 million for the six months ended June 30, 2011 and 2010, respectively, representing effective tax rates of 20.2% and (62.2%), respectively, during those periods. The Company calculated income taxes for the three and six months ended June 30, 2011 and 2010 based on actual year-to-date results.

As of June 30, 2011, the Company’s gross cumulative income tax on UTBs amounted to $99 million, of which $67 million (net of federal tax benefit) would affect the Company’s effective tax rate, if recognized. As of December 31, 2010, the Company’s gross cumulative income tax on UTBs amounted to $102 million. Additionally, the Company had a gross liability of $20 million and $21 million for interest related to its UTBs as of June 30, 2011 and December 31, 2010, respectively. Interest recognized related to UTBs was income of less than $1 million for both the three and six months ended June 30, 2011, respectively, compared to an expense of $2 million and income of $3 million for the three and six months ended June 30, 2010, respectively. The Company continually evaluates the UTBs associated with its uncertain tax positions. It is reasonably possible that the total amount of income tax on UTBs could decrease during the next 12 months by up to $10 million due to completion of tax authority examinations and the expiration of statutes of limitations.

The Company files consolidated and separate income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. As of June 30, 2011, the Company’s federal returns through 2006 have been examined by the IRS and all issues have been resolved. The Company’s 2007 through 2009 federal income tax returns are currently under examination by the IRS. Generally, the state jurisdictions in which the Company files income tax returns are subject to examination for a period from three to seven years after returns are filed.

Note 10 - Employee Benefit Plans

The Company sponsors various short-term incentive and LTI plans for eligible employees. The Company delivers LTIs through various incentive programs, including stock options, restricted stock, LTI cash, and salary shares. Compensation expense related to LTI cash was $9 million and $8 million for the three months ended June 30, 2011 and 2010, respectively, and $18 million and $14 million for the six months ended June 30, 2011 and 2010, respectively.

Notes to Consolidated Financial Statements (Unaudited)-Continued

TARP prohibited the payment of any bonus, incentive compensation or stock option award to our five NEOs and certain other highly compensated executives. As a result, until TARP repayment, SunTrust continued the use of salary shares in 2011 as defined in the U.S. Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance. Specifically, the Company paid additional base salary amounts in the form of stock (salary shares) to the senior executive officers and some of the other employees who were among the next 20 most highly-compensated employees. The Company did this each pay period in the form of stock units under the SunTrust Banks, Inc. 2009 Stock Plan. The stock units did not include any rights to receive dividends or dividend equivalents. As required by The Emergency Economic Stabilization Act of 2008, each salary share was non-forfeitable upon grant but may not be sold or transferred until the expiration of a holding period (except as necessary to satisfy applicable withholding taxes). As a result, these individuals are at risk for the value of our stock price until the stock unit is settled. The stock units are settled in cash; for the 2010 salary shares, one half was settled on March 31, 2011 and one half will be settled on March 31, 2012, unless settled earlier due to the executive’s death. The 2011 salary shares were settled on the date of TARP repayment on March 30, 2011. The amount to be paid on settlement of the stock units will be equal to the value of a share of SunTrust common stock on the settlement date. Benefit plan determinations and limits were established to ensure that the salary shares were accounted for equitably within relevant benefit plans. As of June 30, 2011, the accrual related to salary shares was $5 million.

Following the repayment by SunTrust of the U.S. Treasury’s TARP investment in the Company, the Compensation Committee of the Board approved a revised compensation structure for the Company’s NEOs. Effective April 1, 2011, the compensation structure includes an annual incentive opportunity under the Company’s existing Management Incentive Plan. A new LTI arrangement was also implemented. The design of the LTI plan delivers 50% restricted stock units with vesting tied to the Company’s total shareholder return relative to a peer group consisting of the banks which comprise the KBW Bank Sector Index. The remaining 50% of the LTI plan will consist of approximately half restricted stock units, the vesting of which is tied to the achievement of a Tier 1 capital ratio target, and the other half in stock options.

Stock-Based Compensation

The Company granted 736,538 shares of stock options, 1,325,000 shares of restricted stock and 344,590 restricted stock units during the first six months of 2011. The weighted average prices of these grants were $30.71, $31.88 and $37.57, respectively. The fair value of options granted during the first six months of 2011 and 2010 were $10.97 per share and $12.78 per share, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


	Six Months Ended June 30
	2011			2010

Dividend yield		0.67	%		0.17	%
Expected stock price volatility		34.73			56.10
Risk-free interest rate (weighted average)		2.61			2.84
Expected life of options		6 years			6 years

Stock-based compensation expense recognized in noninterest expense was as follows:


	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2011		2010		2011		2010
Stock-based compensation expense:
Stock options		$5		$3		$8		$7
Restricted stock		8		10		17		22
Restricted stock units		8		-		8		-

Total stock-based compensation expense		$21		$13		$33		$29

The recognized stock-based compensation tax benefit amounted to $8 million and $5 million for the three months ended June 30, 2011 and 2010. For the six months ended June 30, 2011 and 2010, the recognized stock-based compensation tax benefit was $12 million and $11 million, respectively.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Retirement Plans

SunTrust did not contribute to either of its noncontributory qualified retirement plans (“Retirement Benefits” plans) in the first six months of 2011. The expected long-term rate of return on plan assets for the Retirement Benefit Plans is 7.75% for 2011.

Anticipated employer contributions/benefit payments for 2011 are $22 million for the Supplemental Retirement Benefit plans. For the three and six months ended June 30, 2011, the actual contributions/benefit payments totaled $4 million and $5 million, respectively.

SunTrust contributed less than $1 million to the Postretirement Welfare Plan in the second quarter of 2011. Additionally, SunTrust expects to receive a Medicare Part D Subsidy reimbursement for 2011 in the amount of $3 million. The expected pre-tax long-term rate of return on plan assets for the Postretirement Welfare plan is 6.75% for 2011.


	Three Months Ended June 30
	2011				2010
(Dollars in millions)	Retirement Benefits		Other Postretirement Benefits		Retirement Benefits		Other Postretirement Benefits
Service cost		$17		$-		$18		$-
Interest cost		32		2		32		2
Expected return on plan assets		(47)		(2)		(46)		(2)
Amortization of prior service cost		(4)		-		(3)		-
Recognized net actuarial loss		11		-		15		1

Net periodic benefit cost		$9		$-		$16		$1


	Six Months Ended June 30
	2011				2010
(Dollars in millions)	Retirement Benefits		Other Postretirement Benefits		Retirement Benefits		Other Postretirement Benefits
Service cost		$35		$-		$35		$-
Interest cost		64		5		64		5
Expected return on plan assets		(94)		(4)		(91)		(4)
Amortization of prior service cost		(9)		-		(6)		-
Recognized net actuarial loss		21		-		30		1

Net periodic benefit cost		$17		$1		$32		$2

Notes to Consolidated Financial Statements (Unaudited)-Continued

Note 11 - Derivative Financial Instruments

The Company enters into various derivative financial instruments, both in a dealer capacity to facilitate client transactions and as an end user as a risk management tool. When derivatives have been entered into with clients, the Company generally manages the risk associated with these derivatives within the framework of its VAR approach that monitors total exposure daily and seeks to manage the exposure on an overall basis. Derivatives are used as a risk management tool to hedge the Company’s exposure to changes in identified cash flow and fair value risks, either economically or in accordance with hedge accounting provisions. The Company’s Corporate Treasury function is responsible for employing the various hedge accounting strategies to manage these objectives and all derivative activities are monitored by ALCO. The Company may also enter into derivatives, on a limited basis, in consideration of trading opportunities in the market. In addition, as a normal part of its operations, the Company enters into IRLCs on mortgage loans that are accounted for as freestanding derivatives and has certain contracts containing embedded derivatives that are carried, in their entirety, at fair value. All freestanding derivatives and any embedded derivatives that the Company bifurcates from the host contracts are carried at fair value in the Consolidated Balance Sheets in trading assets, other assets, trading liabilities, or other liabilities. The associated gains and losses are either recorded in AOCI, net of tax, or within the Consolidated Statements of Income/(Loss) depending upon the use and designation of the derivatives.

Credit and Market Risk Associated with Derivatives

Derivatives expose the Company to credit risk. The Company minimizes the credit risk in derivatives by entering into transactions with high credit-quality counterparties with defined exposure limits that are reviewed periodically by the Company’s Credit Risk Management division. The Company’s derivatives may also be governed by an ISDA, and depending on the nature of the derivative transactions, bilateral collateral agreements are typically in place as well. When the Company has more than one outstanding derivative transaction with a single counterparty and there exists a legally enforceable master netting agreement with that counterparty, the Company considers its exposure to the counterparty to be the net market value of all positions with that counterparty, if such net value is an asset to the Company, and zero, if such net value is a liability to the Company. As of June 30, 2011, net derivative asset positions to which the Company was exposed to risk of its counterparties were $1.7 billion, representing the net of $2.9 billion in net derivative gains, netted by counterparty where formal netting arrangements exist, adjusted for collateral of $1.2 billion that the Company holds in relation to these gain positions. As of December 31, 2010, net derivative asset positions to which the Company was exposed to risk of its counterparties were $1.6 billion, representing the net of $2.8 billion in net derivative gains by counterparty, netted by counterparty where formal netting arrangements exist, adjusted for collateral of $1.2 billion that the Company holds in relation to these gain positions.

Derivatives also expose the Company to market risk. Market risk is the adverse effect that a change in market factors, such as interest rates, currency rates, equity prices, or implied volatility, has on the value of a derivative. The Company manages the market risk associated with its derivatives by establishing and monitoring limits on the types and degree of risk that may be undertaken. The Company continually measures this risk by using a VAR methodology.

Derivative instruments are primarily transacted in the institutional dealer market and priced with observable market assumptions at a mid-market valuation point, with appropriate valuation adjustments for liquidity and credit risk. For purposes of valuation adjustments to its derivative positions, the Company has evaluated liquidity premiums that may be demanded by market participants, as well as the credit risk of its counterparties and its own credit. The Company has considered factors such as the likelihood of default by itself and its counterparties, its net exposures, and remaining maturities in determining the appropriate fair value adjustments to record. Generally, the expected loss of each counterparty is estimated using the Company’s proprietary internal risk rating system. The risk rating system utilizes counterparty-specific probabilities of default and loss given default estimates to derive the expected loss. For counterparties that are rated by national rating agencies, those ratings are also considered in estimating the credit risk. In addition, counterparty exposure is evaluated by netting positions that are subject to master netting arrangements, as well as considering the amount of marketable collateral securing the position. All counterparties are explicitly approved, as are defined exposure limits. Counterparties are regularly reviewed and appropriate business action is taken to adjust the exposure to certain counterparties, as necessary. This approach used to estimate exposures to counterparties is also used by the Company to estimate its own credit risk on derivative liability positions. The Company adjusted the net fair value of its derivative contracts for estimates of net counterparty credit risk by approximately $35 million and $33 million as of June 30, 2011 and December 31, 2010 respectively.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The majority of the Company’s derivatives contain contingencies that relate to the creditworthiness of the Bank. These contingencies that are contained in industry standard master trading agreements may be considered events of default. Should the Bank be in default under any of these provisions, the Bank’s counterparties would be permitted under such master agreements to close-out net at amounts that would approximate the then-fair values of the derivatives and the netting of the amounts would produce a single sum due by one party to the other. The counterparties would have the right to apply any collateral posted by the Bank against any net amount owed by the Bank. In addition, certain of the Company’s derivative liability positions, totaling $1.1 billion in fair value at both June 30, 2011 and December 31, 2010, contain provisions conditioned on downgrades of the Bank’s credit rating. These provisions, if triggered, would either give rise to an ATE that permits the counterparties to close-out net and apply collateral or, where a CSA is present, require the Bank to post additional collateral. Collateral posting requirements generally result from differences in the fair value of the net derivative liability compared to specified collateral thresholds at different ratings levels of the Bank, both of which are negotiated provisions within each CSA. At June 30, 2011, the Bank carried senior long-term debt ratings of A3/BBB+ from three of the major ratings agencies. At the current rating level, ATEs have been triggered for approximately $3 million in fair value liabilities as of June 30, 2011. For illustrative purposes, if the Bank were further downgraded to Baa3/BBB-, ATEs would be triggered in derivative liability contracts that had a total fair value of $9 million at June 30, 2011, against which the Bank had posted collateral of $5 million; ATEs do not exist at lower ratings levels. At June 30, 2011, $1.1 billion in fair value of derivative liabilities were subject to CSAs, against which the Bank has posted $1.0 billion in collateral, primarily in the form of cash. If requested by the counterparty pursuant to the terms of the CSA, the Bank would be required to post estimated additional collateral against these contracts at June 30, 2011 of $16 million if the Bank were downgraded to Baa3/BBB-, and any further downgrades to Ba1/BB+ or below would require the posting of an additional $14 million. Such collateral posting amounts may be more or less than the Bank’s estimates based on the specified terms of each CSA as to the timing of a collateral calculation and whether the Bank and its counterparties differ on their estimates of the fair values of the derivatives or collateral.

Notional and Fair Value of Derivative Positions

The tables below present the Company’s derivative positions at June 30, 2011 and December 31, 2010. The notional amounts in the tables are presented on a gross basis and have been classified within Asset Derivatives or Liability Derivatives based on the estimated fair value of the individual contract at June 30, 2011 and December 31, 2010. For purposes of the table below, the gross positive and gross negative fair value amounts associated with the respective notional amounts are presented without consideration of any netting agreements. For contracts constituting a combination of options that contain a written option and a purchased option (such as a collar), the notional amount of each option is presented separately, with the purchased notional amount generally being presented as an Asset Derivative and the written notional amount being presented as a Liability Derivative. The fair value of a combination of options is generally presented as a single value with the purchased notional amount if the combined fair value is positive, and with the written notional amount, if the combined fair value is negative.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The table below presents the Company’s derivative positions at June 30, 2011.

As of June 30, 2011

Asset Derivatives

Liability Derivatives

(Dollars in millions)

Balance Sheet
Classification

Notional
Amounts

Fair Value

Balance Sheet
Classification

Notional
Amounts

Fair Value

Derivatives designated in cash flow hedging relationships ⁵

Equity contracts hedging:

Securities AFS

Trading assets

$1,547

Trading liabilities

$1,547

$154

Interest rate contracts hedging:

Floating rate loans

Trading assets

13,050

765

Trading liabilities

2,800

Total

14,597

765

4,347

168

Derivatives designated in fair value hedging relationships ⁶

Interest rate contracts hedging:

Fixed rate debt

Trading assets

1,000

Trading liabilities

Total

1,000

Derivatives not designated as hedging instruments ⁷

Interest rate contracts covering:

Fixed rate debt

Trading assets

437

Trading liabilities

MSRs

Other assets

17,955

166

Other liabilities

1,920

LHFS, IRLCs, LHFI-FV

Other assets

3,104

Other liabilities

1,095

Trading activity

Trading assets

139,529

4,133

Trading liabilities

104,255

3,837

Foreign exchange rate contracts covering:

Foreign-denominated debt and commercial loans

Trading assets

1,176

107

Trading liabilities

510

114

Trading activity

Trading assets

4,593

214

Trading liabilities

4,851

209

Credit contracts covering:

Loans

Trading assets

Trading liabilities

192

Trading activity

Trading assets

1,232

Trading liabilities

1,187

Equity contracts - Trading activity

Trading assets

6,725

726

Trading liabilities

8,769

847

Other contracts:

IRLCs and other

Other assets

2,438

Other liabilities

541

⁴

Trading activity

Trading assets

201

Trading liabilities

197

Total

177,400

5,463

123,577

5,116

Total derivatives

$192,997

$6,247

$127,924

$5,284

¹ Amounts include $29.7 billion and $0.6 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

² Asset and liability amounts include $1 million and $8 million, respectively, of notional from purchased and written credit risk participation agreements, respectively, which notional is calculated as the notional of the derivative participated adjusted by the relevant risk weighted assets conversion factor.

³ Amount includes $1.0 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

⁴ Includes a $17 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

⁵ See “Cash Flow Hedges” in this Note for further discussion.

⁶ See “Fair Value Hedges” in this Note for further discussion.

⁷ See “Economic Hedging and Trading Activities” in this Note for further discussion.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The table below presents the Company’s derivative positions at December 31, 2010.


	As of December 31, 2010
	Asset Derivatives						Liability Derivatives
(Dollars in millions)	Balance Sheet Classification	Notional Amounts			Fair Value		Balance Sheet Classification		Notional Amounts			Fair Value
Derivatives designated in cash flow hedging relationships ⁵
Equity contracts hedging:
Securities AFS	Trading assets		$1,547			$-		Trading liabilities		$1,547			$145
Interest rate contracts hedging:
Floating rate loans	Trading assets		15,350			947		Trading liabilities		500			10

Total			16,897			947				2,047			155


Derivatives not designated as hedging instruments ⁶
Interest rate contracts covering:
Fixed rate debt	Trading assets		1,273			41		Trading liabilities		60			4
Corporate bonds and loans			-			-		Trading liabilities		5			-
MSRs	Other assets		20,474			152		Other liabilities		6,480			73
LHFS, IRLCs, LHFI-FV	Other assets		7,269	³		92		Other liabilities		2,383			20
Trading activity	Trading assets		132,286	¹		4,211		Trading liabilities		105,926			3,884

Foreign exchange rate contracts covering:
Foreign-denominated debt and commercial loans	Trading assets		1,083			17		Trading liabilities		495			128
Trading activity	Trading assets		2,691			92		Trading liabilities		2,818			91

Credit contracts covering:
Loans	Trading assets		15			-		Trading liabilities		227			2
Trading activity	Trading assets		1,094	²		39		Trading liabilities		1,039	²		34

Equity contracts - Trading activity	Trading assets		5,010	¹		583		Trading liabilities		8,012			730

Other contracts:
IRLCs and other	Other assets		2,169			18		Other liabilities		2,196	⁴		42	⁴
Trading activity	Trading assets		111			11		Trading liabilities		111			11

Total			173,475			5,256				129,752			5,019


Total derivatives			$190,372			$6,203				$131,799			$5,174

¹ Amounts include $25.0 billion and $0.5 billion of notional related to interest rate futures and equity futures, respectively. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

² Asset and liability amounts include $1 million and $8 million, respectively, of notional from purchased and written interest rate swap risk participation agreements, respectively, which notional is calculated as the notional of the interest rate swap participated adjusted by the relevant risk weighted assets conversion factor.

³ Amount includes $1.4 billion of notional amounts related to interest rate futures. These futures contracts settle in cash daily and therefore no derivative asset or liability is recorded.

⁴ Includes a $23 million derivative liability recorded in other liabilities in the Consolidated Balance Sheets, related to a notional amount of $134 million. The notional amount is based on the number of Visa Class B shares, 3.2 million, the conversion ratio from Visa Class B common stock to Visa Class A common stock, and the Visa Class A common stock price at the derivative inception date of May 28, 2009. This derivative was established upon the sale of Visa Class B shares in the second quarter of 2009 as discussed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s 2010 Annual Report on Form 10-K.

⁵ See “Cash Flow Hedges” in this Note for further discussion.

⁶ See “Economic Hedging and Trading Activities” in this Note for further discussion.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Impact of Derivatives on the Consolidated Statements of Income/(Loss) and Shareholders’ Equity

The impacts of derivatives on the Consolidated Statements of Income/(Loss) and the Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2011 and 2010 are presented below. The impacts are segregated between those derivatives that are designated in hedging relationships and those that are used for economic hedging or trading purposes, with further identification of the underlying risks in the derivatives and the hedged items, where appropriate. The tables do not disclose the financial impact of the activities that these derivative instruments are intended to hedge, for both economic hedges and those instruments designated in formal, qualifying hedging relationships.


	Three Months Ended June 30, 2011
(Dollars in millions)	Amount of pre-tax gain recognized in OCI on Derivatives (Effective Portion)		Classification of gain reclassified from AOCI into Income (Effective Portion)	Amount of pre-tax gain reclassified from AOCI into Income (Effective Portion) ¹
Derivatives in cash flow hedging relationships
Equity contracts hedging Securities AFS		$6			$-
Interest rate contracts hedging Floating rate loans		261	Interest and fees on loans		105

Total		$267			$105


	Six Months Ended June 30, 2011
(Dollars in millions)	Amount of pre-tax gain/(loss) recognized in OCI on Derivatives (Effective Portion)		Classification of gain reclassified from AOCI into Income (Effective Portion)	Amount of pre-tax gain reclassified from AOCI into Income (Effective Portion) ¹
Derivatives in cash flow hedging relationships
Equity contracts hedging Securities AFS		($10)			$-
Interest rate contracts hedging Floating rate loans		234	Interest and fees on loans		218

Total		$224			$218

¹ During the three and six months ended June 30, 2011, the Company reclassified $49 million and $90 million, respectively, in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.

	Three Months Ended June 30, 2011
(Dollars in millions)	Amount of gain on Derivatives recognized in Income		Amount of loss on related Hedged Items recognized in Income	Amount of gain/(loss) recognized in Income on Hedges (Ineffective Portion)
Derivatives in fair value hedging relationships
Interest rate contracts hedging Fixed rate debt ¹		$15	($15)		$-

	Six Months Ended June 30, 2011
(Dollars in millions)	Amount of gain on Derivatives recognized in Income		Amount of loss on related Hedged Items recognized in Income	Amount of gain/(loss) recognized in Income on Hedges (Ineffective Portion)
Derivatives in fair value hedging relationships
Interest rate contracts hedging Fixed rate debt ¹		$15	($15)		$-

¹ Amounts are recorded in trading account profits/(losses) and commissions in the Consolidated Statements of Income/(Loss).


(Dollars in millions)	Classification of gain/(loss) recognized in Income on Derivatives	Amount of gain/(loss) recognized in Income on Derivatives for the three months ended June 30, 2011		Amount of gain/(loss) recognized in Income on Derivatives for the six months ended June 30, 2011
Derivatives not designated as hedging instruments
Interest rate contracts covering:
Fixed rate debt	Trading account profits and commissions		$-		$1
MSRs	Mortgage servicing related income		134		91
LHFS, IRLCs, LHFI-FV	Mortgage production related income/(loss)		(67)		(93)
Trading activity	Trading account profits and commissions		33		37

Foreign exchange rate contracts covering:
Foreign-denominated debt and commercial loans	Trading account profits and commissions		29		110
Trading activity	Trading account profits and commissions		(5)		(6)

Credit contracts covering:
Loans	Trading account profits and commissions		-		(1)
Other	Trading account profits and commissions		4		8

Equity contracts - trading activity	Trading account profits and commissions		5		8

Other contracts:
IRLCs	Mortgage production related income/(loss)		48		84

Total			$181		$239

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Three Months Ended June 30, 2010
(Dollars in millions)	Amount of pre-tax gain recognized in OCI on Derivatives (Effective Portion)		Classification of gain reclassified from AOCI into Income (Effective Portion)	Amount of pre-tax gain reclassified from AOCI into Income (Effective Portion) ¹
Derivatives in cash flow hedging relationships
Equity contracts hedging Securities AFS		$106			$-
Interest rate contracts hedging Floating rate loans		447	Interest and fees on loans		124

Total		$553			$124


	Six Months Ended June 30, 2010
(Dollars in millions)	Amount of pre-tax gain recognized in OCI on Derivatives (Effective Portion)		Classification of gain reclassified from AOCI into Income (Effective Portion)	Amount of pre-tax gain reclassified from AOCI into Income (Effective Portion) ¹
Derivatives in cash flow hedging relationships
Equity contracts hedging Securities AFS		$167			$-
Interest rate contracts hedging Floating rate loans		735	Interest and fees on loans		251

Total		$902			$251

¹ During the three and six months ended June 30, 2010, the Company reclassified $24 million and $53 million, respectively, in pre-tax gains from AOCI into net interest income. These gains related to hedging relationships that have been previously terminated or de-designated.


(Dollars in millions)	Classification of gain/(loss) recognized in Income on Derivatives	Amount of gain/(loss) recognized in Income on Derivatives for the three months ended June 30, 2010		Amount of gain/(loss) recognized in Income on Derivatives for the six months ended June 30, 2010
Derivatives not designated as hedging instruments
Interest rate contracts covering:
Fixed rate debt	Trading account profits and commissions		$80		$125
Corporate bonds and loans	Trading account profits and commissions		-		(1)
MSRs	Mortgage servicing related income		392		468
LHFS, IRLCs, LHFI-FV	Mortgage production related income/(loss)		(140)		(210)
Trading activity	Trading account profits and commissions		-		30

Foreign exchange rate contracts covering:
Foreign-denominated debt and commercial loans	Trading account profits and commissions		(107)		(202)
Trading activity	Trading account profits and commissions		19		26

Credit contracts covering:
Loans	Trading account profits and commissions		1		1
Trading activity	Trading account profits and commissions		3		4

Equity contracts - trading activity	Trading account profits and commissions		(1)		6

Other contracts:
IRLCs	Mortgage production related income/(loss)		119		211

Total			$366		$458

Notes to Consolidated Financial Statements (Unaudited)-Continued

Credit Derivatives

As part of its trading businesses, the Company enters into contracts that are, in form or substance, written guarantees: specifically, CDS, swap participations, and TRS. The Company accounts for these contracts as derivative instruments and, accordingly, records these contracts at fair value, with changes in fair value recorded in trading account profits/(losses) and commissions in the Consolidated Statements of Income/(Loss).

The Company writes CDS, which are agreements under which the Company receives premium payments from its counterparty for protection against an event of default of a reference asset. In the event of default under the CDS, the Company would either net cash settle or make a cash payment to its counterparty and take delivery of the defaulted reference asset, from which the Company may recover all, a portion, or none of the credit loss, depending on the performance of the reference asset. Events of default, as defined in the CDS agreements, are generally triggered upon the failure to pay and similar events related to the issuer(s) of the reference asset. As of June 30, 2011, all written CDS contracts reference single name corporate credits or corporate credit indices. When the Company has written CDS, it has generally entered into offsetting CDS for the underlying reference asset, under which the Company paid a premium to its counterparty for protection against an event of default on the reference asset. The counterparties to these purchased CDS are generally of high creditworthiness and typically have ISDA master agreements in place that subject the CDS to master netting provisions, thereby mitigating the risk of non-payment to the Company. As such, at June 30, 2011, the Company did not have any significant risk of making a non-recoverable payment on any written CDS. During 2011 and 2010, the only instances of default on written CDS were driven by credit indices with constituent credit default. In all cases where the Company made resulting cash payments to settle, the Company collected like amounts from the counterparties to the offsetting purchased CDS. At June 30, 2011, the written CDS had remaining terms ranging from one year to four years. The maximum guarantees outstanding at June 30, 2011 and December 31, 2010, as measured by the gross notional amounts of written CDS, were $77 million and $99 million, respectively. At June 30, 2011 and December 31, 2010, the gross notional amounts of purchased CDS contracts, which represent benefits to, rather than obligations of, the Company, were $75 million and $87 million, respectively. The fair values of written CDS were $3 million and de minimis at June 30, 2011 and December 31, 2010, respectively, and the fair values of purchased CDS were de minimis at June 30, 2011 and December 31, 2010.

The Company writes risk participations, which are credit derivatives whereby the Company has guaranteed payment to a dealer counterparty in the event that the counterparty experiences a loss on a derivative instrument, such as an interest rate swap, due to a failure to pay by the counterparty’s customer (the “obligor”) on that derivative instrument. The Company monitors its payment risk on its risk participations by monitoring the creditworthiness of the obligors, which is based on the normal credit review process the Company would have performed had it entered into the derivative instruments directly with the obligors. The obligors are all corporations or partnerships. However, the Company continues to monitor the creditworthiness of its obligors and the likelihood of payment could change at any time due to unforeseen circumstances. To date, no material losses have been incurred related to the Company’s written risk participations. At June 30, 2011, the remaining terms on these risk participations generally ranged from two months to seven years, with a weighted average on the maximum estimated exposure of 3.2 years. The Company’s maximum estimated exposure to written risk participations, as measured by projecting a maximum value of the guaranteed derivative instruments based on interest rate curve simulations and assuming 100% default by all obligors on the maximum values, was approximately $72 million and $74 million at June 30, 2011 and December 31, 2010, respectively. The fair values of the written risk participations were de minimis at June 30, 2011 and December 31, 2010. As part of its trading activities, the Company may enter into purchased risk participations, but such activity is not matched, as discussed herein related to CDS or TRS.

The Company has also entered into TRS contracts on loans. The Company’s TRS business consists of matched trades, such that when the Company pays depreciation on one TRS, it receives the same depreciation on the matched TRS. As such, the Company does not have any long or short exposure, other than credit risk of its counterparty which is mitigated through collateralization. The Company typically receives initial cash collateral from the counterparty upon entering into the TRS and is entitled to additional collateral if the fair value of the underlying reference assets deteriorate. At June 30, 2011 and December 31, 2010, there were $1.1 billion and $969 million of outstanding and offsetting TRS notional balances, respectively. The fair values of the TRS derivative assets and liabilities at June 30, 2011 were $22 million and $19 million, respectively, and related collateral held at June 30, 2011 was $258 million. The fair values of the TRS derivative assets and liabilities at December 31, 2010 were $34 million and $32 million, respectively, and related collateral held at December 31, 2010 was $268 million.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Cash Flow Hedges

The Company utilizes a comprehensive risk management strategy to monitor sensitivity of earnings to movements in interest rates. Specific types of funding and principal amounts hedged are determined based on prevailing market conditions and the shape of the yield curve. In conjunction with this strategy, the Company may employ various interest rate derivatives as risk management tools to hedge interest rate risk from recognized assets and liabilities or from forecasted transactions. The terms and notional amounts of derivatives are determined based on management’s assessment of future interest rates, as well as, other factors. At June 30, 2011, the Company’s outstanding interest rate hedging relationships include interest rate swaps that have been designated as cash flow hedges of probable forecasted transactions related to recognized floating rate loans.

Interest rate swaps have been designated as hedging the exposure to the benchmark interest rate risk associated with floating rate loans. At June 30, 2011, the maximum range of hedge maturities for hedges of floating rate loans is two to six years, with the weighted average being 3.8 years. Ineffectiveness on these hedges was de minimis during the six months ended June 30, 2011 and 2010. As of June 30, 2011, $369 million, net of tax, of the deferred net gains on derivatives that are recorded in AOCI are expected to be reclassified to net interest income over the next twelve months in connection with the recognition of interest income on these hedged items.

During the third quarter of 2008, the Company executed The Agreements on 30 million common shares of Coke. A consolidated subsidiary of SunTrust owns 22.9 million Coke common shares and a consolidated subsidiary of the Bank owns 7.1 million Coke common shares. These two subsidiaries entered into separate derivative contracts on their respective holdings of Coke common shares with a large, unaffiliated financial institution (the “Counterparty”). Execution of The Agreements (including the pledges of the Coke common shares pursuant to the terms of The Agreements) did not constitute a sale of the Coke common shares under U.S. GAAP for several reasons, including that ownership of the common shares was not legally transferred to the Counterparty. The Agreements were zero-cost equity collars at inception, which caused the Agreements to be derivatives in their entirety. The Company has designated The Agreements as cash flow hedges of the Company’s probable forecasted sales of its Coke common shares, which are expected to occur between 6.5 years and 7 years from The Agreements’ effective date, for overall price volatility below the strike prices on the floor (purchased put) and above the strike prices on the ceiling (written call). Although the Company is not required to deliver its Coke common shares under The Agreements, the Company has asserted that it is probable that it will sell all of its Coke common shares at or around the settlement date of The Agreements. The Federal Reserve’s approval for Tier 1 capital treatment was significantly based on this expected disposition of the Coke common shares under The Agreements or in another market transaction. Both the sale and the timing of such sale remain probable to occur as designated. At least quarterly, the Company assesses hedge effectiveness and measures hedge ineffectiveness with the effective portion of the changes in fair value of The Agreements recorded in AOCI and any ineffective portions recorded in trading account profits/(losses) and commissions. None of the components of The Agreements’ fair values are excluded from the Company’s assessments of hedge effectiveness. Potential sources of ineffectiveness include changes in market dividends and certain early termination provisions. The Company recognized ineffectiveness gains of $1 million and $7 million during the six months ended June 30, 2011 and 2010, respectively. Ineffectiveness gains were recorded in trading account profits/(losses) and commissions. Other than potential measured hedge ineffectiveness, no amounts are expected to be reclassified from AOCI over the next twelve months and any remaining amounts recorded in AOCI will be reclassified to earnings when the probable forecasted sales of the Coke common shares occur.

Fair Value Hedges

During the second quarter of 2011, the Company entered into interest rate swap agreements to convert Company issued fixed rate senior long-term debt to a floating rate, as part of the Company’s risk management objectives for hedging its exposure to changes in fair value due to changes in interest rates. Consistent with this objective, the Company reflects the accrued contractual interest on the long-term debt and the related swaps as part of current period interest expense. There were no components of derivative gains or losses excluded in the Company’s assessment of hedge effectiveness. No ineffectiveness related to fair value hedges was recorded during the three and six months ended June 30, 2010.

Economic Hedging and Trading Activities

In addition to designated hedging relationships, the Company also enters into derivatives as an end user as a risk management tool to economically hedge risks associated with certain non-derivative and derivative instruments, along with entering into derivatives in a trading capacity with its clients.

The primary risks that the Company economically hedges are interest rate risk, foreign exchange risk, and credit risk. Economic hedging objectives are accomplished by entering into offsetting derivatives either on an individual basis, or collectively on a macro basis, and generally accomplish the Company’s goal of mitigating the targeted risk. To the extent that specific derivatives are associated with specific hedged items, the notional amounts, fair values, and gains/(losses) on the derivatives are illustrated in the tables in this footnote.

Notes to Consolidated Financial Statements (Unaudited)-Continued

—

The Company utilizes interest rate derivatives to mitigate exposures from various instruments.

The Company is subject to interest rate risk on its fixed rate debt. As market interest rates move, the fair value of the Company’s debt is affected. To protect against this risk on certain debt issuances that the Company has elected to carry at fair value, the Company has entered into pay variable-receive fixed interest rate swaps that decrease in value in a rising rate environment and increase in value in a declining rate environment.

The Company is exposed to risk on the returns of certain of its brokered deposits that are carried at fair value. To hedge against this risk, the Company has entered into interest rate derivatives that mirror the risk profile of the returns on these instruments.

The Company is exposed to interest rate risk associated with MSRs, which the Company hedges with a combination of mortgage and interest rate derivatives, including forward and option contracts, futures, and forward rate agreements.

The Company enters into mortgage and interest rate derivatives, including forward contracts, futures, and option contracts to mitigate interest rate risk associated with IRLCs, mortgage LHFS, and mortgage LHFI reported at fair value.

—

The Company is exposed to foreign exchange rate risk associated with certain senior notes denominated in euros and pound sterling. This risk is economically hedged with cross currency swaps, which receive either euros or pound sterling and pay U.S. dollars. Interest expense on the Consolidated Statements of Income/(Loss) reflects only the contractual interest rate on the debt based on the average spot exchange rate during the applicable period, while fair value changes on the derivatives and valuation adjustments on the debt are both recorded within trading account profits/(losses) and commissions.

—

The Company enters into CDS to hedge credit risk associated with certain loans held within its CIB line of business.

—

Trading activity, in the tables in this footnote, primarily includes interest rate swaps, equity derivatives, CDS, futures, options and foreign currency contracts. These derivatives are entered into in a dealer capacity to facilitate client transactions or are utilized as a risk management tool by the Company as an end user in certain macro-hedging strategies. The macro-hedging strategies are focused on managing the Company’s overall interest rate risk exposure that is not otherwise hedged by derivatives or in connection with specific hedges and, therefore, the Company does not specifically associate individual derivatives with specific assets or liabilities.

Note 12 - Fair Value Election and Measurement

The Company carries certain assets and liabilities at fair value on a recurring basis and appropriately classifies them as level 1, 2, or 3 within the fair value hierarchy. The Company’s recurring fair value measurements are based on a requirement to carry such assets and liabilities at fair value or the Company’s election to carry certain financial assets and financial liabilities at fair value. Assets and liabilities that are required to be carried at fair value on a recurring basis include trading securities, securities AFS, and derivative financial instruments. Assets and liabilities that the Company has elected to carry at fair value on a recurring basis include certain LHFI and LHFS, MSRs, certain brokered deposits, and certain issuances of fixed rate debt.

In certain circumstances, fair value enables a company to more accurately align its financial performance with the economic value of actively traded or hedged assets or liabilities. Fair value also enables a company to mitigate the non-economic earnings volatility caused from financial assets and financial liabilities being carried at different bases of accounting, as well as to more accurately portray the active and dynamic management of a company’s balance sheet.

The classification of an instrument as level 3 versus 2 involves judgment and is based on a variety of subjective factors in order to assess whether a market is inactive, resulting in the application of significant unobservable assumptions to value a financial instrument. A market is considered inactive if significant decreases in the volume and level of activity for the asset or liability have been observed. In determining whether a market is inactive, the Company evaluates such factors as the number of recent transactions in either the primary or secondary markets, whether price quotations are current, the nature of the market participants, the variability of price quotations, the significance of bid/ask spreads, declines in (or the absence of) new issuances and the availability of public information. Inactive markets necessitate the use of additional judgment when valuing financial instruments, such as pricing matrices, cash flow modeling, and the selection of an appropriate discount rate. The assumptions used to estimate the value of an instrument where the market was inactive are based on the Company’s assessment of the assumptions a market participant would use to value the instrument in an orderly transaction and include considerations of illiquidity in the current market environment.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Recurring Fair Value Measurements

The following tables present certain information regarding assets and liabilities measured at fair value on a recurring basis and the changes in fair value for those specific financial instruments in which fair value has been elected.


			Fair Value Measurements at June 30, 2011 Using
(Dollars in millions)	Assets/Liabilities		Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets
Trading assets
U.S. Treasury securities		$127		$127		$-		$-
Federal agency securities		504		-		504		-
U.S. states and political subdivisions		42		-		42		-
MBS - agency		271		-		271		-
MBS - private		2		-		-		2
CDO securities		44		-		2		42
ABS		37		-		32		5
Corporate and other debt securities		806		-		806		-
CP		129		-		129		-
Equity securities		91		-		78		13
Derivative contracts		2,952		212		2,740		-
Trading loans		1,581		-		1,581		-

Total trading assets		6,586		339		6,185		62


Securities AFS
U.S. Treasury securities		726		726		-		-
Federal agency securities		2,566		-		2,566		-
U.S. states and political subdivisions		516		-		448		68
MBS - agency		19,331		-		19,331		-
MBS - private		311		-		-		311
CDO securities		337		-		337		-
ABS		625		-		606		19
Corporate and other debt securities		56		-		51		5
Coke common stock		2,019		2,019		-		-
Other equity securities ²		729		-		132		597

Total securities AFS		27,216		2,745		23,471		1,000

LHFS
Residential loans		1,596		-		1,593		3
Corporate and other loans		329		-		329		-

Total LHFS		1,925		-		1,922		3

LHFI		449		-		-		449
MSRs		1,423		-		-		1,423
Other assets ¹		198		1		167		30

Liabilities
Trading liabilities
U.S. Treasury securities		509		509		-		-
Federal agency securities		1		-		1		-
Corporate and other debt securities		359		-		359		-
Equity securities		14		14		-		-
Derivative contracts		2,143		149		1,840		154

Total trading liabilities		3,026		672		2,200		154


Brokered deposits		1,140		-		1,140		-
Long-term debt		2,022		-		2,022		-
Other liabilities ¹		42		-		24		18

¹	These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during the year ended December 31, 2009.

²	Includes $205 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve Bank stock stated at par value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

		00000000000000000		00000000000000000		00000000000000000		00000000000000000
			Fair Value Measurements at December 31, 2010 Using
(Dollars in millions)	Assets/Liabilities		Quoted Prices In Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Assets
Trading assets
U.S. Treasury securities		$187		$187		$-		$-
Federal agency securities		361		-		361		-
U.S. states and political subdivisions		123		-		123		-
MBS - agency		301		-		301		-
MBS - private		15		-		9		6
CDO securities		55		-		2		53
ABS		59		-		32		27
Corporate and other debt securities		743		-		743		-
CP		14		-		14		-
Equity securities		221		-		98		123
Derivative contracts		2,743		166		2,577		-
Trading loans		1,353		-		1,353		-

Total trading assets		6,175		353		5,613		209


Securities AFS
U.S. Treasury securities		5,516		5,516		-		-
Federal agency securities		1,895		-		1,895		-
U.S. states and political subdivisions		579		-		505		74
MBS - agency		14,358		-		14,358		-
MBS - private		347		-		-		347
CDO securities		50		-		50		-
ABS		808		-		788		20
Corporate and other debt securities		482		-		477		5
Coke common stock		1,973		1,973		-		-
Other equity securities ²		887		-		197		690

Total securities AFS		26,895		7,489		18,270		1,136

LHFS
Residential loans		2,847		-		2,845		2
Corporate and other loans		321		-		316		5

Total LHFS		3,168		-		3,161		7

LHFI		492		-		-		492
MSRs		1,439		-		-		1,439
Other assets ¹		241		-		223		18

Liabilities
Trading liabilities
U.S. Treasury securities		439		439		-		-
Corporate and other debt securities		398		-		398		-
Derivative contracts		1,841		120		1,576		145

Total trading liabilities		2,678		559		1,974		145


Brokered deposits		1,213		-		1,213		-
Long-term debt		2,837		-		2,837		-
Other liabilities ¹		114		-		72		42

These amounts include IRLCs and derivative financial instruments entered into by the Mortgage line of business to hedge its interest rate risk along with a derivative associated with the Company’s sale of Visa shares during the year ended December 31, 2009.

Includes $298 million of FHLB of Atlanta stock stated at par value and $391 million of Federal Reserve Bank stock stated at par value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The following tables present the difference between the aggregate fair value and the aggregate unpaid principal balance of trading assets, LHFI, LHFS, brokered deposits, and long-term debt instruments for which the FVO has been elected. For LHFI and LHFS for which the FVO has been elected, the tables also include the difference between aggregate fair value and the aggregate unpaid principal balance of loans that are 90 days or more past due, as well as loans in nonaccrual status.


(Dollars in millions)	Aggregate Fair Value June 30, 2011		Aggregate Unpaid Principal Balance under FVO June 30, 2011		Fair Value Over/(Under) Unpaid Principal

Trading loans		$1,581		$1,558		$23
LHFS		1,917		1,886		31
Past due loans of 90 days or more		7		7		-
Nonaccrual loans		1		8		(7)
LHFI		419		470		(51)
Past due loans of 90 days or more		3		5		(2)
Nonaccrual loans		27		48		(21)
Brokered deposits		1,140		1,107		33
Long-term debt		2,022		1,901		121

(Dollars in millions)	Aggregate Fair Value December 31, 2010		Aggregate Unpaid Principal Balance under FVO December 31, 2010		Fair Value Over/(Under) Unpaid Principal

Trading loans		$1,353		$1,320		$33
LHFS		3,160		3,155		5
Past due loans of 90 days or more		2		2		-
Nonaccrual loans		6		25		(19)
LHFI		462		517		(55)
Past due loans of 90 days or more		2		4		(2)
Nonaccrual loans		28		54		(26)
Brokered deposits		1,213		1,188		25
Long-term debt		2,837		2,753		84

The following tables present the change in fair value during the three and six months ended June 30, 2011 and 2010 of financial instruments for which the FVO has been elected, as well as MSRs that are accounted for at fair value in accordance with applicable fair value accounting guidance. The tables do not reflect the change in fair value attributable to the related economic hedges the Company used to mitigate the market-related risks associated with the financial instruments. The changes in the fair value of economic hedges are also recognized in trading account profits and commissions, mortgage production related income/(loss), or mortgage servicing related income, as appropriate, and are designed to partially offset the change in fair value of the financial instruments referenced in the tables below. The Company’s economic hedging activities are deployed at both the instrument and portfolio level.

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Fair Value Gain/(Loss) for the Three Months Ended June 30, 2011, for Items Measured at Fair Value Pursuant to Election of the FVO								Fair Value Gain/(Loss) for the Six Months Ended June 30, 2011 for Items Measured at Fair Value Pursuant to Election of the FVO
(Dollars in millions)	Trading Account Profits/(Losses) and Commissions		Mortgage Production Related Income ²		Mortgage Servicing Related Income		Total Changes in Fair Values Included in Current- Period Earnings ¹		Trading Account Profits/(Losses) and Commissions		Mortgage Production Related Income ²		Mortgage Servicing Related Income		Total Changes in Fair Values Included in Current Period Earnings ¹

Assets
Trading assets		$5		$-		$-		$5		$12		$-		$-		$12
LHFS		(4)		119		-		115		(2)		149		-		147
LHFI		-		-		-		-		3		(4)		-		(1)
MSRs		-		2		(162)		(160)		-		4		(145)		(141)
Liabilities
Brokered deposits		8		-		-		8		(3)		-		-		(3)
Long-term debt		(21)		-		-		(21)		(38)		-		-		(38)

¹ Changes in fair value for the three and six months ended June 30, 2011, exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFS, LHFI, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of the securities.

² For the three and six months ended June 30, 2011, income related to LHFS includes $46 million and $132 million, respectively, related to MSRs recognized upon the sale of loans reported at fair value. For the three and six months ended June 30, 2011, income related to MSRs includes $2 million and $4 million, respectively, of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.


	Fair Value Gain/(Loss) for the Three Months Ended June 30, 2010, for Items Measured at Fair Value Pursuant to Election of the FVO								Fair Value Gain/(Loss) for the Six Months Ended June 30, 2010, for Items Measured at Fair Value Pursuant to Election of the FVO
(Dollars in millions)	Trading Account Profits/(Losses) and Commissions		Mortgage Production Related Income/(Loss) ²		Mortgage Servicing Related Income		Total Changes in Fair Values Included in Current Period Earnings ¹		Trading Account Profits/(Losses) and Commissions		Mortgage Production Related Income/(Loss) ²		Mortgage Servicing Related Income		Total Changes in Fair Values Included in Current Period Earnings ¹

Assets
Trading assets		($4)		$-		$-		($4)		($3)		$-		$-		($3)
LHFS		(4)		200		-		196		7		292		-		299
LHFI		(2)		8		-		6		(2)		8		-		6
MSRs		-		2		(411)		(409)		-		6		(520)		(514)
Liabilities
Brokered deposits		23		-		-		23		(8)		-		-		(8)
Long-term debt		(39)		-		-		(39)		(125)		-		-		(125)

¹ Changes in fair value for the three and six months ended June 30, 2010, exclude accrued interest for the periods then ended. Interest income or interest expense on trading assets, LHFS, LHFI, brokered deposits and long-term debt that have been elected to be carried at fair value are recorded in interest income or interest expense in the Consolidated Statements of Income/(Loss) based on their contractual coupons. Certain trading assets do not have a contractually stated coupon and, for these securities, the Company records interest income based on the effective yield calculated upon acquisition of those securities.

² For the three and six months ended June 30, 2010, income related to LHFS, includes $65 million and $128 million, respectively, related to MSRs recognized upon the sale of loans reported at fair value. For the three and six months ended June 30, 2010, income related to MSRs includes $3 million and $6 million, respectively, of MSRs recognized upon the sale of loans reported at LOCOM. These MSRs are included in the table since the Company elected to report MSRs recognized in 2009 using the fair value method. Previously, MSRs were reported under the amortized cost method.

The following is a discussion of the valuation techniques and inputs used in developing fair value measurements for assets and liabilities classified as level 2 or 3 that are measured at fair value on a recurring basis, based on the class as determined by the nature and risks of the instrument.

Trading Assets and Securities Available for Sale

Unless otherwise indicated, trading assets are priced by the trading desk and independently validated against pricing received from third party pricing sources; securities AFS are valued by an independent third party pricing service that is widely used by market participants. The Company classifies instruments as level 2 in the fair value hierarchy when it is able to determine that external pricing sources are using similar instruments trading in the markets as the basis for estimating fair value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Federal agency securities

The Company includes in this classification securities issued by federal agencies and GSEs. For SBA instruments, the Company estimated fair value based on pricing from observable trading activity for similar securities or obtained fair values from a third party pricing service; accordingly, the Company has classified these instruments as level 2.

U.S. states and political subdivisions

The Company’s investments in U.S. states and political subdivisions (collectively “municipals”) include obligations of county and municipal authorities and agency bonds, which are general obligations of the municipality or are supported by a specified revenue source. Holdings were geographically dispersed, with no significant concentrations in any one state or municipality. Additionally, all but an insignificant amount of AFS municipal obligations classified as level 2 are highly rated or are otherwise collateralized by securities backed by the full faith and credit of the federal government.

Level 3 municipal securities includes ARS purchased since the auction rate market began failing in February 2008 and have been considered level 3 securities due to the significant decrease in the volume and level of activity in these markets, which has necessitated the use of significant unobservable inputs into the Company’s valuations. Municipal ARS are classified as securities AFS. These securities were valued using comparisons to similar ARS for which auctions are currently successful and/or to longer term, non-ARS issued by similar municipalities. The Company also looked at the relative strength of the municipality and made appropriate downward adjustments in price based on the credit rating of the municipality as well as the relative financial strength of the insurer on those bonds. Although auctions for several municipal ARS have been operating successfully, ARS owned by the Company at June 30, 2011 continued to be classified as level 3 as they are those ARS for which the auctions continued to fail; accordingly, due to the uncertainty around the success rates for auctions and the absence of any successful auctions for these identical securities, the Company continued to price the ARS below par.

Level 3 AFS municipal bond securities also include bonds that are only redeemable with the issuer at par and cannot be traded in the market. As such, no significant observable market data for these instruments is available. In order to estimate pricing on these securities, the Company utilized a third party municipal bond yield curve for the lowest investment grade bonds (BBB rated) and priced each bond based on the yield associated with that maturity.

MBS – agency

MBS – agency includes pass-through securities and collateralized mortgage obligations issued by GSEs and U.S. government agencies, such as Fannie Mae, Freddie Mac and Ginnie Mae. Each security contains a guarantee by the issuing GSE or agency. For agency MBS, the Company estimated fair value based on pricing from observable trading activity for similar securities or obtained fair values from a third party pricing service; accordingly, the Company has classified these instruments as level 2.

MBS – private

Private-label MBS includes purchased interests in third party securitizations as well as retained interests in Company-sponsored securitizations of residential mortgages. Generally, the Company attempts to obtain pricing for its securities from an independent pricing service or third party brokers who have experience in valuing certain investments. This pricing may be used as either direct support for the Company’s valuations or used to validate outputs from its own proprietary models. The Company evaluates third party pricing to determine the reasonableness of the information relative to changes in market data, such as any recent trades, market information received from outside market participants and analysts, and/or changes in the underlying collateral performance. When actual trades are not available to corroborate pricing information received, the Company uses industry-standard or proprietary models to estimate fair value and considers assumptions that are generally not observable in the current markets or that are not specific to the securities that the Company owns, such as relevant market indices that correlate to the underlying collateral, prepayment speeds, default rates, loss severity rates and discount rates. As liquidity returns to these markets, we have seen more pricing information from third parties and a reduction in the need to use internal pricing models to estimate fair value. Even though limited third party pricing has been available, the Company continued to classify private-label MBS as level 3, as the Company believes that this third party pricing relied on a significant amount of unobservable assumptions, as evidenced by a persistently wide bid-ask price range, particularly for the vintage and exposures held by the Company.

Securities that are classified as AFS and are in an unrealized loss position are included as part of our quarterly OTTI evaluation process. See Note 2, “Securities Available for Sale,” for details regarding assumptions used to assess impairment and impairment amounts recognized through earnings on private-label MBS during the three and six months ended June 30, 2011 and 2010.

Notes to Consolidated Financial Statements (Unaudited)-Continued

CDO Securities

Level 2 securities AFS consists of senior interests in third party CLOs for which independent broker pricing based on market trades and/or from new issuance of similar assets is readily available. At June 30, 2011, the Company’s investments in level 3 trading CDOs consisted of senior ARS interests in Company-sponsored securitizations of trust preferred collateral totaling $42 million. In the first quarter of 2011, the Company sold the remaining securities within trading assets that were received upon the liquidation of one of the Company’s SIV investments, which included $21 million of CDO securities. In addition, the Company’s $20 million retained interest in a structured participation of commercial loans was liquidated through the exercise of the Company’s clean up call. For the remaining CDOs classified as level 3 trading assets, increases in the value of these interests during the six months ending June 30, 2011 was due primarily to a steady recovery in the broader CDO market. For the ARS CDO interests, although market conditions have improved, the auctions continued to fail and the Company continues to make significant adjustments to valuation assumptions available from observable secondary market trading of similar term securities; therefore, the Company continued to classify these as level 3 investments.

Asset-backed securities

Level 2 ABS classified as securities AFS are primarily interests collateralized by third party securitizations of 2009 through 2011 vintage auto loans. These ABS are either publicly traded or are 144A privately placed bonds. The Company utilizes an independent pricing service to obtain fair values for publicly traded securities and similar securities for estimating the fair value of the privately placed bonds. No significant unobservable assumptions were used in pricing the auto loan ABS; therefore, the Company classified these bonds as level 2. Additionally, the Company classified $32 million of trading ARS and $74 million of AFS ARS collateralized by government guaranteed student loans as level 2 due to observable market trades and bids for similar senior securities. Student loan ABS held by the Company are generally collateralized by Federal Family Education Loan Program student loans, the majority of which benefit from a 97% (or higher) government guarantee of principal and interest. For subordinate securities in the same structure, the Company adjusts valuations on the senior securities based on the likelihood that the issuer will refinance in the near term, a security’s level of subordination in the structure, and/or the perceived risk of the issuer as determined by credit ratings or total leverage of the trust. These adjustments may be significant; therefore, the subordinate student loan ARS held as trading assets continue to be classified as level 3.

During the first quarter of 2011, the Company sold the remaining ABS related to the assets acquired in 2007, including those received in the SIV liquidation that occurred in December 2010. This included $31 million of level 3 trading ABS collateralized by auto loans and home equity lines of credit.

Corporate and other debt securities

Corporate debt securities are predominantly comprised of senior and subordinate debt obligations of domestic corporations. Other debt securities in level 3 include bonds that are redeemable with the issuer at par and cannot be traded in the market; as such, no significant observable market data for these instruments is available.

Commercial paper

From time to time, the Company trades third party CP that is generally short-term in nature (less than 30 days) and highly rated. The Company estimates the fair value of the CP that it trades based on observable pricing from executed trades of similar instruments.

Equity securities

Level 2 equity securities, both trading and AFS, consist primarily of money market mutual funds that trade at a $1 net asset value, which is considered the fair market value of those fund shares.

Level 3 equity securities classified as trading include nonmarketable preferred shares in municipal funds issued as ARS that the Company has purchased since the auction rate market began failing in February 2008. The fair value of ARS recorded in trading equity securities declined to $13 million as of June 30, 2011 compared to $123 million as of December 31, 2010 due to issuer redemptions. During the three and six months ended June 30, 2011, the Company recognized gains of $4 million and $12 million, respectively from redemptions of these ARS at par. These ARS have been considered level 3 securities due to the significant decrease in the volume and level of activity in these markets, which has necessitated the use of significant unobservable inputs into the Company’s valuations. Valuation of these shares is based on the level of issuer redemptions at par that have occurred as well as discussions with the dealer community.

Level 3 equity securities classified as securities AFS include, as of June 30, 2011, $597 million of FHLB stock and Federal Reserve Bank stock, which are redeemable with the issuer at par and cannot be traded in the market. As such, no significant observable market data for these instruments is available. The Company accounts for the stock based on the industry guidance that requires these investments be carried at cost and evaluated for impairment based on the ultimate recovery of par value. During the second quarter, the FHLB of Atlanta repurchased $93 million of its stock, which accounts for the decline in level 3 equity securities during the period.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Derivative contracts (trading assets or trading liabilities)

With the exception of one derivative contract discussed herein and certain instruments discussed under ‘other assets/liabilities, net’ that qualify as derivative instruments, the Company’s derivative instruments are level 1 or level 2 instruments. Level 1 derivative contracts generally include exchange-traded futures or option contracts for which pricing is readily available. See Note 11, “Derivative Financial Instruments,” for additional information on the Company’s derivative contracts.

The Company’s level 2 instruments are predominantly standard OTC swaps, options, and forwards, with underlying market variables of interest rates, foreign exchange, equity, and credit. Because fair values for OTC contracts are not readily available, the Company estimates fair values using internal, but standard, valuation models that incorporate market-observable inputs. The valuation model is driven by the type of contract: for option-based products, the Company uses an appropriate option pricing model, such as Black-Scholes; for forward-based products, the Company’s valuation methodology is generally a discounted cash flow approach. The primary drivers of the fair values of derivative instruments are the underlying variables, such as interest rates, exchange rates, equity, or credit. As such, the Company uses market-based assumptions for all of it significant inputs, such as interest rate yield curves, quoted exchange rates and spot prices, market implied volatilities and credit curves.

The Agreements the Company entered into related to its Coke common stock are level 3 instruments, due to the unobservability of a significant assumption used to value these instruments. Because the value is primarily driven by the embedded equity collars on the Coke shares, a Black-Scholes model is the appropriate valuation model. Most of the assumptions are directly observable from the market, such as the per share market price of Coke common stock, interest rates, and the dividend rate on the Coke common stock. Volatility is a significant assumption and is impacted both by the unusually large size of the trade and the long tenor until settlement. Because the derivatives carry scheduled terms of 6.5 years and 7 years from the effective date and are on a significant number of Coke shares, the observable and active options market on Coke does not provide for any identical or similar instruments. As such, the Company receives estimated market values from a market participant who is knowledgeable about Coke equity derivatives and is active in the market. Based on inquiries of the market participant as to their procedures, as well as the Company’s own valuation assessment procedures, the Company has satisfied itself that the market participant is using methodologies and assumptions that other market participants would use in estimating the fair value of The Agreements. At June 30, 2011 and December 31, 2010, The Agreements’ combined fair value was a liability of $154 million and $145 million, respectively.

Trading loans

The Company engages in certain businesses whereby the election to carry loans at fair value for financial reporting aligns with the underlying business purposes. Specifically, the loans that are included within this classification are: (i) loans made in connection with the Company’s TRS business (see Note 11, “Derivative Financial Instruments,” for further discussion of this business), (ii) loans backed by the SBA and (iii) the loan sales and trading business within the Company’s CIB line of business. All of these loans have been classified as level 2, due to the market data that the Company uses in its estimates of fair value.

The loans made in connection with the Company’s TRS business are short-term, demand loans, whereby the repayment is senior in priority and whose value is collateralized. While these loans do not trade in the market, the Company believes that the par amount of the loans approximates fair value and no unobservable assumptions are made by the Company to arrive at this conclusion. At June 30, 2011 and December 31, 2010, the Company had outstanding $1.1 billion and $972 million, respectively, of such short-term loans carried at fair value.

SBA loans are similar to SBA securities discussed herein under “Federal agency securities,” except for their legal form. In both cases, the Company trades instruments that are fully guaranteed by the U.S. government as to contractual principal and interest and has sufficient observable trading activity upon which to base its estimates of fair value.

The loans from the Company’s sales and trading business are commercial and corporate leveraged loans that are either traded in the market or for which similar loans trade. The Company elected to carry these loans at fair value in order to reflect the active management of these positions. The Company is able to obtain fair value estimates for substantially all of these loans using a third party valuation service that is broadly used by market participants. While most of the loans are traded in the markets, the Company does not believe that trading activity qualifies the loans as level 1 instruments, as the volume and level of trading activity is subject to variability and the loans are not exchange-traded, such that the Company believes that level 2 is a more appropriate presentation of the underlying market activity for the loans. At June 30, 2011 and December 31, 2010, $415 million and $381 million, respectively, of loans related to the Company’s trading business were held in inventory.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Loans and Loans Held for Sale

Residential LHFS

The Company recognized at fair value certain newly-originated mortgage LHFS based upon defined product criteria. The Company chooses to fair value these mortgage LHFS in order to eliminate the complexities and inherent difficulties of achieving hedge accounting and to better align reported results with the underlying economic changes in value of the loans and related hedge instruments. This election impacts the timing and recognition of origination fees and costs, as well as servicing value. Specifically, origination fees and costs are recognized in earnings at the time of origination. The servicing value, which had been recorded as MSRs at the time the loan was sold, is included in the fair value of the loan and initially recognized at the time the Company enters into IRLCs with borrowers. The Company uses derivatives to economically hedge changes in servicing value as a result of including the servicing value in the fair value of the loan. The mark to market adjustments related to LHFS and the associated economic hedges are captured in mortgage production income.

Level 2 LHFS are primarily agency loans which trade in active secondary markets and are priced using current market pricing for similar securities adjusted for servicing and risk. Level 3 loans are primarily non-agency residential mortgages for which there is little to no observable trading activity of similar instruments in either the new issuance or secondary loan markets as either whole loans or as securities. Prior to the non-agency residential loan market disruption, which began during the third quarter of 2007 and continues, the Company was able to obtain certain observable pricing from either the new issuance or secondary loan market. However, as the markets deteriorated and certain loans were not actively trading as either whole loans or as securities, the Company began employing the same alternative valuation methodologies used to value level 3 residential MBS to fair value the loans.

As disclosed in the tabular level 3 rollforwards, transfers of certain mortgage LHFS into level 3 during 2011 were largely due to borrower defaults or the identification of other loan defects impacting the marketability of the loans.

For residential loans that the Company has elected to carry at fair value, the Company has considered the component of the fair value changes due to instrument-specific credit risk, which is intended to be an approximation of the fair value change attributable to changes in borrower-specific credit risk. For the three and six months ended June 30, 2011, the Company recognized losses in the Consolidated Statements of Income/(Loss) of $4 million and $9 million, respectively, due to changes in fair value attributable to borrower-specific credit risk. For the three and six months ended June 30, 2010, the Company recognized losses in the Consolidated Statements of Income/(Loss) of $8 million and $12 million, respectively, due to changes in fair value attributable to borrower-specific credit risk. In addition to borrower-specific credit risk, there are other, more significant, variables that drive changes in the fair values of the loans, including interest rates and general conditions in the principal markets for the loans.

Corporate and other LHFS

As discussed in Note 6, “Certain Transfers of Financial Assets and Variable Interest Entities,” the Company has determined that it is the primary beneficiary of a CLO vehicle, which resulted in the Company consolidating the loans of that vehicle. Because the CLO trades its loans from time to time and in order to fairly present the economics of the CLO, the Company elected to carry the loans of the CLO at fair value. The Company is able to obtain fair value estimates for substantially all of these loans using a third party valuation service that is broadly used by market participants. While most of the loans are traded in the markets, the Company does not believe the loans qualify as level 1 instruments, as the volume and level of trading activity is subject to variability and the loans are not exchange-traded, such that the Company believes that level 2 is more representative of the general market activity for the loans.

LHFI

Level 3 loans include $4 million of fair value loans that were acquired through the acquisition of GB&T. The loans the Company elected to account for at fair value are primarily nonperforming commercial real estate loans, which do not trade in an active secondary market. As these loans are classified as nonperforming, cash proceeds from the sale of the underlying collateral is the expected source of repayment for a majority of these loans. Accordingly, the fair value of these loans is derived from internal estimates, incorporating market data when available, of the value of the underlying collateral. Additionally, level 3 LHFI include $445 million of mortgage loans that have been deemed not marketable, largely due to borrower defaults or the identification of other loan defects. The Company values these loans using a discounted cash flow approach based on assumptions that are generally not observable in the current markets, such as prepayment speeds, default rates, loss severity rates, and discount rates.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Other Intangible Assets

Other intangible assets that the Company records at fair value are the Company’s MSR assets. The fair values of MSRs are determined by projecting cash flows, which are then discounted to estimate an expected fair value. The fair values of MSRs are impacted by a variety of factors, including prepayment assumptions, discount rates, delinquency rates, contractually specified servicing fees, servicing costs, and underlying portfolio characteristics. The underlying assumptions and estimated values are corroborated by values received from independent third parties based on their review of the servicing portfolio. Because these inputs are not transparent in market trades, MSRs are considered to be level 3 assets.

Other Assets/Liabilities, net

The Company’s other assets/liabilities that are carried at fair value on a recurring basis include IRLCs that satisfy the criteria to be treated as derivative financial instruments, derivative financial instruments that are used by the Company to economically hedge certain loans and MSRs, and the derivative that the Company obtained as a result of its sale of Visa Class B shares.

The fair value of IRLCs on residential mortgage LHFS, while based on interest rates observable in the market, is highly dependent on the ultimate closing of the loans. These “pull-through” rates are based on the Company’s historical data and reflect the Company’s best estimate of the likelihood that a commitment will ultimately result in a closed loan. Servicing value is included in the fair value of IRLCs, and the fair value of servicing value is determined by projecting cash flows which are then discounted to estimate an expected fair value. The fair value of servicing value is impacted by a variety of factors, including prepayment assumptions, discount rates, delinquency rates, contractually specified servicing fees, servicing costs, and underlying portfolio characteristics. Because these inputs are not transparent in market trades, IRLCs are considered to be level 3 assets.

During the three and six months ended June 30, 2011, the Company transferred $40 million and $54 million, respectively, of IRLCs out of level 3 as the associated loans were closed, compared to $62 million and $129 million, during the same periods in 2010, respectively.

The Company is exposed to interest rate risk associated with MSRs, IRLCs, mortgage LHFS, and mortgage LHFI reported at fair value. The Company hedges these exposures with a combination of derivatives, including MBS forward and option contracts, interest rate swap and swaption contracts, futures contracts, and eurodollar options. The Company estimates the fair values of such derivative instruments consistent with the methodologies discussed herein under “Derivative contracts” and accordingly these derivatives are considered to be level 2 instruments.

During the second quarter of 2009, in connection with its sale of Visa Class B shares, the Company entered into a derivative contract whereby the ultimate cash payments received or paid, if any, under the contract are based on the ultimate resolution of litigation involving Visa. The value of the derivative was estimated based on the Company’s expectations regarding the ultimate resolution of that litigation, which involved a high degree of judgment and subjectivity. Accordingly, the value of the derivative liability was classified as a level 3 instrument.

Liabilities

Trading liabilities

Trading liabilities are primarily comprised of derivative contracts, but also include various contracts involving U.S. Treasury securities, Federal agency securities, and corporate debt securities that the Company uses in certain of its trading businesses. The Company employs the same valuation methodologies for these derivative contracts and securities as are discussed within the corresponding sections herein under “Trading Assets and Securities Available for Sale”.

Brokered deposits

The Company has elected to measure certain CDs at fair value. These debt instruments include embedded derivatives that are generally based on underlying equity securities or equity indices, but may be based on other underlyings that may or may not be clearly and closely related to the host debt instrument. The Company elected to carry these instruments at fair value in order to remove the mixed attribute accounting model for the single debt instrument or to better align the economics of the CDs with the Company’s risk management strategies. The Company evaluated, on an instrument by instrument basis, whether a new issuance would be carried at fair value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

The Company has classified these CDs as level 2 instruments due to the Company’s ability to reasonably measure all significant inputs based on observable market variables. The Company employs a discounted cash flow approach to the host debt component of the CD, based on observable market interest rates for the term of the CD and an estimate of the Bank’s credit risk. For the embedded derivative features, the Company uses the same valuation methodologies as if the derivative were a standalone derivative, as discussed herein under “Derivative contracts”.

For brokered deposits carried at fair value, the Company estimated credit spreads above LIBOR, based on credit spreads from actual or estimated trading levels of the debt or other relevant market data. The Company recognized gains of $1 million and losses of $13 million for the three and six months ended June 30, 2011, respectively, and gains of $22 million and $7 million for the three and six months ended June 30, 2010, respectively, due to changes in its own credit spread on its brokered deposits carried at fair value.

Long-term debt

The Company has elected to carry at fair value certain fixed rate debt issuances of public debt which are valued by obtaining quotes from a third party pricing service and utilizing broker quotes to corroborate the reasonableness of those marks. In addition, information from market data of recent observable trades and indications from buy side investors, if available, are taken into consideration as additional support for the value. Due to the availability of this information, the Company determined that the appropriate classification for the debt was level 2. The election to fair value the debt was made in order to align the accounting for the debt with the accounting for the derivatives without having to account for the debt under hedge accounting, thus avoiding the complex and time consuming fair value hedge accounting requirements.

The Company’s public debt carried at fair value impacts earnings mainly through changes in the Company’s credit spreads as the Company has entered into derivative financial instruments that economically convert the interest rate on the debt from fixed to floating. The estimated earnings impact from changes in credit spreads above U.S. Treasury rates were gains of $5 million and losses of $15 million for the three and six months ended June 30, 2011, respectively, and gains of $61 million and losses of $17 million for the three and six months ended June 30, 2010, respectively.

The Company also carries approximately $289 million of issued securities contained in a consolidated CLO at fair value in order to recognize the nonrecourse nature of these liabilities to the Company. Specifically, the holders of the liabilities are only paid interest and principal to the extent of the cash flows from the assets of the vehicle and the Company has no current or future obligations to fund any of the CLO vehicle’s liabilities. The Company has classified these securities as level 2, as the primary driver of their fair values are the loans owned by the CLO, which the Company has also elected to carry at fair value, as discussed herein under “Loans and Loans Held for Sale – Corporate and other LHFS”.

The following tables show a reconciliation of the beginning and ending balances for fair valued assets and liabilities measured on a recurring basis using significant unobservable inputs (other than MSRs which are disclosed in Note 5, “Goodwill and Other Intangible Assets”). Transfers into and out of the fair value hierarchy levels are assumed to be as of the end of the quarter in which the transfer occurred. None of the transfers into or out of level 3 have been the result of using alternative valuation approaches to estimate fair values.

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Fair Value Measurements Using Significant Unobservable Inputs
(Dollars in millions)	Beginning balance April 1, 2011		Included in earnings			OCI			Sales		Settlements		Transfers to/from other balance sheet line items		Transfers into Level 3		Transfers out of Level 3		Fair value June 30, 2011		Change in unrealized gains/(losses) included in earnings for the three months ended June 30, 2011 related to financial assets still held at June 30, 2011

Assets
Trading assets
MBS - private		$2		$-			$-			$-		$-		$-		$-		$-		$2		$-
CDO securities		42		-			-			-		-		-		-		-		42		-
ABS		5		-			-			-		-		-		-		-		5		-
Equity securities		56		4			-			-		(47)		-		-		-		13		-

Total trading assets		105		4	¹		-			-		(47)		-		-		-		62		-


Securities AFS
U.S. states and political subdivisions		73		-			-			-		(5)		-		-		-		68		-
MBS - private		338		(1)			(7)			-		(19)		-		-		-		311		1
ABS		20		-			-			-		(1)		-		-		-		19		-
Corporate and other debt securities		5		-			-			-		-		-		-		-		5		-
Other equity securities		690		-			-			-		(93)		-		-		-		597		-

Total securities AFS		1,126		(1	) ²		(7)			-		(118)		-		-		-		1,000		1	²

LHFS		17		1	³		-			(12)		-		(7)		5		(1)		3		-
LHFI		457		1	⁴		-			-		(11)		2		-		-		449		(1)	⁴
Other assets/(liabilities), net		(2)		48			-			-		6		(40)		-		-		12		-

Liabilities
Derivative contracts		(161)		1			6	⁵		-		-		-		-		-		(154)		-

Notes to Consolidated Financial Statements (Unaudited)-Continued



(Dollars in millions)	Beginning balance January 1, 2011		Included in earnings			OCI			Sales		Settlements		Transfers to/from other balance sheet line items		Transfers into Level 3		Transfers out of Level 3		Fair value June 30, 2011		Change in unrealized gains/(losses) included in earnings for the six months ended June 30, 2011 related to financial assets still held at June 30, 2011

Assets
Trading assets
MBS - private		$6		$2			$-			($5)		($1)		$-		$-		$-		$2		$-
CDO securities		53		31			-			(21)		(1)		(20)		-		-		42		15
ABS		27		9			-			(31)		-		-		-		-		5		2
Equity securities		123		12			-			-		(122)		-		-		-		13		-

Total trading assets		209		54	¹		-			(57)		(124)		(20)		-		-		62		17	¹


Securities AFS
U.S. states and political subdivisions		74		1			-			-		(7)		-		-		-		68		-
MBS - private		347		(3)			9			-		(42)		-		-		-		311		(3)
ABS		20		-			1			-		(2)		-		-		-		19		-
Corporate and other debt securities		5		-			-			-		-		-		-		-		5		-
Other equity securities		690		-			-			-		(93)		-		-		-		597		-

Total securities AFS		1,136		(2)	²		10			-		(144)		-		-		-		1,000		(3)	²

LHFS
Residential loans		2		-			-			(14)		(1)		2		16		(2)		3		-
Corporate and other loans		5		(1)	⁶		-			-		-		(4)		-		-		-		-
LHFI		492		-			-			-		(34)		(9)		-		-		449		(3)	⁴
Other assets/(liabilities), net		(24)		84			-			-		6		(54)		-		-		12		-

Liabilities
Derivative contracts		(145)		1			(10)	⁵		-		-		-		-		-		(154)		-

¹ Amounts included in earnings are recorded in trading account profits and commissions.

² Amounts included in earnings are recorded in net securities gains.

³ Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income/(loss).

⁴ Amounts are generally included in mortgage production related income/(loss), however, the mark on certain fair value loans is included in trading account profits and commissions.

⁵ Amount recorded in OCI is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke common stock as discussed in Note 11, “Derivative Financial Instruments.”

⁶ Amounts included in earnings are recorded in other noninterest income.

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Fair Value Measurements Using Significant Unobservable Inputs
(Dollars in millions)	Beginning balance April 1, 2010		Included in earnings			Other comprehensive income			Purchases, sales, issuances, settlements, maturities paydowns, net		Transfers to/from other balance sheet line items		Transfers into Level 3		Transfers out of Level 3		Fair value June 30, 2010		Change in unrealized gains/(losses) included in earnings for the three months ended June 30, 2010 related to financial assets still held at 2010
Assets
Trading assets
U.S. states and political subdivisions		$6		$-			$-			$3		$-		$-		$-		$9		$-
MBS - private		5		(1)			-			(1)		-		-		-		3		(1)
CDO securities		159		6			-			(48)		-		-		-		117		4
ABS		51		(1)			-			(2)		-		-		-		48		(1)
Equity securities		145		(2)			-			(23)		-		-		-		120		(4)
Derivative contracts		22		-			106	⁵		-		-		-		-		128		-

Total trading assets		388		2	¹		106			(71)		-		-		-		425		(2)	¹


Securities AFS
U.S. states and political subdivisions		131		-			(2)			(4)		-		-		-		125		-
MBS - private		369		(1)			17			(20)		-		-		-		365		(1)
ABS		108		-			1			(1)		-		-		-		108		-
Corporate and other debt securities		5		-			-			-		-		-		-		5		-
Other equity securities		705		-			-			-		-		-		-		705		-

Total securities AFS		1,318		(1)	²		16			(25)		-		-		-		1,308		(1)	²

LHFS
Residential loans		152		6	³		-			(51)		(6)		4		(1)		104		2	³
Corporate and other loans		9		(2)	⁶		-			(2)		-		-		-		5		(2)	⁶
LHFI		422		5	⁴		-			(12)		(4)		-		-		411		4	⁴
Other assets/(liabilities), net		(10)		119	³		-			6		(62)		-		-		53		-

Notes to Consolidated Financial Statements (Unaudited)-Continued



(Dollars in millions)	Beginning balance January 1, 2010		Included in earnings			Other comprehensive income			Purchases, sales, issuances, settlements, maturities paydowns, net		Transfers to/ from other balance sheet line items		Transfers into Level 3		Transfers out of Level 3		Fair value June 30, 2010		Change in unrealized gains/(losses) included in earnings for the six months ended June 30, 2010 related to financial assets still held at June 30, 2010
Assets
Trading assets
U.S. states and political subdivisions		$7		$-			$-			$2		$-		$-		$-		$9		$-
MBS - private		6		(1)			-			(2)		-		-		-		3		(1)
CDO securities		175		17			-			(75)		-		-		-		117		11
ABS		51		3			-			(6)		-		-		-		48		1
Equity securities		151		4			-			(35)		-		-		-		120		-
Derivative contracts		-		7			121	⁵		-		-		-		-		128		-

Total trading assets		390		30	¹		121			(116)		-		-		-		425		11	¹


Securities AFS
U.S. states and political subdivisions		132		-			(2)			(5)		-		-		-		125		-
MBS - private		378		(2)			34			(45)		-		-		-		365		(2)
ABS		102		1			(7)			12		-		-		-		108		-
Corporate and other debt securities		5		-			-			-		-		-		-		5		-
Other equity securities		705		-			-			-		-		-		-		705		-

Total securities AFS		1,322		(1)	²		25			(38)		-		-		-		1,308		(2)	²

LHFS
Residential loans		142		5	³		-			(70)		4		24		(1)		104		(6)	³
Corporate and other loans		9		(2)	⁶		-			(2)		-		-		-		5		(2)	⁶
LHFI		449		5	⁴		-			(25)		(17)		-		(1)		411		6	⁴
Other assets/(liabilities), net		(35)		211	³		-			6		(129)		-		-		53		-

Liabilities
Derivative contracts		(46)		-			46	⁵		-		-		-		-		-		-

¹ Amounts included in earnings are recorded in trading account profits/(losses) and commissions.

² Amounts included in earnings are recorded in net securities gains/(losses).

³ Amounts included in earnings are net of issuances, fair value changes, and expirations and are recorded in mortgage production related income/(loss).

⁴ Amounts are generally included in mortgage production related income, however, the mark on certain fair value loans is included in trading account profits/(losses) and commissions.

⁵ Amount recorded in other comprehensive income is the effective portion of the cash flow hedges related to the Company’s probable forecasted sale of its shares of Coke stock as discussed in Note 10, “Derivative

Financial Instruments.”

⁶ Amounts included in earnings are recorded in other noninterest income.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Non-recurring Fair Value Measurements

The following tables present the change in carrying value of those assets measured at fair value on a non-recurring basis, for which impairment was recognized. The table does not reflect the change in fair value attributable to any related economic hedges the Company may have used to mitigate the interest rate risk associated with LHFS. The Company’s economic hedging activities for LHFS are deployed at the portfolio level.


			Fair Value Measurement at June 30, 2011 Using
(Dollars in millions)	Net Carrying Value		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Allowance

LHFS		$128		$-		$61		$67		$-
LHFI		118		-		-		118		(45)
OREO		483		-		370		113		(120)
Other Assets		13		-		6		7		(10)

			Fair Value Measurement at December 31, 2010, Using
(Dollars in millions)	Net Carrying Value		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Valuation Allowance

LHFS		$333		$-		$142		$191		$-
LHFI		85		-		-		85		(15)
OREO		596		-		553		43		(116)
Affordable Housing		357		-		-		357		-
Other Assets		130		-		90		40		(20)

The following is a discussion of the valuation techniques and inputs used in developing fair value measurements for assets classified as level 2 or level 3 that are measured at fair value on a non-recurring basis, based on the class as determined by the nature and risks of the instrument.

Loans Held for Sale

Level 2 LHFS consist primarily of conforming, residential mortgage loans and corporate loans that are accounted for at LOCOM. Level 3 LHFS consist of non-agency residential mortgage LHFS for which there is little or no secondary market activity and leases held for sale. These loans are valued consistent with the methodology discussed in the Recurring Fair Value Measurement section of this footnote. Leases held for sale are valued using internal estimates which incorporate market data when available. Due to the lack of current market data for comparable leases, these assets are considered level 3.

During the six months ended June 30, 2011, the Company transferred $47 million in NPLs, net of a $10 million incremental charge-off, that were previously designated as LHFI to LHFS in conjunction with the Company’s election to actively market these loans for sale. These loans were predominantly reported at amortized cost prior to transferring to LHFS; however, a portion of the NPLs was carried at fair value. Of these transferred loans, $34 million were sold at approximately their carrying value during the second quarter; the remaining $13 million were returned to LHFI as they were no longer deemed marketable for sale. The Company executed a similar transfer of $160 million in NPLs during the six months ended June 30, 2010; these loans were subsequently sold at prices approximating fair value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Loans Held for Investment

LHFI consist primarily of nonperforming commercial real estate loans for which specific reserves have been recorded. As these loans have been classified as nonperforming, cash proceeds from the sale of the underlying collateral is the expected source of repayment for a majority of these loans. Accordingly, the fair value of these loans is derived from internal estimates of the underlying collateral incorporating market data when available. Due to the lack of market data for similar assets, these loans are considered level 3.

OREO

OREO is measured at the lower of cost or its fair value less costs to sell. Level 2 OREO consists primarily of residential homes, commercial properties, and vacant lots and land for which current property-specific appraisals, broker pricing opinions, or other market information is available. Level 3 OREO consists of lots and land for which initial valuations are based on property-specific appraisals or internal valuations. Due to the lower dollar value per property and geographic dispersion of the portfolio, these properties are re-evaluated at least annually using a pooled approach, which applies geographic factors to adjust carrying values for estimated further declines in value.

Affordable Housing

The Company evaluates its consolidated affordable housing partnership investments for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable. An impairment is recorded when the carrying amount of the partnership exceeds its fair value. Fair value measurements for affordable housing investments are derived from internal models using market assumptions when available. Significant assumptions utilized in these models include cash flows, market capitalization rates, and tax credit market pricing. Due to the lack of comparable sales in the marketplace, these valuations are considered level 3. During the three and six months ended June 30, 2011, there were no impairments recognized; however, for the three and six months ended June 30, 2010, the Company recorded $5 million in impairment charges on its consolidated affordable housing partnership investments.

Other Assets

Other assets consist of private equity investments, structured leasing products, other repossessed assets, and assets under operating leases where the Company is the lessor.

Investments in private equity partnerships are valued based on the estimated expected remaining cash flows to be received from these assets discounted at a market rate that is commensurate with their risk profile. Based on the valuation methodology and the lack of observable inputs, these investments are considered level 3. During the three months ended June 30, 2011 and 2010, the Company recorded $2 million in impairment charges and no impairment charges, respectively, on its private equity partnership investments. During the six months ended June 30, 2011 and 2010, the Company recorded $4 million and $2 million, respectively, in impairment charges on its private equity partnership investments.

Structured leasing consists of assets held for sale under third party operating leases. These assets consist primarily of commercial buildings and are recognized at fair value less cost to sell. These assets are valued based on internal estimates which incorporate current market data for similar assets when available. Due to the lack of current market data for comparable assets, these assets are considered level 3. During both the three months ended June 30, 2011 and 2010, the Company recorded no impairment charges on these assets. During the six months ended June 30, 2011 and 2010, the Company recorded no impairment charges and $2 million in impairment charges, respectively, on these assets.

Other repossessed assets consist of repossessed personal property that is measured at fair value less cost to sell. These assets are considered level 2 as their fair value is determined based on market comparables and broker opinions. During both the three months ended June 30, 2011 and 2010, the Company recorded $1 million in impairment charges on these assets. During the six months ended June 30, 2011 and 2010, the Company recorded $1 million and $7 million, respectively, in impairment charges, on these assets.

The Company monitors the fair value of assets under operating leases, where the Company is the lessor, and records impairment to the extent the carrying value is not recoverable and the fair value is less than its carrying value. Fair value is determined using collateral specific pricing digests, external appraisals, and recent sales data from industry equipment dealers. As market data for similar assets is available and used in the valuation, these assets are considered level 2. During the three months ended June 30, 2011 and 2010, the Company recorded no impairment charges and $2 million in impairment charges, respectively, attributable to the fair value of various personal property under operating leases. During the six months ended June 30, 2011 and 2010, the Company recorded $1 million and $11 million, respectively, in impairment charges attributable to the fair value of various personal property under operating leases.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at June 30, 2011 and December 31, 2010 were as follows:

June 30, 2011

December 31, 2010

(Dollars in millions)

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value

Financial assets

Cash and cash equivalents

$6,787

(a)

$5,378

(a)

Trading assets

6,586

(b)

6,175

(b)

Securities AFS

27,216

(b)

26,895

(b)

LHFS

2,052

2,053

(c)

3,501

(c)

LHFI

114,913

115,975

Interest/credit adjustment on LHFI

(2,744)

(3,109)

(2,974)

(3,823)

LHFI, as adjusted for interest/credit risk

112,169

111,804

(d)

113,001

112,152

(d)

Market risk/liquidity adjustment on LHFI

(4,303)

(3,962)

LHFI, fully adjusted

$112,169

$107,501

(d)

$113,001

$108,190

(d)

Financial liabilities

Consumer and commercial deposits

$121,671

$122,025

(e)

$120,025

$120,368

(e)

Brokered deposits

2,345

2,373

(f)

2,365

2,381

(f)

Foreign deposits

905

(f)

654

(f)

Short-term borrowings

5,983

5,979

(f)

5,821

5,815

(f)

Long-term debt

13,693

13,404

(f)

13,648

13,191

(f)

Trading liabilities

3,026

(b)

2,678

(b)

The following methods and assumptions were used by the Company in estimating the fair value of financial instruments:

(a)

Cash and cash equivalents are valued at their carrying amounts reported in the balance sheet, which are reasonable estimates of fair value due to the relatively short period to maturity of the instruments.

(b)

Securities AFS, trading assets, and trading liabilities that are classified as level 1 are valued based on quoted market prices. For those instruments classified as level 2 or level 3, refer to the respective valuation discussions within this footnote.

(c)

LHFS are generally valued based on observable current market prices or, if quoted market prices are not available, on quoted market prices of similar instruments. In instances when significant valuation assumptions are not readily observable in the market, instruments are valued based on the best available data in order to approximate fair value. This data may be internally-developed and considers risk premiums that a market participant would require under then-current market conditions. Refer to the LHFS section within this footnote for further discussion of the LHFS carried at fair value.

(d)

LHFI fair values are based on a hypothetical exit price, which does not represent the estimated intrinsic value of the loan if held for investment. The assumptions used are expected to approximate those that a market participant purchasing the loans would use to value the loans, including a market risk premium and liquidity discount. Estimating the fair value of the loan portfolio when loan sales and trading markets are illiquid, or for certain loan types, nonexistent, requires significant judgment. Therefore, the estimated fair value can vary significantly depending on a market participant’s ultimate considerations and assumptions. The final value yields a market participant’s expected return on investment that is indicative of the current market conditions, but it does not take into consideration the Company’s estimated value from continuing to hold these loans or its lack of willingness to transact at these estimated values.

The Company estimated fair value based on estimated future cash flows discounted, initially, at current origination rates for loans with similar terms and credit quality, which derived an estimated value of 100% and 99% on the loan portfolio’s net carrying value as of June 30, 2011 and December 31, 2010, respectively. The value derived from origination rates likely does not represent an exit price; therefore, an incremental market risk and liquidity discount was subtracted from the initial value as of June 30, 2011 and December 31, 2010, respectively. The discounted value is a function of a market participant’s required yield in the current environment and is not a reflection of the expected cumulative losses on the loans. Loan prepayments are used to adjust future cash flows based on historical experience and prepayment model forecasts. The value of related accrued interest on loans approximates fair value; however, it is not included in the carrying amount or fair value of loans. The value of long-term customer relationships is not permitted under current U.S. GAAP to be included in the estimated fair value.

Notes to Consolidated Financial Statements (Unaudited)-Continued

(e)

Deposit liabilities with no defined maturity such as demand deposits, NOW/money market accounts, and savings accounts have a fair value equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to a schedule of aggregated expected maturities. The assumptions used in the discounted cash flow analysis are expected to approximate those that market participants would use in valuing deposits. The value of long-term relationships with depositors is not taken into account in estimating fair values.

(f)

Fair values for foreign deposits, certain brokered deposits, short-term borrowings, and certain long-term debt are based on quoted market prices for similar instruments or estimated using discounted cash flow analysis and the Company’s current incremental borrowing rates for similar types of instruments. For brokered deposits and long-term debt that the Company carries at fair value, refer to the respective valuation sections within this footnote.

Note 13 – Reinsurance Arrangements and Guarantees

Reinsurance

The Company provides mortgage reinsurance on certain mortgage loans through contracts with several primary mortgage insurance companies. Under these contracts, the Company provides aggregate excess loss coverage in a mezzanine layer in exchange for a portion of the pool’s mortgage insurance premium. As of June 30, 2011, approximately $8.5 billion of mortgage loans were covered by such mortgage reinsurance contracts. The reinsurance contracts are intended to place limits on the Company’s maximum exposure to losses by defining the loss amounts ceded to the Company as well as by establishing trust accounts for each contract. The trust accounts, which are comprised of funds contributed by the Company plus premiums earned under the reinsurance contracts, are maintained to fund claims made under the reinsurance contracts. If claims exceed funds held in the trust accounts, the Company does not intend to make additional contributions beyond future premiums earned under the existing contracts.

At June 30, 2011, the total loss exposure ceded to the Company was approximately $333 million; however, the maximum amount of loss exposure based on funds held in each separate trust account, including net premiums due to the trust accounts, was limited to $69 million. Of this amount, $60 million of losses have been reserved for as of June 30, 2011, reducing the Company’s net remaining loss exposure to $9 million. The reinsurance reserve was $148 million as of December 31, 2010. The decrease in the reserve balance was due to claim payments made to the primary mortgage insurance companies since December 31, 2010, as well as the relinquishment of one trust during the second quarter of 2011. The Company’s evaluation of the required reserve amount includes an estimate of claims to be paid by the trust in relation to loans in default and an assessment of the sufficiency of future revenues, including premiums and investment income on funds held in the trusts, to cover future claims. Future reported losses may exceed $9 million, since future premium income will increase the amount of funds held in the trust; however, future cash losses, net of premium income, are not expected to exceed $9 million. The amount of future premium income is limited to the population of loans currently outstanding since additional loans are not being added to the reinsurance contracts; future premium income could be further curtailed to the extent the Company agrees to relinquish control of other individual trusts to the mortgage insurance companies. Premium income, which totaled $6 million and $14 million for the three and six months ended June 30, 2011, respectively, and $10 million and $20 million for the three and six months ended June 30, 2010, respectively, is reported as part of noninterest income. The related provision for losses, which totaled $6 million and $13 million for the three and six months ended June 30, 2011, respectively and $9 million and $18 million for the three and six months ended June 30, 2010, respectively, is reported as part of noninterest expense.

Guarantees

The Company has undertaken certain guarantee obligations in the ordinary course of business. The issuance of a guarantee imposes an obligation for the Company to stand ready to perform and should certain triggering events occur, it also imposes an obligation to make future payments. Payments may be in the form of cash, financial instruments, other assets, shares of stock, or provisions of the Company’s services. The following discussion appends and updates certain guarantees disclosed in Note 18, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. In addition, the Company has entered into certain contracts that are similar to guarantees, but that are accounted for as derivatives (see Note 11, “Derivative Financial Instruments”).

Notes to Consolidated Financial Statements (Unaudited)-Continued

Letters of Credit

Letters of credit are conditional commitments issued by the Company generally to guarantee the performance of a client to a third party in borrowing arrangements, such as CP, bond financing, and similar transactions. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to clients and may be reduced by selling participations to third parties. The Company issues letters of credit that are classified as financial standby, performance standby, or commercial letters of credit.

As of June 30, 2011 and December 31, 2010, the maximum potential amount of the Company’s obligation was $5.4 billion and $6.4 billion, respectively, for financial and performance standby letters of credit. The Company has recorded $113 million and $109 million in other liabilities for unearned fees related to these letters of credit as of June 30, 2011 and December 31, 2010, respectively. The Company’s outstanding letters of credit generally have a term of less than one year but may extend longer. If a letter of credit is drawn upon, the Company may seek recourse through the client’s underlying obligation. If the client’s line of credit is also in default, the Company may take possession of the collateral securing the line of credit, where applicable. The Company monitors its credit exposure under standby letters of credit in the same manner as it monitors other extensions of credit in accordance with credit policies. Some standby letters of credit are designed to be drawn upon and others are drawn upon only under circumstances of dispute or default in the underlying transaction to which the Company is not a party. In all cases, the Company holds the right to reimbursement from the applicant and may or may not also hold collateral to secure that right. An internal assessment of the probability of default and loss severity in the event of default is assessed consistent with the methodologies used for all commercial borrowers. The management of credit risk regarding letters of credit leverages the risk rating process to focus higher visibility on the higher risk and higher dollar letters of credit. The associated reserve is a component of the unfunded commitment reserve recorded in other liabilities included in the allowance for credit losses as disclosed in Note 4, “Allowance for Credit Losses,”.

Loan Sales

STM, a consolidated subsidiary of SunTrust, originates and purchases residential mortgage loans, a portion of which are sold to outside investors in the normal course of business, through a combination of whole loan sales to GSEs, Ginnie Mae, and non-agency investors, as well as a limited amount of Company sponsored securitizations. When mortgage loans are sold, representations and warranties regarding certain attributes of the loans sold are made to these third party purchasers. Subsequent to the sale, if a material underwriting deficiency or documentation defect is discovered, STM may be obligated to repurchase the mortgage loan or to reimburse the investor for losses incurred (make whole requests) if such deficiency or defect cannot be cured by STM within the specified period following discovery. These representations and warranties may extend through the life of the mortgage loan, up to 25 to 30 years; however, most demands occur within the first few years of origination. STM’s risk of loss under its representations and warranties is largely driven by borrower payment performance since investors will perform extensive reviews of delinquent loans as a means of mitigating losses.

Loan repurchase requests generally arise from loans sold during the period from January 1, 2005 to June 30, 2011, which totaled $235.5 billion at the time of sale, consisting of $181.1 billion and $30.3 billion of agency and non-agency loans, respectively, as well as $24.1 billion of loans sold to Ginnie Mae. The composition of the remaining outstanding balance by vintage and type of buyer as of June 30, 2011 is shown in the following table:


	Remaining Outstanding Balance by Year of Sale
(Dollars in billions)	2005		2006		2007		2008		2009		2010		2011		Total
GSE ¹		$5.0		$6.0		$11.5		$12.9		$28.6		$17.1		$8.4		$89.5
Ginnie Mae ¹		0.7		0.5		0.6		2.7		6.0		4.0		1.5		16.0
Non-agency		5.9		6.0		3.5		-		-		-		-		15.4

Total		$11.6		$12.5		$15.6		$15.6		$34.6		$21.1		$9.9		$120.9

¹ Balances based on loans serviced by the Company.

Non-agency loan sales include whole loans and loans sold in private securitization transactions. While representation and warranties have been made related to these sales, they differ in many cases from those made in connection with loans sold to the GSEs in that non-agency loans may not be required to meet the same underwriting standards and, in addition to identifying a representation or warranty breach, non-agency investors are generally required to demonstrate that the breach was material and directly related to the cause of default. Loans sold to Ginnie Mae are insured by either the FHA or VA. As servicer, we may elect to repurchase delinquent loans in accordance with Ginnie Mae guidelines; however, the loans continue to be insured. Although we indemnify FHA and VA for losses related to loans not originated in accordance with their guidelines, such occurrences are limited and no repurchase liability has been recorded for loans sold to Ginnie Mae.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Although the timing and volume has varied, repurchase and make whole requests have increased over the past several years. Repurchase request volume was $661 million during the six months ended June 30, 2011 and $1.1 billion, $1.1 billion, and $557 million during the years ended 2010, 2009, and 2008, respectively, and on a cumulative basis since 2005 has been $4.2 billion. The majority of these requests are from GSEs, with a limited number of requests having been received related to non-agency investors; repurchase requests from non-agency investors were $43 million during the six months ended June 30, 2011 and $55 million, $99 million, and $148 million during the years ended 2010, 2009, and 2008, respectively. In addition, repurchase requests related to loans originated in 2006 and 2007 have consistently comprised the vast majority of total repurchase requests during the past three years. The repurchase and make whole requests received have been primarily due to material breaches of representations related to compliance with the applicable underwriting standards, including borrower misrepresentation and appraisal issues. STM performs a loan by loan review of all requests and demands have been and will continue to be contested to the extent they are not considered valid. At June 30, 2011, the unpaid principal balance of loans related to unresolved requests previously received from investors was $472 million, comprised of $435 million from the GSEs and $37 million from non-agency investors. Comparable amounts at December 31, 2010, were $293 million, comprised of $264 million from the GSEs and $29 million from non-agency investors.

As of June 30, 2011 and December 31, 2010, the liability for contingent losses related to loans sold totaled $299 million and $265 million, respectively. The liability is recorded in other liabilities in the Consolidated Balance Sheets, and the related repurchase provision is recognized in mortgage production related income/(loss) in the Consolidated Statements of Income/(Loss). The Company does not maintain any legal reserves with respect to mortgage repurchase activity because there is currently no litigation outstanding. The following table summarizes the changes in the Company’s reserve for mortgage loan repurchase losses:


	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2011		2010		2011		2010
Balance at beginning of period		$270		$210		$265		$200
Repurchase provision		90		148		170		276
Charge-offs		(61)		(102)		(136)		(220)

Balance at end of period		$299		$256		$299		$256

During the six months ended June 30, 2011 and 2010, the Company repurchased or otherwise settled mortgages with unpaid principal balances of $246 million and $375 million, respectively, related to investor demands. As of June 30, 2011 and December 31, 2010, the carrying value of outstanding repurchased mortgage loans, net of any allowance for loan losses, totaled $163 million and $153 million, respectively, of which $83 million and $86 million, respectively, were nonperforming.

As of June 30, 2011, the Company maintained a reserve for costs associated with foreclosure delays of loans serviced for GSEs. STM also maintains a liability for contingent losses related to MSR sales, which totaled $7 million and $6 million as of June 30, 2011 and December 31, 2010, respectively.

Contingent Consideration

The Company has contingent payment obligations related to certain business combination transactions. Payments are calculated using certain post-acquisition performance criteria. Arrangements entered into prior to January 1, 2009 are not recorded as liabilities until the contingency is resolved; whereas arrangements entered into subsequent to that date are recorded as liabilities at the fair value of the contingent payment. The potential obligation associated with these arrangements was $13 million and $5 million as of June 30, 2011 and December 31, 2010, respectively, of which $12 million and $3 million were recorded as a liability representing the fair value of the contingent payments as of June 30, 2011 and December 31, 2010, respectively. If required, these contingent payments will be payable at various times over the next three years.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Visa

The Company issues and acquires credit and debit card transactions through Visa. The Company is a defendant, along with Visa U.S.A. Inc. and MasterCard International (the “Card Associations”), as well as several other banks, in one of several antitrust lawsuits challenging the practices of the Card Associations (the “Litigation”). The Company has entered into judgment and loss sharing agreements with Visa and certain other banks in order to apportion financial responsibilities arising from any potential adverse judgment or negotiated settlements related to the Litigation. Additionally, in connection with Visa’s restructuring in 2007, a provision of the original Visa By-Laws, Section 2.05j, was restated in Visa’s certificate of incorporation. Section 2.05j contains a general indemnification provision between a Visa member and Visa, and explicitly provides that after the closing of the restructuring, each member’s indemnification obligation is limited to losses arising from its own conduct and the specifically defined Litigation. The maximum potential amount of future payments that the Company could be required to make under this indemnification provision cannot be determined as there is no limitation provided under the By-Laws and the amount of exposure is dependent on the outcome of the Litigation. As of June 30, 2011, Visa had funded $6.5 billion into an escrow account, established for the purpose of funding judgments in, or settlements of, the Litigation. Agreements associated with Visa’s IPO have provisions that Visa will first use the funds in the escrow account to pay for future settlements of, or judgments in the Litigation. If the escrow account is insufficient to cover the Litigation losses, then Visa will issue additional Class A shares (“loss shares”). The proceeds from the sale of the loss shares would then be deposited in the escrow account. The issuance of the loss shares will cause a dilution of Visa’s Class B common stock as a result of an adjustment to lower the conversion factor of the Class B common stock to Class A common stock. Visa USA’s members are responsible for any portion of the settlement or loss on the Litigation after the escrow account is depleted and the value of the Class B shares is fully-diluted.

In May 2009, the Company sold its 3.2 million shares of Class B Visa Inc. common stock to another financial institution (“the Counterparty”) and entered into a derivative with the Counterparty. The Company received $112 million and recognized a gain of $112 million in connection with these transactions. Under the derivative, the Counterparty will be compensated by the Company for any decline in the conversion factor as a result of the outcome of the Litigation. Conversely, the Company will be compensated by the Counterparty for any increase in the conversion factor. The amount of compensation is a function of the 3.2 million shares sold to the Counterparty, the change in conversion rate, and Visa’s share price. The Counterparty, as a result of its ownership of the Class B common stock, will be impacted by dilutive adjustments to the conversion factor of the Class B common stock caused by the Litigation losses. The conversion factor at the inception of the derivative in May 2009 was 0.6296 and as of June 30, 2011 the conversion factor had decreased to 0.4881 due to Visa’s funding of the litigation escrow account. The decreases in the conversion factor triggered payments by the Company to the Counterparty of $5 million, $17 million, and $10 million during 2011, 2010, and 2009, respectively. A high degree of subjectivity was used in estimating the fair value of the derivative liability, and the ultimate impact to the Company could be significantly higher or lower than the $17 million and $23 million recorded as of June 30, 2011 and December 31, 2010, respectively.

Other

In the normal course of business, the Company enters into indemnification agreements and provides standard representations and warranties in connection with numerous transactions. These transactions include those arising from securitization activities, underwriting agreements, merger and acquisition agreements, loan sales, contractual commitments, payment processing sponsorship agreements, and various other business transactions or arrangements. The extent of the Company’s obligations under these indemnification agreements depends upon the occurrence of future events; therefore, the Company’s potential future liability under these arrangements is not determinable.

Note 14 – Contingencies

Litigation and Regulatory Matters

In the ordinary course of business, the Company and its subsidiaries are subject to regulatory examinations, investigations, and requests for information, and are also parties to numerous civil claims and lawsuits. Some of these matters involve claims for substantial amounts. The Company’s experience has shown that the damages alleged by plaintiffs or claimants are often overstated, based on novel or unsubstantiated legal theories, unsupported by the facts, and/or bear no relation to the ultimate award that a court might grant. In addition, the outcome of litigation and regulatory matters and the timing of ultimate resolution are inherently difficult to predict. Because of these factors, the Company typically cannot provide a meaningful estimate of the range of reasonably possible outcomes of claims in the aggregate or by individual claim. On a case-by-case basis, however, reserves are established for those legal claims in which it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. In no cases are those accrual amounts material to the financial condition of the Company. The actual costs of resolving these claims may be substantially higher or lower than the amounts reserved.

Notes to Consolidated Financial Statements (Unaudited)-Continued

For a limited number of legal matters in which the Company is involved, the Company is able to estimate a range of reasonably possible losses. For other matters for which a loss is probable or reasonably possible, such an estimate is not possible. For those matters where an estimate is reasonably possible, management currently estimates the aggregate range of reasonably possible losses as $95 million to $205 million in excess of the accrued liability, if any, related to those matters. This estimated range of reasonably possible losses represents the estimated possible losses over the life of such legal matters, which may span a currently indeterminable number of years, and is based on information currently available as of June 30, 2011. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from this estimate. Those matters for which an estimate is not possible are not included within this estimated range; therefore, this estimated range does not represent the Company’s maximum loss exposure. Based on current knowledge, it is the opinion of management that liabilities arising from legal claims in excess of the amounts currently accrued, if any, will not have a material impact to the Company’s financial condition, results of operations, or cash flows. However, in light of the significant uncertainties involved in these matters, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to the Company’s results or cash flows for any given reporting period.

The following appends and updates certain litigation and regulatory matters disclosed in Note 21, “Contingencies,” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Auction Rate Securities Investigations and Claims

FINRA Auction Rate Securities Investigation

In September 2008, STRH and STIS entered into an “agreement in principle” with FINRA related to the sales and brokering of ARS by STRH and STIS. This agreement was non-binding and subject to the negotiation of a final settlement. The parties were unable to finalize this agreement and FINRA continued its investigation. Beginning in late 2008, the Company moved forward with ARS purchases from essentially the same categories of investors who would have been covered by the original agreement with FINRA as well as certain other investors not addressed by the agreement. In 2010, FINRA notified the Company that it had completed its investigation and that it intended to recommend that charges be filed against both STRH and STIS. Both STRH and STIS subsequently have entered into settlement agreements with FINRA under which each firm will be assessed a fine and be required to provide certain other relief, but neither firm will be required to repurchase any additional ARS. The Company has fully accrued for these fines that total $5 million at June 30, 2011. These agreements have been approved by FINRA and are final. Since 2008, the Company has purchased ARS with par amounts totaling $617 million as a result of the FINRA investigation and cumulative losses through June 30, 2011 of $111 million. As of June 30, 2011, the Company has completed these ARS purchases. The fair value of the remaining ARS purchased pursuant to the settlement, net of sales, redemptions and calls, is approximately $54 million and $147 million in trading securities and $107 million and $128 million in securities AFS, at June 30, 2011 and December 31, 2010, respectively. The losses related to the FINRA agreement were accrued in 2008; however, during the six months ended June 30, 2011 and 2010, the Company recognized gains relating to these ARS of $35 million and $6 million, respectively, and a gain of $5 million and a loss of $2 million during the three months ended June 30, 2011 and 2010, respectively. Gain and loss amounts are comprised of net trading gains and net securities gains resulting primarily from sales, calls, and redemptions of both trading securities and securities AFS that were purchased from investors, as well as, net mark to market gains on positions that continue to be held by the Company. Due to the pass-through nature of these security purchases, gains, and losses are included in the Corporate Other and Treasury segment.

In re LandAmerica Financial Group, Inc. et al.

Two putative class action lawsuits have been filed against the Company by former customers of LandAmerica 1031 Exchange Services, Inc, (“LES”), a subsidiary of LandAmerica Financial Group, Inc. (“LFG”). The first of these actions, Arthur et al. v. SunTrust Banks, Inc. et al. , was filed on January 14, 2009 in the U.S. District Court for the Southern District of California. The second of these cases, Terry et al. v. SunTrust Banks, Inc. et al. , was filed on February 2, 2009 in the Court of Common Pleas, Tenth Judicial Circuit, County of Anderson, South Carolina, and subsequently removed to the U.S. District Court for the District of South Carolina. On June 12, 2009, the Multi-District Litigation (“MDL”) Panel issued a transfer order designating the U.S. District Court for the District of South Carolina, Anderson Division, as MDL Court for IRS Section 1031 Tax Deferred Exchange Litigation (MDL 2054). Plaintiffs’ allegations in these cases are that LES and certain of its officers caused them to suffer damages in connection with potential 1031 exchange transactions that were pending at the time that LES filed for bankruptcy. Essentially, Plaintiffs’ core allegation is that their damages are the result of breaches of fiduciary and other duties owed to them by LES and others, fraud, and other improper acts committed by LES and certain of its officers, and that the Company is partially or entirely responsible for such damages because it knew or should have known about the alleged wrongdoing and failed to take appropriate steps to stop the same. The Company believes that the allegations and claims made against it in these actions are both factually and legally unsupported and has filed a motion to dismiss all claims. The Court granted this motion to dismiss with prejudice on June 15, 2011. Plaintiffs have appealed this decision to the Fourth Circuit Court of Appeals.

Notes to Consolidated Financial Statements (Unaudited)-Continued

In addition, the Company is aware of threatened litigation by the bankruptcy trustee representing the estates of LFG and LES related to the purchase of ARS by LES through STRH. The total par amount of ARS bought through STRH and held by LES at the time of the collapse of the auction rate market in February 2008 was approximately $152 million. The parties settled this dispute for $14 million. This amount was fully accrued as of June 30, 2011 and has subsequently been paid out.

Other ARS Claims

Since April 2008, several arbitrations and individual lawsuits have been filed against STRH and STIS by parties who purchased ARS through these entities. Broadly stated, these complaints allege that STRH and STIS made misrepresentations about the nature of these securities and engaged in conduct designed to mask some of the liquidity risk associated with them. They also allege that STRH and STIS were aware of the risks and problems associated with these securities and took steps in advance of the wave of auction failures to remove these securities from their own holdings. The claimants in these actions are seeking to recover the par value of the ARS in question as well as compensatory and punitive damages in unspecified amounts. The Company reserved $8 million and $24 million as of June 30, 2011 and December 31, 2010, respectively, for estimated probable losses related to other ARS claims. The Company also has a loss accrual totaling $13 million related to one of the claims that was settled, but unpaid, as of June 30, 2011. Losses related to the other ARS claims have been recognized in trading account profits/(losses) and commissions in the Consolidated Statements of Income/(Loss).

Overdraft Fee Cases

The Company has been named as a defendant in two putative class actions relating to the imposition of overdraft fees on customer accounts. The first such case, Buffington et al. v. SunTrust Banks, Inc. et al. was filed in Fulton County Superior Court on May 6, 2009. This action was removed to the U.S. District Court for the Northern District of Georgia, Atlanta Division on June 10, 2009, and was transferred to the U.S. District Court for the Southern District of Florida for inclusion in Multi-District Litigation Case No. 2036 on December 1, 2009. Plaintiffs assert claims for breach of contract, conversion, unconscionability, and unjust enrichment for alleged injuries they suffered as a result of the method of posting order used by the Company, which allegedly resulted in overdraft fees being assessed to their joint checking account, and purport to bring their action on behalf of a putative class of “all SunTrust Bank account holders who incurred an overdraft charge despite their account having a sufficient balance of actual funds to cover all debits that have been submitted to the bank for payment, “as well as” all SunTrust account holders who incurred one or more overdraft charges based on SunTrust Bank’s reordering of charges.” Plaintiffs seek restitution, damages, expenses of litigation, attorneys’ fees, and other relief deemed equitable by the Court. The Company filed a Motion to Dismiss and Motion to Compel Arbitration and both motions were denied. The denial of the Motion to Compel Arbitration was appealed to the Eleventh Circuit Court of Appeals. The Eleventh Circuit remanded this matter back to the District Court with instructions to the District Court to review its prior ruling in light of the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion. The second of these cases, Bickerstaff v. SunTrust Bank, was filed in the Fulton County State Court on July 12, 2010 and an amended complaint was filed on August 9, 2010. Plaintiff asserts that all overdraft fees charged to his account which related to debit card and ATM transactions are actually interest charges and therefore subject to the usury laws of Georgia. Plaintiff has brought claims for violations of civil and criminal usury, conversion, and money had and received, and purports to bring the action on behalf of all Georgia citizens who have incurred such overdraft fees within the last four years where the overdraft fee resulted in an interest rate being charged in excess of the usury rate. SunTrust has filed a motion to compel arbitration and that motion is pending.

SunTrust Mortgage, Inc. v United Guaranty Residential Insurance Company of North Carolina

STM filed a suit in the Eastern District of Virginia in July of 2009 against United Guaranty Residential Insurance Company of North Carolina (“UGRIC”) seeking payment involving denied mortgage insurance claims regarding second lien mortgages. STM’s claims are in two counts. Count one involves a common reason for denial of claims by UGRIC for a group of loans. Count two involves a group of loans with individualized reasons for the claim denials asserted by UGRIC. The two counts filed by STM have been bifurcated for trial purposes. UGRIC has counterclaimed for declaratory relief involving interpretation of the insurance policy involving certain caps on the amount of claims covered, whether ongoing premium obligations exist after any caps are met, and the potential to accelerate any premiums that may be owed if UGRIC prevails on its counterclaim. UGRIC later disclaimed its argument for acceleration of premiums. The Court granted STM’s motion for summary judgment as to liability on Count one and a trial on damages was held on July 18, 2011. The Court has taken the matter under advisement and the parties are waiting on the Court’s decision. Count two has been stayed pending final resolution of Count one. On UGRIC’s counterclaim, the Court agreed that UGRIC’s interpretation was correct regarding STM’s continued obligations to pay premiums in the future after coverage caps are met. The Court has not ruled on STM’s affirmative defense that UGRIC can no longer enforce the contract due to its prior breaches. This issue has been presented to the Court and the parties are awaiting a decision.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Lehman Brothers Holdings, Inc. Litigation

Beginning in October 2008, STRH, along with other underwriters and individuals, were named as defendants in several individual and putative class action complaints filed in the U.S. District Court for the Southern District of New York and state and federal courts in Arkansas, California, Texas and Washington. Plaintiffs allege violations of Sections 11 and 12 of the Securities Act of 1933 for allegedly false and misleading disclosures in connection with various debt and preferred stock offerings of Lehman Brothers Holdings, Inc. and seek unspecified damages. All cases have now been transferred for coordination to the multi-district litigation captioned In re Lehman Brothers Equity/Debt Securities Litigation pending in the U.S. District Court for the Southern District of New York. Defendants filed a motion to dismiss all claims asserted. On July 27, 2011, the District Court granted in part and denied in part the motion to dismiss the claims against STRH and the other underwriter defendants.

Krinsk v. SunTrust Bank

This is a lender liability action in which the borrower claims that the Company has taken actions in violation of her home equity line of credit agreement and in violation of the Truth in Lending Act (“TILA”). Plaintiff filed this action in the U.S. District Court for the Middle District of Florida as a putative class action. The Court dismissed portions of Plaintiff’s first complaint, and she subsequently filed an amended complaint asserting breach of contract, breach of implied covenant of good faith and fair dealing, and violation of TILA. Plaintiff has filed a motion seeking to certify a class of all Florida borrowers. The Company filed its answer to the complaint, has opposed class certification, and has filed a motion to compel arbitration. The Court denied the motion to compel arbitration and this decision is on appeal to the Eleventh Circuit Court of Appeals. The case has been stayed pending the resolution of this appeal.

SunTrust Securities Class Action Litigation

Beginning in May 2009, the Company, STRH, SunTrust Capital IX, officers and directors of the Company, and others were named in three putative class actions arising out of the offer and sale of approximately $690 million of SunTrust Capital IX 7.875% Trust Preferred Securities (“TRUPs”) of SunTrust Banks, Inc. The complaints alleged, among other things, that the relevant registration statement and accompanying prospectus misrepresented or omitted material facts regarding the Company’s allowance for loan and lease loss reserves, the Company’s capital position and its internal risk controls. Plaintiffs seek to recover alleged losses in connection with their investment in the TRUPs or to rescind their purchases of the TRUPs. These cases were consolidated under the caption Belmont Holdings Corp., et al., v. SunTrust Banks, Inc., et al. , in the U.S. District Court for the Northern District of Georgia, Atlanta Division, and on November 30, 2009, a consolidated amended complaint was filed. On January 29, 2010, Defendants filed a motion to dismiss the consolidated amended complaint. This motion was granted, with leave to amend, on September 10, 2010. On October 8, 2010, the lead plaintiff filed an amended complaint in an attempt to address the pleading deficiencies identified in the Court’s dismissal decision. The Company filed a motion to dismiss the amended complaint on March 21, 2011. This motion has been fully briefed and is pending a decision by the District Court.

Riverside National Bank of Florida v. The McGraw-Hill Companies, Inc. et al.

On August 6, 2009, Riverside National Bank of Florida (“Riverside”) filed a complaint in the Supreme Court of the State of New York, County of Kings, against STRH, along with several other broker-dealers, portfolio managers, rating agencies and others. On November 13, 2009, the Plaintiffs filed a second amended complaint entitled Riverside National Bank of Florida v. TheMcGraw-Hill Companies, Inc. et al. The complaint alleges claims for common law fraud, negligent misrepresentation, breach of contract and other state law claims relating to the sale of CDOs, backed by trust preferred securities. The complaint alleges that the offering materials for the CDOs were misleading, the trust preferred securities underlying the CDOs were not sufficiently diversified, and the CDOs had inflated and erroneous ratings. As to STRH, the complaint seeks damages in connection with a $7 million senior CDO security that was acquired by Riverside. The complaint alleges that the security has lost over $5 million in value and seeks aggregate damages from all defendants of over $132 million. Defendants filed a motion to dismiss on December 11, 2009. On April 16, 2010, Riverside was closed by the Office of the Comptroller of the Currency and the FDIC was named its receiver. On June 3, 2010, the case was removed to the U.S. District Court for the Southern District of New York. On April 22, 2011, the FDIC voluntarily dismissed this case without prejudice.

Colonial BancGroup Securities Litigation

Beginning in July 2009, STRH, certain other underwriters, The Colonial BancGroup, Inc. (“Colonial BancGroup”) and certain officers and directors of Colonial BancGroup were named as defendants in a putative class action filed in the U.S. District Court for the Middle District of Alabama, Northern District entitled In re Colonial BancGroup, Inc. Securities Litigation. The complaint was brought by purchasers of certain debt and equity securities of Colonial BancGroup and seeks unspecified damages. Plaintiffs allege violations of Sections 11 and 12 of the Securities Act of 1933 due to allegedly false and misleading disclosures in the relevant registration statement and prospectus relating to Colonial BancGroup’s goodwill impairment, mortgage underwriting standards and credit quality. On August 28, 2009, The Colonial BancGroup filed for bankruptcy. The Defendants’ motion to dismiss was denied in May 2010, but the Court subsequently has ordered Plaintiffs to file an amended complaint. This amended complaint has now been filed.

Notes to Consolidated Financial Statements (Unaudited)-Continued

U.S. Department of Justice Investigation

Since late 2009, STM has been cooperating with the United States Department of Justice (“USDOJ”) in connection with an investigation relating to alleged violations of the Equal Credit Opportunity Act and the Fair Housing Act. STM recently has been informed by the USDOJ that it intends to file a lawsuit against STM in this matter if the parties are unable to reach a settlement. To the best of STM’s knowledge, the USDOJ’s allegations in this matter relate solely to prior periods and to alleged practices of STM that no longer are in effect. The parties are engaged in settlement discussions, but there may be significant disagreements about the appropriateness and validity of the methodology and analysis upon which USDOJ has based its allegations.

Consent Order with the Federal Reserve

On April 13, 2011 SunTrust Banks, Inc., SunTrust Bank and STM entered into a Consent Order with the Federal Reserve in which SunTrust Banks, Inc., SunTrust Bank and STM agreed to strengthen oversight of and improve risk management, internal audit, and compliance programs concerning the residential mortgage loan servicing, loss mitigation, and foreclosure activities of STM. Under the terms of the Consent Order, SunTrust Bank and STM also agreed to retain an independent consultant to conduct a review of residential foreclosure actions pending at any time during the period from January 1, 2009 through December 31, 2010 for loans serviced by STM, to identify any errors, misrepresentations or deficiencies, determine whether any instances so identified resulted in financial injury, and then make any appropriate remediation, reimbursement or adjustment. Under the terms of the Consent Order, SunTrust Bank and STM also agreed, among other things, to: (a) strengthen the coordination of communications between borrowers and STM concerning ongoing loss mitigation and foreclosure activities; (b) submit a plan to enhance processes for oversight and management of third party vendors used in connection with residential mortgage servicing, loss mitigation and foreclosure activities; (c) enhance and strengthen the enterprise-wide compliance program with respect to oversight of residential foreclosure loan servicing, loss mitigation and foreclosure activities; (d) ensure appropriate oversight of STM’s activities with respect to Mortgage Electronic Registration System; (e) review and remediate, if necessary, STM’s management information systems for its residential mortgage loan servicing, loss mitigation, and foreclosure activities; (f) improve the training of STM officers and staff concerning applicable law, supervisory guidance and internal procedures concerning residential mortgage loan servicing, loss mitigation and foreclosure activities, including the single point of contact for foreclosure and loss mitigation; (g) enhance and strengthen the enterprise-wide risk management program with respect to oversight of residential foreclosure loan servicing, loss mitigation and foreclosure activities; and (h) enhance and strengthen the internal audit program with respect to residential loan servicing, loss mitigation and foreclosure activities. The full text of the Consent Order is available on the Federal Reserve’s website and is filed as Exhibit 10.11 to this report. Work required by the Consent Order is proceeding and is on schedule.

The Company completed an internal review of STM’s residential foreclosure processes, and as a result of the review, steps have been taken to improve upon those processes. An independent consultant review will also be performed as required by the Consent Order, and until the results of that review are known, the Company cannot reasonably estimate financial reimbursements or adjustments. As a result of the Federal Reserve’s review of the Company’s residential mortgage loan servicing and foreclosure processing practices that preceded the Consent Order, the Federal Reserve announced that it believed monetary sanctions would be appropriate and it planned to announce monetary sanctions. The Federal Reserve has not made any further announcements nor has it provided the Company with information related to timing or amount of these potential monetary sanctions. Consequently, the amount cannot be reasonably estimated, and therefore, no accrual has been made.

A Financial Guaranty Insurance Company

The Company is engaged in settlement negotiations with a financial guaranty insurance company relating to second lien mortgage loan repurchase claims for a securitization that the financial guaranty insurance company guaranteed under an insurance policy. The financial guaranty insurance company’s allegations in this matter generally are that it has paid claims as a result of defaults in the underlying loans and that some of these losses are the result of breaches of representations and warranties made in the documents governing the transaction in question.

Note 15 - Business Segment Reporting

The Company has six business segments used to measure business activities: Retail Banking, Diversified Commercial Banking, CRE, CIB, Mortgage, and W&IM with the remainder in Corporate Other and Treasury. The business segments are determined based on the products and services provided, or the type of customer served, and they reflect the manner in which financial information is currently evaluated by management. For a further discussion concerning SunTrust’s business segments, see Note 22, “Business Segment Reporting”, to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Because the business segment results are presented based on management accounting practices, the transition to the consolidated results, which are prepared under U.S. GAAP, creates certain differences which are reflected in Reconciling Items in the tables below.

For business segment reporting purposes, the basis of presentation in the accompanying discussion includes the following:

—

Net interest income – All net interest income is presented on a FTE basis. The revenue gross-up has been applied to tax-exempt loans and investments to make them comparable to other taxable products. The segments have also been matched maturity funds transfer priced, generating credits or charges based on the economic value or cost created by the assets and liabilities of each segment. The mismatch between funds credits and funds charges at the segment level resides in Reconciling Items. The change in the matched maturity funds mismatch is generally attributable to the corporate balance sheet management strategies.

—

Provision for credit losses - Represents net charge-offs by segment. The difference between the segment net charge-offs and the consolidated provision for credit losses is reported in Reconciling Items.

—

Provision/(benefit) for income taxes - Calculated using a nominal income tax rate for each segment. This calculation includes the impact of various income adjustments, such as the reversal of the FTE gross up on tax-exempt assets, tax adjustments, and credits that are unique to each business segment. The difference between the calculated provision/(benefit) for income taxes at the segment level and the consolidated provision/(benefit) for income taxes is reported in Reconciling Items.

The segment’s financial performance is comprised of direct financial results as well as various allocations that for internal management reporting purposes provide an enhanced view of analyzing the segment’s financial performance. The internal allocations include the following:

—

Operational Costs – Expenses are charged to the segments based on various statistical volumes multiplied by activity based cost rates. As a result of the activity based costing process, planned residual expenses are also allocated to the segments. The recoveries for the majority of these costs are in the Corporate Other and Treasury segment.

—

Support and Overhead Costs – Expenses not directly attributable to a specific segment are allocated based on various drivers (e.g., number of full-time equivalent employees and volume of loans and deposits). The recoveries for these allocations are in Corporate Other and Treasury.

—

Sales and Referral Credits – Segments may compensate another segment for referring or selling certain products. The majority of the revenue resides in the segment where the product is ultimately managed.

The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. The implementation of these enhancements to the internal management reporting methodology may materially affect the results disclosed for each segment with no impact on consolidated results. Whenever significant changes to management reporting methodologies take place, the impact of these changes is quantified and prior period information is reclassified wherever practicable.

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Three Months Ended June 30, 2011
(Dollars in millions)	Retail Banking		Diversified Commercial Banking		CRE		CIB		Mortgage		W&IM		Corporate Other and Treasury		Reconciling Items		Consolidated
Average total assets		$40,458		$24,771		$8,262		$23,120		$33,363		$8,640		$31,530		$383		$170,527
Average total liabilities		78,081		21,113		1,541		18,240		3,427		12,839		15,764		13		151,018
Average total equity		-		-		-		-		-		-		-		19,509		19,509

Net interest income		$632		$148		$36		$120		$116		$102		$137		($32)		$1,259
FTE adjustment		-		25		-		1		-		-		2		(1)		27

Net interest income (FTE) ¹		632		173		36		121		116		102		139		(33)		1,286
Provision for credit losses ²		197		30		112		3		153		11		(1)		(113)		392

Net interest income/(loss) after provision for credit losses		435		143		(76)		118		(37)		91		140		80		894

Noninterest income		280		65		22		193		75		208		74		(5)		912
Noninterest expense		653		120		109		148		277		241		-		(6)		1,542

Income/(loss) before provision/(benefit) for income taxes		62		88		(163)		163		(239)		58		214		81		264
Provision/(benefit) for income taxes ³		23		32		(81)		60		(92)		22		88		33		85

Net income/(loss) including income attributable to noncontrolling interest		39		56		(82)		103		(147)		36		126		48		179
Net income attributable to noncontrolling interest		-		-		-		-		-		(1)		2		-		1

Net income/(loss)		$39		$56		($82)		$103		($147)		$37		$124		$48		$178


	Three Months Ended June 30, 2010
(Dollars in millions)	Retail Banking		Diversified Commercial Banking		CRE		CIB		Mortgage		W&IM		Corporate Other and Treasury		Reconciling Items		Consolidated
Average total assets		$38,548		$24,753		$11,255		$19,557		$34,624		$9,157		$31,632		$1,747		$171,273
Average total liabilities		75,779		20,470		1,707		15,831		3,594		11,728		19,590		261		148,960
Average total equity		-		-		-		-		-		-		-		22,313		22,313

Net interest income		$629		$133		$43		$93		$106		$95		$113		($34)		$1,178
FTE adjustment		-		27		-		-		-		-		3		-		30

Net interest income (FTE) ¹		629		160		43		93		106		95		116		(34)		1,208
Provision for credit losses ²		251		41		118		7		289		16		-		(60)		662

Net interest income/(loss) after provision for credit losses		378		119		(75)		86		(183)		79		116		26		546

Noninterest income		302		57		19		142		77		197		161		(3)		952
Noninterest expense		620		112		114		122		261		219		58		(3)		1,503

Income/(loss) before provision/(benefit) for income taxes		60		64		(170)		106		(367)		57		219		26		(5)
Provision/(benefit) for income taxes ³		21		24		(84)		39		(139)		21		83		15		(20)

Net income/(loss) including income attributable to noncontrolling interest		39		40		(86)		67		(228)		36		136		11		15
Net income attributable to noncontrolling interest		-		-		-		-		-		-		2		1		3

Net income/(loss)		$39		$40		($86)		$67		($228)		$36		$134		$10		$12

¹	Net interest income is FTE and is presented on a matched maturity funds transfer price basis for the line of business.

²	Provision for credit losses represents net charge-offs for the segments.

³	Includes regular income tax provision/(benefit) and taxable-equivalent income adjustment reversal.

Notes to Consolidated Financial Statements (Unaudited)-Continued


	Six Months Ended June 30, 2011
(Dollars in millions)	Retail Banking		Diversified Commercial Banking		CRE		CIB		Mortgage		W&IM		Corporate Other and Treasury		Reconciling Items		Consolidated
Average total assets		$40,595		$24,714		$8,580		$22,288		$33,947		$8,678		$31,328		$1,659		$171,789
Average total liabilities		77,357		21,227		1,507		17,928		3,559		12,918		16,017		(22)		150,491
Average total equity		-		-		-		-		-		-		-		21,298		21,298

Net interest income		$1,258		$294		$71		$237		$241		$204		$274		($71)		$2,508
FTE adjustment		-		50		1		1		-		-		3		-		55

Net interest income (FTE) ¹		1,258		344		72		238		241		204		277		(71)		2,563
Provision for credit losses ²		413		38		219		3		376		28		(1)		(237)		839

Net interest income/(loss) after provision for credit losses		845		306		(147)		235		(135)		176		278		166		1,724
Noninterest income		544		122		48		370		156		423		151		(19)		1,795
Noninterest expense		1,282		235		217		295		528		477		(9)		(18)		3,007

Income/(loss) before provision/(benefit) for income taxes		107		193		(316)		310		(507)		122		438		165		512
Provision/(benefit) for income taxes ³		39		71		(157)		114		(195)		43		164		67		146

Net income/(loss) including income attributable to noncontrolling interest		68		122		(159)		196		(312)		79		274		98		366
Net income attributable to noncontrolling interest		-		-		-		-		-		4		5		(1)		8

Net income/(loss)		$68		$122		($159)		$196		($312)		$75		$269		$99		$358


	Six Months Ended June 30, 2010
(Dollars in millions)	Retail Banking		Diversified Commercial Banking		CRE		CIB		Mortgage		W&IM		Corporate Other and Treasury		Reconciling Items		Consolidated
Average total assets		$38,611		$24,945		$11,582		$19,212		$34,662		$9,112		$32,169		$1,058		$171,351
Average total liabilities		74,961		20,989		1,832		15,089		3,460		11,657		20,743		294		149,025
Average total equity		-		-		-		-		-		-		-		22,326		22,326

Net interest income		$1,239		$262		$85		$177		$208		$187		$233		($41)		$2,350
FTE adjustment		-		54		-		1		-		-		6		(1)		60

Net interest income (FTE) ¹		1,239		316		85		178		208		187		239		(42)		2,410
Provision for credit losses ²		535		64		188		36		691		29		-		(19)		1,524

Net interest income/(loss) after provision for credit losses		704		252		(103)		142		(483)		158		239		(23)		886
Noninterest income		578		109		40		255		125		382		168		(7)		1,650
Noninterest expense		1,226		228		203		232		514		441		28		(8)		2,864

Income/(loss) before provision/(benefit) for income taxes		56		133		(266)		165		(872)		99		379		(22)		(328)
Provision/(benefit) for income taxes ³		19		48		(139)		61		(331)		37		126		(5)		(184)

Net income/(loss) including income attributable to noncontrolling interest		37		85		(127)		104		(541)		62		253		(17)		(144)
Net income attributable to noncontrolling interest		-		-		-		-		-		-		5		-		5

Net income/(loss)		$37		$85		($127)		$104		($541)		$62		$248		($17)		($149)

¹	Net interest income is FTE and is presented on a matched maturity funds transfer price basis for the line of business.

²	Provision for credit losses represents net charge-offs for the segments.

³	Includes regular income tax provision/(benefit) and taxable-equivalent income adjustment reversal.

Notes to Consolidated Financial Statements (Unaudited)-Continued

Note 16 - Accumulated Other Comprehensive Income

Comprehensive income was calculated as follows:

Three Months Ended
June 30

Six Months Ended
June 30

(Dollars in millions)

2011

2010

2011

2010

Comprehensive income:

Net income/(loss)

$178

$12

$358

($149)

OCI:

Change in unrealized gains on securities, net of taxes

190

176

121

215

Change in unrealized gains/(losses) on derivatives, net of taxes

255

(53)

377

Change related to employee benefit plans

(19)

(16)

Total comprehensive income

$421

$451

$410

$526

The components of AOCI were as follows:


(Dollars in millions)	June 30, 2011		December 31, 2010
Unrealized net gain on AFS securities		$1,647		$1,526
Unrealized net gain on derivative financial instruments		479		532
Employee benefit plans		(458)		(442)

Total AOCI		$1,668		$1,616

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Important Cautionary Statement About Forward-Looking Statements

This report may contain forward-looking statements. Statements regarding future levels of net interest margin, net charge-offs, NPLs, the rate of change in inflows into certain segments of our NPL portfolios, the ALLL, higher-risk portfolios, and early-stage delinquencies; the amount of future expense reductions and revenue increases; the expected impact of regulatory changes on our revenues, including the costs and effects of reviewing and enhancing our mortgage loan servicing, loss mitigation and foreclosure processes and activities; our ability to realize deferred tax assets; future default frequencies in our residential mortgage portfolio; and the future performance and size of our loan and investment portfolios are forward-looking statements. Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words “believes,” “expects,” “anticipates,” “estimates,” “intends,” “plans,” “targets,” “initiatives,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future conditional verbs such as “may,” “will,” “should,” “would,” and “could.” Such statements are based upon the current beliefs and expectations of management and on information currently available to management. Such statements speak as of the date hereof, and we do not assume any obligation to update the statements made herein or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events.

Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward-looking statements. Factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, “ Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010, and in Part II, “ Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2011, and in Part II, “ Item 1A. Risk Factors” of this report, and also include those risks discussed in this MD&A and in other periodic reports that we file with the SEC. Those factors include: difficult market conditions have adversely affected our industry; concerns over market volatility continue; the Dodd-Frank Act makes fundamental changes in the regulation of the financial services industry, some of which may adversely affect our business; we are subject to capital adequacy and liquidity guidelines and, if we fail to meet these guidelines, our financial condition would be adversely affected; emergency measures designed to stabilize the U.S. banking system are beginning to wind down; we are subject to credit risk; our ALLL may not be adequate to cover our eventual losses; we will realize future losses if the proceeds we receive upon liquidation of nonperforming assets are less than the carrying value of such assets; weakness in the economy and in the real estate market, including specific weakness within our geographic footprint, has adversely affected us and may continue to adversely affect us; weakness in the real estate market, including the secondary residential mortgage loan markets, has adversely affected us and may continue to adversely affect us; we are subject to certain risks related to originating and selling mortgages. We may be required to repurchase mortgage loans or indemnify mortgage loan purchasers as a result of breaches of representations and warranties, borrower fraud, or certain borrower defaults, which could harm our liquidity, results of operations, and financial condition; we are subject to risks related to delays in the foreclosure process; we may continue to suffer increased losses in our loan portfolio despite enhancement of our underwriting policies; as a financial services company, adverse changes in general business or economic conditions could have a material adverse effect on our financial condition and results of operations; changes in market interest rates or capital markets could adversely affect our revenue and expense, the value of assets and obligations, and the availability and cost of capital or liquidity; the fiscal and monetary policies of the federal government and its agencies could have a material adverse effect on our earnings; depressed market values for our stock may require us to write down goodwill; clients could pursue alternatives to bank deposits, causing us to lose a relatively inexpensive source of funding; consumers may decide not to use banks to complete their financial transactions, which could affect net income; we have businesses other than banking which subject us to a variety of risks; hurricanes and other natural or man-made disasters may adversely affect loan portfolios and operations and increase the cost of doing business; negative public opinion could damage our reputation and adversely impact business and revenues; the soundness of other financial institutions could adversely affect us; we rely on other companies to provide key components of our business infrastructure; we rely on our systems, employees, and certain counterparties, and certain failures could materially adversely affect our operations; we depend on the accuracy and completeness of information about clients and counterparties; regulation by federal and state agencies could adversely affect the business, revenue, and profit margins; competition in the financial services industry is intense and could result in losing business or margin declines; maintaining or increasing market share depends on market acceptance and regulatory approval of new products and services; we may not pay dividends on your common stock; disruptions in our ability to access global capital markets may negatively affect our capital resources and liquidity; any reduction in our credit rating could increase the cost of our funding from the capital markets; we have in the past and may in the future pursue acquisitions, which could affect costs and from which we may not be able to realize anticipated benefits; we are subject to certain litigation, and our expenses related to this litigation may adversely affect our results; we depend on the expertise of key personnel, and if these individuals leave or change their roles without effective replacements, our operations may suffer; we may not be able to hire or retain additional qualified personnel and recruiting and compensation costs may increase as a result of turnover, both of which may increase costs and reduce profitability and may adversely impact our ability to implement our business strategies; our accounting policies and processes are critical to how we report our financial condition and results of operations and require management to make estimates about matters that are uncertain; changes in our accounting policies or in accounting standards could materially affect how we report our financial results and condition; our stock price can be volatile; our disclosure controls and procedures may not prevent or detect all errors or acts of fraud; our financial instruments carried at fair value expose us to certain market risks; our revenues derived from our investment securities may be volatile and subject to a variety of risks; and we may enter into transactions with off-balance sheet affiliates or our subsidiaries.

INTRODUCTION

This MD&A is intended to assist readers in their analysis of the accompanying consolidated financial statements and supplemental financial information. It should be read in conjunction with the Consolidated Financial Statements and Notes. When we refer to “SunTrust,” “the Company,” “we,” “our” and “us” in this narrative, we mean SunTrust Banks, Inc. and subsidiaries (consolidated).

We are one of the nation’s largest commercial banking organizations and our headquarters are located in Atlanta, Georgia. Our principal banking subsidiary, SunTrust Bank, offers a full line of financial services for consumers and businesses through its branches located primarily in Florida, Georgia, Maryland, North Carolina, South Carolina, Tennessee, Virginia, and the District of Columbia. Within our geographic footprint, we operate under six business segments: Retail Banking, Diversified Commercial Banking, CRE, CIB, Mortgage, and W&IM, with the remainder in Corporate Other and Treasury. In addition to traditional deposit, credit, and trust and investment services offered by the Bank, our other subsidiaries provide mortgage banking, credit-related insurance, asset management, securities brokerage, and capital market services.

The following analysis of our financial performance for the three and six months ended June 30, 2011 should be read in conjunction with the financial statements, notes to consolidated financial statements and other information contained in this document and our Annual Report on Form 10-K for the year ended December 31, 2010. Certain reclassifications have been made to prior year financial statements and related information to conform them to the 2011 presentation. In the MD&A, net interest income and the net interest margin and efficiency ratios are presented on an FTE and annualized basis. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources. In addition, we present certain non-U.S. GAAP metrics to assist investors in understanding management’s view of particular financial measures, as well as to align presentation of these financial measures with peers in the industry who may also provide a similar presentation. Reconcilements for all non-U.S. GAAP measures are provided below in Table 1, Selected Quarterly Financial Data.

EXECUTIVE OVERVIEW

Economic and regulatory

The economic recovery remained uneven during the quarter and uncertainty was evident as unemployment climbed and data surrounding job growth indicated an unexpected pullback in hiring and available jobs in recent months. Additionally, consumer spending declined during the quarter, consumer sentiment remained relatively low, and measures of inflation increased, due in part to higher commodity prices. The U.S. housing market continued to be weak due to the inventory of foreclosed or distressed properties, weak demand, and home prices remaining under pressure. Amidst the uncertain economic conditions, the Federal Reserve indicated that key interest rates will remain at exceptionally low levels for an extended period and that they will continue to reinvest principal payments from its securities holdings. Further, the Federal Reserve maintained a forecast for stable longer-term inflation expectations, gradual economic recovery through 2011 and 2012, although at a slower pace than previously expected, and a slow decline in unemployment with elevated levels persisting through the end of 2012.

The regulatory agencies have taken actions on a considerable amount of rules and regulations during the second quarter, as we marked the one year anniversary of the Dodd-Frank Act in July. The Federal Reserve finalized rules during the quarter that would allow the payment of interest on business demand deposits, which had been prohibited under Regulation Q. As a result, our product offerings have been expanded to include business demand deposits that pay interest; however, we do not believe the impact will be material to our financial results. The Federal Reserve also issued a final rule on debit card interchange fees that will limit the amount of interchange fee income that can be received for electronic debit transactions. This rule will be effective beginning in the fourth quarter of this year, and we currently believe the impact of this rule may decrease our annual interchange revenue by as much as 50% before any mitigating actions that we may take to offset the impact. See additional discussion of the new interchange rules and their impact on our income in the “Noninterest Income” section of this MD&A. New FDIC rules related to the calculation of our deposit insurance assessment became effective on April 1, 2011 and require us to base our deposit insurance assessment calculation on our total average assets less average tangible equity, rather than domestic deposits. In addition, the FDIC revised the overall pricing structure for large banks, which results in assessment rates being affected by specific risk characteristics, such as asset concentrations, liquidity, and asset quality. These changes by the FDIC caused a modest increase in our regulatory assessments during the quarter. In addition, the work required in complying with the Federal Reserve’s Consent Order that was issued in April is continuing and we remain on schedule. We currently do not expect that complying with the Consent Order will have a material effect on our financial results. We are actively evaluating other proposed rules and regulations, and as they emerge from the various stages of implementation and promulgation, we will be in a position to comply with new requirements and take appropriate actions as warranted.

Capital

During the first quarter, the Federal Reserve completed its CCAR for the nineteen largest U.S. bank holding companies. Upon completion of their review, the Federal Reserve did not object to the capital plan that we submitted. As a result of the CCAR completion, we initiated and completed certain elements of our capital plan, including public offerings of $1.0 billion of common stock and $1.0 billion of senior debt. In addition, we used the proceeds from those offerings, as well as other available funds, to repurchase $3.5 billion of Fixed Rate Cumulative Preferred Stock, Series C and $1.4 billion of Fixed Rate Cumulative Preferred Stock, Series D that was issued to the U.S. Treasury under the TARP’s CPP in November and December 2008. The repurchase of the preferred stock will eliminate approximately $265 million in annual preferred dividend payments and discount accretion that has been negatively affecting our earnings the past two years. In addition, by keeping our shareholders’ best interest in mind and demonstrating a patient and deliberate approach to TARP repayment, we believe that we successfully lessened the impact to our shareholders by issuing less common stock than what would have been required had we chosen to repay TARP earlier.

Our capital remained strong at June 30, 2011, and the level of common equity was significantly bolstered as a result of the successful common equity raise in the first quarter of 2011. Our Tier 1 common equity ratio increased to 9.22% compared to 8.08% at December 31, 2010. Meanwhile, as a result of the change in our equity mix due to the repurchase of the preferred stock issued to the U.S. Treasury, our Tier 1 capital ratio declined to 11.11%, compared to 13.67% at December 31, 2010, but increased compared to 11.00% at March 31, 2011. At December 31, 2010, our Tier 1 capital ratio, excluding TARP, was 10.08%. Our total capital ratio at June 30 was 14.01% compared to 16.54% at December 31, 2010 and 13.92% at March 31, 2011. Overall, our capital remains well above the requirements to be considered “well capitalized” according to current and proposed regulatory standards. With strong capital, ample liquidity, and improved earnings, we believe that we are well-positioned for long-term growth. At the same time, we recognize the value of returning capital to shareholders and on August 9, 2011, our Board approved an increase in the quarterly dividend to $0.05 per share, payable on September 15, 2011, to shareholders of record at the close of business on September 1, 2011. See additional discussion of our liquidity and capital position in the “Liquidity Risk” and “Capital Resources” sections of this MD&A.

Financial performance

Our EPS continued to improve during the second quarter, and we continued to build on the positive momentum created in 2010 and the first quarter of 2011. Our continued focus on serving our clients and managing our core business to drive improved bottom line results, together with improved credit quality, resulted in net income available to common shareholders during the current quarter of $174 million, or $0.33 per average common diluted share, which compares favorably to the net loss available to common shareholders of $56 million, or $0.11 per average common share, during the second quarter of 2010. Second quarter 2011 results were improved over the same period in 2010 due primarily to a lower credit loss provision, higher net interest income, and the absence of preferred dividends paid to the U.S. Treasury. Net income available to common shareholders also improved compared to the first quarter’s results of $38 million. The current quarter’s results, when compared to the prior quarter, were driven by a lower credit loss provision, higher noninterest income, the absence of preferred dividends paid to the U.S. Treasury, and a one-time non-cash charge of $74 million related to the accelerated accretion associated with the repurchase of the preferred stock in March 2011, offset by higher noninterest expense. Net income available to common shareholders for the six months ended June 30, 2011 was $212 million compared to a loss of $285 million during the same period in 2010. The improvement during the six month period is primarily related to a reduced credit losses provision, higher total revenue, and less preferred dividend payments. During the three and six month periods ended June 30, 2011, the decreases in our provision for credit losses compared to the same periods in the prior year were 41% and 45%, respectively, and were a significant driver of the increase in our net income available to common shareholders. As credit quality continues to improve, the impact to net income available to common shareholders due to lower provisions for credit losses is expected to be less substantial in future periods. As we look towards the future, we continue to invest in teammate engagement, client loyalty, and growth in primary relationships that we believe will drive market share growth and, ultimately, higher levels of profitability and improved financial performance for our shareholders.

Asset quality improvement was broad-based and continued a multi-quarter trend with improvements in the provision for loan losses, net charge-offs, NPLs, nonperforming assets, and early stage delinquencies. At June 30, 2011, the ALLL remains elevated by historical standards at 2.40% of total loans but declined 18 basis points compared to December 31, 2010, in part due to a $230 million decrease in the ALLL, and declined by 9 basis points since the first quarter of 2011. The improvement in credit quality drove a 12%, 22%, and 44% decrease in the provision for loan losses compared to the first quarter of 2011, the fourth quarter of 2010, and the second quarter of 2010, respectively. In addition, net charge-offs declined 12%, 19%, and 30% compared to the first quarter of 2011, the fourth quarter of 2010, and the second quarter of 2010. We currently expect net charge-offs to trend down over time, however, we believe third quarter net charge-offs will approximate second quarter net charge-offs. Total NPLs continued the downward trend seen during 2010 with a decline of 12% from December 31, 2010 as a result of reduced inflows into nonaccrual and our problem loan resolution efforts. NPLs are also down 9% compared to the first quarter of 2011. We expect NPLs to continue to decline during the remainder of 2011 subject to economic conditions and credit quality trends remaining stable or improving. In addition, OREO declined 10% during the quarter and 19% since year end, as we continued to opportunistically dispose of properties once we had clear title. Our accruing restructured loan portfolio, which is primarily mortgage and consumer loans, increased by 4% compared to December 31, 2010. However, the portfolio continued to exhibit strong payment performance with 86% current on principal and interest payments at both June 30, 2011 and December 31, 2010. See additional discussion of credit and asset quality in the “Loans,” “Allowance for Credit Losses,” “Nonperforming Assets,” and “Restructured Loans,” sections of this MD&A.

Average loans remained flat during the quarter compared to both the first quarter of 2011 and to the fourth quarter of 2010, with decreases in certain commercial real estate, commercial construction, and residential real estate categories being offset by increases in commercial & industrial and consumer loans. Even though the total average loan balances have remained flat, our risk profile continues to improve as a result of the decline in certain higher-risk loan portfolios, which have been offset by targeted growth in certain lower-risk portfolios, such that higher-risk loans comprised less than 10% of our entire loan portfolio and lower-risk government guaranteed loans represented 8% of the portfolio as of June 30, 2011. Despite continued soft loan demand, we remain focused on extending credit to qualified borrowers during this uncertain economic landscape. To that end, during the six months ended June 30, 2011, we extended approximately $36.8 billion in new loan originations, commitments, and renewals of commercial, residential, and consumer loans to our clients.

Client deposit growth continued its positive trajectory, reaching a record high in the second quarter, and the positive shift in deposit mix continued with lower-cost deposit increases more than offsetting the decline in higher-cost deposits. Average consumer and commercial deposits increased 1% during the second quarter and 2% since the fourth quarter of 2010. Average balance increases were driven by increases in lower cost noninterest-bearing demand deposits and money market accounts, partially offset by declines in higher cost CDs. Due to the growth seen in core deposits, our liquidity has been enhanced, enabling us to reduce our higher-cost funding sources, helping to drive significant reductions in our funding costs and improvement in net interest margin. While we continue to believe that a portion of the low-cost deposit growth is attributable to clients’ desires for having increased liquidity, we believe that we’ve also proactively driven this growth in both our Consumer and Wholesale business, as we’ve expanded the number of primary client relationships and improved our client loyalty.

Our client-focused revenue generation strategies, lower cost funding mix, and improved asset quality contributed to improved operating trends as seen in higher net interest income and margin and lower provision for credit losses, partially offset by higher non-interest expenses compared to a year ago. Total revenue, on an FTE basis, remained relatively unchanged compared to the second quarter of 2010 and increased 7% for the first six months of 2011, in comparison to the first six months of 2010, due to stable earning assets, increases in certain fee based revenue, and an expanded net interest margin. Net interest income, on an FTE basis, increased 6%, in the first half of 2011. The increase in net interest income compared to the prior year was due to lower funding costs, improved funding mix, and a reduction in long-term debt. As a result, our net interest margin increased to 3.53% for the three months ended June 30, 2011 from 3.33% during the same period in 2010 and 3.53% compared to 3.32% for the six months ended June 30, 2011 and 2010. Noninterest income declined 4% compared to the same quarter in 2010, most notably due to decreases in trading income, securities gains, and lower service charges on deposit accounts, partially offset by higher investment banking income, card fees, and mortgage production income. Compared to the first six months of 2010, noninterest income was up 9% in 2011 due to increases across most categories of income, but primarily driven by higher investment banking income and mortgage production income, partially offset by a decline in deposit account service change income primarily as a result of the Regulation E impact in the current periods compared to the prior year when Regulation E changes were yet to be effective. Noninterest expense increased 3% during the current quarter when compared to the same quarter in 2010, driven primarily by higher personnel costs, operating losses, and regulatory costs, partially offset by gains on debt extinguishment. Compared to the first six months of 2010, noninterest expense increased by 5% during 2011, primarily due to the same factors as the three month periods. The higher personnel costs are due to an increase in compensation as a result of improved revenue generation in certain businesses, as well as the hiring of additional teammates, primarily in loss mitigation and in client service and support roles. The increase in the operating losses was due to increases in legal and compliance related accruals, and regulatory cost increases were due to the change in the FDIC assessment methodology. See additional discussion of our financial performance in the “Consolidated Financial Results” section of this MD&A.

Overall, we had some encouraging signs during the quarter with progress being made, but our performance is not where we would like for it to be, and therefore we have specific initiatives aimed at improving our performance in the future. Some of these efforts are designed to further improve our revenue generation while others are intended to lower our expense base. To lower expenses, a key focus will be on implementing an aggressive approach to shared services wherein we will centralize and eliminate redundancy of similar functions currently contained in multiple parts of the organization. This will allow us to more effectively balance cost, quality, and service to more efficiently meet the needs of our lines of business, geographies, and support functions. We have initiatives underway to identify enterprise-wide solutions in such disciplines as technology and operations, finance, procurement, marketing, and human resources to maximize the impact of our investments there. In addition to the shared services assessment, our supplier management efforts will be intensified to yield greater cost savings, and plans to reduce paper usage both within the organization and in our interaction with clients will be accelerated. We also will move toward more technology-driven self-service channels, such as a more robust ATM network and enhanced mobile banking platforms, that increase convenience for clients while driving down delivery costs and enabling improved efficiencies of our branch network. As a result of these initiatives, we are targeting $300 million in annual expense savings, with a majority of the actions to be accomplished during 2012 and the remainder in 2013.


Selected Quarterly Financial Data		Table 1


	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions, except per share data)	2011			2010			2011			2010
Summary of Operations
Interest income		$1,546			$1,570			$3,100			$3,144
Interest expense		287			392			592			794

Net interest income		1,259			1,178			2,508			2,350
Provision for credit losses		392			662			839			1,524

Net interest income after provision for credit losses		867			516			1,669			826
Noninterest income		912			952			1,795			1,650
Noninterest expense		1,542			1,503			3,007			2,864

Net income/(loss) before provision/(benefit) for income taxes		237			(35)			457			(388)
Net income attributable to noncontrolling interest		1			3			8			5
Provision/(benefit) for income taxes		58			(50)			91			(244)

Net income/(loss)		$178			$12			$358			($149)

Net income/(loss) available to common shareholders		$174			($56)			$212			($285)

Net interest income - FTE		$1,286			$1,208			$2,563			$2,410
Total revenue - FTE		2,198			2,160			4,358			4,060
Total revenue - FTE excluding securities gains, net ¹		2,166			2,103			4,262			4,002
Net income/(loss) per average common share:
Diluted ²		0.33			(0.11)			0.41			(0.58)
Diluted excluding effect of accelerated accretion for repurchase of preferred stock issued to U.S. Treasury ²		0.33			(0.11)			0.55			(0.58)
Basic		0.33			(0.11)			0.41			(0.58)
Dividends paid per average common share		0.01			0.01			0.02			0.02
Book value per common share		36.30			36.19
Tangible book value per common share ³		24.57			23.58
Market price:
High		30.13			31.92			33.14			31.92
Low		24.63			23.12			24.63			20.16
Close		25.80			23.30			25.80			23.30
Selected Average Balances
Total assets		$170,527			$171,273			$171,789			$171,351
Earning assets		145,985			145,464			146,383			146,176
Loans		114,920			113,016			115,040			113,721
Consumer and commercial deposits		121,879			116,460			121,298			115,776
Brokered and foreign deposits		2,340			2,670			2,472			3,049
Total shareholders’ equity		19,509			22,313			21,298			22,326
Average common shares - diluted (thousands)		535,416			498,499			519,548			498,369
Average common shares - basic (thousands)		531,792			495,351			515,819			495,112
Financial Ratios (Annualized)
ROA		0.42	%		0.03	%		0.42	%		(0.17)	%
ROE		3.61			(1.29)			2.28			(3.31)
Net interest margin - FTE		3.53			3.33			3.53			3.32
Efficiency ratio ⁴		70.17			69.57			69.01			70.52
Tangible efficiency ratio ⁵		69.64			68.96			68.49			69.87
Total average shareholders’ equity to total average assets		11.44			13.03			12.40			13.03
Tangible equity to tangible assets ⁶		8.07			10.18
Capital Adequacy
Tier 1 common equity		9.22	%		7.92	%
Tier 1 capital		11.11			13.51
Total capital		14.01			16.96
Tier 1 leverage		8.92			10.94
Reconcilement of Non U.S. GAAP Financial Measures
Net income/(loss)		$178			$12			$358			($149)
Preferred dividends, Series A		(2)			(2)			(4)			(4)
U.S. Treasury preferred dividends and accretion of discount		-			(66)			(66)			(132)
Accelerated accretion for repurchase of preferred stock issued to U.S. Treasury		-			-			(74)			-
Dividends and undistributed earnings allocated to unvested shares		(2)			-			(2)			-

Net income/(loss) available to common shareholders		174			(56)			212			(285)
Securities gains, net of tax of $12 million, $22 million, $36 million, and $22 million, respectively		(20)			(35)			(60)			(36)
Coke stock dividend, net of tax of $2 million, $1 million, $3 million, and $3 million, respectively		(13)			(12)			(25)			(24)

Net income/(loss) available to common shareholders excluding securities gains and losses and the Coke stock dividend		$141			($103)			$127			($345)

Net income/(loss) excluding securities gains and losses Coke stock dividend, net of tax		$145			($35)			$273			($209)

Net income/(loss) available to common shareholders		$174			($56)			$212			($285)
Accelerated accretion for repurchase of preferred stock issued to U.S. Treasury		-			-			74			-

Net income/(loss) available to common shareholders excluding accelerated accretion for repurchase of preferred stock issued to U.S. Treasury		$174			($56)			$286			($285)

Net income/(loss) per average common share - diluted		$0.33			($0.11)			$0.41			($0.58)
Effect of accelerated accretion for repurchase of preferred stock issued to U.S. Treasury		-			-			0.14			-

Net income/(loss) per average common share - diluted, excluding effect of accelerated accretion for repurchase of preferred stock issued to U.S. Treasury		$0.33			($0.11)			$0.55			($0.58)


Selected Quarterly Financial Data, continued


	Three Months Ended June 30						Six Months Ended June 30
Reconcilement of Non U.S. GAAP Financial Measures	2011			2010			2011			2010
Net interest income		$1,259			$1,178			$2,508			$2,350
FTE adjustment		27			30			55			60

Net interest income - FTE		1,286			1,208			2,563			2,410
Noninterest income		912			952			1,795			1,650

Total revenue - FTE		2,198			2,160			4,358			4,060
Securities gains, net		(32)			$(57)			(96)			(58)

Total revenue - FTE excluding securities gains, net ¹		$2,166			$2,103			$4,262			$4,002


Efficiency ratio ⁴		70.17	%		69.57	%		69.01	%		70.52	%
Impact of excluding amortization of intangible assets other than MSRs		(0.53)			(0.61)			(0.52)			(0.65)

Tangible efficiency ratio ⁵		69.64	%		68.96	%		68.49	%		69.87	%

Total shareholders’ equity		$19,660			$23,024
Goodwill, net of deferred taxes of $144 million and $126 million, respectively		(6,199)			(6,197)
Other intangible assets including MSRs, net of deferred taxes of $21 million and $34 million, respectively		(1,518)			(1,409)
MSRs		1,423			1,298

Tangible equity		13,366			16,716
Preferred stock		(172)			(4,929)

Tangible common equity		$13,194			$11,787


Total assets		$172,173			$170,668
Goodwill		(6,343)			(6,323)
Other intangible assets including MSRs		(1,539)			(1,443)
MSRs		1,423			1,298

Tangible assets		$165,714			$164,200

Tangible equity to tangible assets ⁶		8.07	%		10.18	%
Tangible book value per common share ³		$24.57			$23.58

Tier 1 Capital excluding impact of preferred stock issued to the U.S. Treasury	As of December 31, 2010
Tier 1 Capital		$18,156
Preferred stock issued to U.S. Treasury		4,769

Tier 1 Capital excluding preferred stock issued to U.S. Treasury		$13,387


Risk Weighted Assets		$132,819


Tier 1 Capital ratio excluding impact of preferred stock issued to U.S. Treasury		10.08	%

¹ We present total revenue-FTE excluding net securities gains. We believe noninterest income without net securities gains is more indicative of our performance because it isolates income that is primarily client relationship and client transaction driven and is more indicative of normalized operations.

² For EPS calculation purposes, the impact of dilutive securities are excluded from the diluted share count during periods in which we recognize a net loss available to common shareholders because the impact would be antidilutive.

³ We present a tangible book value per common share that excludes the after-tax impact of purchase accounting intangible assets and also excludes preferred stock from tangible equity. We believe this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity as well as preferred stock (the level of which may vary from company to company), it allows investors to more easily compare our book value on common stock to other companies in the industry.

⁴ Computed by dividing noninterest expense by total revenue - FTE. The FTE basis adjusts for the tax-favored status of net interest income from certain loans and investments. We believe this measure to be the preferred industry measurement of net interest income and it enhances comparability of net interest income arising from taxable and tax-exempt sources.

⁵ We present a tangible efficiency ratio which excludes the amortization of intangible assets other than MSRs. We believe this measure is useful to investors because, by removing the effect of these intangible asset costs (the level of which may vary from company to company), it allows investors to more easily compare our efficiency to other companies in the industry. This measure is utilized by us to assess our efficiency and that of our lines of business.

⁶ We present a tangible equity to tangible assets ratio that excludes the after-tax impact of purchase accounting intangible assets. We believe this measure is useful to investors because, by removing the effect of intangible assets that result from merger and acquisition activity (the level of which may vary from company to company), it allows investors to more easily compare our capital adequacy to other companies in the industry. This measure is used by us to analyze capital adequacy.


Net Interest Margin		Table 2


	Three Months Ended														Increase/(Decrease) From
	June 30, 2011							June 30, 2010							Prior Year Quarter
(Dollars in millions; yields on taxable-equivalent basis)	Average Balances		Income/ Expense		Yields/ Rates			Average Balances		Income/ Expense		Yields/ Rates			Average Balances		Yields/Rates
Assets
Loans: ¹
Real estate residential mortgage 1-4 family		$28,971		$357		4.93	%		$28,638		$393		5.49	%		$333		(0.56)	%
Real estate construction		2,167		21		3.90			3,274		30		3.67			(1,107)		0.23
Real estate home equity lines		14,347		121		3.37			14,973		126		3.37			(626)		-
Real estate commercial		13,156		132		4.02			15,091		154		4.09			(1,935)		(0.07)
Commercial - FTE ²		35,211		476		5.42			32,503		447		5.52			2,708		(0.10)
Credit card		967		20		8.33			1,064		23		8.45			(97)		(0.12)
Consumer - direct		6,844		77		4.52			5,544		60		4.32			1,300		0.20
Consumer - indirect		9,459		111		4.70			6,946		101		5.86			2,513		(1.16)
Nonaccrual ³		3,798		10		1.08			4,983		11		0.86			(1,185)		0.22

Total loans		114,920		1,325		4.62			113,016		1,345		4.77			1,904		(0.15)
Securities AFS:
Taxable		23,711		199		3.35			23,977		186		3.11			(266)		0.24
Tax-exempt - FTE ²		517		7		5.47			866		12		5.39			(349)		0.08

Total securities AFS - FTE		24,228		206		3.40			24,843		198		3.19			(615)		0.21
Funds sold and securities purchased under agreements to resell		1,079		-		-			1,009		-		0.11			70		(0.11)
LHFS		2,104		22		4.17			3,342		33		3.97			(1,238)		0.20
Interest-bearing deposits		23		-		0.16			27		-		0.17			(4)		(0.01)
Interest earning trading assets		3,631		20		2.30			3,227		24		3.03			404		(0.73)

Total earning assets		145,985		1,573		4.32			145,464		1,600		4.41			521		(0.09)
ALLL		(2,740)							(3,107)							367
Cash and due from banks		4,452							5,788							(1,336)
Other assets		17,348							18,450							(1,102)
Noninterest earning trading assets		2,999							2,709							290
Unrealized gains on securities AFS, net		2,483							1,969							514

Total assets		$170,527							$171,273							($746)

Liabilities and Shareholders’ Equity
Interest-bearing deposits:
NOW accounts		$24,672		$10		0.16	%		$24,949		$16		0.25	%		($277)		(0.09)	%
Money market accounts		42,865		43		0.40			37,703		57		0.61			5,162		(0.21)
Savings		4,587		2		0.18			4,093		2		0.22			494		(0.04)
Consumer time		12,712		51		1.60			14,779		72		1.96			(2,067)		(0.36)
Other time		7,203		31		1.74			9,445		50		2.11			(2,242)		(0.37)

Total interest-bearing consumer and commercial deposits		92,039		137		0.60			90,969		197		0.87			1,070		(0.27)
Brokered deposits		2,317		25		4.38			2,416		28		4.57			(99)		(0.19)
Foreign deposits		23		-		0.05			254		-		0.11			(231)		(0.06)

Total interest-bearing deposits		94,379		162		0.69			93,639		225		0.96			740		(0.27)
Funds purchased		1,001		-		0.12			1,224		1		0.18			(223)		(0.06)
Securities sold under agreements to repurchase		2,264		1		0.14			2,632		1		0.14			(368)		-
Interest-bearing trading liabilities		922		8		3.39			868		8		3.76			54		(0.37)
Other short-term borrowings		2,934		3		0.38			2,537		3		0.48			397		(0.10)
Long-term debt		13,765		113		3.30			16,529		154		3.75			(2,764)		(0.45)

Total interest-bearing liabilities		115,265		287		1.00			117,429		392		1.34			(2,164)		(0.34)
Noninterest-bearing deposits		29,840							25,491							4,349
Other liabilities		3,823							4,240							(417)
Noninterest-bearing trading liabilities		2,090							1,800							290
Shareholders’ equity		19,509							22,313							(2,804)

Total liabilities and shareholders’ equity		$170,527							$171,273							($746)

Interest Rate Spread						3.32	%						3.07	%				0.25	%

Net Interest Income - FTE ⁴				$1,286							$1,208					$78


Net Interest Margin ⁵						3.53	%						3.33	%				0.20	%

¹ Interest income includes loan fees of $37 million and $39 million for the three month periods ended June 30, 2011 and June 30, 2010, respectively. Income on nonaccrual loans, if recognized, is recorded on a cash basis.

² Interest income includes the effects of taxable-equivalent adjustments using a federal income tax rate of 35% and, where applicable, state income taxes to increase tax-exempt interest income to a taxable-equivalent basis. The net taxable-equivalent adjustment amounts included in the above table aggregated $27 million and $30 million for the three month periods ended June 30, 2011 and June 30, 2010, respectively.

³ Accruing TDRs were classified in nonaccruals during prior periods. Due to sustained performance, accruing TDRs have been reclassified to the applicable loans category where the related interest income is being classified for all periods presented.

⁴ We obtained derivative instruments to manage our interest-sensitivity position that increased net interest income $157 million and $148 million for the three month periods ended June 30, 2011 and June 30, 2010, respectively.

⁵ The net interest margin is calculated by dividing annualized net interest income – FTE by average total earning assets.


	Six Months Ended														Increase/(Decrease) From Prior Year
	June 30, 2011							June 30, 2010							Increase/(Decrease) From Prior Year
(Dollars in millions; yields on taxable-equivalent basis)	Average Balances		Income/ Expense		Yields/ Rates			Average Balances		Income/ Expense		Yields/ Rates			Average Balances		Yields/ Rates
Assets
Loans: ¹
Real estate 1-4 family		$29,198		$726		4.97	%		$28,587		$790		5.53	%		$611		(0.56)	%
Real estate construction		2,326		45		3.92			3,674		64		3.54			(1,348)		0.38
Real estate home equity lines		14,459		242		3.37			15,064		250		3.35			(605)		0.02
Real estate commercial		13,334		268		4.06			15,098		305		4.07			(1,764)		(0.01)
Commercial - FTE ²		34,572		948		5.53			32,797		896		5.51			1,775		0.02
Credit card		989		41		8.23			1,065		46		8.57			(76)		(0.34)
Consumer - direct		6,783		151		4.50			5,400		113		4.22			1,383		0.28
Consumer - indirect		9,466		225		4.79			6,822		202		5.98			2,644		(1.19)
Nonaccrual ³		3,913		18		0.93			5,214		22		0.84			(1,301)		0.09

Total loans		115,040		2,664		4.67			113,721		2,688		4.77			1,319		(0.10)
Securities AFS:
Taxable		23,708		383		3.23			24,376		381		3.13			(668)		0.10
Tax-exempt - FTE ²		533		15		5.51			888		24		5.39			(355)		0.12

Total securities AFS - FTE		24,241		398		3.29			25,264		405		3.21			(1,023)		0.08
Funds sold and securities purchased under agreements to resell		1,071		-		-			946		1		0.11			125		(0.11)
LHFS		2,414		50		4.15			3,296		66		4.03			(882)		0.12
Interest-bearing deposits		22		-		0.14			26		1		0.22			(4)		(0.08)
Interest earning trading assets		3,595		43		2.39			2,923		44		3.04			672		(0.65)

Total earning assets		146,383		3,155		4.35			146,176		3,205		4.42			207		(0.07)
ALLL		(2,796)							(3,095)							299
Cash and due from banks		5,463							5,102							361
Other assets		17,522							18,569							(1,047)
Noninterest earning trading assets		2,828							2,672							156
Unrealized gains on securities AFS		2,389							1,927							462

Total assets		$171,789							$171,351							$438

Liabilities and Shareholders’ Equity
Interest-bearing deposits:
NOW accounts		$25,019		$21		0.17	%		$25,270		$33		0.26	%		($251)		(0.09)	%
Money market accounts		42,735		91		0.43			36,980		117		0.64			5,755		(0.21)
Savings		4,428		3		0.16			3,975		5		0.23			453		(0.07)
Consumer time		12,743		101		1.60			14,599		142		1.96			(1,856)		(0.36)
Other time		7,309		64		1.76			9,944		106		2.15			(2,635)		(0.39)

Total interest-bearing consumer and commercial deposits		92,234		280		0.61			90,768		403		0.90			1,466		(0.29)
Brokered deposits		2,332		52		4.37			2,709		55		4.04			(377)		0.33
Foreign deposits		140		-		0.14			340		-		0.11			(200)		0.03

Total interest-bearing deposits		94,706		332		0.71			93,817		458		0.98			889		(0.27)
Funds purchased		1,057		1		0.15			1,319		1		0.18			(262)		(0.03)
Securities sold under agreements to repurchase		2,283		2		0.15			2,308		2		0.12			(25)		0.03
Interest-bearing trading liabilities		926		15		3.37			803		15		3.59			123		(0.22)
Other short-term borrowings		2,847		5		0.40			2,694		6		0.47			153		(0.07)
Long-term debt		13,785		237		3.47			17,052		313		3.70			(3,267)		(0.23)

Total interest-bearing liabilities		115,604		592		1.03			117,993		795		1.36			(2,389)		(0.33)
Noninterest-bearing deposits		29,064							25,008							4,056
Other liabilities		3,889							4,231							(342)
Noninterest-bearing trading liabilities		1,934							1,793							141
Shareholders’ equity		21,298							22,326							(1,028)

Total liabilities and shareholders’ equity		$171,789							$171,351							$438

Interest Rate Spread						3.32	%						3.06	%				0.26	%

Net Interest Income - FTE ⁴				$2,563							$2,410					$153

Net Interest Margin ⁵						3.53	%						3.32	%				0.21	%

¹ Interest income includes loan fees of $76 million and $77 million for the six months ended June 30, 2011 and June 30, 2010, respectively. Income on nonaccrual loans, if recognized, is recorded on a cash basis.

² Interest income includes the effects of taxable-equivalent adjustments using a federal income tax rate of 35% and, where applicable, state income taxes to increase tax-exempt interest income to a taxable-equivalent basis. The net taxable-equivalent adjustment amounts included in the above table aggregated $54 million and $61 million for the six months ended June 30, 2011 and June 30, 2010, respectively.

⁴ We obtained derivative instruments to manage our interest-sensitivity position that increased net interest income $312 million and $304 million for the six months ended June 30, 2011 and June 30, 2010, respectively.

⁵ The net interest margin is calculated by dividing annualized net interest income – FTE by average total earning assets.

Net Interest Income/Margin

Second Quarter of 2011

Net interest income, on an FTE basis, was $1.3 billion for the second quarter of 2011, an increase of $78 million, or 6%, from the second quarter of 2010. This increase was driven mainly by a continued positive trend in net interest margin, which increased 20 basis points to 3.53% in the second quarter of 2011 from 3.33% in the second quarter of 2010. Earning asset yields declined 9 basis points compared to second quarter 2010, but the cost of interest-bearing liabilities decreased 34 basis points over the same period. The biggest contributors to the increase in net interest margin were the growth in lower-cost deposits, specifically demand deposit and money market accounts, while higher-cost time deposits and long-term debt declined. We currently expect the net interest margin to modestly decline in the third quarter of 2011 due primarily to continued decreases in interest earning asset yields, given the low rate environment.

Average earning assets increased $521 million, or less than 1%, compared to the second quarter of 2010. Average loans increased $1.9 billion, or 2%, compared to the second quarter of 2010. The increase in loans was primarily attributable to increases of $2.7 billion, or 8%, in commercial loans, $2.5 billion, or 36%, in consumer-indirect loans, driven by purchases of high quality auto loan portfolios, and $1.3 billion, or 23%, in higher yielding consumer-direct loans related to an increase in government-guaranteed student loans. These increases were partially offset by declines of $1.9 billion, or 13%, in commercial real estate and $1.1 billion, or 34%, in real estate construction, both primarily as a result of our targeted efforts to reduce exposure to these loans, and a $1.2 billion, or 24%, decline in nonaccrual loans. LHFS declined $1.2 billion, or 37%, as a result of a reduction in closed mortgage loan volume, as higher mortgage interest rates affected loan demand. Average securities AFS decreased $615 million, or 2%, due primarily to the sale of lower yielding U.S. Treasury securities of $4.6 billion and almost entirely offset by purchases of agency MBS and federal agency securities. See additional discussion in the “Securities Available for Sale” section included in this MD&A for more information on the repositioning of our securities AFS portfolio. Average interest earning trading assets increased $404 million, or 13%, in the second quarter of 2011 compared to the second quarter of 2010, but the additional assets’ yields were lower compared to the assets replaced from the prior year as a result of a change in market spreads.

Our loan portfolio yielded 4.62% for the second quarter, down 15 basis points from second quarter 2010. The yield decline was primarily related to real estate 1-4 family, which was driven by run-off of higher rate loans being replaced with lower rate government guaranteed loans and an increase in the consumer-indirect loan portfolio that included the addition of lower rate loans. Since a large percentage of our commercial loans are variable rate indexed to one month LIBOR, we utilize receive fixed/pay floating interest rate swaps to manage interest rate risk. As of June 30, 2011, the outstanding notional balance of swaps was $15.9 billion, which qualified as cash flow hedges on variable rate commercial loans, compared to $16.4 billion as of June 30, 2010. Swap income remained stable at $157 million in the second quarter of 2011 compared to $148 million in the second quarter of 2010.

Average interest-bearing liabilities declined $2.2 billion, or 2%, from the second quarter of 2010 primarily as a result of significant declines in long-term debt. Total average consumer and commercial deposits increased $5.4 billion, or 5%, in the second quarter of 2011 compared to the second quarter of 2010. This growth consisted of lower-cost deposits, including $5.2 billion, or 14%, in money market accounts, and $4.3 billion, or 17%, in demand deposits, partially offset by a decline of $4.3 billion, or 18%, in higher-cost time deposits. This growth in lower-cost deposits was the result of marketing campaigns, competitive pricing and clients’ increased preference for more liquid products. The overall growth in consumer and commercial deposits allowed for a reduction in other higher-cost funding sources, including $2.8 billion of long-term debt. The growth in lower-cost deposits and decline in higher-cost deposits and wholesale funding resulted in a 34 basis point decline in rates paid on interest-bearing liabilities compared to the same quarter in the prior year.

During the second quarter of 2011, the interest rate environment was characterized by lower long-term rates compared to short-term rates, resulting in a flatter yield curve versus the second quarter of 2010. More specifically, the Fed funds target rate averaged 0.25%, unchanged from second quarter 2010, the Prime rate averaged 3.25%, unchanged from second quarter 2010, one-month LIBOR averaged 0.20%, a decrease of 11 basis points, three-month LIBOR averaged 0.26%, a decrease of 18 basis points, five-year swaps averaged 2.07%, a decrease of 42 basis points, and ten-year swaps averaged 3.29%, a decrease of 22 basis points.

First Half of 2011

For the first six months of 2011, net interest income was $2.6 billion, an increase of $153 million, or 6%, from the first six months of 2010. Average earning assets increased $207 million, or less than 1%. The slight increase in earning assets was attributable to a $2.6 billion, or 39%, increase in consumer indirect loans, a $1.8 billion, or 5%, increase in commercial loans, and a $1.4 billion, or 26%, increase in consumer direct loans. These increases were partially offset by decreases of $1.8 billion, or 12%, in real estate commercial loans, $1.3 billion, or 37%, in real estate construction, $1.3 billion, or 25%, in average nonaccrual loans, and $1.0 billion, or 4%, in average securities AFS. The average balance decrease in the securities portfolio was primarily attributable to a $1.8 billion reduction in U.S. Treasury securities and federal agency securities.

Average consumer and commercial deposits increased $5.5 billion, or 5%, during the six month period ended June 30, 2011 compared to the six month period ended June 30, 2010. Increases of $5.8 billion, or 16%, in money market accounts, and $4.1 billion, or 16%, in demand deposits contributed to the growth in deposits, partially offset by a decrease of $4.5 billion, or 18%, in time deposits. As a result of our asset/liability management actions, long-term debt also decreased by $3.3 billion, or 19%, and brokered deposits decreased by $377 million, or 14%. Factors affecting the year-over-year changes were the same as those discussed related to the second quarter of 2010 compared to the second quarter of 2011.

Consistent with the positive trend previously discussed, the net interest margin increased by 21 basis points from the six months ended June 30, 2010 to the same period in 2011. Yields on average earning assets declined 7 basis points from 4.42% for the first six months ended June 30, 2010 to 4.35% for the six months ended June 30, 2011. The average yield on loans for the six months ended June 30, 2011 was 4.67%, down 10 basis points from the same period in 2010. The factors in the year-over-year decrease were the same as those discussed related to the second quarter of 2010 compared to the second quarter of 2011. Partially offsetting the decline in the average yield on loans, was the average yield on LHFS which increased 12 basis points to 4.15%, and the average yield on securities AFS which increased 8 basis points to 3.29%. The cost of interest-bearing liabilities over the same period decreased 33 basis points, due primarily to the 29 basis point decline in consumer and commercial deposits, which resulted from the declining interest rate environment and the change in deposit mix.

Foregone Interest

Foregone interest income from NPLs reduced net interest margin by 16 basis points for the second quarter of 2011 and 17 basis points for the first six months of 2011, compared to 22 basis points and 23 basis points during the three and six months ended June 30, 2010, as average nonaccrual loans decreased $1.2 billion, or 24%, and $1.3 billion, or 25%, during the three and six month periods ended June 30, 2011, respectively. See additional discussion of our expectations for future levels of credit quality in the “Allowance for Credit Losses” and “Nonperforming Assets” sections of this MD&A. Table 2 contains more detailed information concerning average balances, yields earned, and rates paid.


Noninterest Income											Table 3

	Three Months Ended June 30,				%			Six Months Ended June 30,				%
(Dollars in millions)	2011		2010		Change ¹			2011		2010		Change ¹
Service charges on deposit accounts		$170		$208		(18)	%		$333		$404		(18)	%
Other charges and fees		130		133		(2)			256		262		(2)
Card fees		105		94		12			205		181		13
Trust and investment management income		135		127		6			270		249		8
Retail investment services		59		48		23			117		95		23
Mortgage production related income/(loss)		4		(16)		NM			3		(47)		NM
Mortgage servicing related income		72		88		(18)			144		158		(9)
Investment banking income		95		58		64			162		114		42
Trading account profits and commissions		53		109		(51)			105		102		3
Net securities gains		32		57		(44)			96		58		66
Other noninterest income		57		46		24			104		74		41

Total noninterest income		$912		$952		(4)			$1,795		$1,650		9

¹ NM - not meaningful. Those changes over 100 percent were not considered to be meaningful.

Noninterest Income

Noninterest income decreased by $40 million, or 4%, compared to the three months ended June 30, 2010, due to lower net gains on the sale of investment securities, lower service charges on deposit accounts, and lower trading account profits and commissions, partially offset by growth in certain consumer and commercial fee categories, including investment banking income, retail investment services income, and card fees. For the six months ended June 30, 2011, noninterest income increased by $145 million, or 9%, as strong investment banking results, improved mortgage production related results, and higher gains on the sale of investment securities were offset by lower service charges on deposit accounts.

Service charges on deposit accounts decreased by $38 million, or 18%, compared to the three months ended June 30, 2010, and by $71 million, or 18%, compared to the six months ended June 30, 2010. The decreases were attributable to Regulation E changes and a voluntary decision to eliminate fees on transactions where the overdrafted amount is small, as well as reducing the maximum number of daily overdraft fees charged to our clients. The voluntary changes and the Regulation E impact began during the third quarter of 2010.

Card fees increased by $11 million, or 12%, compared to the three months ended June 30, 2010, and by $24 million, or 13%, compared to the six months ended June 30, 2010. The increases were primarily due to an increase in debit card interchange transactions. Growth was driven by household expansion, higher product penetration, and increasing consumer usage patterns. On June 29, 2011, the Federal Reserve issued a final rule establishing revised standards that significantly lowered the rates that can be charged on debit card transactions and prohibited network exclusivity arrangements and routing restrictions. Currently, our debit card interchange fee revenue is approximately $370 million on an annualized basis. We estimate that this rule, when it becomes effective in the fourth quarter, will impact our debit interchange income by about 50% prior to any mitigating actions. As a means to mitigate some of this lost revenue, we have introduced new checking account products which are aligned with clients’ needs and which we expect will provide additional streams of fee income. Additionally, we will also benefit from the discontinuation of our debit card rewards programs and plan to add other value-added checking account features that, over time, we expect will produce additional deposit fee income. Collectively, and over time, we currently estimate that the benefits from all of these changes will enable us to recapture approximately 50% of the revenue loss attributable to both the newly-issued interchange fee rules and Regulation E.

Trust and investment management income increased by $8 million, or 6%, compared to the three months ended June 30, 2010, and by $21 million, or 8%, compared to the six months ended June 30, 2010. The increases were primarily due to higher market valuations on managed equity assets partially offset by lower money market mutual fund revenue.

Retail investment services income increased by $11 million, or 23%, compared to the three months ended June 30, 2010, and by $22 million, or 23%, compared to the six months ended June 30, 2010. The increases were driven by higher recurring brokerage revenue and annuity income.

Mortgage production related income improved by $20 million compared to the three months ended June 30, 2010 and by $50 million compared to the six months ended June 30, 2010. The improvements were primarily due to a decline in the mortgage repurchase provision, partially offset by lower loan production. Reserves for mortgage repurchases were $299 million as of June 30, 2011, an increase of $34 million compared to December 31, 2010. The increase in the reserve was related to an increase in repurchase requests during both the first and second quarters of the year. The increases have been driven primarily by increased agency requests related to the 2007 vintage loans. Repurchase requests can vary significantly from period to period based on the timing of requests from the GSEs. While demands will likely continue to be volatile on a quarter-over-quarter basis, we continue to believe that demands from the higher loss 2006 and 2007 vintages will decline as normal seasoning patterns occur.

Mortgage servicing related income decreased by $16 million, or 18%, compared to the three months ended June 30, 2010, and by $14 million, or 9%, compared to the six months ended June 30, 2010. The decreases for the three months were primarily due to a decrease in MSR mark to market adjustments, net of hedging gains and losses. The decreases for the six months were primarily due to the decrease in servicing fees. See the “Other Market Risk” section of this MD&A for further information regarding the risks pertaining to the valuation of our MSRs.

Investment banking income increased by $37 million, or 64%, compared to the three months ended June 30, 2010, and by $48 million, or 42%, compared to the six months ended June 30, 2010. The increases were primarily attributable to strong syndicated finance fees, which resulted from continued market penetration. We note that investment banking income has and will continue to experience volatility due to market factors.

Trading account profits and commissions decreased by $56 million, or 51%, compared to the three months ended June 30, 2010. The decrease was primarily attributable to a decline in valuation gains on our fair value debt and index-linked CDs as our credit spreads tightened. For the six months ended June 30, 2011, trading account profits and commissions were essentially flat compared to the same period in 2010.

In 2011 and 2010, we repositioned the securities AFS portfolio in response to market conditions. Net securities gains decreased by $25 million, or 44%, compared to the three months ended June 30, 2010 and increased by $38 million, or 66%, compared to the six months ended June 30, 2010. See “Securities Available for Sale” in this MD&A for further discussion regarding our repositioning activity.

Other noninterest income increased by $11 million, or 24%, compared to the three months ended June 30, 2010, and by $30 million, or 41%, compared to the six months ended June 30, 2010. The increase was primarily attributable to current year gains on private equity investments and client leasing transactions.


Noninterest Expense		Table 4


	Three Months Ended June 30				%			Six Months Ended June 30				%
(Dollars in millions)	2011		2010		Change ¹			2011		2010		Change ¹
Employee compensation		$638		$575		11	%		$1,256		$1,132		11	%
Employee benefits		110		107		3			246		242		2

Personnel expense		748		682		10			1,502		1,374		9
Other real estate expense		64		87		(26)			133		133		-
Credit and collection services		60		66		(9)			111		140		(21)
Operating losses		62		16		NM			89		30		NM
Mortgage reinsurance		6		9		(33)			13		18		(28)

Credit-related costs		192		178		8			346		321		8
Outside processing and software		162		158		3			320		307		4
Net occupancy expense		89		90		(1)			178		181		(2)
Regulatory assessments		81		65		25			152		129		18
Marketing and customer development		46		44		5			84		78		8
Equipment expense		44		42		5			88		83		6
Consulting and legal		29		18		61			43		32		34
Postage and delivery		20		20		-			42		42		-
Other staff expense		20		15		33			35		28		25
Communications		15		16		(6)			31		32		(3)
Amortization of intangible assets		12		13		(8)			23		26		(12)
Net loss/(gain) on debt extinguishment		(1)		63		NM			(2)		54		NM
Other expense		85		99		(14)			165		177		(7)

Total noninterest expense		$1,542		$1,503		3	%		$3,007		$2,864		5	%

¹ NM - not meaningful. Those changes over 100 percent were not considered to be meaningful.

Noninterest Expense

Noninterest expense increased by $39 million, or 3%, compared to the three months ended June 30, 2010, and by $143 million, or 5%, compared to the six months ended June 30, 2010. The increases were driven primarily by a rise in compensation expenses associated with improved revenue generation in certain businesses as well as the hiring of additional teammates, primarily in client-facing and loss mitigation positions. Also contributing to the increases in noninterest expense were higher credit-related costs and increases in regulatory assessment expenses partially offset by lower gains on the extinguishment of debt.

Personnel expenses increased by $66 million, or 10%, compared to the three months ended June 30, 2010, and by $128 million, or 9%, compared to the six months ended June 30, 2010. The increases in personnel expenses were attributable to higher incentive compensation related to improved business performance and the previously mentioned increases in full-time equivalent employees.

Credit-related costs increased by $14 million, or 8%, compared to the three months ended June 30, 2010, and by $25 million, or 8%, compared to the six months ended June 30, 2010. Operating losses, which include certain legal and compliance-related costs, drove the increases, partially offset by decreases in credit and collection services expenses. Over time, as the economic environment improves, we expect that credit-related expenses will also improve, but will likely remain elevated compared to the levels realized prior to the economic recession.

Regulatory assessments expense increased by $16 million, or 25%, compared to the three months ended June 30, 2010, and by $23 million, or 18%, compared to the six months ended June 30, 2010. The increases were the result of higher average deposit balances and the change in the assessment base for FDIC insurance premiums that took effect at the beginning of the second quarter of 2011.

Consulting and legal expenses increased by $11 million, or 61%, compared to the three months ended June 30, 2010, and by $11 million, or 34%, compared to the six months ended June 30, 2010. The increases were attributable to consulting costs associated with specific revenue growth initiatives, as well as costs to address the Consent Order with the Federal Reserve. For additional information regarding the Consent Order, see Note 14, “Contingencies,” to the Consolidated Financial Statements in this Form 10-Q and the “Nonperforming Assets” section of this MD&A.

Other staff expense increased by $5 million, or 33%, compared to the three months ended June 30, 2010, and by $7 million, or 25%, compared to the six months ended June 30, 2010. The increases were primarily attributable to employee recruitment costs related to the previously mentioned increases in full-time equivalent employees.

Other noninterest expense decreased by $14 million, or 14%, compared to the three months ended June 30, 2010, and by $12 million, or 7%, compared to the six months ended June 30, 2010. The decreases were primarily attributable to net decreases in litigation reserves upon the resolution of specific legal matters.

Provision for Income Taxes

The provision for income taxes includes both federal and state income taxes. During the three and six months ended June 30, 2011, the provision for income taxes was $58 million and $91 million, respectively, compared to tax benefits of $50 million and $244 million for the same periods in 2010, respectively. The provision represents a 24.5% and 20.2% effective tax rate for the three and six months ended June 30, 2011, respectively, compared to a (133.1%) and (62.2%) effective tax rate for the three and six months ended June 30, 2010, respectively. We calculated income taxes for the three and six months ended June 30, 2011 and 2010 based on actual year-to-date results. For the three and six months ended June 30, 2011, the effective tax rate was primarily a result of positive pre-tax earnings adjusted for net favorable permanent tax items, such as interest income from lending to tax-exempt entities and federal tax credits from community reinvestment activities. In addition, the effective tax rate for the six months ended June 30, 2011 was also impacted by $15 million of net unfavorable discrete items. For the three and six months ended June 30, 2010, the effective tax rate was primarily attributable to the pre-tax loss as well as the aforementioned favorable permanent tax items. See additional discussion related to the provision for income taxes in Note 9, “Income Taxes,” to the Consolidated Financial Statements in this Form 10-Q.

In determining whether a valuation allowance against our deferred tax assets is necessary, we consider the level of taxable income in prior years to the extent that carrybacks are permitted under current tax law, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented. The cumulative valuation allowance associated with the deferred tax asset for certain state carryforwards was $51 million and $50 million as of June 30, 2011 and December 31, 2010, respectively. We expect to realize our remaining deferred tax assets over the allowable carryback period or in future years. Therefore, no valuation allowance is required against federal deferred tax assets or the remaining state deferred tax assets, and we estimate that on a consolidated basis, we have a net deferred tax liability at June 30, 2011.

Loans

We report our loan portfolio in three segments: commercial, residential, and consumer. Loans are assigned to these segments based upon the type of borrower, collateral, and/or our underlying credit management processes. Additionally, within each segment, we have identified loan types, or classes, which further identify loans based upon common risk characteristics.

The commercial and industrial class includes loans secured by owner-occupied properties, corporate credit cards, as well as, other wholesale lending activities. Loans that are reported in the commercial real estate and commercial construction classes are based on investor exposures where repayment is largely dependent upon the underlying real estate.

Residential mortgages consist of loans secured by 1-4 family homes, mostly prime first-lien loans. Residential construction loans include residential lot loans and construction-to-perm loans. Home equity products consist of both first-lien equity lines and closed-end second-lien loans. At June 30, 2011, 29% of our home equity products were in a first lien position and 71% were in a junior lien position. For home equity products in a junior lien position, we service 28% of the loans that are senior to the home equity product.

Consumer other direct loans consist primarily of nonguaranteed student loans and consumer indirect loans consist of loans secured by automobiles or recreational vehicles.


Loan Portfolio by Types of Loans		Table 5


(Dollars in millions)	June 30, 2011		December 31, 2010		% Change
Commercial loans:

Commercial & industrial ¹		$45,922		$44,753		3	%
Commercial real estate		5,707		6,167		(7)
Commercial construction		1,740		2,568		(32)

Total commercial loans		53,369		53,488		-
Residential loans:
Residential mortgages - guaranteed		4,513		4,520		-
Residential mortgages - nonguaranteed ²		23,224		23,959		(3)
Home equity products		16,169		16,751		(3)
Residential construction		1,118		1,291		(13)

Total residential loans		45,024		46,521		(3)
Consumer loans:
Guaranteed student loans		4,620		4,260		8
Other direct		1,863		1,722		8
Indirect		9,630		9,499		1
Credit cards		407		485		(16)

Total consumer loans		16,520		15,966		3

LHFI		$114,913		$115,975		(1)	%

LHFS		$2,052		$3,501		(41)	%

¹ Includes $4 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

² Includes $445 million and $488 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively.

Loans Held for Investment

LHFI decreased by $1.1 billion, or 1%, during the six months ended June 30, 2011. The decrease was primarily attributable to decreases in nonguaranteed residential mortgages, home equity products, commercial real estate loans, and commercial construction loans. We continued to make progress in diversifying the loan portfolio, as we drove growth in targeted commercial and consumer areas while further reducing our residential real estate exposure. We believe that the reduction in higher risk balances and the growth in specific commercial and consumer loans constitutes a meaningful improvement in our risk profile. Overall, loan growth and loan demand remains weaker than we would like, but we are pleased with the progress that we have been able to make in growing selected areas of our portfolio while concurrently reducing our risk. We expect declines in the higher risk portfolios to continue in the future, though, given the smaller aggregate balance, the absolute dollar decline could moderate somewhat. As such, the runoff in these portfolios could be less of a headwind for total loan growth than it has been in prior quarters.

Commercial loans decreased by $119 million, or less than 1%, during the six months ended June 30, 2011. The decline was largely attributable to decreases in commercial construction loans and commercial real estate loans, largely offset by an increase in commercial and industrial loans. Commercial construction loans decreased by $828 million, or 32%, primarily as a result of our efforts to reduce risk levels by aggressively managing existing construction exposure and significantly limiting new production under tighter underwriting standards. Meanwhile, commercial and industrial loans grew by $1.2 billion, or 3%, primarily due to larger corporate borrowers; the increase was most pronounced within areas that we have been targeting for growth, such as asset based lending, middle market lending, and certain industry verticals within CIB.

Residential loans decreased by $1.5 billion, or 3%, during the six months ended June 30, 2011, primarily to due to payments and payoffs, as well as transfers to OREO and current year net charge-offs. The decline in residential loans was primarily in the higher risk categories, including certain nonguaranteed residential mortgages, home equity products, and residential construction loans.

Consumer loans increased by $554 million, or 3%, during the six months ended June 30, 2011. The increase was primarily attributable to a $360 million, or 8%, increase in guaranteed student loans and a $141 million, or 8%, increase in other direct loans partially offset by a $78 million, or 16%, decline in consumer credit card loans.

Loans Held for Sale

LHFS decreased by $1.4 billion, or 41%, during the six months ended June 30, 2011. The decline was attributable to a reduction in closed mortgage loan volume, as higher mortgage interest rates affected loan demand.

Asset Quality

During the second quarter we continued, and in some cases accelerated, the multi-quarter trend of improvements that we have seen among all of our primary metrics. We continue to expect that additional improvement in early stage delinquencies, particularly in our residential portfolio, will be tied to the condition of the economy, as commercial and consumer delinquency rates are already at relatively low levels.

The commercial and industrial loan portfolio continues to perform well, as low delinquency levels were accompanied by a modest decline in NPLs during the quarter. Charge-offs increased slightly as we resolved certain NPLs, but remain well within our expectations.

Commercial real estate net charge-offs increased during the quarter, although the increase in charge-offs was offset by a decline in NPLs. We continue to believe that this portfolio will perform comparatively well given its composition, the quality of our underwriting, and our ongoing management disciplines. Given the stresses in the commercial real estate market, we have performed a thorough analysis of our commercial real estate portfolio in order to identify loans with an increased risk of default. We believe that our investor-owned portfolio is appropriately diversified by borrower, geography, and property type. We typically underwrite commercial projects to credit standards that are more stringent than historical commercial MBS guidelines. Where appropriate, we have taken prudent actions with the client to strengthen our credit position. These actions reflect market terms and structures and are intended to improve the client’s financial ability to perform. Impaired loans are assessed relative to the client’s and guarantor’s, if any, ability to service the debt, the loan terms, and the value of the property. These factors are taken into consideration when formulating our ALLL through our credit risk rating and/or specific reserving processes.

Commercial construction NPLs declined again this quarter, as we continue to resolve and work through our remaining exposure to these loans. This decline in NPLs was partially attributable to increased payoffs and paydowns. We continue to be proactive in our credit monitoring and management processes to provide early warning for problem loans. For example, we use an expanded liquidity and contingency analysis to provide a thorough view of borrower capacity and their ability to service obligations in a steep market decline. We also have strict limits and exposure caps on specific projects and borrowers for risk diversification. Due to the lack of new construction projects and the completion of many that were previously started, the aggregate amount of interest reserves that we are obligated to fund has declined from prior periods and are not considered material relative to total loans outstanding.

Net charge-offs, NPLs, and early stage delinquencies in the residential mortgages portfolio declined during the second quarter. Our outlook for the residential mortgage portfolio, based on improving delinquency trends, is for reduced frequency of default over the next few quarters despite the potential for some offsetting increases in severity due to lower home values.

Net charge-offs for the home equity portfolio declined during the quarter, while NPLs and early stage delinquencies remained relatively stable. Runoff in this portfolio has been concentrated in the higher risk categories, where no new production has occurred and little to no line availability exists.

The residential construction portfolio, which is primarily comprised of lot and land loans to individuals, remained relatively stable in terms of NPLs and net charge-offs, while we experienced another quarter of declines in early stage delinquencies. Net charge-offs are expected to remain elevated and uneven as we work through the remainder of the risk in this portfolio. Further, while there may be some variability, we generally expect the trend of declining NPLs to continue as we aggressively pursue workouts and transition foreclosed assets to OREO and, ultimately, disposition.

For the consumer portfolios, asset quality was stable to modestly improved. Early stage delinquencies, excluding guaranteed student loans, declined during the quarter. Meanwhile, the level of nonperforming consumer loans and net charge-offs remained relatively stable compared to the first quarter of 2011.

We believe that our loan portfolio is well diversified by product, client, and geography throughout our footprint. However, our loan portfolio may be exposed to certain concentrations of credit risk which exist in relation to individual borrowers or groups of borrowers, certain types of collateral, certain types of industries, certain loan products, or certain regions of the country. See Note 3, “Loans,” to the Consolidated Financial Statements in this Form 10-Q for more information.

The following table shows the percentage breakdown of our total LHFI portfolio at June 30, 2011 and December 31, 2010 by geographic region.


Loan Types by Geography		Table 6


	Commercial						Residential						Consumer
	June 30, 2011			December 31, 2010			June 30, 2011			December 31, 2010			June 30, 2011			December 31, 2010
Geography:

Central ¹		28	%		29	%		21	%		20	%		15	%		14	%

Florida ²		20			21			28			29			20			21

MidAtlantic ³		28			28			36			35			27			27
Other		24			22			15			16			38			38

Total		100	%		100	%		100	%		100	%		100	%		100	%

¹ The Central region includes Alabama, Arkansas, Georgia, Mississippi, and Tennessee.

² The Florida region includes Florida only.

³ The MidAtlantic region includes the District of Columbia, Maryland, North Carolina, South Carolina, and Virginia.

Allowance for Credit Losses

At June 30, 2011, the allowance for credit losses was $2.8 billion, which includes both the ALLL as well as the reserve for unfunded commitments. A rollforward of our allowance for credit losses, along with our summarized credit loss experience, is shown in the table below:


Summary of Credit Losses Experience		Table 7


	Three Months Ended June 30,						% Change		Six Months Ended June 30,						% Change
(Dollars in millions)	2011			2010			% Change		2011			2010			% Change

Allowance for Credit Losses
Balance - beginning of period		$2,908			$3,276			(11)		$3,032			$3,235			(6)	%
Benefit for unfunded commitments		(3)			(40)			93		(7)			(55)			87
Provision for loan losses:
Commercial loans		124			270			(54)		232			485			(52)
Residential loans		252			413			(39)		574			1,014			(43)
Consumer loans		19			19			-		40			80			(50)

Total provision for loan losses		395			702			(44)		846			1,579			(46)

Charge-offs:
Commercial loans		(220)			(251)			(12)		(405)			(443)			(9)
Residential loans		(303)			(470)			(36)		(688)			(1,078)			(36)
Consumer loans		(40)			(47)			(15)		(85)			(109)			(22)

Total charge-offs		(563)			(768)			(27)		(1,178)			(1,630)			(28)

Recoveries:
Commercial loans		41			29			41		70			52			35
Residential loans		6			5			20		11			10			10
Consumer loans		11			12			(8)		21			25			(16)

Total recoveries		58			46			26		102			87			17

Net charge-offs		(505)			(722)			(30)		(1,076)			(1,543)			(30)

Balance - end of period		$2,795			$3,216			(13)		$2,795			$3,216			(13)	%


Components:
ALLL		$2,744			$3,156			(13)
Unfunded commitments reserve ¹		51			60			(15)

Allowance for credit losses		$2,795			$3,216			(13)


Average loans		$114,920			$113,016			2		$115,040			$113,721			1	%
Period-end loans outstanding		114,913			112,925			2

Ratios:
Allowance to period-end loans ^2,3		2.40	%		2.81	%		(15)
Allowance to NPLs ^2,4		76.57			67.64			13
Allowance to net charge-offs (annualized) ²		1.35	x		1.09	x		24
Net charge-offs to average loans (annualized)		1.76	%		2.57	%		(32)		1.89	%		2.74	%		(31)	%
Provision for loan losses to average loans (annualized)		1.38			2.49			(45)		1.48			2.80			(47)
Recoveries to total charge-offs		10.3			6.0			72		8.7			5.3			64

¹ The unfunded commitments reserve is separately recorded in other liabilities in the Consolidated Balance Sheets.

² This ratio is calculated using the ALLL.

³ $449 million and $422 million, respectively, of LHFI carried at fair value were excluded from period-end loans in the calculation.

⁴ $26 million and $33 million, respectively, of NPLs carried at fair value were excluded from NPLs in the calculation.

Charge-offs

Net charge-offs for the three months ended June 30, 2011 declined by $217 million, or 30%, versus the three months ended June 30, 2010. For the six months ended June 30, 2011, net charge-offs declined by $467 million, or 30%, versus the six months ended June 30, 2010. The decline in net charge-offs occurred across each segment of our loan portfolio and was particularly notable for residential loans. As a percentage of average loans, annualized net charge-offs were 1.76% and 2.57% during the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, annualized net charge-offs as a percentage of average loans were 1.89% and 2.74%, respectively. The improvements in these figures were the result of improved asset quality. We currently expect net charge-offs to trend down over time, however, we believe third quarter net charge-offs will approximate second quarter net charge-offs.

Provision for Loan Losses

For the three months ended June 30, 2011, the provision for loan losses decreased by $307 million, or 44%, versus the three months ended June 30, 2010. For the six months ended June 30, 2011, the provision for loan losses decreased by $733 million, or 46%, versus the six months ended June 30, 2010. The decrease in the provision for loan losses was attributable to significantly lower net charge-offs and the decline in the ALLL resulting from improved credit quality.

ALLL and Reserve for Unfunded Commitments

The allocation of our ALLL by loan segment is shown in the tables below:


Allowance for Loan Losses by Loan Segment								Table 8

	June 30, 2011						December 31, 2010
(Dollars in millions)	ALLL		Segment ALLL as a % of total ALLL		Loan segment as a % of total loans		ALLL		Segment ALLL as a % of total ALLL		Loan segment as a % of total loans
Commercial loans		$1,200		44 %		47 %		$1,303		44 %		46 %
Residential loans		1,395		51		39		1,498		50		40
Consumer loans		149		5		14		173		6		14

Total		$2,744		100 %		100 %		$2,974		100 %		100 %

The ALLL decreased by $230 million, or 8%, during the six months ended June 30, 2011, with commercial, residential, and consumer loans-related ALLL decreasing $103 million, $103 million, and $24 million, respectively. The decrease in ALLL was commensurate with the improved credit quality of each segment, including a reduction in higher-risk balances, lower emerging risks in the portfolio, as evidenced by the lower delinquency rates, and the recognition of current year net charge-offs absorbing existing risk. Our risk profile continues to improve, such that higher-risk loans comprised only 10% of our entire loan portfolio and lower-risk government guaranteed loans represented 8% of the portfolio as of June 30, 2011. The variables most impacting the ALLL continue to be unemployment, residential real estate property values, and the variability and relative strength of the housing market. At this point in the cycle, we expect the ALLL to continue to trend downward at a pace consistent with improvements in credit quality and overall economic conditions. As of June 30, 2011, the allowance to period-end loans ratio was 2.40%, down 18 basis points from December 31, 2010, consistent with our continued de-risking of our loan portfolio during the period. The ratio of the ALLL to total NPLs improved to 76.57% as of June 30, 2011 from 72.86% as of December 31, 2010. The increase in this ratio was primarily attributable to the $500 million decrease in NPLs partially offset by the decline in ALLL.

The reserve for unfunded commitments was $51 million as of June 30, 2011, a decrease of $7 million, or 12%, versus a reserve of $58 million at December 31, 2010. The decrease in the reserve was attributed to improved credit quality related to certain commercial and large corporate borrowers.

Nonperforming Assets


Nonperforming Assets			Table 9


(Dollars in millions)	June 30, 2011			December 31, 2010			% Change
Nonaccrual/NPLs:
Commercial loans
Commercial & industrial ¹		$537			$584			(8)	%
Commercial real estate		399			342			17
Commercial construction		627			961			(35)

Total commercial NPLs		1,563			1,887			(17)
Residential loans
Residential mortgages - nonguaranteed ²		1,412			1,543			(8)
Home equity products		335			355			(6)
Residential construction		266			290			(8)

Total residential NPLs		2,013			2,188			(8)
Consumer loans
Other direct		9			10			(10)
Indirect		25			25			-

Total consumer NPLs		34			35			(3)

Total nonaccrual/NPLs		3,610			4,110			(12)
OREO ³		483			596			(19)
Other repossessed assets		11			52			(79)

Total nonperforming assets		$4,104			$4,758			(14)	%


Accruing loans past due 90 days or more		$1,636			$1,565			5	%
TDRs:
Accruing restructured loans		2,719			2,613			4
Nonaccruing restructured loans ⁴		923			1,005			(8)
Ratios:
NPLs to total loans		3.14	%		3.54	%
Nonperforming assets to total loans plus
OREO and other repossessed assets		3.56			4.08
¹ Includes $4 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively. ² Includes $23 million and $24 million of loans carried at fair value at June 30, 2011 and December 31, 2010, respectively. ³ Does not include foreclosed real estate related to loans insured by the FHA or the VA. Proceeds due from the FHA and the VA are recorded as a receivable in other assets until the funds are received and the property is conveyed. The receivable amount related to proceeds due from FHA or the VA totaled $175 million and $195 million at June 30, 2011 and December 31, 2010, respectively. ⁴ Nonaccruing restructured loans are included in total nonaccrual/NPLs.

Nonperforming assets decreased by $654 million, or 14%, during the six months ended June 30, 2011. The decrease was primarily attributable to a $500 million reduction in NPLs as a result of our problem loan resolution efforts. Real estate related loans comprise a significant portion of our overall nonperforming assets as a result of the U.S. housing market correction. The amount of time necessary to obtain control of residential real estate collateral in certain states, primarily Florida, has remained elevated due to delays in the foreclosure process. These delays may impact the resolution of real estate related loans within the nonperforming assets portfolio. Nonetheless, we expect that we will see continued declines in NPLs throughout the rest of the year.

Nonperforming Loans

Nonperforming commercial loans decreased by $324 million, or 17%, during the six months ended June 30, 2011, as a $334 million decrease in commercial construction NPLs and a $47 million decrease in commercial and industrial NPLs was partially offset by a $57 million increase in commercial real estate NPLs related to a small number of large commercial real estate borrowers. We continue to expect some variability in inflows of commercial real estate NPLs as a result of the ongoing commercial real estate correction cycle.

Nonperforming residential loans decreased by $175 million, or 8%, during the six months ended June 30, 2011, primarily as a result of a $131 million decrease in nonguaranteed residential mortgage NPLs. The $131 million decrease was partially attributable to the reclassification of certain nonperforming residential mortgages as held for sale to reflect our intention to sell these mortgages. We recorded an incremental charge-off of $10 million in the first quarter in connection with the decision to transfer and sell these mortgages. Approximately $34 million of these reclassified NPLs were sold during the quarter; the remaining $13 million were transferred back to LHFI as they were no longer deemed marketable for sale. The remaining decrease was attributable to lower inflows of NPLs and net charge-offs.

Nonperforming consumer loans decreased by $1 million, or 3%, during the six months ended June 30, 2011, primarily as a result of a $1 million decrease in indirect consumer NPLs. The decrease was driven by net charge-offs of existing nonperforming consumer loans during the year, largely offset by the migration of delinquent consumer loans to nonaccrual status.

Interest income on nonaccrual loans, if recognized, is recorded using the cash basis method of accounting. We recognized $10 million and $11 million of cash basis interest income for the three months ended June 30, 2011 and 2010, respectively, and $18 million and $22 million for the six months ended June 30, 2011 and 2010, respectively. If all such loans had been accruing interest according to their original contractual terms, estimated interest income of $65 million and $89 million for the three months ended June 30, 2011 and 2010, respectively, and $136 million and $185 million for the six months ended June 30, 2011 and 2010, respectively, would have been recorded.

Other Nonperforming Assets

OREO decreased by $113 million, or 19%, during the six months ended June 30, 2011. The decline consisted of a $130 million decrease in residential homes and an $18 million decrease in residential construction related properties, partially offset by a $35 million increase in commercial properties. During the six months ended June 30, 2011 and 2010, sales of OREO resulted in proceeds of $351 million and $344 million, respectively, and net losses on sales of OREO of $1 million and net gains of $5 million, respectively, inclusive of the valuation reserve attributed to lots and land evaluated under the pooled approach. Sales of OREO and the related gains or losses are highly dependent on our disposition strategy and buyer opportunities. See Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q for more information. Gains and losses on sale of OREO are recorded in other real estate expense in the Consolidated Statements of Income/(Loss). Geographically, most of our OREO properties are located in Georgia, Florida, and North Carolina. Residential properties and land comprised 37% and 41%, respectively, of OREO; the remainder is related to commercial and other properties. Upon foreclosure, the values of these properties were reevaluated and, if necessary, written down to their then-current estimated value, less costs to sell. Further declines in home prices could result in additional losses on these properties. We are actively managing and disposing of these foreclosed assets to minimize future losses.

Other repossessed assets decreased by $41 million, or 79%, during the six months ended June 30, 2011. The decrease was largely attributable to the sale of repossessed assets during the year.

Accruing loans past due ninety days or more increased by $71 million, or 5%, during the six months ended June 30, 2011. The majority of our past due accruing loans are residential mortgages or student loans that are fully guaranteed by a federal agency. At June 30, 2011 and December 31, 2010, $69 million and $84 million, respectively, of past due accruing loans were not guaranteed.

At the end of 2010, we completed an internal review of STM’s residential foreclosure processes. We have taken steps to improve upon our processes as a result of our review. In addition, the Federal Reserve recently conducted a horizontal review of the nation’s largest mortgage loan servicers, including SunTrust. Following this review, SunTrust and other servicers entered into a Consent Order with the Federal Reserve. We describe the Consent Order in Note 14, “Contingencies,” to the Consolidated Financial Statements in this Form 10-Q and have filed a copy of it as an Exhibit to this Form 10-Q. The Consent Order requires us to improve certain processes and to retain an independent consultant to conduct a review of residential foreclosure actions pending during 2009 and 2010 to identify any errors, misrepresentations or deficiencies, determine whether any instances so identified resulted in financial injury, and then make any appropriate remediation, reimbursement, or adjustment. We have already begun implementing the requirements prescribed by the Consent Order. However, this may result in additional delays in the foreclosure process at a time when foreclosure

upon residential real estate collateral in certain states, primarily Florida, is already elevated. Any delay in the foreclosure process will adversely affect us by increasing our expenses related to carrying such assets, such as taxes, insurance, and other carrying costs, and exposes us to losses as a result of potential additional declines in the value of such collateral. We expect that our costs will increase in 2011 as a result of the additional resources necessary to perform the foreclosure process assessment, revise affidavit filings and make any other operational changes. This may result in higher noninterest expense, including higher servicing costs and legal expenses, in our Mortgage line of business. In addition, process enhancements could increase our default servicing costs over the longer term. Finally, the time to complete foreclosure sales temporarily may increase, and this may result in an increase in nonperforming assets and servicing advances, and may impact the collectability of such advances and the value of our MSR asset. Accordingly, delays in foreclosure sales, including any delays beyond those currently anticipated, our process enhancements, and any issues that may arise out of alleged irregularities in our foreclosure processes, could increase the costs associated with our mortgage operations. Nevertheless, we believe these additional costs will not have a material effect on our financial position, results of operations, or EPS.

Restructured Loans

In order to maximize the collection of loan balances, we evaluate troubled loans on a case-by-case basis to determine if a loan modification would be appropriate. We pursue loan modifications when there is a reasonable chance that an appropriate modification would allow our client to continue servicing the debt. For loans secured by residential real estate, if the client demonstrates a loss of income such that the client cannot reasonably support even a modified loan, we may pursue short sales and/or deed-in-lieu arrangements. For loans secured by income producing commercial properties, we perform a rigorous and ongoing review that is programmatic in nature. We review a number of factors, including cash flows, loan structures, collateral values, and guarantees, to identify loans within our income producing commercial loan portfolio that are most likely to experience distress. Based on our review of these factors and our assessment of overall risk, we evaluate the benefits of proactively initiating discussions with our clients to improve a loan’s risk profile. In some cases, we may renegotiate terms of their loans so that they have a higher likelihood of continuing to perform. To date, we have restructured loans in a variety of ways to help our clients service their debt and to mitigate the potential for additional losses. The primary restructuring methods being offered to our residential clients are reductions in interest rates and extension in terms. For commercial loans, the primary restructuring method is the extensions of terms. Accruing loans with modifications deemed to be economic concessions resulting from borrower difficulties are reported as accruing TDRs. Nonaccruing loans that are modified and demonstrate a history of repayment performance in accordance with their modified terms are reclassified to accruing restructured status, typically after six months of repayment performance. Generally, once a residential loan becomes a TDR, it is probable that the loan will likely continue to be reported as TDR for the remaining life of the loan, or foreclosed and sold. We note that some restructurings may not ultimately result in the complete collection of principal and interest (as modified by the terms of the restructuring), culminating in default, which could result in additional incremental losses. These potential incremental losses have been factored into our overall ALLL estimate. The level of re-defaults will likely be affected by future economic conditions. At June 30, 2011, specific reserves included in the ALLL for residential TDRs were $397 million.

The following table displays our residential real estate TDR portfolio, which includes both guaranteed and nonguaranteed loans, by modification type and payment status at June 30, 2011. The table excludes loans that have been repurchased from Ginnie Mae under an early buyout clause and subsequently modified. Such loans totaled less than $100 million at June 30, 2011.

Selected Residential TDR Data

Table 10


	Accruing TDRs						Nonaccruing TDRs
(Dollars in millions)	Current		Delinquent ¹		Total		Current		Delinquent ¹		Total
Rate reduction		$364		$41		$405		$18		$57		$75
Rate reduction and term extension		1,772		310		2,082		64		439		503
Other ²		49		17		66		4		29		33

Total		$2,185		$368		$2,553		$86		$525		$611

¹ TDRs considered delinquent for purposes of this table were those at least thirty days past due.

² Primarily consists of extensions and deficiency notes.

At June 30, 2011, our total TDR portfolio was $3.6 billion and was composed of $3.2 billion, or 87%, of residential loans (predominately first and second lien residential mortgages and home equity lines of credit), $466 million, or 13%, of commercial loans (predominately income-producing properties), and $13 million, or less than 1%, of direct consumer loans.

Accruing TDRs increased by $106 million, or 4%, during the six months ended June 30, 2011. The increase in accruing TDRs was attributable to a general increase in the number of loan modifications during the year. Nonaccruing TDRs decreased by $82 million, or 8%, during the six months ended June 30, 2011, reflecting net charge-offs during the year. The size of our TDR portfolio increased by less than $100 million upon adopting the new TDR accounting guidance as of July 1, 2011. See Note 1, “Significant Accounting Policies,” to the Consolidated Financial Statements in this Form 10-Q for additional information.

Interest income on restructured loans that have met sustained performance criteria and have been returned to accruing status is recognized according to the terms of the restructuring. Such interest income recorded was $28 million and $24 million for the three months ended June 30, 2011 and 2010, respectively, and $55 million and $44 million for the six months ended June 30, 2011 and 2010, respectively. If all such loans had been accruing interest according to their original contractual terms, estimated interest income of $39 million and $35 million for the three months ended June 30, 2011 and 2010, respectively, and $76 million and $65 million for the six months ended June 30, 2011 and 2010, respectively, would have been recorded.

SELECTED FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE

The following is a discussion of the more significant financial assets and financial liabilities that are currently carried at fair value on the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010. For a complete discussion of our fair value elections and the methodologies used to estimate the fair values of our financial instruments, refer to Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q.


Trading Assets and Liabilities			Table 11


(Dollars in millions)	June 30, 2011		December 31, 2010
Trading Assets
U.S. Treasury securities		$127		$187
Federal agency securities		504		361
U.S. states and political subdivisions		42		123
MBS - agency		271		301
MBS - private		2		15
CDO securities		44		55
ABS		37		59
Corporate and other debt securities		806		743
CP		129		14
Equity securities		91		221
Derivative contracts		2,952		2,743
Trading loans		1,581		1,353

Total trading assets		$6,586		$6,175


Trading Liabilities
U.S. Treasury securities		$509		$439
Federal agency securities		1		-
Corporate and other debt securities		359		398
Equity securities		14		-
Derivative contracts		2,143		1,841

Total trading liabilities		$3,026		$2,678

Trading Assets and Liabilities

Trading assets increased $411 million, or 7%, since December 31, 2010. This increase was primarily driven by an increase in federal agency securities, CP, derivative contracts and trading loans due to normal business activity. The increase was offset by a net decrease in equity securities due primarily to issuer redemptions of ARS municipal fund preferred shares.

Certain illiquid securities were purchased during the fourth quarter of 2007 from affiliates, which included SIVs that are collateralized by various domestic and foreign assets, residential MBS, including Alternative A-paper and subprime collateral, CDOs, and commercial loans, as well as senior interests retained from SunTrust-sponsored securitizations. During the first quarter of 2011, we recognized approximately $17 million in net market valuation gains related to these securities and received approximately $77 million in cash from sales and paydowns related to these securities, thereby eliminating our exposure to these distressed assets.

The Company also purchased ARS primarily in the fourth quarter of 2008 and first quarter of 2009 as a result of the FINRA investigation. See additional discussion related to FINRA’s ARS investigation in Note 14, “Contingencies.” The fair value of these ARS recorded in trading assets declined to $54 million as of June 30, 2011 compared to $147 million as of December 31, 2010. The reduction was due primarily to issuer redemptions of preferred equity ARS, offset slightly by a gain in fair value of the ARS. The majority of these remaining ARS securities are CDOs collateralized by trust preferred bank debt.

Trading liabilities increased $348 million, or 13%, since December 31, 2010 due primarily to an increase in derivative contracts as a result of normal business activity.


Securities Available for Sale			Table 12

As of June 30, 2011

(Dollars in millions)

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

U.S. Treasury securities

$730

$726

Federal agency securities

2,519

2,566

U.S. states and political subdivisions

499

516

MBS - agency

18,797

536

19,331

MBS - private

335

311

CDO securities

337

ABS

615

625

Corporate and other debt securities

Coke common stock

2,019

Other equity securities ¹

728

729

Total securities AFS

$24,614

$2,645

$43

$27,216


	As of December 31, 2010
(Dollars in millions)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
U.S. Treasury securities		$5,446		$115		$45		$5,516
Federal agency securities		1,883		19		7		1,895
U.S. states and political subdivisions		565		17		3		579
MBS - agency		14,014		372		28		14,358
MBS - private		378		3		34		347
CDO securities		50		-		-		50
ABS		798		15		5		808
Corporate and other debt securities		464		19		1		482
Coke common stock		-		1,973		-		1,973
Other equity securities ¹		886		1		-		887

Total securities AFS		$24,484		$2,534		$123		$26,895

¹ At December 31, 2010, other equity securities included $298 million in FHLB of Atlanta stock (par value), $391 million in Federal Reserve Bank stock (par value), and $197 million in mutual fund investments (par value).

Securities Available for Sale

The securities AFS portfolio is managed as part of our overall asset and liability management process to optimize income and portfolio value over an entire interest rate cycle while mitigating the associated risks. The size of the securities portfolio, at fair value, was $27.2 billion as of June 30, 2011, an increase of $321 million, or 1%, versus December 31, 2010. Changes in the size and composition of the portfolio during the six months reflect our efforts to maintain a high quality portfolio and manage our interest rate risk profile. These changes included reducing the size of the U.S. Treasury securities portfolio by $4.8 billion, from which the proceeds were partly used to repurchase our Series C and Series D Fixed Rate Cumulative Preferred Stock that we issued to the U.S. Treasury under the TARP’s CPP. The proceeds were also used to increase agency MBS and federal agency securities. During the six months ended June 30, 2011, we recorded $96 million in net realized gains primarily from the sale of securities AFS as a result of the aforementioned activities in our portfolio, compared to net realized gains of $58 million during the same period in 2010. For additional information on composition and valuation assumptions related to securities AFS, see the “Trading Assets and Securities Available for Sale” section of Note 12, “Fair Value Election and Measurement,” to the Consolidated Financial Statements in this Form 10-Q.

At June 30, 2011, the carrying value of securities AFS reflected $2.6 billion in net unrealized gains, comprised of a $2.0 billion unrealized gain from our remaining 30 million shares of Coke common stock and a $583 million net unrealized gain on the remainder of the portfolio. At December 31, 2010, the carrying value of securities AFS reflected $2.4 billion in net unrealized gains, which were comprised of a $2.0 billion unrealized gain from our remaining 30 million shares of Coke common stock and a $438 million net unrealized gain on the remainder of the portfolio. We entered into two variable forward agreements and share forward agreements effective July 15, 2008 with a major, unaffiliated financial institution (the “Counterparty”) collectively covering our 30 million Coke shares. Under The Agreements, we must deliver to the Counterparty at settlement of the variable forward agreements either a variable number of Coke common shares or a cash payment in lieu of such shares. The Counterparty is obligated to settle The Agreements for no less than $38.67 per share, or approximately $1.16 billion in the aggregate (the “Minimum Proceeds”). The share forward agreements give us the right, but not the obligation, to sell to the Counterparty, at prevailing market prices at the time of settlement, any of the 30 million Coke common shares that are not delivered to the Counterparty in settlement of the variable forward agreements. The Agreements effectively ensure that we will be able to sell our 30 million Coke common shares at a price no less than $38.67 per share, while permitting us to participate in future appreciation in the value of the Coke common shares up to $66.02 per share and $65.72 per share, under each of the respective variable forward agreements. Additional details related to these forward agreements can be found in Note 11, “Derivative Financial Instruments,” to the Consolidated Financial Statements in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2010.

For the three months ended June 30, 2011, the average yield on a FTE basis for the securities AFS portfolio increased to 3.40% compared to 3.19% for the three months ended June 30, 2010. For the six months ended June 30, 2011, the average yield on a FTE basis for the securities AFS portfolio increased to 3.29% compared to 3.21% for the six months ended June 30, 2010. The yield increases were largely due to reduced holdings of lower yielding U.S. Treasury securities and increased holdings of higher yielding agency MBS securities over the last six months.

The portfolio’s effective duration decreased to 3.0% as of June 30, 2011 from 3.3% as of December 31, 2010. Effective duration is a measure of price sensitivity of a bond portfolio to an immediate change in market interest rates, taking into consideration embedded options. An effective duration of 3.0% suggests an expected price change of 3.0% for a one percent instantaneous change in market interest rates.

The credit quality of the securities portfolio remained strong at June 30, 2011 and, consequently, we have the flexibility to respond to changes in the economic environment and take actions as opportunities arise to manage our interest rate risk profile and balance liquidity against investment returns.

We expect the size of our securities portfolio to remain relatively stable in the near term. Over the longer term, we continue to expect that a growing economy will result in loan balances trending up and deposits trending down. Accordingly, we may eventually decrease the size of our securities portfolio in response to loan growth and/or declining deposits.

BORROWINGS


Short-Term Borrowings			Table 13

As of June 30, 2011

Three Months Ended June 30, 2011

Six Months Ended June 30, 2011

(Dollars in millions)

Balance

Rate

Maximum
Outstanding at
any Month-End

Daily Average

Balance

Rate

Balance

Rate

Fed funds purchased¹

$939

0.12

$1,001

0.12

$990

$1,057

0.15

$1,169

Securities sold under agreement to repurchase¹

2,253

0.14

2,264

0.14

2,253

2,283

0.15

2,411

CP issued

1.00

149

1.20

196

159

1.10

196

Other short-term borrowings ²

2,756

0.34

2,785

0.34

2,909

2,688

0.35

2,909

Total short-term borrowings

$5,983

$6,199

$6,187

As of June 30, 2010

Three Months Ended June 30, 2010

Six Months Ended June 30, 2010

Maximum
Outstanding at
any Month-End

(Dollars in millions)

Balance

Rate

Daily Average

Balance

Rate

Balance

Rate

Fed funds purchased¹

$1,260

0.18

$1,224

0.18

$1,370

$1,319

0.18

$3,163

Securities sold under agreement to repurchase¹

2,477

0.16

2,632

0.14

2,673

2,308

0.12

2,794

CP issued

180

0.50

246

0.63

223

615

0.37

1,009

Other short-term borrowings ²

2,337

0.38

2,291

0.46

2,422

2,079

0.49

2,422

Total short-term borrowings

$6,254

$6,393

$6,321

¹ Fed funds purchased and securities sold under agreements to repurchase mature overnight or at a fixed maturity generally not exceeding three months. Rates on overnight funds reflect current market rates. Rates on fixed maturity borrowings are set at the time of borrowings.

² Other short-term borrowings includes master notes, dealer collateral held by the Company, U.S. Treasury demand notes, and other short-term borrowed funds.

Our period-end short-term borrowings decreased $271 million, or 4%, from June 30, 2010. The decrease was primarily attributable to a reduction in Fed funds purchased of $321 million and a $145 million decline in CP outstanding, partially offset by an increase in dealer collateral of $205 million.

Average short-term borrowings decreased by $194 million, or 3%, compared to the second quarter of 2010. The decrease was primarily due to average declines in Fed funds purchased and securities sold under agreement to repurchase of $223 million and $368 million, respectively, partially offset by an increase of $494 million in average other short-term borrowings. For the first six months of 2011, average short-term borrowings decreased by $134 million, or 2%, compared to the six months ended June 30, 2010 as a result of declines in average Fed funds purchased and average CP issued of $262 million and $456 million, respectively, were largely offset by a rise in average other short-term borrowings of $609 million. The amount of average CP outstanding declined, in part, due to a downgrade of our short-term debt ratings during 2010.

For the three and six months ended June 30, 2011, and for the three months ended June 30, 2010, our period-end outstanding balances were not materially different from maximum monthly outstanding balances or from the daily averages for any category of short-term borrowings. For the six months ended June 30, 2010, Fed funds purchased was the only category of short-term borrowings with a significant difference between the maximum outstanding balance and the period ended balance, resulting from our temporary increase in borrowings during January 2010, which was part of our ordinary balance sheet management practices.

Long-Term Debt

During the six months ended June 30, 2011, our long-term debt increased by $45 million. The change was primarily due to our issuance of $1.0 billion of five year 3.60% senior notes during the first quarter of 2011, offset by the maturity and redemption of $852 million of our ten year 6.375% subordinated notes and our repurchase of $220 million of fixed rate senior and junior subordinated notes that were due in 2011 and 2036.

CAPITAL RESOURCES

Our primary regulator, the Federal Reserve, measures capital adequacy within a framework that makes capital requirements sensitive to the risk profiles of individual banking companies. The guidelines weight assets and off-balance sheet risk exposures (risk weighted assets) according to predefined classifications, creating a base from which to compare capital levels. Tier 1 capital primarily includes realized equity and qualified preferred instruments, less purchase accounting intangibles such as goodwill and core deposit intangibles.

Total capital consists of Tier 1 capital and Tier 2 capital, which includes qualifying portions of subordinated debt, ALLL up to a maximum of 1.25% of risk weighted assets, and 45% of the unrealized gain on equity securities.

Both the Company and the Bank are subject to a minimum Tier 1 capital and Total capital ratios of 4% and 8%, respectively, of risk weighted assets. To be considered “well-capitalized,” ratios of 6% and 10%, respectively, are required. Additionally, the Company and the Bank are subject to requirements for the Tier 1 leverage ratio, which measures Tier 1 capital against average assets, a regulatory exposure measure with adjustments similar to those used to calculate Tier 1 capital. The minimum and well-capitalized leverage ratios are 3% and 5%, respectively.

In September 2010, the BCBS announced new regulatory capital requirements (commonly referred to as “Basel III”) aimed at substantially strengthening existing capital requirements, through a combination of higher minimum capital requirements, new capital conservation buffers, and more stringent definitions of capital and exposure. Basel III would impose a new common equity requirement of 7%, comprised of a minimum of 4.5% plus a capital conservation buffer of 2.5%. The transition period for banks to meet the revised common equity requirement will begin in 2013, with full implementation in 2019. The BCBS has also stated that from time to time it may require an additional, counter-cyclical capital buffer on top of Basel III standards. The new rule also proposes the deduction of certain assets in measuring Tier 1 capital. It is anticipated that U.S. regulators will adopt new regulatory capital requirements similar to those proposed by the BCBS. We monitor our capital structure as to compliance with current regulatory and prescribed operating levels and take into account these new regulations as they are published and become applicable to us in our capital planning.


Capital Ratios			Table 14


(Dollars in millions)	June 30, 2011			December 31, 2010
Tier 1 capital		$14,446			$18,156
Total capital		18,230			21,967
Risk-weighted assets		130,077			132,819

Tier 1 capital		14,446			18,156
Less:
Qualifying trust preferred securities		2,151			2,350
Preferred stock		172			4,942
Allowable minority interest		129			127

Tier 1 common equity		$11,994			$10,737


Risk-based ratios:
Tier 1 common equity		9.22	%		8.08	%
Tier 1 capital		11.11			13.67
Total capital		14.01			16.54
Tier 1 leverage ratio		8.92			10.94
Total shareholders’ equity to assets		11.42			13.38

In March 2011, the Federal Reserve completed its CCAR to evaluate capital plans of the nineteen largest U.S. bank holding companies. As a result of the CCAR, some of the bank holding companies increased or restarted dividends payments, common stock repurchases, or repaid U.S. government capital borrowed under the CPP. Upon completion of their review, the Federal Reserve did not object to our capital plan submitted as part of the CCAR in December 2010. As such, during March 2011, we initiated and completed certain elements of our capital plan, including public offerings of $1.0 billion of common stock and $1.0 billion of senior debt. In addition, we used the proceeds from those offerings, as well as other available funds, to repurchase $3.5 billion of Fixed Rate Cumulative Preferred Stock, Series C and $1.4 billion of Fixed Rate Cumulative Preferred Stock, Series D that was issued to the U.S. Treasury under the TARP’s CPP. As a result of the repurchase of Series C and D preferred stock, we incurred a one-time, non-cash charge to net income available to common shareholders of $74 million during the first quarter of 2011 related to accelerating the outstanding discount accretion on the Series C and D preferred stock.

As a result of the common stock offering our common equity was enhanced, increasing by $1.0 billion, net of issuance costs, adding approximately 35 million new common shares to our total outstanding common shares. Conversely, during the six months ended June 30, 2011, total Shareholders’ Equity decreased by $3.5 billion from December 31, 2010 primarily as a result of the repurchase of the Series C and D preferred stock offset by the issuance of the new common shares.

While our total equity decreased, our capital levels remain strong. Tier 1 common equity, Tier 1 capital, and Total capital ratios were 9.22%, 11.11%, and 14.01 %, respectively, at June 30, 2011 compared to 8.08%, 13.67%, and 16.54%, respectively, at December 31, 2010. At December 31, 2010, our Tier 1 Capital ratio excluding preferred stock issued to the U.S. Treasury was 10.08%. The increase in Tier 1 common equity was the result of the issuance of common equity. The decline in Tier 1 capital and Total capital ratios was due to the reduction in total equity as a result of the repurchase of the preferred shares issued to the U.S. Treasury. Overall, we remain well above the requirements to be considered “well capitalized” according to the current U.S. regulatory standards, and our capital ratios exceed the proposed guidelines recently published by the Basel Committee under Basel III and endorsed by U.S. regulatory agencies.

We declared and paid common dividends totaling $6 million during the three months ended June 30, 2011, or $0.01 per common share, compared to $5 million, or $0.01 per common share, during the same period in 2010. During the six months ended June 30, 2011, we declared and paid common dividends totaling $11 million, or $0.02 per common share, compared to $10 million, or $0.02 per common share during the same period in 2010. In addition, we declared dividends payable during the three and six months ended June 30, 2011 and June 30, 2010 of $2 million and $4 million, respectively, on our Series A preferred stock. Further, during the three and six month periods ended June 30, 2011 and 2010, we declared dividends payable of $0 million and $60 million, and $60 million and $120 million, respectively, to the U.S. Treasury on the Series C and D Preferred Stock.

We remain subject to certain restrictions on our ability to increase our dividend. However, with the repurchase of the preferred stock issued to the U.S. Treasury as part of the CPP, we can return capital to our shareholders in the form of an increased common dividend, and on August 9, 2011, our Board approved an increase in the quarterly dividend to $0.05 per share, payable on September 15, 2011, to shareholders of record at the close of business on September 1, 2011. See Part II, Item 1A, “Risk Factors,” in this Form 10-Q for additional information on our dividend. In addition, limits exist on the ability of the Bank to pay dividends to the Parent Company. Substantially all of our retained earnings are undistributed earnings of the Bank, which are restricted by various regulations administered by federal and state bank regulatory authorities. There was no capacity for payment of cash dividends to the Parent Company under these regulations at June 30, 2011.

CRITICAL ACCOUNTING POLICIES

There have been no significant changes to our Critical Accounting Policies as described in our Annual Report on Form 10-K for the year ended December 31, 2010.

ENTERPRISE RISK MANAGEMENT

There have been no significant changes to our Enterprise Risk Management as described in our Annual Report on Form 10-K for the year ended December 31, 2010, except as discussed below.

Credit Risk Management

There have been no significant changes in our credit risk management practices as described in our Annual Report on Form 10-K for the year ended December 31, 2010.

Operational Risk Management

There have been no significant changes in our operational risk management practices as described in our Annual Report on Form 10-K for the year ended December 31, 2010.

Market Risk Management

Market risk refers to potential losses arising from changes in interest rates, foreign exchange rates, equity prices, commodity prices, and other relevant market rates or prices. Interest rate risk, defined as the exposure of net interest income and MVE to adverse movements in interest rates, is our primary market risk, and mainly arises from the structure of the balance sheet, which includes all loans (including variable rate loans) and any associated hedges. We are also exposed to market risk in our trading activities, investment portfolio, Coke common stock, MSRs, loan warehouse and pipeline, and debt and brokered deposits carried at fair value. The ALCO meets regularly and is responsible for reviewing our open positions and establishing policies to monitor and limit exposure to market risk. The policies established by ALCO are reviewed and approved by our Board.

Market Risk from Non-Trading Activities

As the future path of interest rates cannot be known in advance, we use simulation analysis to project net interest income under various interest rate scenarios including implied forward and deliberately extreme and perhaps unlikely scenarios. The analyses may include rapid and gradual ramping of interest rates, rate shocks, basis risk analysis, and yield curve twists. Each analysis incorporates what management believes to be the most appropriate assumptions about client behavior in an interest rate scenario. Specific strategies are also analyzed to determine their impact on net interest income levels and sensitivities.

The sensitivity analysis included below is measured as a percentage change in net interest income due to an instantaneous 100 basis point move in benchmark interest rates. Estimated changes set forth below are dependent upon material assumptions such as those previously discussed in our Annual Report on Form 10-K for the year ended December 31, 2010. The net interest income profile reflects a relatively neutral interest rate sensitive position with respect to an instantaneous 100 basis point change in rates.

	December 31, 2010	December 31, 2010
	Economic Perspective
	Estimated % Change in Net Interest Income Over 12 Months
(Basis points)	June 30, 2011	December 31, 2010
Rate Change
+100	(0.6%)	0.2%
-100	(1.2%)	(0.9%)

The recognition of interest rate sensitivity from an economic perspective (above) is different from a financial reporting perspective (below) due to certain interest rate swaps that are used as economic hedges for fixed rate debt. The above profile includes the recognition of the net interest payments from these swaps, while the profile below does not include the net interest payments. The swaps are accounted for as trading assets and therefore, the benefit to income due to a decline in short term interest rates will be recognized as a gain in the fair value of the swaps and will be recorded as an increase in trading account profits/(losses) and commissions from a financial reporting perspective.

100


	Financial Reporting Perspective
	Estimated % Change in Net Interest Income
	Over 12 Months
(Basis points)	June 30, 2011	December 31, 2010
Rate Change
+100	(0.3%)	0.5%
-100	(1.3%)	(1.0%)

The difference from December 31, 2010 to June 30, 2011 seen above in both the economic and financial reporting perspectives related to the +100 and -100 basis point shock scenarios is primarily due to an increase in liability sensitivity from projected fixed rate loan and investment security growth, funded with short-term borrowings and customer deposits.

We also perform valuation analysis, which is used for discerning levels of risk present in the balance sheet and derivative positions that might not be taken into account in the net interest income simulation analysis above. Whereas net interest income simulation highlights exposures over a relatively short time horizon, valuation analysis incorporates all cash flows over the estimated remaining life of all balance sheet and derivative positions. The valuation of the balance sheet, at a point in time, is defined as the discounted present value of asset cash flows and derivative cash flows minus the discounted present value of liability cash flows, the net of which is referred to as MVE. The sensitivity of MVE to changes in the level of interest rates is a measure of the longer-term repricing risk and options risk embedded in the balance sheet. Similar to the net interest income simulation, MVE uses instantaneous changes in rates. MVE values only the current balance sheet and does not incorporate the growth assumptions that are used in the net interest income simulation model. As with the net interest income simulation model, assumptions about the timing and variability of balance sheet cash flows are critical in the MVE analysis. Particularly important are the assumptions driving prepayments and the expected changes in balances and pricing of the indeterminate deposit portfolios.

As of June 30, 2011, the MVE profile indicates changes with respect to an instantaneous 100 basis point change in rates.


	Estimated % Change in MVE
(Basis points)	June 30, 2011	December 31, 2010
Rate Change
+100	(3.1%)	(3.4%)
-100	(0.2%)	1.1%

While an instantaneous and severe shift in interest rates is used in this analysis to provide an estimate of exposure under an extremely adverse scenario, we believe that a gradual shift in interest rates would have a much more modest impact. Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current fiscal year). Further, MVE does not take into account factors such as future balance sheet growth, changes in product mix, changes in yield curve relationships, and changing product spreads that could mitigate the adverse impact of changes in interest rates. The net interest income simulation and valuation analyses do not include actions that management may undertake to manage this risk in response to anticipated changes in interest rates.

Trading Activities

Under established policies and procedures, we manage market risk associated with trading, capital markets and foreign exchange activities using a VAR approach that determines total exposure arising from interest rate risk, equity risk, foreign exchange risk, spread risk, and volatility risk. For trading portfolios, VAR measures the estimated maximum loss from a trading position, given a specified confidence level and time horizon. VAR exposures and actual results are monitored daily for each trading portfolio. Our VAR calculation measures the potential losses using a 99% confidence level with a one day holding period. This means that, on average, losses are expected to exceed VAR two or three times per year. We had no backtest exceptions to our overall VAR for the three and six months ended June 30, 2011 and 2010. The following table displays high, low, and average VAR for the three and six months ended June 30, 2011 and 2010.

101


	For the Three Months Ended		For the Six Months Ended
	June 30		June 30
(Dollars in millions)	2011	2010	2011	2010
Average VAR	$5	$9	$5	$10
High VAR	$6	$11	$7	$13
Low VAR	$4	$7	$4	$7

Average VAR during the three and six months ended June 30, 2011 was lower compared to the three and six months ended June 30, 2010 primarily due to sales, paydowns, and maturities of illiquid trading assets. This is a result of continuing to manage down illiquid asset holdings where possible, as they are not part of our core business activities. Trading assets, net of trading liabilities, averaged $3.6 billion and $3.3 billion for the three months ended June 30, 2011 and 2010, respectively, and $3.6 billion and $3.0 billion for the six months ended June 30, 2011 and 2010. The increase in average trading balances is primarily a result of an increase in the TRS portfolio and growth in fixed income trading partially offset by reductions in illiquid asset holdings. Trading assets, net of trading liabilities, were $3.6 billion and $3.5 billion at June 30, 2011 and 2010, respectively.

Liquidity Risk

Liquidity risk is the risk of being unable to meet obligations as they come due at a reasonable funding cost. We mitigate this risk by structuring our balance sheet prudently and by maintaining diverse borrowing resources to fund potential cash needs. For example, we structure our balance sheet so that we fund less liquid assets, such as loans, with stable funding sources, such as retail and wholesale deposits, long-term debt, and capital. We primarily monitor and manage liquidity risk at the Parent Company and Bank levels as the non-bank subsidiaries are relatively small and these subsidiaries ultimately rely upon the Parent Company as a source of liquidity.

The Bank’s primary liquid assets consist of excess reserves and free and liquid securities in its investment portfolio. The Bank manages its investment portfolio primarily as a source of liquidity, maintaining the strong majority of its securities in liquid and high-grade asset classes such as agency MBS, agency debt, and U.S. Treasury securities. As of June 30, 2011, the Bank’s AFS investment portfolio contained $24.6 billion of securities, of which approximately 90% consisted of agency MBS, agency debt, and U.S. Treasury securities.

We manage the Parent Company to maintain most of its liquid assets in cash. Unlike the Bank, it is not typical for the Parent Company to maintain a liquid securities portfolio, although the Parent Company invested approximately $5 billion of cash in a portfolio of U.S. Treasury securities during 2010 and the first quarter of 2011 prior to retiring its TARP preferred securities. We manage the Parent Company cash balance to provide sufficient liquidity to fund all forecasted obligations (primarily debt and capital related) for an extended period of months in accordance with Company risk limits.

We assess liquidity needs in both the normal course of business and times of unusual events, considering both on and off-balance sheet arrangements and commitments that may impact liquidity in certain business environments. We have contingency funding plans that assess liquidity needs that may arise from certain stress events such as credit rating downgrades, severe economic recessions, and financial market disruptions. Our contingency plans also provide for continuous monitoring of net borrowed funds dependence and available sources of contingent liquidity. These sources of contingent liquidity include available cash reserves; the ability to sell, pledge, or borrow against unencumbered securities in the Bank’s investment portfolio; capacity to borrow from the FHLB system; and the capacity to borrow at the Federal Reserve discount window. The table below presents period-end and average balances from these four sources as of and for the six months ended June 30, 2011 and 2010, which we believe exceeds any contingent liquidity needs.


Contingent Liquidity Sources		Table 15

June 30, 2011

June 30, 2010

(Dollars in billions)

As of

Average for the
Six Months Ended ¹

As of

Average for the
Six Months Ended ¹

Excess reserves

$3.1

$3.0

$1.5

$2.6

Free and liquid investment portfolio securities

18.3

17.8

18.3

17.1

FHLB borrowing capacity

12.5

12.9

8.9

7.7

Discount window borrowing capacity

14.5

13.3

11.6

11.7

Total

$48.4

$47.0

$40.3

$39.1

¹ Average based upon month-end data, except excess reserves, which is based upon a daily average.

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Uses of Funds. Our primary uses of funds include the extension of loans and credit, the purchase of investment securities, working capital, and debt and capital service. In addition, contingent uses of funds may arise from events such as financial market disruptions or credit rating downgrades. Factors that affect our credit ratings include, but are not limited to, the credit risk profile of our assets, the adequacy of our ALLL, the level and stability of our earnings, the liquidity profile of both the Bank and the Parent Company, the economic environment, and the adequacy of our capital base. As of June 30, 2011, Moody’s, Standard & Poor’s, and DBRS all maintained a “Stable” outlook on our credit ratings, while Fitch maintained a “Positive” outlook, citing improved credit and earnings trends. Future credit rating downgrades are possible, although not currently anticipated given the “Stable” and “Positive” credit rating outlooks.

Debt Credit Ratings and Outlook

As of June 30, 2011


	Moody’s	S&P	Fitch	DBRS
SunTrust Banks, Inc.
Short-term	P-2	A-2	F2	R-1 (low)
Senior long-term	Baa1	BBB	BBB+	A (low)
SunTrust Bank
Short-term	P-2	A-2	F2	R-1 (low)
Senior long-term	A3	BBB+	BBB+	A

Outlook	Stable	Stable	Positive	Stable

The Bank and the Parent Company borrow in the money markets using instruments such as Fed funds, Eurodollars, and CP. As of June 30, 2011, the Parent Company had no CP outstanding and the Bank retained a material cash position in the form of excess reserves in its Federal Reserve account. In the absence of robust loan demand, we have chosen to deploy some of this excess liquidity to purchase and retire certain high-cost debt securities or other borrowings. During the six months ended June 30, 2011, pursuant to a capital plan submitted to the Federal Reserve, we repurchased high-cost Tier 1 capital securities, including $4.9 billion of our Series C and Series D Fixed Rate Cumulative Preferred stock issued to the U.S. Treasury under the TARP’s CPP. Despite these transactions, the Parent Company retains a material cash position, in accordance with Company policies and risk limits discussed in greater detail below.

Sources of Funds. Our primary source of funds is a large, stable retail deposit base. Core deposits, primarily gathered from our retail branch network, are our largest and most cost-effective source of funding. Core deposits totaled $121.7 billion as of June 30, 2011, up from $120.0 billion as of December 31, 2010.

We also maintain access to a diversified collection of wholesale funding sources. These uncommitted sources include Fed funds purchased from other banks, securities sold under agreements to repurchase, negotiable CDs, offshore deposits, FHLB advances, Global Bank Notes, and CP. Aggregate wholesale funding totaled $22.7 billion as of June 30, 2011, down slightly from $22.9 billion as of December 31, 2010. In total, the Bank and Parent Company have approximately $3.2 billion of wholesale funding maturing during the second half of 2011. Approximately $852 million of wholesale debt matured during the six months ended June 30, 2011 and was redeemed at par. Net short-term unsecured borrowings, which includes wholesale domestic and foreign deposits and Fed funds purchased, totaled $6.8 billion as of June 30, 2011, down from $7.1 billion as of December 31, 2010.

We also have access to wholesale liquidity via the capital markets. The Parent Company maintains an SEC shelf registration statement from which it may issue senior or subordinated notes and various capital securities such as common or preferred stock. Our Board has authorized outstanding issuance of up to $5.0 billion of such securities, of which approximately $3.0 billion of issuance capacity remains available. The Bank also maintains a Global Bank Note program under which it may issue senior or subordinated debt with various terms. As of June 30, 2011, the Bank had capacity to issue $33.7 billion of notes under the Global Bank Note program. Borrowings under these programs are designed to appeal primarily to domestic and international institutional investors. Institutional investor demand for these securities is dependent upon numerous factors, including but not limited to our credit ratings and investor perception of financial market conditions and the health of the banking sector. Our capacity under these programs refers to authorization granted by our Board, and does not refer to a commitment to purchase by any investor.

Parent Company Liquidity. Our primary measure of Parent Company liquidity is the length of time the Parent Company can meet its existing obligations using its present balance of cash and liquid securities without the support of dividends from the Bank or new debt issuance. In accordance with risk limits established by ALCO and the Board, we manage the Parent Company’s liquidity by structuring its maturity schedule to minimize the amount of debt maturing within a short period of time. Through the second quarter of 2011, we had no Parent Company debt that matured, and none is scheduled to mature during the remainder of 2011. Approximately $1.0 billion of Parent Company debt is scheduled to mature in 2012. Much of the Parent Company’s liabilities are long-term in nature, coming from the proceeds of our capital securities and long-term senior and subordinated notes.

103

The primary uses of Parent Company liquidity include debt service, dividends on capital instruments, the periodic purchase of investment securities, and loans to our subsidiaries. We fund corporate dividends primarily with dividends from our banking subsidiary. We are subject to both state and federal banking regulations that limit our ability to pay common stock dividends in certain circumstances.

Recent Developments. Numerous legislative and regulatory proposals currently outstanding may have an effect on our liquidity if they become effective, the potential impact of which cannot be presently quantified. However, we believe that we will be well positioned to comply with new standards as they become effective as a result of our strong core banking franchise and conservative liquidity management practices. See discussion of certain current legislative and regulatory proposals within the “Executive Overview” section of this MD&A.

Other Liquidity Considerations. As detailed in Table 16, we had an aggregate potential obligation of $60.8 billion to our clients in unused lines of credit at June 30, 2011. Commitments to extend credit are arrangements to lend to clients who have complied with predetermined contractual obligations. We also had $5.5 billion in letters of credit as of June 30, 2011, most of which are standby letters of credit, which require that we provide funding if certain future events occur. Approximately $3.4 billion of these letters as of June 30, 2011 supported variable rate demand obligations.


Unfunded Lending Commitments		Table 16


(Dollars in millions)	June 30, 2011		December 31, 2010
Unused lines of credit
Commercial		$34,533		$34,363
Mortgage commitments ¹		7,230		9,159
Home equity lines		13,245		13,557
Commercial real estate		1,415		1,579
CP conduit		895		1,091
Credit card		3,514		3,561

Total unused lines of credit		$60,832		$63,310


Letters of credit
Financial standby		$5,353		$6,263
Performance standby		88		108
Commercial		60		68

Total letters of credit		$5,501		$6,439

¹ Includes $2.8 billion and $4.2 billion in IRLCs accounted for as derivatives as of June 30, 2011 and December 31, 2010, respectively.

As of June 30, 2011, our cumulative UTBs amounted to $99 million. The gross liability for interest related to UTBs was $20 million as of June 30, 2011. These UTBs represent the difference between tax positions taken or expected to be taken in our tax returns and the benefits recognized and measured in accordance with the relevant accounting guidance for income taxes. The UTBs are based on various tax positions in several jurisdictions and, if taxes related to these positions are ultimately paid, the payments would be made from our normal, operating cash flows, likely over multiple years.

Other Market Risk

Except as discussed below, there have been no other significant changes to other market risk as described in our Annual Report on Form 10-K for the year ended December 31, 2010.

MSRs, which are carried at fair value, totaled $1.4 billion as of June 30, 2011 and December 31, 2010, and are managed within established risk limits and are monitored as part of various governance processes. For the three and six months ended June 30, 2011, we originated MSRs with fair values at the time of origination of $47 million and $136 million, respectively. For the three and six months ended June 30, 2010, we originated MSRs with fair values at the time of origination of $67 million and $134 million, respectively. We recorded decreases of $162 million and $145 million in the fair value of our MSRs for the three and six months ended June 30, 2011, respectively. We recorded decreases of $411 million and $520 million in the fair value of our MSRs for the three and six months ended June 30, 2010, respectively. Increases or decrease in fair value include the decay resulting from the realization of expected monthly net servicing cash flows.

104

For the three and six months ended June 30, 2011, we recorded losses related to MSRs of $29 million and $54 million (including decay of $41 million and $94 million), respectively, inclusive of the mark to market adjustments on the related hedges. For the three and six months ended June 30, 2010, we recorded losses related to MSRs of $19 million and $52 million (including decay of $54 million and $118 million), respectively, inclusive of the mark to market adjustments on the related hedges. We continue to evaluate the impact that the Consent Order may have, and we currently do not expect the impact to be material unless third party price indications reflect lower market valuations.

OFF-BALANCE SHEET ARRANGEMENTS

See discussion of off-balance sheet arrangements in Note 6, “Certain Transfers of Financial Assets and Variable Interest Entities,” and Note 13, “Reinsurance Arrangements and Guarantees,” to the Consolidated Financial Statements in this Form 10-Q.

CONTRACTUAL COMMITMENTS

In the normal course of business, we enter into certain contractual obligations, including obligations to make future payments on debt and lease arrangements, contractual commitments for capital expenditures, and service contracts. Except as noted within the “Long-Term Debt” section of this MD&A, there have been no significant changes in our Contractual Commitments as described in our Annual Report on Form 10-K for the year ended December 31, 2010.

105

BUSINESS SEGMENTS

The following table for our reportable business segments compares net income/(loss) for the three and six months ended June 30, 2011 to the same periods in 2010:


Net Income/(Loss) by Segment		Table 17


	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2011		2010		2011		2010
Retail Banking		$39		$39		$68		$37
Diversified Commercial Banking		56		40		122		85
CRE		(82)		(86)		(159)		(127)
CIB		103		67		196		104
Mortgage		(147)		(228)		(312)		(541)
W&IM		37		36		75		62
Corporate Other and Treasury		124		134		269		248
Reconciling Items		48		10		99		(17)

The following table for our reportable business segments compares average loans and average deposits for the three and six month periods ended June 30, 2011 to the same periods in 2010:


Average Loans and Deposits by Segment		Table 18

Three Months Ended June 30

Average Loans

Average Consumer and Commercial Deposits

(Dollars in millions)

2011

2010

2011

2010

Retail Banking

$35,021

$32,740

$77,372

$75,502

Diversified Commercial Banking

22,649

22,457

18,955

18,162

CRE

7,354

10,185

1,520

1,609

CIB

13,338

10,762

8,241

6,663

Mortgage

28,822

28,662

2,695

2,749

W&IM

7,522

8,072

12,148

11,070

Corporate Other and Treasury

253

200

1,000

802

Six Months Ended June 30

Average Loans

Average Consumer and Commercial Deposits

2011

2010

2011

2010

Retail Banking

$35,176

$32,689

$76,640

$74,681

Diversified Commercial Banking

22,585

22,596

19,064

18,731

CRE

7,654

10,501

1,475

1,679

CIB

12,783

10,871

8,110

6,334

Mortgage

29,067

28,773

2,838

2,597

W&IM

7,567

8,070

12,227

11,052

Corporate Other and Treasury

245

257

986

809

See Note 15, “Business Segment Reporting,” to the Consolidated Financial Statements in this Form 10-Q for additional discussion of our segment structure, basis of presentation and internal management reporting methodologies.

BUSINESS SEGMENT RESULTS

Six Months Ended June 30, 2011 vs. 2010

Retail Banking

Retail Banking reported net income of $68 million for the six months ended June 30, 2011, an increase of $31 million, or 84%, compared to the same period in 2010. The increase in net income was primarily due to lower provision for credit losses and higher net interest income that was partially offset by lower noninterest income and higher noninterest expense.

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Net interest income was $1.3 billion, an increase of $19 million, or 2%, from the same period in 2010. The increase was driven by the benefits derived from higher average loan balances and spreads and higher average deposit balances partially offset by the impact of lower deposit spreads. Average loan balances increased $2.5 billion, or 8%. Indirect installment loans increased $2.7 billion, driven by organic indirect auto production and by the acquisition of $1.7 billion of consumer auto loans in the third and fourth quarters of 2010. Additional growth was the result of the purchase of $1.5 billion of guaranteed student loans during the past twelve months. Partially offsetting those increases were decreases in home equity lines, residential mortgages, and business banking loans. Loan-related net interest income increased $44 million, or 10%, compared to the prior year driven by increased loan volume and higher loan spreads. Average deposit balances increased $2.0 billion, or 3%. Favorable deposit mix trends continued as low cost average deposit balances increased, offsetting a $3.5 billion, or 16%, decline in average time deposits. Deposit-related net interest income decreased $33 million, or 4%, as the value of deposits fell in the current interest rate environment.

Provision for credit losses was $413 million, a decrease of $122 million, or 23%, over the same period in 2010 primarily driven by declines of $54 million in home equity line, $21 million in commercial, $20 million in credit card, and $18 million in residential mortgage loan net charge-offs.

Total noninterest income was $544 million, a decrease of $34 million, or 6%, compared to the same period in 2010. Service charges on deposits decreased $66 million, or 21%, driven by lower NSF/overdraft fees resulting from Regulation E changes. Those decreases were partially offset by higher interchange and ATM card fees, which increased a combined $29 million, or 13%, primarily due to increased transaction volume and households.

Total noninterest expense was $1.3 billion, up $56 million, or 5%, compared to the same period in 2010. The increase was primarily driven by increases in other real estate, marketing and advertising, and shared corporate expenses primarily in technology and operational areas.

Diversified Commercial Banking

Diversified Commercial Banking reported net income of $122 million for the six months ended June 30, 2011, an increase of $37 million, or 44%, compared to the same period in 2010. The increase in net income was attributable to a decrease in provision for credit losses and an increase in total revenue.

Net interest income was $344 million, a $28 million, or 9%, increase from the same period in 2010. Average loan balances were relatively flat to prior year. However, the mix of the portfolio changed as an increase in commercial loans was offset by decreases in leasing and commercial real estate loans. Loan-related net interest income increased $26 million, or 13%, compared to the same period in 2010 due to increased loan spreads. Average deposit balances increased $333 million, or 2%, from the same period in 2010. Favorable trends in deposit mix continued as higher cost time deposits declined $534 million, or 40%, while lower cost commercial demand deposits increased $1.2 billion, or 19%. NOW and money market combined average balances decreased $351 million, or 3%. Deposit-related net interest income decreased $3 million, or 2%, due to a modest decrease in overall deposit spreads.

Provision for credit losses was $38 million, a decrease of $26 million, or 41%, from the prior year. The decrease was primarily driven by lower net charge-offs in commercial real estate loans, commercial loans, leasing and consumer mortgages partly offset by higher net charge-offs in tax-exempt loans.

Total noninterest income was $122 million, an increase of $13 million, or 12%, from the prior year driven primarily by leasing revenue.

Total noninterest expense was $235 million, up $7 million, or 3%, from the prior year as lower credit-related expenses were offset with higher overhead and staff expenses.

Commercial Real Estate

CRE reported a net loss of $159 million for the six months ended June 30, 2011, compared to a net loss of $127 million for the same period in 2010. The increase in net loss was primarily due to higher provision for credit losses.

Net interest income was $72 million, a $13 million, or 15%, decline from the same period in 2010. Average loan balances declined $2.8 billion, or 27%, largely resulting from a $2.4 billion decrease in commercial real estate loans. Loan-related net interest income decreased $15 million, or 19%, as the decrease in average balances more than offset higher loan spreads. Average deposit balances declined $204 million, or 12%, driven by a $150 million decrease in money market accounts and a $43 million decrease in demand deposits. Deposit-related net interest income declined from prior year by $4 million, or 17%, primarily attributable to decreased average balances and lower deposit spreads.

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Provision for credit losses was $219 million, an increase of $31 million, or 16%, over the same period in 2010. The increase was predominantly driven by higher net charge-offs of residential construction and development and commercial real estate loans.

Total noninterest income was $48 million, an increase of $8 million, or 20%, from the same period in 2010. The increase was primarily due to sales and mark-to-market gains related to loans carried at fair value and higher income related to Affordable Housing.

Total noninterest expense was $217 million, an increase of $14 million, or 7%, over the same period in 2010. The increase was primarily driven by higher other real estate expenses.

Corporate and Investment Banking

CIB’s net income for the six months ended June 30, 2011 was $196 million, an increase of $92 million, or 88%, compared to the same period in 2010. The increase was driven by higher total revenues and a decline in provision for credit losses, which were partially offset by an increase in noninterest expense.

Net interest income was $238 million, an increase of $60 million, or 34%, from the prior year. The increase was primarily driven by a $1.9 billion, or 18%, increase in average loan balances. The increase in loan balances was largely the result of a $0.9 billion increase in Three Pillars, our CP conduit, and a $0.3 billion increase in asset based lending loans. Line of credit utilization rates are slightly down versus prior year although offset by term loan growth. The increase in average loan balances, as well as higher loan spreads, resulted in a $49 million, or 44%, increase in loan-related net interest income. Total average customer deposits increased $1.8 billion, or 28%, with growth concentrated in money market accounts, demand deposits, and NOW accounts. Higher deposit volumes mitigated the impact of lower deposits spreads which resulted in increased net interest income of $10 million.

Provision for credit losses was $3 million, as net charge-offs declined $33 million, or 92%, from the prior year. Lower net charge-offs related to large corporate borrowers operating in economically sensitive industries.

Total noninterest income was $370 million, an increase of $115 million, or 45%, over the prior year. The increase is primarily due to improved performance in loan syndications, equity underwritings and bond originations, as well as lower loss contingency reserves related to the deterioration of collateral on previously securitized loans and higher merchant banking gains.

Total noninterest expense was $295 million, an increase of $63 million, or 27%, over the prior year. The increase was primarily due to higher staff expense related to increased revenue generation and higher credit-related expenses.

Mortgage

Mortgage reported a net loss of $312 million for the six months ended June 30, 2011, an improvement of $229 million, or 42%, compared to the same period in 2010. The improvement was driven by lower provision for credit losses, lower mortgage repurchase provision, and higher net interest income that was partially offset by reduced mortgage production income due to lower loan volume and higher noninterest expense.

Net interest income was $241 million, up $33 million, or 16%, over the prior year. The increase was primarily due to higher net interest income on loans, which increased $35 million, or 27%, principally due to improved spreads. Total average loans, primarily residential mortgages, were up $294 million, or 1%.

Provision for credit losses was $376 million, a decrease of $315 million, or 46%, from the same period in 2010. The decline was driven by a $241 million decline in residential mortgage loan charge-offs, in addition to a decline in other residential related construction net charge-offs. Net charge-offs in 2011 included charge-offs of $10 million related to $57 million of NPLs transferred to LHFS compared to $51 million in charge-offs in 2010 related to a larger NPL transfer.

Total noninterest income was $156 million, up $31 million, or 25%, compared with the same period in 2010. The increase was principally due to higher production income, which was up $51 million. The improvement was primarily due to lower mortgage repurchase provision, which declined $106 million, or 39%, that was partially offset by reduced income as a result of lower mortgage production. Loan originations were $10.4 billion for the first six months of 2011, compared to $12.6 billion for the same period in the prior year, a 17% decrease. Servicing income of $144 million was down $14 million, or 9%, principally due to lower service fees resulting from a reduction in the total loans serviced. At June 30, 2011, total loans serviced were $162.9 billion compared with $177.8 billion at June 30, 2010, a decline of 8%.

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Total noninterest expense was $528 million, an increase of $14 million, or 3%, over the prior year. The increase was due to higher staff expenses.

Wealth and Investment Management

W&IM’s net income for the six months ended June 30, 2011 was $75 million, an increase of $13 million, or 21%, compared to the same period in 2010. The increase in net income was primarily due to higher trust and retail investment income and net interest income partially offset by an increase in noninterest expense.

Net interest income was $204 million, an increase of $17 million, or 9%, over the prior year driven mostly by deposit-related net interest income. Average loan balances declined $503 million, or 6%, with decreases primarily in consumer direct, commercial real estate, and residential mortgages. However, loan-related net interest income increased $2 million, or 3%, as higher loan spreads more than offset the decrease in average loan balances. Average customer deposits increased $1.2 billion, or 11%, as money market accounts increased $1.6 billion, or 44% and average demand deposits increased $311 million, or 16%. Average time deposits decreased $470 million, or 33%, and NOW accounts decreased $202 million, or 5%. Deposit-related net interest income increased $13 million, or 11%, due to the combination of higher average balances and improved deposit spreads driven by deposit mix.

Provision for credit losses was $28 million, a decrease of $1 million, or 3%, over the prior year primarily due to decreased consumer and commercial loan net charge-offs.

Total noninterest income was $423 million, an increase of $41 million, or 11%, over the prior year. Trust income increased $20 million, or 8%, primarily due to higher market valuations on managed equity assets and higher revenue from our RidgeWorth mutual fund complex. Retail Investment income increased $22 million, or 23%, driven by increased recurring brokerage revenue and annuity income.

As of June 30, 2011, assets under management were approximately $104.7 billion compared to $116.1 billion as of June 30, 2010. Assets under management include individually managed assets, the RidgeWorth Funds, managed institutional assets, and participant-directed retirement accounts. The June 30, 2010 assets under management included approximately $16 billion of money market mutual fund assets that transferred to a third-party during the latter part of 2010. SunTrust’s total assets under advisement were approximately $201.0 billion, which includes $104.7 billion in assets under management, $49.9 billion in non-managed trust assets, $35.8 billion in retail brokerage assets, and $10.6 billion in non-managed corporate trust assets.

Total noninterest expense was $477 million, an increase of $36 million, or 8%, over the prior year. The increase was primarily driven by staff expense due to higher compensation associated with revenue growth, as well as increases in structural expense, other real estate expense, and allocated administrative expenses.

Corporate Other and Treasury

Corporate Other and Treasury’s net income for the six months ended June 30, 2011 was $269 million, an increase of $21 million, or 8%, compared to the same period in 2010. The increase was primarily due to increased net interest income and lower losses from the extinguishment of debt.

Net interest income was $277 million, an increase of $38 million, or 16%, compared to the same period in 2010. The increase was mainly due to the interest rate environment and balance sheet risk management strategies. Total average assets decreased $841 million, or 3%, primarily due to a reduction in investment securities. Total average deposits remained consistent with the prior year. Average long-term debt decreased by $3.6 billion, or 22%, compared to last year as we repaid FHLB advances and senior and subordinated bank debt in conjunction with strong consumer and commercial deposit growth.

Total noninterest income was $151 million, a decrease of $17 million, or 10%, compared to the same period in 2010. The decrease was mainly due to less favorable mark-to-market valuations on our public debt carried at fair value partially offset by a $36 million increase in gains of the sale of investment securities.

Total noninterest expense decreased $37 million compared to the same period in 2010. The decrease is mainly due to FHLB debt termination losses in 2010.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Market Risk Management” in the MD&A, which is incorporated herein by reference.

Item 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

The Company conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, 2011. The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2011. However, the Company believes that a controls system, no matter how well designed and operated, cannot provide absolute assurance, but can provide reasonable assurance, that the objectives of the controls system are met and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in internal control over financial reporting

There have been no changes to the Company’s internal control over financial reporting that occurred during the quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to numerous claims and lawsuits arising in the normal course of its business activities, some of which involve claims for substantial amounts. Although the ultimate outcome of these suits cannot be ascertained at this time, it is the opinion of management that none of these matters, when resolved, will have a material effect on the Company’s consolidated results of operations, cash flows, or financial condition. For additional information, see Note 14, “Contingencies,” to the Consolidated Financial Statements in this Form 10-Q, which is incorporated into this Item 1 by reference.

Item 1A.

RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010, and in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2011, which could materially affect our business, financial condition or future results. The risks described in this report, in our Annual Report on Form 10-K, and in our Quarterly Report on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Additionally, we delete three existing risk factors. First, we delete the existing risk factors “ Recently enacted legislation, legislation enacted in the future, and certain proposed federal programs subject us to increased regulation and may adversely affect us,” and “ We have not yet received permission to repay TARP funds,” to reflect the substantial implementation of most expected legislation and regulatory actions, and to reflect our repayment of TARP. We also delete the existing risk factor “SunTrust Bank may be subject to higher deposit insurance assessment” following the publication by the FDIC of its final rule.

Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

SunTrust did not repurchase any shares of its common stock or Series A Preferred Stock Depositary Shares during the six month period ended June 30, 2011.

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Item 3.

DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.

(REMOVED AND RESERVED)

Item 5.

OTHER INFORMATION

(a) On August, 8, 2011, the Registrant’s Board adopted amended and restated bylaws (the “Bylaws”) which are filed as Exhibit 3.2 to this report and which are incorporated by reference herein. The foregoing summary description of the amendments is qualified in its entirety by reference to the Bylaws. The Bylaws include a new Article I, Section 7 which states the common law proposition that the Chairman of the Meeting has the power to rule business out of order. Article I, Section 8 was amended to expand the disclosure requirements applicable to shareholders seeking to bring other business before a meeting of shareholders. This is intended to elicit information that might bear on the shareholder’s independence or motivations and which might be of interest to other shareholders or which might be required to be included in a proxy statement related to the meeting of shareholders. The bylaw as amended also clarifies that the person proposing business must be a record shareholder both at the time of providing notice and at the time of the meeting. The amended bylaw makes clear that notice may not be provided earlier than 150 days before the anniversary of the date on which SunTrust first mailed its proxy materials for the preceding year’s meeting; previously the bylaw required only that notice be provided more than 120 days before, but did not limit how early notice could be provided. Article II, Section 2 was updated to reflect the fact that all directors are elected annually and to delete language that was necessary when the Company transitioned from a board whose directors were elected with staggered, three-year terms to a board whose directors are elected annually for one-year terms. Article II, Section 3 was amended in ways similar to Article I, Section 8 to expand the disclosure requirements applicable to shareholders who make director nominations. This elicits information that might bear on the shareholder’s or nominee’s independence or motivations and which information might be of interest to other shareholders or which might be required to be included in a proxy statement related to the meeting of shareholders. The amended bylaw also requires disclosure of financial relationships between the person making the nomination and any beneficial owner on whose behalf the nomination is made, and their respective affiliates, and more clearly requires the nominee to furnish a customary questionnaire and to provide other information. The amended bylaw also clarifies that the person making the nomination must be a record shareholder both at the time of providing notice and at the time of the meeting. This bylaw also has been amended to make clear that notice may not be provided earlier than 150 days before the anniversary of the date on which SunTrust first mailed its proxy materials for the preceding year’s meeting.

(b) The information in Part II, Item 5(a) is incorporated herein by reference.

Item 6.

EXHIBITS


Exhibit	Description	Sequential Page Number

3.1	Amended and Restated Articles of Incorporation of the Registrant, restated effective January 16, 2009, incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed January 22, 2009.	*

3.2	Bylaws of the Registrant, as amended and restated on August 8, 2011.	(filed herewith)

10.1	Form of Director Restricted Stock Award Agreement under the SunTrust Banks, Inc. 2009 Stock Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 27, 2011.	*

10.2	Form of Director Restricted Stock Unit Award Agreement under the SunTrust Banks, Inc. 2009 Stock Plan, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 27, 2011.	*

10.3	Form of TSR Performance-Vested Restricted Stock Unit Award Agreement under the SunTrust Banks, Inc. 2009 Stock Plan, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A filed April 27, 2011.	*

10.4	Form of Tier 1 Capital Performance-Vested Restricted Stock Unit Award Agreement under the SunTrust Banks, Inc. 2009 Stock Plan, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 4, 2011.	*

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10.5	Form of Pro-Rata Nonqualified Stock Option Award Agreement under the SunTrust Banks, Inc. 2009 Stock Plan, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed April 4, 2011.	*

10.6	SunTrust Banks, Inc. 2009 Stock Plan, as amended and approved by the shareholders April 26, 2011, incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement filed March 8, 2011.	*

10.7	SunTrust Banks, Inc. Supplemental Executive Retirement Plan, amended and restated as of January 1, 2011.	(filed herewith)

10.8	SunTrust Banks, Inc. ERISA Excess Retirement Plan, amended and restated effective as of January 1, 2011.	(filed herewith)

10.9	SunTrust Restoration Plan, amended and restated effective May 31, 2011.	(filed herewith)

10.10	SunTrust Banks, Inc. Deferred Compensation Plan, amended and restated effective as of May 31, 2011.	(filed herewith)

10.11	Consent order dated April 13, 2011 by and among the Board of Governors of the Federal Reserve System, SunTrust Banks, Inc.; SunTrust Bank; and SunTrust Mortgage, Inc.	(filed herewith)

31.1	Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(filed herewith)

31.2	Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	(filed herewith)

32.1	Certification of principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(filed herewith)

32.2	Certification of principal financial officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	(filed herewith)

101.1	Interactive Data File.	(filed herewith)

* incorporated by reference.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized this 9th day of August, 2011.

SunTrust Banks, Inc.

(Registrant)

/s/ Thomas E. Panther

Thomas E. Panther

Senior Vice President and Controller

(On behalf of the Registrant and as Principal

Accounting Officer)

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Exhibit 3.2

SUNTRUST BANKS, INC.

BYLAWS

(as Amended and Restated August 8, 2011)

ARTICLE I

SHAREHOLDERS

SECTION 1. Annual Meeting. The annual meeting of the shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held at such place, on such date and at such time as the Board of Directors may by resolution provide. If the Board of Directors fails to provide such date and time, then such meeting shall be held at the corporate headquarters at 9:30 A.M. local time on the third Tuesday in April of each year, or, if such date is a legal holiday, on the next succeeding business day. The Board of Directors may specify by resolution prior to any special meeting of shareholders held within the year that such meeting shall be in lieu of the annual meeting.

SECTION 2. Special Meeting; Call of Meetings. Special meetings of the shareholders may be called at any time by the Board of Directors, the Chairman of the Board or the President. In addition, subject to the provisions of this Section 2, special meetings of the shareholders shall be called by the Board of Directors if the holders of more than fifty percent (50%) of the outstanding common stock of the Corporation sign, date and deliver to the Corporation one (1) or more written demands for the meeting describing the purpose or purposes for which it is to be held. A special meeting shall be held at such time and place, either within or without the State of Georgia, as is designated in the call of the meeting by the Board of Directors, the Chairman of the Board or the President; provided that in the case of a special meeting of the shareholders that is called at the demand of the shareholders pursuant to the second sentence of this Section 2, the time of such meeting shall not be less than ninety (90) nor more than one hundred twenty (120) days after the receipt and determination of the validity of such demand. The Board of Directors shall fix the record date (which shall be a future date) for a special meeting.

If a special meeting is to be called by the Board of Directors pursuant to demands delivered by the holders of more than fifty percent (50%) of the outstanding common stock of the Corporation, then, within twenty (20) days after the date on which demands are received representing more than 50% of the outstanding common stock of the Corporation, the Board of Directors shall fix the record date for such special meeting. If no record date has been fixed by the Board of Directors within twenty (20) days of the date on which demands are received representing more than 50% of the outstanding common stock of the Corporation, the record date for the special meeting shall be the thirtieth (30 ^th ) day after the date on which such demands were received.

Any shareholder of record seeking to join with other shareholders in demanding a special meeting shall, by written notice to the Corporation, request the Board of Directors to fix a record date to determine the shareholders entitled to demand a special meeting. The Board of Directors shall promptly, but in all events within fifteen (15) days after the date on which such request is received, adopt a resolution fixing the record date to determine the shareholders entitled to demand a special meeting, which record date shall not exceed thirty (30) days from the date on which the request was received. If no record date has been fixed by the Board of Directors within fifteen (15) days of the date on which such a request is received, the record date for the determination of shareholders entitled to demand a special meeting shall be the thirtieth (30 ^th ) day after the date on which such request was received.

SECTION 3. Notice of Meetings. Written notice of each meeting of shareholders, stating the place, day and hour of the meeting, and the purpose or purposes for which the meeting is called if a special meeting, shall be mailed to each shareholder entitled to vote at or to notice of such meeting at his address shown on the books of the Corporation not less than ten (10) nor more than sixty (60) days prior to such meeting unless such shareholder waives notice of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the records of shareholders of the Corporation, with postage thereon prepaid. Any shareholder may execute a waiver of notice, in person or by proxy, either before or after any meeting, and shall be deemed to have waived notice if he is present at such meeting in person or by proxy. Neither the business transacted at, nor the purpose of, any meeting need be stated in a waiver of notice of such meeting. Notice of any meeting may be given by the Chairman of the Board, President, the Corporate Secretary or any Assistant Secretary. No notice need be given of the time and place of reconvening of any adjourned meeting, if the time and place to which the meeting is adjourned are announced at the adjourned meeting.

SECTION 4. Quorum; Required Shareholder Vote. Each outstanding share of common stock of the Corporation is entitled to one vote on each matter submitted to a vote. A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of the shareholders. If a quorum is present, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action, unless a different vote is required by law, the Articles of Incorporation or these Bylaws (including Article II, Section 2 of these Bylaws). When a quorum is once present to organize a meeting, the shareholders present may continue to do business at the meeting or at any adjournment thereof (unless a new record date is or must be set for the adjourned meeting) notwithstanding the withdrawal of enough shareholders to leave less than a quorum, and the holders of a majority of the voting shares present at such meeting shall be the act of the shareholders unless a different vote is required by law, the Articles of Incorporation or these Bylaws. The Board of Directors, the Chairman of the Board, the President, or the holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.

SECTION 5. Proxies. A shareholder may vote either in person or by proxy. A shareholder may appoint a proxy: (i) by executing a written document, which may be accomplished by any reasonable means, including facsimile transmission; (ii) orally, which may be by telephone; or (iii) by any other form of electronic communication. No proxy shall be valid for more than eleven (11) months after the date of such appointment, unless, in the case of a written proxy, a longer period is expressly provided for in the written document. An electronic transmission must contain or be accompanied by information from which it can be determined that the shareholder, the shareholder’s agent or the shareholder’s attorney in fact authorized the electronic transmission.

SECTION 6. Inspectors of Election; Opening and Closing the Polls. The Board of Directors by resolution shall have the sole authority, except as provided in this Section 6, to appoint one or more inspectors of election, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of shareholders and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of shareholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall have the duties prescribed by law. The chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at a meeting.

Section 7. Order of Business. At any annual or special meeting of the shareholders, only such nominations of persons for election to the Board of Directors shall be made, and only such other business shall be conducted or considered, as shall have been properly brought before the meeting. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the Chairman of the meeting shall have the power to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with these

Bylaws and, if any proposed nomination or other business is not in compliance with these Bylaws, to declare that no action shall be taken on such nomination or other proposal and such nomination or other proposal shall be disregarded.

SECTION 8. Notice of Shareholder Proposals.

(A) To be properly brought before an annual meeting of the shareholders of the Corporation, proposals of other business must be: (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors; (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors; or (iii) otherwise properly requested to be brought before the annual meeting by a shareholder of the Corporation in accordance with these Bylaws. For proposals of other business to be properly requested by a shareholder to be made at an annual meeting, a shareholder must (i) be a shareholder of record at the time the shareholder gives notice of such business or proposal, (ii) be entitled to vote at such annual meeting, and (iii) comply with the procedures set forth in these Bylaws. The immediately preceding sentence shall be the exclusive means for a shareholder to bring other business proposals before an annual meeting of shareholders. To be properly brought before a special meeting of the shareholders of the Corporation, proposals of business must be (i) specified in the Corporation’s notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or (ii) otherwise properly brought before the special meeting, by or at the direction of the Board of Directors.

(B) For proposals of other business to be properly brought before an annual meeting by a shareholder, a shareholder must have given timely notice thereof in writing to the Corporate Secretary.

(i) To be timely, a shareholder’s notice for the annual meeting must actually be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than 150 days prior and not less than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders (the “ Anniversary ”), regardless of any postponements, deferrals or adjournments of that annual meeting to a later date; provided , however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Anniversary, then to be timely notice by the shareholder must be so delivered or received (a) no earlier than 150 days prior and not less than 120 days prior to the date of such annual meeting or (b) if the first public announcement of the date of such annual meeting is less than 130 days prior to the date of such annual meeting, no later than the 10th day following the day on which public announcement of the date of such annual meeting is first made by the Corporation.

(ii) In addition, to be timely, a shareholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the annual meeting and as of the date that is ten (10) business days prior to the annual meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the annual meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the annual meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the annual meeting or any adjournment or postponement thereof.

(C) A shareholder’s notice to the Corporate Secretary shall set forth as to each matter such shareholder proposes to bring before the annual meeting:

(i) a brief description of the business or proposal desired to be brought before the annual meeting and the reasons for conducting such business or considering such proposal at the meeting;

(ii) the name and address of such shareholder, as they appear on the Corporation’s books, of such

beneficial owner, if any, and of their respective affiliates or associates or others acting in concert therewith;

(iii) the text of the proposal or business (including the text of any resolutions proposed for consideration),

(iv) a complete description of the economic interests of the shareholder giving the notice, any beneficial owner on whose behalf the proposal is made, and any affiliates or associates or others acting in concert therewith, which description shall include with respect to each of them:

(a) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith;

(b) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, or any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of shares of the Corporation, through the delivery of cash or other property, or otherwise, and without regard of whether the shareholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right or any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith;

(c) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith has a right to vote any class or series of shares of the Corporation;

(d) any agreement, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any class or series of the shares of the Corporation (any of the foregoing, “Short Interests”);

(e) any rights to dividends on the shares of the Corporation owned beneficially by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith that are separated or separable from the underlying shares of the Corporation;

(f) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership;

(g) any performance related fees (other than an asset-based fee) that such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, including without limitation any such interests held by members of such shareholder’s immediate family sharing the same household;

(h) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the Corporation held by such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith;

(i) any direct or indirect interest of such shareholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement); and

(j) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder.

(D) Miscellaneous. For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the provisions of these Bylaws, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Bylaws; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to these Bylaws. Nothing in these Bylaws shall be deemed to affect any rights (i) of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Articles of Incorporation or these Bylaws. Subject to Rule 14a-8 and Rule 14a-11 under the Exchange Act, nothing in these Bylaws shall be construed to permit any shareholder, or give any shareholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

ARTICLE II

DIRECTORS

SECTION 1. Board of Directors. The Board of Directors shall manage the business and affairs of the Corporation and may exercise all of the powers of the Corporation subject to any restrictions imposed by law.

SECTION 2. Composition of the Board. The exact number of Directors constituting the Board of Directors of the Corporation shall be fixed from time to time solely by the Board of Directors by resolution. No decrease in the number of directors shall shorten the term of an incumbent Director. In the absence of the Board of Directors setting the number of Directors, the number shall be fifteen (15). Directors shall be elected for terms expiring at the next annual meeting of shareholders and shall hold office for the term for which elected and until his successor has been elected and qualified, or until his earlier retirement, resignation, removal from office, or death. In any uncontested election of Directors, a nominee for Director shall be elected to the Board of Directors if the votes cast for such nominee’s election at a meeting exceed the votes cast against such nominee’s election; provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of shareholders not involving an uncontested election of directors. If directors are to be elected by a plurality of the votes cast, shareholders shall not be permitted to vote against a nominee. For purposes of this Article II, Section 2, (a) the term “uncontested election of Directors” means an election in which the only nominees for election to the Board of Directors are persons nominated by the Board of Directors, and (b) the term “votes cast” includes votes to withhold authority in each case but excludes abstentions with respect to that Director’s election.

SECTION 3. Nomination of Directors.

(A) Nominations of persons for election to the Board of Directors of the Corporation may be made at an annual meeting of the shareholders by or at the direction of the Board of Directors or by any shareholder of the Corporation who (i) is a shareholder of record at the time the shareholder gives notice to the Corporation of such nomination, (ii) is entitled to vote at the annual meeting, and (iii) complies with the procedures set forth in these Bylaws as to such nomination. The immediately preceding sentence shall be the exclusive means for a shareholder to make nominations before an annual meeting of shareholders.

(B) Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting by or at the direction of the Board of Directors or (provided that the Board of Directors has determined that directors shall be elected at such meeting) by any shareholder of the Corporation who (i) is a shareholder of record at the time the shareholder gives notice to the Corporation of such nomination, (ii) is entitled to vote at the special meeting, and (iii) complies with the procedures set forth in these Bylaws as to such nomination. The immediately preceding sentence shall be the exclusive means for a shareholder to make nominations or other business proposals before a special meeting of shareholders.

(C) For a nomination (other than those made by or at the direction of the Board of Directors) to be properly brought before a meeting by a shareholder, a shareholder must give timely notice of the nomination in writing to the Corporate Secretary. To be timely, a shareholder’s notice for:

(i) the annual meeting must actually be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than 150 days prior and not less than 120 days prior to the first anniversary of the date on which the Corporation first mailed its proxy materials for the preceding year’s annual meeting of shareholders (the “ Anniversary ”), regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided , however, that if the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Anniversary, then to be timely notice by the shareholder must be so delivered or received (i) no earlier than 150 days prior and not less than 120 days prior to the date of such annual meeting or (ii) if the first public announcement of the date of such annual meeting is less than 130 days prior to the

date of such annual meeting, no later than the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation; and

(ii) a special meeting must actually be delivered to, or mailed and received at, the Secretary at the principal executive offices of the Corporation (i) not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or (ii) if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, no later than the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting, or the public announcement thereof, commence a new time period for the giving of a shareholder’s notice as described above.

In addition, to be timely, a shareholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.

(D) A shareholder’s notice of a nomination provided to the Corporate Secretary shall provide the following information:

(i) as to each person which such shareholder proposes to nominate for election or re-election as a director:

(a) the name, age, business address and residence address of the person;

(b) the principal occupation or employment of the person;

(c) the total number of shares that, to the knowledge of the notifying or nominating shareholder, will be voted for such person;

(d) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person;

(e) a signed written statement of the nominee attesting that, to their knowledge, they believe that they are qualified to serve as a director of the Corporation and of SunTrust Bank, and such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation and of SunTrust Bank; and

(f) all other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving, if elected, as a director of the Corporation and of SunTrust Bank).

(ii) the name and address of such shareholder, as they appear on the Corporation’s books, of such beneficial owner, if any, on whose behalf the nomination is made, and of their respective affiliates or associates or

others acting in concert therewith;

(iii) a complete description of the economic interests of the shareholder giving the notice, any beneficial owner on whose behalf the nomination or proposal is made, and any affiliates or associates or others acting in concert therewith, which description shall include with respect to each of them:

(j) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

(iv) As to each person, if any, whom the shareholder proposes to nominate for election or reelection to the Board of Directors, a shareholder’s notice must, in addition to the matters set forth in paragraph (a) above, also set forth a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and

(v) With respect to each person whom the shareholder proposes to nominate for election or reelection to the Board of Directors, a shareholder’s notice must, in addition to the matters set forth above, also include a completed and signed questionnaire, representation and agreement with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request), and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (a) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if

elected as a director of the Corporation, with such person’s fiduciary duties under applicable law; (b) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, (c) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation publicly disclosed from time to time; and (d) will abide by the requirements of any resignation policy in connection with majority voting, if applicable. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such nominee.

(E) No person shall be eligible for election as a director of the Corporation unless such person has been nominated in accordance with the procedures set forth herein. If the facts warrant, the chairman of the meeting shall determine and declare to the meeting that a nomination does not satisfy the requirements set forth in the preceding sentence and the defective nomination shall be disregarded.

(F) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the provisions of these Bylaws, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in these Bylaws; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to these Bylaws. Nothing in these Bylaws shall be deemed to affect any rights (i) of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act, or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Articles of Incorporation or these Bylaws. Subject to Rule 14a-8 and Rule 14a-11 under the Exchange Act, nothing in these Bylaws shall be construed to permit any shareholder, or give any shareholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

SECTION 4. Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding to fill director vacancies, vacancies resulting from retirement, resignation, removal from office (with or without cause), death or a vacancy resulting from an increase in the number of Directors comprising the Board, shall be filled by the Board of Directors. Any Director so elected shall hold office until the next annual meeting of shareholders. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director.

SECTION 5. Retirement. Each Director serving as an officer or employee of the Corporation or any of its direct or indirect subsidiaries shall cease to be a Director on the date of the annual meeting of shareholders coinciding with or first following the date of the first to occur while serving as a Director of (a) such Director’s 65th birthday, (b) the date of his termination of employment, (c) the date of his resignation from employment, or (d) the date of his retirement from employment. Each Director who is not an officer or employee of the Corporation or any of its direct or indirect subsidiaries shall cease to be a Director on the date of the annual meeting of shareholders coinciding with or first following such Director’s 72nd birthday.

SECTION 6. Removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any Director, or all Directors, may be removed from office at any time with or without cause, but only by the same

affirmative vote of the shareholders required to amend this Article II as provided in the Corporation’s Articles of Incorporation.

SECTION 7. Resignations. Any Director of the Corporation may resign at any time by giving written notice thereof to the Chairman of the Board, the President, or the Corporate Secretary. Such resignation shall take effect when delivered unless the notice specifies a later effective date; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

ARTICLE III

ACTION OF THE BOARD OF DIRECTORS; COMMITTEES

SECTION 1. Quorum; Vote Requirement. A majority of the Directors holding office shall constitute a quorum for the transaction of business; if a quorum is present, a vote of a majority of the Directors present at such time shall be the act of the Board of Directors, unless a greater vote is required by law, the Articles of Incorporation, or by these Bylaws.

SECTION 2. Executive Committee. There is hereby established an Executive Committee which shall consist of not less than four (4) Directors. The Board of Directors shall at the Board of Directors’ meeting immediately following the Corporation’s annual shareholders’ meeting, and may at such other time as the Board of Directors determines, elect the Directors who shall be members of the Executive Committee. The Executive Committee shall have and may exercise all the authority of the Board of Directors as permitted by law. The Board of Directors shall elect the Chairman of the Executive Committee who shall preside at all meetings of the Executive Committee and shall perform such other duties as may be designated by the Executive Committee. The Board of Directors may also elect one member of the Executive Committee as Vice Chairman of the Executive Committee who shall preside at Executive Committee meetings in the absence of the Chairman of the Executive Committee.

SECTION 3. Audit Committee. There is hereby established an Audit Committee which shall consist of not less than four (4) Directors. No Director who is an officer of the Corporation or any direct or indirect subsidiary of the Corporation shall be a member of the Audit Committee. The Board of Directors shall at the Board of Directors’ meeting immediately following the Corporation’s annual shareholders’ meeting, and may at such other time as the Board of Directors determine, elect the members of the Audit Committee. The Audit Committee shall require that an audit of the books and affairs of the Corporation be made at such time or times as the members of the Audit Committee shall choose. The Board of Directors shall elect the Chairman of the Audit Committee who shall preside at all meetings of the Audit Committee and shall perform such other duties as may be designated by the Audit Committee.

SECTION 4. Other Committees. The Board of Directors may designate from among its members one or more other committees, each consisting of one (1) or more Directors, and each of which, to the extent provided in the resolution establishing such committee, shall have and may exercise all authority of the Board of Directors to the extent permitted by law.

SECTION 5. Committee Meetings. Regular meetings of committees, of which no notice shall be necessary, shall be held at such times and at such places as shall be fixed, from time to time, by resolution adopted by such committees. Special meetings of any committee may be called by the Chairman of the Board or the President, or by the Chairman of such committee or by any other two members of the committee, at any time. Notice of any special meeting of any committee may be given in the manner provided in the Bylaws for giving notice of a special meeting of the Board of Directors, but notice of any such meeting need not be given to any member of the committee if waived by him before or after the meeting, in writing (including telegram, cablegram, facsimile, or radiogram) or if he shall be present at the meeting; and any meeting of any committee shall be a legal meeting, without any notice thereof having been given, if all the members shall be present thereat. A majority of any committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of the committee.

SECTION 6. Committee Records. Each committee shall keep a record of its acts and proceedings and shall report the same, from time to time, to the Board of Directors.

SECTION 7. Alternate Members; Vacancies. The Board of Directors may designate one or more Directors as alternate members of any committee, and such alternate members may act in the place and stead of any absent member or members at any meeting of such committee. The Board of Directors may fill any vacancy or vacancies occurring in any committee.

SECTION 8. Place, Time, Notice and Call of Directors’ Meetings. The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held each year immediately following the annual meeting of shareholders or at such other time and place as the Chairman of the Board may designate. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors may determine from time to time. Regular meetings of the Board of Directors may be held without notice. Special meetings of the Board of Directors shall be held upon notice of the date, time and place of such special meetings as shall be given to each Director orally, either by telephone or in person, or in writing, either by personal delivery or by mail, telegram, facsimile, or cablegram no later than the day before such meeting. Notice of a meeting of the Board of Directors need not be given to any Director who signs and delivers to the Corporation a waiver of notice either before or after the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting (or promptly upon his arrival), any such objection or objections to the transaction of business and thereafter does not vote for or assent to action taken at the meeting.

Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting unless required by law or these Bylaws.

A majority of the Directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. No notice of any adjourned meeting need be given.

Meetings of the Board of Directors may be called by the Chairman of the Board, the President or any two Directors.

SECTION 9. Action by Directors Without a Meeting; Participation in Meeting by Telephone. Except as limited by law, any action to be taken at a meeting of the Board, or by any committee of the Board, may be taken without a meeting if written consent, setting forth the action so taken, shall be signed by all the members of the Board or such Committee and shall be filed with the minutes of the proceedings of the Board or such committee. Such written consent shall have the same force and effect as a unanimous vote of the Board or such committee and any document executed on behalf of the Corporation may recite that the action was duly taken at a meeting of the Board or such committee.

Members of the Board or any committee of the Board may participate in a meeting of the Board or such committee by means of conference telephone or similar communications equipment by which means all persons participating in the meeting can hear each other, and participation in a meeting of the Board or such committee by such means shall constitute personal presence at such meeting.

SECTION 10. Directors’ Compensation. The Board of Directors shall have authority to determine from time to time the amount of compensation which shall be paid to its members for attendance at meetings of, or services on, the Board of Directors or any committee of the Board. The Board of Directors shall also have the power to reimburse Directors for reasonable expenses of attendance at Directors’ meetings and committee meetings.

ARTICLE IV

OFFICERS

SECTION 1. Executive Structure. The Board of Directors shall elect the following officers: Chairman of the Board, President, Chief Financial Officer, Corporate Secretary, and Treasurer, and may elect one or more Vice Chairmen and Executive Vice Presidents, as the Board of Directors may deem necessary. The Board of Directors shall designate from among such elected officers a Chief Executive Officer. The Chief Executive Officer may appoint such assistant officers, whose duties shall consist of assisting one or more of the Officers in the discharge of the duties of any such Officer, as may be specified from time to time by the Chief Executive Officer, whose titles may include such designations as the Chief Executive Officer shall deem appropriate. All Officers (including assistant officers) shall be elected for a term of office running until the meeting of the Board of Directors following the next annual meeting of shareholders. All assistant officers shall be appointed for a term specified by the Chief Executive Officer but not later than the meeting of the Board of Directors following the next annual meeting of shareholders. Any two or more offices may be held by the same person. The title of any officer may include any additional designation descriptive of such duties as the Board of Directors may prescribe.

SECTION 2. Chief Executive Officer. The Chief Executive Officer shall be the most senior officer of the Corporation, and all other officers and agents of the Corporation shall be subject to his direction. He shall be accountable to the Board of Directors for the fulfillment of his duties and responsibilities and, in the performance and exercise of all his duties, responsibilities and powers, he shall be subject to the supervision and direction of, and any limitations imposed by, the Board of Directors. The Chief Executive Officer shall be responsible for interpretation and required implementation of the policies of the Corporation as determined and specified from time to time by the Board of Directors and he shall be responsible for the general management and direction of the business and affairs of the Corporation. For the purpose of fulfilling his duties and responsibilities, the Chief Executive Officer shall have, subject to these Bylaws and the Board of Directors, plenary authorities and powers, including general executive powers, the authority to delegate and assign duties, responsibilities and authorities, and, in the name of the Corporation and on its behalf, to negotiate and make any agreements, waivers or commitments which do not require the express approval of the Board of Directors. The Chief Executive Officer shall preside at all meetings of shareholders.

SECTION 3. Chairman of the Board. The Chairman of the Board shall be a member of the Board of Directors and shall preside at all meetings of the Board of Directors, and shall have such powers and perform such duties as may be assigned by the Board of Directors.

SECTION 4. President. The President shall have such powers and perform such duties as may be assigned by the Board of Directors or the Chief Executive Officer.

SECTION 5. Vice Chairman. Any Vice Chairman elected shall have such duties and authority as may be conferred upon him by the Board of Directors or delegated to him by the Chief Executive Officer.

SECTION 6. Chief Financial Officer. The Chief Financial Officer shall have the care, custody, control and handling of the funds and assets of the Corporation, and shall render a statement of the assets, liabilities and operations of the Corporation to the Board of Directors at its regular meetings.

SECTION 7. Treasurer. The Treasurer shall perform such duties as may be assigned to the Treasurer and shall report to the Chief Financial Officer or, in the absence of the Chief Financial Officer, to the President.

SECTION 8. Corporate Secretary. Due notice of all meetings of the shareholders and directors shall be given by the Corporate Secretary or the person or persons calling such meeting. The Corporate Secretary shall report the proceedings of all meetings in a book of minutes and shall perform all the duties pertaining to his office including

authentication of corporate documents and shall have custody of the Seal of the Corporation. Each assistant Corporate Secretary appointed by the Chief Executive Officer may perform all duties of the Corporate Secretary.

SECTION 9. Other Duties and Authority. Each officer, employee and agent of the Corporation shall have such other duties and authority as may be conferred upon him by the Board of Directors or delegated to him by the Chief Executive Officer.

SECTION 10. Removal of Officers. Any officer may be removed by the Board of Directors with or without cause whenever in its judgment the best interests of the Corporation will be served thereby. In addition, an officer of the Corporation shall cease to be an officer upon ceasing to be an employee of the Corporation or any of its subsidiaries. Any officer appointed by another officer may also be removed, with or without cause, by the appointing officer or any officer senior to the appointing officer.

SECTION 11. Voting of Stock. Unless otherwise ordered by the Board of Directors or Executive Committee, the Chairman of the Board, any Vice Chairman, the Chief Executive Officer, the President or any Executive Vice President of the Corporation shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of shareholders of any corporation in which the Corporation may hold stock, and at such meetings may possess and shall exercise any and all rights and powers incident to the ownership of such stock which such owner thereof (the Corporation) might have possessed and exercised if present. The Board of Directors or Executive Committee, by resolution from time to time, may confer like powers upon any other person or persons.

ARTICLE V

STOCK

SECTION 1. Stock Certificates. The shares of stock of the Corporation shall be represented by certificates, or shall be uncertificated shares that may be evidenced by a book-entry system maintained by the registrar of such stock, or a combination of both. To the extent that shares are represented by certificates, such certificates whenever authorized by the Board, shall be in such form as shall be approved by the Board. The certificates representing shares of stock of each class shall be signed by, or in the name of, the Corporation by the Chairman of the Board, or the President, together with the Secretary or any Assistant Secretary of the Corporation, and sealed with the seal of the Corporation, which may be a facsimile thereof. Any or all such signatures may be facsimiles if countersigned by a transfer agent or registrar. Although any officer, transfer agent or registrar whose manual or facsimile signature is affixed to such a certificate ceases to be such officer, transfer agent or registrar before such certificate has been issued, it may nevertheless be issued by the Corporation with the same effect as if such officer, transfer agent or registrar were still such at the date of its issue. The stock ledger and blank share certificates shall be kept by the Secretary or by a transfer agent or by a registrar or by any other officer or agent designated by the Board.

SECTION 2. Transfer of Stock. Transfers of shares of stock of each class of the Corporation shall be made only on the books of the Corporation upon authorization by the registered holder thereof, or by such holder’s attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary or a transfer agent for such stock, if any, and if such shares are represented by a certificate, upon surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power (or by proper evidence of succession, assignment or authority to transfer) and the payment of any taxes thereon; provided, however, that the Corporation shall be entitled to recognize and enforce any lawful restriction on transfer. The Corporation may refuse any requested transfer until furnished evidence satisfactory to it that such transfer is proper. Upon the surrender of a certificate for transfer of stock, such certificate shall be marked on its face “Canceled”. The Board of Directors may make such additional rules concerning the issuance, transfer and registration of stock and requirements regarding the establishment of lost, destroyed or wrongfully taken stock certificates (including any requirement of an indemnity bond prior to issuance of any replacement certificate and

provision for appointment of a transfer agent and a registrar) as it deems appropriate. The person in whose name shares are registered on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation.

SECTION 3. Registered Shareholders. The Corporation may deem and treat the holder of record of any stock as the absolute owner thereof for all purposes and shall not be required to take any notice of any right or claim of right of any other person.

SECTION 4. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days and, in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken.

ARTICLE VI

DEPOSITORIES, SIGNATURES AND SEAL

SECTION 1. Depositories. All funds of the Corporation shall be deposited in the name of the Corporation in such bank, banks, or other financial institutions as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts or other orders signed on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate.

SECTION 2. Seal. The seal of the Corporation shall be as follows:

[SEAL]

If the seal is affixed to a document, the signature of the Corporate Secretary or an Assistant Secretary shall attest the seal. The seal and its attestation may be lithographed or otherwise printed on any document and shall have, to the extent permitted by law, the same force and effect as if it has been affixed and attested manually.

SECTION 3. Execution of Instruments. All bills, notes, checks, and other instruments for the payment of money, all agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Corporation by the Chairman of the Board, the President, any Vice Chairman, Executive Vice President, Senior Vice President or Vice President, the Secretary or the Treasurer. Any such instruments may also be signed, executed, acknowledged, verified, delivered or accepted on behalf of the Corporation in such manner and by such other officers, employees or agents of the Corporation as the Board of Directors or Executive Committee may from time to time direct.

ARTICLE VII

INDEMNIFICATION OF OFFICERS, DIRECTORS, AND EMPLOYEES

SECTION 1. Definitions . As used in this Article, the term:

(A) “Corporation” includes any domestic or foreign predecessor entity of this Corporation in a merger or other transaction in which the predecessor’s existence ceased upon consummation of the transaction.

(B) “Director” means an individual who is or was a director of the Corporation or an individual who, while a director of the Corporation, is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity. A “director” is considered to be serving an employee benefit plan at the Corporation’s request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. “Director” includes, unless the context requires otherwise, the estate or personal representative of a director.

(C) “Disinterested director” means a director who at the time of a vote referred to in Section 3(C) or a vote or selection referred to in Section 4(B), 4(C) or 7(A) is not: (i) a party to the proceeding; or (ii) an individual who is a party to a proceeding having a familial, financial, professional, or employment relationship with the director whose indemnification or advance for expenses is the subject of the decision being made with respect to the proceeding, which relationship would, in the circumstances, reasonably be expected to exert an influence on the director’s judgment when voting on the decision being made.

(D) “Employee” means an individual who is or was an employee of the Corporation or an individual who, while an employee of the Corporation, is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise. An “Employee” is considered to be serving an employee benefit plan at the Corporation’s request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. “Employee” includes, unless the context requires otherwise, the estate or personal representative of an employee.

(E) “Expenses” includes counsel fees.

(F) “Liability” means the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), or reasonable expenses incurred with respect to a proceeding.

(G) “Officer” means an individual who is or was an officer of the Corporation which for purposes of this Article VII shall include an assistant officer, or an individual who, while an Officer of the Corporation, is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity. An “Officer” is considered to be serving an employee benefit plan at the Corporation’s request if his duties to the Corporation also impose duties on, or otherwise involve services by, him to the plan or to participants in or beneficiaries of the plan. “Officer” includes, unless the context requires otherwise, the estate or personal representative of an Officer.

(H) “Official capacity” means: (i) when used with respect to a director, the office of a director in a corporation; and (ii) when used with respect to an Officer, the office in a corporation held by the Officer. Official capacity does not include service for any other domestic or foreign corporation or any partnership, joint venture, trust, employee benefit plan, or other entity.

(I) “Party” means an individual who was, is, or is threatened to be made a named defendant or respondent in a proceeding.

(J) “Proceeding” means any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investigative and whether formal or informal.

SECTION 2. Basic Indemnification Arrangement .

(A) Except as provided in subsection (D) below and, if required by Section 4 below, upon a determination pursuant to Section 4 in the specific case that such indemnification is permissible in the circumstances under this subsection because the individual has met the standard of conduct set forth in this subsection (A), the Corporation shall indemnify an individual who is made a party to a proceeding because he is or was a director or Officer against liability incurred by him in the proceeding if he conducted himself in good faith and, in the case of conduct in his official capacity, he reasonably believed such conduct was in the best interest of the Corporation, or in all other cases, he reasonably believed such conduct was at least not opposed to the best interests of the Corporation and, in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful.

(B) A person’s conduct with respect to an employee benefit plan for a purpose he believes in good faith to be in the interests of the participants in and beneficiaries of the plan is conduct that satisfies the requirement of subsection 2(A) above.

(C) The termination of a proceeding by judgment, order, settlement, or conviction, or upon a plea of nolo contendere or its equivalent is not, of itself, determinative that the proposed indemnitee did not meet the standard of conduct set forth in subsection 2(A) above.

(D) The Corporation shall not indemnify a person under this Article in connection with (i) a proceeding by or in the right of the Corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that such person has met the relevant standard of conduct under this section, or (ii) with respect to conduct for which such person was adjudged liable on the basis that personal benefit was improperly received by him, whether or not involving action in his official capacity.

SECTION 3. Advances for Expenses .

(A) The Corporation may advance funds to pay for or reimburse the reasonable expenses incurred by a director or Officer who is a party to a proceeding because he is a director or Officer in advance of final disposition of the proceeding if: (i) such person furnishes the Corporation a written affirmation of his good faith belief that he has met the relevant standard of conduct set forth in subsection 2(A) above or that the proceeding involves conduct for which liability has been eliminated under the Corporation’s Articles of Incorporation; and (ii) such person furnishes the Corporation a written undertaking meeting the qualifications set forth below in subsection 3(B), executed personally or on his behalf, to repay any funds advanced if it is ultimately determined that he is not entitled to any indemnification under this Article or otherwise.

(B) The undertaking required by subsection 3(A)(ii) above must be an unlimited general obligation of the director or Officer but need not be secured and shall be accepted without reference to financial ability to make repayment.

(C) Authorizations under this Section shall be made: (i) By the Board of Directors: (a) when there are two or more disinterested directors, by a majority vote of all disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote; or (b) when there are fewer than two disinterested directors, by a majority of the directors present, in which authorization directors who do not qualify as disinterested directors may participate; or (ii) by the shareholders, but shares

owned or voted under the control of a director who at the time does not qualify as a disinterested director with respect to the proceeding may not be voted on the authorization.

SECTION 4. Authorization of and Determination of Entitlement to Indemnification .

(A) The Corporation shall not indemnify a director or Officer under Section 2 above unless authorized thereunder and a determination has been made for a specific proceeding that indemnification of such person is permissible in the circumstances because he has met the relevant standard of conduct set forth in subsection 2(A) above; provided, however, that regardless of the result or absence of any such determination, to the extent that a director or Officer has been wholly successful, on the merits or otherwise, in the defense of any proceeding to which he was a party because he is or was a director or Officer, the Corporation shall indemnify such person against reasonable expenses incurred by him in connection therewith.

(B) The determination referred to in subsection 4(A) above shall be made:

(i)

If there are two or more disinterested directors, by the board of directors by a majority vote of all the disinterested directors (a majority of whom shall for such purpose constitute a quorum) or by a majority of the members of a committee of two or more disinterested directors appointed by such a vote;

(ii)

by special legal counsel:

(1)

selected by the Board of Directors or its committee in the manner prescribed in subdivision (i); or

(2)

If there are fewer than two disinterested directors, selected by the Board of Directors (in which selection directors who do not qualify as disinterested directors may participate); or

(iii)

by the shareholders; but shares owned by or voted under the control of a director who at the time does not qualify as a disinterested director may not be voted on the determination.

(C) Authorization of indemnification or an obligation to indemnify and evaluation as to reasonableness of expenses of a director or Officer in the specific case shall be made in the same manner as the determination that indemnification is permissible, as described in subsection 4(B) above, except that if there are fewer than two disinterested directors or if the determination is made by special legal counsel, authorization of indemnification and evaluation as to reasonableness of expenses shall be made by those entitled under subsection 4(B)(ii)(2) above to select counsel.

(D) The Board of Directors, a committee thereof, or special legal counsel acting pursuant to subsection (B) above or Section 5 below, shall act expeditiously upon an application for indemnification or advances, and cooperate in the procedural steps required to obtain a judicial determination under Section 5 below.

(E) The Corporation may, by a provision in its Articles of Incorporation or Bylaws or in a resolution adopted or a contract approved by its Board of Directors or shareholders, obligate itself in advance of the act or omission giving rise to a proceeding to provide indemnification or advance funds to pay for or reimburse expenses consistent with this part. Any such obligatory provision shall be deemed to satisfy the requirements for authorization referred to in Section 3(C) or Section 4(C).

SECTION 5. Court-Ordered Indemnification and Advances for Expenses . A director or Officer who is a party to a proceeding because he is a director or Officer may apply for indemnification or advances for expenses to the court

conducting the proceeding or to another court of competent jurisdiction. After receipt of an application and after giving any notice it considers necessary, the court shall order indemnification or advances for expenses if it determines that:

(i)

The director is entitled to indemnification or advances of expenses under this part; or

(ii)

In view of all the relevant circumstances, it is fair and reasonable to indemnify the director or Officer or to advance expenses to the director or Officer, even if the director or Officer has not met the relevant standard of conduct set forth in subsection 2(A) above, failed to comply with Section 3, or was adjudged liable in a proceeding referred to in subsections (i) or (ii) of Section 2(D), but if the director or Officer was adjudged so liable, the indemnification shall be limited to reasonable expenses incurred in connection with the proceeding, unless the Articles of Incorporation of the Corporation or a Bylaw, contract or resolution approved or ratified by shareholders pursuant to Section 7 below provides otherwise.

If the court determines that the director or Officer is entitled to indemnification or advance for expenses, it may also order the Corporation to pay the director’s or Officer’s reasonable expenses to obtain court-ordered indemnification or advance for expenses. The court may summarily determine, without a jury, the Corporation’s obligation to advance expense.

SECTION 6. Indemnification of Officers and Employees .

(A) Unless the Corporation’s Articles of Incorporation provide otherwise, the Corporation shall indemnify and advance expenses under this Article to an employee of the Corporation who is not a director or Officer to the same extent, consistent with public policy, as to a director or Officer.

(B) The Corporation may indemnify and advance expenses under this Article to an Officer of the Corporation who is a party to a proceeding because he is an Officer of the Corporation: (i) to the same extent as a director; and (ii) if he is not a director, to such further extent as may be provided by the Articles of Incorporation, the Bylaws, a resolution of the Board of Directors, or contract except for liability arising out of conduct that is enumerated in subsections (A)(i) through (A)(iv) of Section 7.

The provisions of this Section shall also apply to an Officer who is also a director if the sole basis on which he is made a party to the proceeding is an act or omission solely as an Officer.

SECTION 7. Shareholder Approved Indemnification .

(A) If authorized by the Articles of Incorporation or a Bylaw, contract or resolution approved or ratified by shareholders of the Corporation by a majority of the votes entitled to be cast, the Corporation may indemnify or obligate itself to indemnify a person made a party to a proceeding, including a proceeding brought by or in the right of the Corporation, without regard to the limitations in other sections of this Article, but shares owned or voted under the control of a director who at the time does not qualify as a disinterested director with respect to any existing or threatened proceeding that would be covered by the authorization may not be voted on the authorization. The Corporation shall not indemnify a person under this Section 7 for any liability incurred in a proceeding in which the person is adjudged liable to the Corporation or is subjected to injunctive relief in favor of the Corporation:

(i)

for any appropriation, in violation of his duties, of any business opportunity of the Corporation;

(ii)

for acts or omissions which involve intentional misconduct or a knowing violation of law;

(iii)

for the types of liability set forth in Section 14-2-832 of the Georgia Business Corporation Code; or

(iv)

for any transaction from which he received an improper personal benefit.

(B) Where approved or authorized in the manner described in subsection 7(A) above, the Corporation may advance or reimburse expenses incurred in advance of final disposition of the proceeding only if:

(i)

the proposed indemnitee furnishes the Corporation a written affirmation of his good faith belief that his conduct does not constitute behavior of the kind described in subsection 7(A)(i)-(iv) above; and

(ii)

the proposed indemnitee furnishes the Corporation a written undertaking, executed personally, or on his behalf, to repay any advances if it is ultimately determined that he is not entitled to indemnification.

SECTION 8. Liability Insurance . The Corporation may purchase and maintain insurance on behalf of an individual who is a director, officer, employee, or agent of the Corporation or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, employee benefit plan, or other entity against liability asserted against or incurred by him in that capacity or arising from his status as a director, officer, employee, or agent, whether or not the Corporation would have power to indemnify him against the same liability under Section 2 or Section 3 above.

SECTION 9. Witness Fees . Nothing in this Article shall limit the Corporation’s power to pay or reimburse expenses incurred by a person in connection with his appearance as a witness in a proceeding at a time when he is not a party.

SECTION 10. Report to Shareholders . If the Corporation indemnifies or advances expenses to a director in connection with a proceeding by or in the right of the Corporation, the Corporation shall report the indemnification or advance, in writing, to shareholders with or before the notice of the next shareholders’ meeting.

SECTION 11. Severability . In the event that any of the provisions of this Article (including any provision within a single section, subsection, division or sentence) is held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions of this Article shall remain enforceable to the fullest extent permitted by law.

SECTION 12. Indemnification Not Exclusive . The rights of indemnification provided in this Article VII shall be in addition to any rights which any such director, Officer, employee or other person may otherwise be entitled by contract or as a matter of law.

SECTION 13. Amendments to Georgia Business Corporation Code. In the event that, following the date of these Bylaws, the Georgia Business Corporation Code is amended to expand the indemnification protections that a Georgia corporation is permitted to provide to its directors, Officers and/or Employees, as applicable, the indemnification protections set forth in this Article VII shall be automatically amended, without any further action by the Board of Directors, the shareholders of the Corporation or the Corporation, to provide the same indemnification protections to the fullest extent provided by such amendments to the Georgia Business Corporation Code.

ARTICLE VIII

AMENDMENTS OF BYLAWS

The Board of Directors shall have the power to alter, amend or repeal the Bylaws or adopt new Bylaws, but any Bylaws adopted by the Board of Directors may be altered, amended or repealed and new Bylaws adopted by the shareholders. Action by the Directors with respect to the Bylaws shall be taken by an affirmative vote of a majority of all of the Directors then elected and serving, unless a greater vote is required by law, the Articles of Incorporation or these Bylaws.

ARTICLE IX

EMERGENCY TRANSFER OF RESPONSIBILITY

SECTION 1. Emergency Defined. In the event of a national emergency threatening national security or a major disaster declared by the President of the United States or the person performing his functions, which directly or severely affects the operations of the Corporation, the officers and employees of this Corporation will continue to conduct the affairs of the Corporation under such guidance from the Directors as may be available except as to matters which by law or regulation require specific approval of the Board of Directors and subject to conformance with any applicable laws, regulations, and governmental directives during the emergency.

SECTION 2. Officers Pro Tempore. The Board of Directors shall have the power, in the absence or disability of any officer, or upon the refusal of any officer to act as a result of said national emergency directly and severely affecting the operations of the Corporation, to delegate and prescribe such officer’s powers and duties to any other officer, or to any Director.

In the event of a national emergency or state of disaster of sufficient severity to prevent the conduct and management of the affairs and business of this Corporation by its Directors and officers as contemplated by the Bylaws, any two or more available members or alternate members of the then incumbent Executive Committee shall constitute a quorum of such Committee for the full conduct and management of the Corporation in accordance with the provisions of Articles II and III of the Bylaws. If two members or alternate members of the Executive Committee cannot be expeditiously located, then three available Directors shall constitute the Executive Committee for the full conduct and management of the affairs and business of the Corporation until the then remaining Board can be convened. These provisions shall be subject to implementation by resolutions of the Board of Directors passed from time to time, and any provisions of the Bylaws (other than this Section) and any resolutions which are contrary to the provisions of this Section or the provisions of any such implementary resolutions shall be suspended until it shall be determined by any such interim Executive Committee acting under this Section that it shall be to the advantage of this Corporation to resume the conduct and management of its affairs and business under all of the other provisions of these Bylaws.

SECTION 3. Officer Succession. If, in the event of a national emergency or disaster which directly and severely affects the operations of the Corporation, the Chief Executive Officer cannot be located expeditiously or is unable to assume or to continue normal duties, then the authority and duties of the office shall be automatically assumed, without Board of Directors action, in order of title, and subject only to willingness and ability to serve, by the Chairman of the Board, President, Vice Chairman, Executive Vice President, Senior Vice President, Vice President, Corporate Secretary or their successors in office at the time of the emergency or disaster. Where two or more officers hold equivalent titles and are willing and able to serve, seniority in title controls initial appointment. If, in the same manner, the Corporate Secretary or Treasurer cannot be located or is unable to assume or continue normal duties, the responsibilities attached thereto shall, in like manner as described immediately above, be assumed by any Executive Vice President, Senior Vice President, or Vice President. Any officer assuming authority and position hereunder shall continue to serve until the earlier of his resignation or the elected officer or a more senior officer shall become available to perform the duties of the position of Chief Executive Officer, Corporate Secretary, or Treasurer.

SECTION 4. Certification of Authority. In the event of a national emergency or disaster which directly and severely affects the operations of the Corporation, anyone dealing with this Corporation shall accept a certification by the Corporate Secretary or any three officers that a specified individual is acting as Chairman of the Board, Chief Executive Officer, President, Corporate Secretary, or Treasurer, in accordance with these Bylaws; and that anyone accepting such certification shall continue to consider it in force until notified in writing of a change, such notice of change to carry the signature of the Corporate Secretary or three officers of the Corporation.

SECTION 5. Alternative Locations. In the event of a national emergency or disaster which destroys, demolishes, or renders the Corporation’s offices or facilities unserviceable, or which causes, or in the judgment of the Board of Directors or the Executive Committee probably will cause, the occupancy or use thereof to be a clear and imminent hazard to personal safety, the Corporation shall temporarily lease or acquire sufficient facilities to carry on its business as may be designated by the Board of Directors. Any temporarily relocated place of business of this Corporation shall be returned to its legally authorized location as soon as practicable and such temporary place of business shall then be discontinued.

SECTION 6. Amendments to Article IX. At any meeting called in accordance with Section 2 of this Article IX, the Board of Directors or Executive Committee, as the case may be, may modify, amend or add to the provisions of this Article IX so as to make any provision that may be practical or necessary for the circumstances of the emergency.

ARTICLE X

BUSINESS COMBINATIONS WITH INTERESTED SHAREHOLDERS

All of the requirements of Article 11A of the Georgia Business Corporation Code (currently codified in Sections 14-2-1131 through 14-2-1133 thereof), as may be in effect from time to time (the “Business Combination Statute”), shall apply to all “business combinations” (as defined in Section 14-2-1131 of the Georgia Business Corporation Code) involving the Corporation. The requirements of the Business Combination Statute shall be in addition to the requirements of Article XI of the Corporation’s Articles of Incorporation. Nothing contained in the Business Combination Statute shall be deemed to limit the provisions contained in Article XI of the Corporation’s Articles of Incorporation, and nothing contained in Article XI of the Corporation’s Articles of Incorporation shall be deemed to limit the provisions contained in the Business Combination Statute.

ARTICLE XI

INSPECTION OF BOOKS AND RECORDS

The Board of Directors shall determine whether and to what extent the accounts and books of the Corporation, or any of them, other than the share records, shall be open to the inspection of shareholders, and no shareholder shall have any right to inspect any account or books or document of the Corporation except as conferred by law or by resolution of the shareholders or the Board of Directors. Without prior approval of the Board of Directors in their discretion, the right of inspection set forth in Section 14-2-1602(c) of the Georgia Business Corporation Code shall not be available to any shareholder owning two (2%) percent or less of the shares outstanding.

Exhibit 10.7

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated as of

January 1, 2011

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Amended and Restated as of

January 1, 2011

ARTICLE 1

ESTABLISHMENT AND PURPOSE

SunTrust Banks, Inc. hereby amends and restates the SunTrust Banks, Inc. Supplemental Executive Retirement Plan as last amended and restated effective as of January 1, 2010 in the form of this SunTrust Banks, Inc. Supplemental Executive Retirement Plan amended and restated as of January 1, 2011 (the “Plan”). Except as otherwise specifically provided in this document, the terms of this Plan shall apply only to a Participant who terminates employment with SunTrust and all Affiliates after 2004 and has not commenced receiving payment of the benefits under the Plan prior to January 1, 2009. During the period from January 1, 2005 through December 31, 2008, the Plan has operated in reasonable good faith compliance with Code section 409A and the transitional guidelines set forth in official IRS guidance. The Plan is maintained to provide a targeted level of post-retirement income for certain executives of SunTrust and its Affiliates and to supplement the benefits provided under the SunTrust Banks, Inc. Retirement Plan and the SunTrust Banks, Inc. ERISA Excess Retirement Plan.

This Plan is intended to better enable SunTrust to deliver more competitive levels of total retirement income to its senior executives; to aid in the recruitment and retention of critical executive talent; and to comply with Code section 409A and official guidance issued thereunder (except with respect to Grandfathered Amounts). Notwithstanding anything herein to the contrary, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

ARTICLE 2

DEFINITIONS

All capitalized terms used in this Plan and not defined in this document (including an Exhibit) shall have the same meaning as in SunTrust’s Retirement Plan, as amended from time to time. The following capitalized terms will have the meanings set forth in this Article 2 whenever such capitalized terms are used throughout this Plan:

2.1	Affiliate means as of any date any organization which is a member of a controlled group of corporations (within the meaning of Code section 414(b)) which includes SunTrust or a controlled group of trades or businesses (within the meaning of Code section 414(c)) which includes SunTrust.

2.2

Beneficiary means one or more persons or entities entitled to receive any benefits payable under this Plan at the Participant’s death. A Participant may name one or more primary Beneficiaries and one or more secondary Beneficiaries. A Participant may revoke a Beneficiary designation by filing a new Beneficiary Designation Form or a written revocation with the Committee. If the Committee is not in receipt of a properly completed Beneficiary Designation Form at the Participant’s death, or if none of the Beneficiaries named by the Participant survives the Participant or is in existence at the date of the Participant’s death, then the Participant’s Beneficiary shall be the Participant’s estate.

2.3	Beneficiary Designation Form means the form that a Participant uses to name his Beneficiary or Beneficiaries for purposes of this Plan.

2.4	Board means the Board of Directors of SunTrust.

2.5	Cause means for purposes of this Plan and as determined by the Committee, in its sole discretion, one or more of the following actions that serves as the primary reason(s) for the termination of the Participant’s employment with SunTrust or an Affiliate:

(a)

the Participant’s willful and continued failure to perform his job duties in a satisfactory manner after written notice from SunTrust to Participant and a thirty (30) day period in which to cure such failure;

(b)

the Participant’s conviction of a felony or engagement in a dishonest act, misappropriation of funds, embezzlement, criminal conduct or common law fraud;

(c)

the Participant’s material violation of the Code of Business Conduct and Ethics of SunTrust or the Code of Conduct of an Affiliate;

(d)

the Participant’s engagement in an act that materially damages or materially prejudices SunTrust or an Affiliate or the Participant’s engagement in activities materially damaging to the property, business or reputation of SunTrust or an Affiliate; or

(e)

the Participant’s failure and refusal to comply in any material respect with the current and any future amended policies, standards and regulations of SunTrust, any Affiliate and their regulatory agencies, if such failure continues after written notice from SunTrust to the Participant and a thirty (30) day period in which to cure such failure, or the determination by any such governing agency that the Participant may no longer serve as an officer of SunTrust or an Affiliate.

Notwithstanding anything herein to the contrary, if a Participant is subject to the terms of a change in control agreement with SunTrust (the “Change in Control Agreement”) at the time of his termination of employment with SunTrust or an Affiliate, solely for purposes of such Participant’s benefits under the Plan, “Cause” shall have the meaning provided in the Change in Control Agreement.

2.6	Code means the Internal Revenue Code of 1986, as amended.

2.7	Committee means the Compensation Committee of the Board.

2.8

Disabled or Disability means a Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer and, in addition, has begun to receive benefits under SunTrust’s Long-Term Disability Plan.

2.9	ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.10	ERISA Excess Plan means the SunTrust Banks, Inc. ERISA Excess Plan, as amended.

2.11	Grandfathered Amounts mean Plan benefits that were earned and vested as of December 31, 2004 within the meaning of Code section 409A and pursuant to the terms of the Plan in effect on

October 3, 2004. Grandfathered Amounts are exempt from Code section 409A and subject to the distribution rules in effect under the Plan on October 3, 2004.

2.12

Key Employee means an employee treated as a “specified employee” as of his Separation from Service under Code section 409A(a)(2)(B)(i) (i.e., a key employee (as defined in Code section 416(i) without regard to section (5) thereof)) if the common stock of SunTrust or an Affiliate is publicly traded on an established securities market or otherwise. Key Employees shall be determined in accordance with Code section 409A using a December 31 identification date. A listing of Key Employees as of an identification date shall be effective for the twelve (12) month period beginning on the April 1 following the identification date.

2.13

MIP means the SunTrust Banks, Inc. Management Incentive Plan as in effect from time to time or any successor or replacement short-term bonus plan or any substitute plan designated by the Committee. If a Participant does not participate in the MIP because he is participating in a functional incentive plan or some other similar incentive plan, then MIP shall mean for such Participant the amount of the bonus under such other plan, which shall be used as the MIP portion of such Participant’s SERP Compensation, except that if the amount of the bonus under such other plan exceeds the target MIP amount for that year for a similarly structured position, then the target MIP amount will be used instead of the bonus from such other plan in determining such Participant’s SERP Compensation. If there is any material change in the terms, operation or administration of the MIP following a Change in Control as defined in Article 13, then MIP means any successor to such plan in which the Participant is eligible to participate and which provides an opportunity for a bonus for the Participant which is comparable to the opportunity which the Participant had under such plan before such Change in Control.

2.14	Other Retirement Arrangement means any plan, program, arrangement or agreement maintained by SunTrust or an Affiliate as described in Exhibit A to this Plan.

2.15	Other Retirement Arrangement Benefit means for each Participant who is eligible for a benefit under any Other Retirement Arrangement, the benefit payable to that Participant pursuant to that Other Retirement Arrangement.

2.16

Participant means each executive of SunTrust or an Affiliate described in Article 3. Effective as of January 1, 2001, a Participant shall be classified as a Tier 1 Participant or a Tier 2 Participant, as determined by the Committee, and his or her benefit under the Plan, if any, shall be determined in accordance with such classification. In the event an executive becomes a

Participant in the Plan after December 31, 2004, such Participant shall be classified as a Tier 2 Participant unless otherwise specifically designated by the Committee.

2.17	Plan means this SunTrust Banks, Inc. Supplemental Executive Retirement Plan, as reflected in this document, including appendices and exhibits, as amended (or as amended and restated) from time to time.

2.18	PUP means the SunTrust Banks, Inc. Performance Unit Plan effective from time to time or any successor or replacement long-term bonus plan or any substitute plan designated by the Committee for performance cycles ending on or before December 31, 2007.

2.19	Retirement Date means for each Participant, the date he or she reaches age 65.

2.20	Retirement Plan means either the SunTrust Banks, Inc. Retirement Plan or the SunTrust Banks, Inc. Retirement Plan for Inactive Participants in which the Participant has an accrued benefit, as such plan is amended and restated from time to time, and any successor plan;

2.21	Separation from Service means a “separation from service” within the meaning of Code section 409A.

2.22

SERP Average Compensation means for each Participant who terminates employment with SunTrust and all Affiliates on or after January 1, 2001, the average of such Participant’s SERP Compensation for the three (3) full calendar years out of the five (5) full calendar years immediately preceding the date as of which his or her SERP Benefit is determined that will produce the largest amount. Effective November 12, 2002, SERP Average Compensation means for each Tier 1 Participant and each Tier 2 Participant who terminates employment with SunTrust and all Affiliates on or after November 12, 2002, the average of such Participant’s SERP Compensation for the three (3) full calendar years out of the ten (10) full calendar years immediately preceding the date as of which his or her SERP Benefit is determined that will produce the largest amount. If a Participant became an employee of SunTrust or an Affiliate in connection with a corporate merger or acquisition, the Committee shall determine on the date such Participant becomes eligible to participate in the Plan under Article 3 to what extent, if any, such Participant’s compensation with the predecessor employer shall be included as his SERP Compensation under this Plan.

2.23	SERP Benefit means the “SERP Benefit” under the Plan determined as follows:

(a)

General . SERP Benefit means for each Participant who is designated by the Committee as eligible for a SERP Benefit under this Plan, the annual benefit that would have been payable on or after the Participant’s Retirement Date in the form of a life only annuity which is equal to the following, as applicable:

(1)

If a Participant is a Tier 1 Participant, his or her SERP Benefit is equal to (i) or (ii), whichever is greater, minus (iii), where:

(i) =

the Reduction Factor x (60% x his or her SERP Average Compensation); and

(ii) =

60% x his or her SERP Average Compensation as of December 31, 2007; and

(iii) =

(A + B + C + D) as described in Section 2.23(a)(3).

For purposes of this Section 2.23(a)(1), the term “Reduction Factor” means 96.3%.

(2)

If a Participant is a Tier 2 Participant, his or her SERP Benefit is equal to (i) plus (ii) minus (iii), where:

(i) =

2% x his or her SERP Service as of December 31, 2007 (up to twenty-five (25) years) x his or her SERP Average Compensation as of December 31, 2007 (the “Tier 2 Frozen Benefit”);

(ii) =

For a Participant with less than twenty-five (25) years of SERP Service as of December 31, 2007, the annual benefit which is the Actuarial Equivalent (as defined in the Retirement Plan) to the amount that would have been credited to the Personal Pension Account (as defined in the Retirement Plan), if any, under the Retirement Plan absent the limitations of Code section 415 and Code section 401(a)(17) (“SERP Personal Pension Account”). For purposes of determining the portion of the Participant’s SERP Benefit attributable to his or her Personal Pension Account (as defined in the Retirement Plan), if any, (A) no Participant shall receive credits under this Section 2.23(a)(2)(ii) that would have been credited to the Personal Pension Account as Pay Credits (as defined in the Retirement Plan) after completing twenty-five (25) years of SERP Service, and (B) PPA Compensation (as defined in the Retirement Plan) shall include: (a) the amount of any elective deferrals (for the calendar year in which earned and not when deferred) from the MIP and any SunTrust functional incentive plan (or any successor or similar

incentive or short-term bonus plan as determined by the Committee) (“FIP”) deferred into the SunTrust Banks, Inc. Deferred Compensation Plan, as amended from time to time (the “Deferred Compensation Plan”); provided, that the amount of any such FIP or other incentive or short term bonus plan may not exceed the target MIP amount for that same calendar year for a similarly structured position; and (b) the amount of any “Mandatory Deferral” (as defined in the Deferred Compensation Plan) vesting in such year; provided, that such Mandatory Deferral amount shall not be included as PPA Compensation in any future year.

(iii) =

(A + B + C + D) as described in Section 2.23(a)(3);

Provided, that in no event shall the SERP Benefit for a Tier 2 Participant with an accrued benefit as of December 31, 2007 be less than (iv) or (v), whichever is greater (the “Tier 2 Minimum Benefit”), minus (vi), where:

(iv) =

such Participant’s Tier 2 Frozen Benefit + (1.75% x his or her SERP Average Compensation x his or her SERP Service after December 31, 2007 (up to twenty-five (25) years, including the SERP service at December 31, 2007);

(v) =

1.75% x his or her SERP Average Compensation x his or her SERP Service (up to twenty-five (25) years, including the SERP Service at December 31, 2007)); and

(vi) =

(A + B + C + D) as described in Section 2.23(a)(3).

(3)

For purposes of the formulae in Sections 2.23(a)(1) and (2),

A =

such Participant’s annual Social Security benefit at age 65;

B =

such Participant’s annual Retirement Plan benefit, if any;

C =

such Participant’s annual benefit under the ERISA Excess Plan, if any;

and

D =

such Participant’s annual Other Retirement Arrangement Benefit, if any.

If any benefit payable under A through D is payable in a form other than a life only annuity or such benefit is payable at a time other than the date as of which the SERP Benefit is paid, such benefit will be converted to a life only annuity

payable as of the same date as the SERP Benefit using the actuarial factors then in effect to make such conversions under the Retirement Plan.

(b)

Special Lump Sum Calculation . Notwithstanding the foregoing, this Section 2.23(b) shall apply for purpose of calculating the SERP Benefit payable to or on behalf of a Participant designated by the Committee and named in Exhibit B attached to this Plan if the SERP Benefit of such Participant is paid in a lump sum. The amount of the SERP Benefit payable to or on behalf of such Participant will equal the present value, determined as described below, of the greater of the SERP Benefit determined under Section 2.23(a)(1)(i) or (ii), less the sum of (A + B + C + D) where,

A =

the present value, determined as described below, of such Participant’s annual Social Security benefit at age 65;

B =

the lump sum benefit paid to such Participant under the Retirement Plan or, if the Participant’s benefit under the Retirement Plan is not paid in a lump sum, the amount that would have been payable to such Participant as a lump sum under the Retirement Plan;

C =

such Participant’s benefit under the ERISA Excess Plan, or, if this benefit is not paid in a lump sum, the amount that would have been payable if the Participant’s benefit under the ERISA Excess Plan had been paid in a lump sum; and

D =

the present value, determined as described below, of such Participant’s Other Retirement Arrangement Benefits, if any.

For purposes of this Section 2.23(b), “present value” is determined using the same interest rate and mortality assumptions used for calculating lump sum payments under the Retirement Plan as in effect on December 31, 1995, including the interest rate published by the Pension Benefit Guaranty Corporation (“PBGC”), and when the PBGC rate is no longer published, the interest rate will be (i) the rate that would be used to calculate a lump sum paid from the Retirement Plan less (ii) the average monthly difference between the PBGC rate and the Retirement Plan rate for the five (5) year period ending on the date the PBGC rate was last published.

2.24	SERP Compensation means the compensation used to determine the SERP Benefit, as follows:

(a)

Tier 1 Participant . For a Tier 1 Participant who terminates employment with SunTrust and all Affiliates on or after January 1, 2001, SERP Compensation means the Participant’s compensation paid for a full calendar year from SunTrust and each Affiliate which is attributable to the sum of the following amounts:

(1)

plan and any pre-tax reductions for parking). For the designated Tier 1 Participants listed in Exhibit C , their annual base salary for the 2010 and 2011 calendar years, respectively, shall include the specified dollar amount listed by each such Participant’s name for the applicable year (subject to restrictions in Exhibit C ), which represents the value of “salary shares” that the Committee has denominated as part of each such Participant’s 2010 or 2011 base salary, respectively, to be used in calculating benefits under certain benefit plans, including this Plan; and

(2)

the amount of the cash bonuses such Participant earns under the MIP and the PUP, if any, for the year, without regard to whether any such bonus may be subject to elective deferral or, if not deferred, may be paid in the year following the calendar year in which such bonus is earned. Notwithstanding the preceding provision, the amount of the PUP that may be included in SERP Compensation for any calendar year beginning on or after January 1, 2005, shall not exceed the corresponding payout level (at minimum, target or maximum) established for the Tier 1 Participant’s February 2004 PUP award. As allowed by Section 2.18, the Committee has designated a substitute plan to be treated as though it were the PUP award earned for the 2003-2005 cycle as described in the following sentence. The fair market value on the date of vesting of a Tier 1 Participant’s February 11, 2003 restricted stock grant shall be used in the same manner in calculating such Participant’s SERP Compensation as if it were the amount of the PUP cash award earned for the cycle including 2003-2005. In no event shall any amounts be treated as a PUP award or be included in SERP Compensation as a substitute for a PUP award in calendar years beginning after December 31, 2007.

(b)

Tier 2 Participant . For a Tier 2 Participant, SERP Compensation means such Participant’s compensation paid for a calendar year from SunTrust and each Affiliate which is attributable to the sum of the following amounts:

(1)

such Participant’s annual base salary actually paid for the year (disregarding any elective deferrals by such Participant pursuant to any cafeteria plan under Code section 125 or any qualified plan under Code section 401(k) or any nonqualified plan and any pre-tax reductions for parking). For the designated Tier 2 Participants listed in Exhibit C , their annual base salary for the 2010 and 2011 calendar years, respectively, shall include the specified dollar amount listed by each such Participant’s name for the applicable year (subject to restrictions in

Exhibit C ), which represents the value of “salary shares” that the Committee has denominated as part of each such Participant’s 2010 or 2011 base salary, respectively, to be used in calculating benefits under certain benefit plans, including this Plan; and

(2)

the amount of the cash bonus such Participant earns under the MIP for the year, without regard to whether such bonus may be subject to elective or mandatory deferral or, if not deferred, may be paid in the year following the calendar year in which such bonus is earned.

2.25

SERP Service means, effective January 1, 2001, a Participant’s whole and partial “years of benefit service” as calculated under the Retirement Plan (including his “prior benefit service” under the Retirement Plan). If a Participant terminates employment with SunTrust and all Affiliates and is subsequently rehired by SunTrust or an Affiliate, he or she shall not accrue any additional SERP Service following his or her reemployment unless the Committee again designates him or her as a Tier 1 or a Tier 2 Participant. If a Participant became an employee of SunTrust or an Affiliate in connection with a corporate merger or acquisition, the Committee shall determine upon the date such Participant becomes eligible to participate in this Plan under Article 3 to what extent, if any, such Participant’s service with the predecessor employer shall be included as his SERP Service under this Plan.

2.26	SunTrust means SunTrust Banks, Inc. or any successor to SunTrust Banks, Inc.

2.27	Tier 1 Participant means an employee of SunTrust or an Affiliate who is designated by the Committee as a Tier 1 Participant and listed as a Tier 1 Participant on Exhibit D .

2.28	Tier 2 Participant means an employee of SunTrust or an Affiliate who is designated by the Committee as a Tier 2 Participant and listed as a Tier 2 Participant on Exhibit D and any Participant who joins the Plan after December 31, 2004, unless the Committee specifically designates otherwise.

2.29	Vested Date means:

(a)

the applicable date specified on Exhibit E for those individuals listed on Exhibit E for whom the Committee has designated a special vesting date; and

(b)

for a SERP Benefit not described in any other subsection of this Section 2.29, the date a Participant completes ten (10) whole years of SERP Service and reaches age 60.

ARTICLE 3

PARTICIPATION

Each executive of SunTrust or an Affiliate who is eligible for one or more benefits under this Plan will be a Participant in this Plan to the extent of the benefits for which he or she is eligible and will remain a Participant until all such benefits are paid to or on behalf of such Participant or forfeited in accordance with the terms of this Plan.

The Committee will designate those executives who are eligible for a SERP Benefit and will also designate each eligible executive as a Tier 1 Participant or a Tier 2 Participant. After December 31, 2010, SunTrust does not expect to add any new Participants to this Plan.

Subject to Article 13, the Committee in its absolute discretion may revoke or change any such designation at any time but no such revocation or change will be applied retroactively to deprive an individual of vested benefits accrued under this Plan to the date of such revocation or change. Eligibility for an Other Retirement Arrangement Benefit will depend upon the terms of the applicable Other Retirement Arrangement.

ARTICLE 4

SERP BENEFIT

4.1	Amount .

(a)

Normal or Delayed Retirement Benefit . If a Participant terminates employment with SunTrust and all Affiliates on or after such Participant’s Retirement Date, the entire vested benefit, if any, to which such Participant is entitled under this Plan shall be determined as soon as practicable following the date of such Participant’s termination of employment and shall be paid in accordance with Section 4.2.

(b)

Early Retirement Benefit .

(1)

General . If a Participant terminates employment with SunTrust and all Affiliates on or after such Participant’s Vested Date but before his or her Retirement Date, such Participant’s entire vested benefit, if any, under this Plan (except an Other Retirement Arrangement Benefit) will be determined (taking into account the applicable reductions under Section 4.1(b)(2) through Section 4.1(b)(4)) as of the

date he or she terminates employment. Such benefit shall be paid in accordance with Section 4.2.

(2)

Tier 1 Reduction . For purposes of determining the SERP Benefit payable to a Tier 1 Participant before his or her Retirement Date, the product of the applicable formula under Section 2.23(a)(1)(i) or (ii) will be reduced by a fraction, the numerator of which is such Participant’s SERP Service as of the date he or she terminates employment with SunTrust and Affiliates and the denominator of which is the SERP Service such Participant would have had if he or she had continued in employment with SunTrust and Affiliates until such Participant’s Retirement Date.

(3)

Tier 2 Reduction . For purposes of determining the SERP Benefit payable to a Tier 2 Participant before his or her Retirement Date, the SERP Benefit accrued under the applicable formula stated in Section 2.23(a)(2) through such Participant’s termination of employment with SunTrust and all Affiliates will be reduced by the same early retirement reduction factors that are used in the Retirement Plan as of December 31, 2007 to reduce the Future Service Benefit (i.e., 5/12% for each full month by which such Participant’s early retirement date precedes his or her Retirement Date, except that if the Participant was hired by SunTrust before July 1, 1990, the reduction is from the first day of the month on or immediately following the date when such Participant would have attained age 60); and provided further that the portion of the SERP Benefit attributable to the SERP Personal Pension Account (if any) shall be reduced on an Actuarial Equivalent basis.

(4)

Designated Participant Reduction . This Subsection 4.1(b)(4) shall apply only to a Tier 1 Participant who is specifically designated by the Committee as eligible for the following special retirement reduction (a “Designated Participant”), instead of the reduction in Section 4.1(b)(2), and who is listed as a “Designated Participant” on Exhibit F . For purposes of determining the SERP Benefit payable to such a Designated Participant who elects early retirement after his or her Vested Date and prior to attaining age 60, the product of the applicable formula under Section 2.23(a)(1)(i) or (ii) will be reduced by a fraction, the numerator of which is such Participant’s SERP Service as of his or her early retirement date and the denominator of which is the SERP Service such Participant would have completed if he or she had continued in employment with SunTrust and Affiliates

until such Participant’s Retirement Date, and then further reduced by a factor of 5/12% for each full calendar month by which such Participant’s early retirement date precedes the date he or she would attain age 60.

(c)

Termination Before Vested Date . Except to the extent a survivor benefit is payable on behalf of a Participant under Section 4.3 or except as provided in Article 13, no benefit will be payable under this Plan to or on behalf of a Participant whose employment with SunTrust and all Affiliates terminates before the Vested Date for that particular benefit.

(d)

Special Disability Assumption for SERP Benefit . If a Participant becomes Disabled before his Separation from Service, then the amount of the SERP Benefit payable to such Participant will be calculated using the same service assumptions that are used to calculate the Participant’s benefit under the Retirement Plan and assuming that the annual base salary component of such Participant’s SERP Compensation continues in effect at the same rate as earned at the time such Disability begins, and further assuming that the MIP component of such Participant’s SERP Compensation for any year, and also for a Tier 1 Participant, the PUP component for years prior to 2008, during the Participant’s Disability, are equal to the target MIP and target PUP amounts, if any, for that year that would be payable to a SunTrust executive in a similar position as such Participant held at the time of his Disability, as determined by the Committee in its sole discretion. If such a Participant is eligible for benefits under this Section 4.1(d), payment of the Participant’s SERP Benefit shall be made in accordance with Section 4.2. Notwithstanding the foregoing, for a Participant listed in Exhibit C that becomes Disabled during 2010 or 2011, respectively, and before his Separation from Service, the amount of the annual base salary component of the Participant’s SERP Compensation assumed to continue, as described above, shall include the value of the “salary shares” listed by the Participant’s name for the applicable year in Exhibit C ; provided, however, such value shall only be included in the Participant’s assumed SERP Compensation for the balance of the 2010 or 2011 calendar year, respectively.

4.2 Time and Form of Benefit Payable to Participants . A Participant’s entire vested SERP Benefit under this Plan (other than Grandfathered Amounts) will be paid at the time and in the form determined in accordance with the applicable provisions of the SunTrust Banks, Inc. ERISA Excess Retirement Plan, including any required six-month delay in payment for Key Employees. Notwithstanding the foregoing, if a lump sum is payable to a Participant designated in Exhibit B , the amount of the lump sum will be calculated in accordance with the special lump sum calculation in Section 2.23(b). If the SERP Benefit is payable after the date of a Participant’s Separation from Service (including as a result of the six month

delay in payment for a Key Employee), interest shall accrue from the date of determination of such amount in the same manner and at the same rate as would accrue on the Personal Pension Account under the Retirement Plan until payment commences.

4.3	Survivor Benefit .

(a)

General . If a Participant who is an active SunTrust employee and eligible for a SERP Benefit (determined without regard to whether he or she is vested) or if a Participant who has a vested SERP Benefit dies before he or she has received or begun to receive payment of his or her SERP Benefit, a survivor benefit automatically will be payable on such deceased Participant’s behalf under this Plan in the amount described in this Section 4.3.

(b)

Time and Form of Payment . The survivor benefit determined under this Section 4.3 based on the SERP Benefit other than Grandfathered Amounts shall be paid in accordance with Section 4.2.

(c)

Survivor Benefit for Spouse . If the Participant’s sole Beneficiary is the Participant’s surviving spouse, the survivor benefit payable to such spouse under this Plan will be calculated as follows:

(1)

Step One – For a Tier 1 Participant, determine the product of the formula in either Section 2.23(a)(1)(i) or Section 2.23(a)(1)(ii) that produces the greater amount. For a Tier 2 Participant, the amount which is greater between (y) the sum of Section 2.23(a)(2)(i) plus Section 2.23(a)(2)(ii), and (z) the Tier 2 Minimum Benefit (as defined in Section 2.23(a)(2)).

(2)

Step Two – Determine the time as of which the benefit under the Retirement Plan would have been paid to the Participant, which is the later of the date the Participant would have reached age 55 or the date of the Participant’s death (“Annuity Commencement Date”), and reduce the amount determined under Step One for early commencement, if applicable, as follows:

(i)

If the Participant is a Tier 1 Participant and if the Annuity Commencement Date is before the date such Participant would have reached age 65, the amount determined under Step One above will be multiplied by a fraction, the numerator of which is the Tier 1 Participant’s SERP Service as of the date of his or her death and the denominator of which is the SERP Service the Tier 1 Participant would have had if he or

she had survived and continued in employment with SunTrust or an Affiliate until his or her Retirement Date, and

(ii)

If the Annuity Commencement Date is before the date the Tier 1 Participant would have reached age 60, or if the Participant is a Tier 2 Participant, then the amount determined in Step One, as reduced in Step Two (i) above, if applicable, will be reduced further by the same early retirement reduction factors that are used in the Retirement Plan to reduce the Future Service Benefit (i.e., 5/12% for each full month by which such Participant’s early retirement date precedes the first day of the month on or immediately following the date when he or she would have attained age 65, except that in the case of a Participant who was hired by SunTrust before July 1, 1990, the reduction is from the first day of the month on or immediately following the date when such Participant would have attained age 60).

(iii)

This subparagraph 4.3(c)(2)(iii) shall apply only to a Participant who is designated by the Committee as eligible for the following special reduction (a “Designated Participant”) and who is listed on Exhibit E as a Designated Participant for purposes of this subparagraph. If the Annuity Commencement Date is before the date such Designated Participant would have reached age 60, then the reduction in Step Two (ii) is not used and the amount determined in Step One as reduced in Step Two (i) above will be reduced further by a factor of 5/12% for each full calendar month by which such Designated Participant’s date of death precedes the date he or she would have attained age 60.

(3)

Step Three – Convert the amount determined under Step Two above as follows:

(i)

For a Tier 1 Participant, convert to a 100% joint and survivor annuity payable monthly as of the Annuity Commencement Date based on the ages the surviving spouse and such Participant would have attained as of the Annuity Commencement Date, and

(ii)

For a Tier 2 Participant who ceases to be an active SunTrust employee prior to October 1, 2010, convert to a 50% joint and survivor annuity payable monthly as of the Annuity Commencement Date based on the ages the surviving spouse and such Participant would have attained as of the Annuity Commencement Date; and for a Tier 2 Participant who is

an active SunTrust employee on or after October 1, 2010, convert to a 100% joint and survivor annuity payable monthly as of the Annuity Commencement Date based on the ages the surviving spouse and such Participant would have attained as of the Annuity Commencement Date; provided, however, any increase in the survivor benefit attributable to the amendment of this section changing the benefit from a 50% to a 100% joint and survivor annuity is subject to Code section 409A and shall be paid in accordance with Section 4.2.

(4)

Step Four – Determine the time as of which the benefit will be paid under Section 4.3(e) and convert the survivor portion of the annuity determined under Step Three to a lump sum using the actuarial factors then in effect under the Retirement Plan to make such conversion or, if applicable, the factors under Section 2.23(b).

(5)

Step Five – Reduce the amount determined in Step Four above by the sum of (A + B + C + D), where --

A =

the present value, determined as described below, of the Social Security survivor benefit that would have been payable to the spouse based on the Participant’s employment when the Participant would have reached age 65;

B =

the lump sum survivor benefit payable to such spouse under the Retirement Plan or, if the survivor benefit under the Retirement Plan is not paid in a lump sum, the amount that would have been payable to such spouse as a lump sum under the Retirement Plan;

C =

the lump sum survivor benefit payable to the surviving spouse under the ERISA Excess Plan or, if the survivor benefit under the Excess Plan is not paid in a lump sum, the amount that would have been payable to such spouse if the survivor benefit under the Excess Plan had been paid in a lump sum; and

D =

the present value, determined as described below, of the survivor benefit payable under any Other Retirement Arrangement, if any, regardless of whether the Beneficiary is the surviving spouse or someone else.

“Present value” is determined using the actuarial factors then in effect under the Retirement Plan to calculate lump sums or, if applicable, the factors under Section 2.23(b).

(d)

Survivor Benefit for Non-Spouse Beneficiary . If the survivor benefit under this Plan is payable to a non-spouse Beneficiary, it will be calculated in the same manner as the survivor benefit under Section 4.3(c) by substituting the non-spouse Beneficiary for the spouse except that the conversion to a 100% joint and survivor annuity in the case of a deceased Tier 1 Participant or the conversion to a 50% or 100% joint and survivor annuity, as applicable, in the case of a deceased Tier 2 Participant, as described in Step Three and to an actuarially equivalent lump sum under Steps Four and Five of Section 4.3(c)(4) and (5) will be based on the assumption that the Beneficiary is the same age as the Participant. If the non-spouse Beneficiary is not a person but is an entity (such as a trust or an estate), the survivor benefit shall be calculated in the same manner as described in this Section 4.3(d) for a non-spouse Beneficiary who is a person.

(e)

Multiple Beneficiaries . If the survivor benefit is payable to two or more beneficiaries, the amount allocable to each Beneficiary shall be determined by allocating the amount resulting from applying Step One and Step Two of Section 4.3(c)(1) and (2) pro rata to each Beneficiary according to the Participant’s direction on the Beneficiary designation form. If the Participant’s spouse is one of the multiple beneficiaries, then the amount of such spouse’s survivor benefit shall be determined by applying Steps Three, Four and Five of Section 4.3(c)(3), (4) and (5) to such spouse’s allocable share. For a non-spouse Beneficiary, the same procedure shall be used as used for the Participant’s spouse who is one of multiple beneficiaries except that in applying Steps Three, Four and Five of Section 4.3(c)(3), (4) and (5), the non-spouse Beneficiary shall be assumed to be the same age as the Participant.

(f)

No Post-Retirement Survivor Benefits . No survivor benefit will be paid on behalf of a Participant who dies after he or she has received or has begun receiving benefits under this Plan except to the extent such survivor benefit is payable under the form of benefit being paid to the Participant at his or her death.

4.4

Transferred SERP Benefits. In the event a Participant changes from a position eligible to participate in the Plan to one that is not eligible for any reason, such Participant shall cease to participate and accrue benefits under the Plan as of such date. The Committee, or its delegate, shall determine, in its or his sole discretion, the portion of such Participant’s SERP Benefit subject to Code section 409A as of the date of such change and shall credit the present value of such benefit to an account in the SunTrust Banks, Inc. Deferred Compensation Plan (the “Deferred Compensation Plan”) as soon as practicable following such date. Such Participant will thus no

longer be eligible to receive that portion of the SERP Benefit from this Plan; provided, however, other than as specifically set forth in the Deferred Compensation Plan, such amount and the earnings thereon shall remain subject to the terms and conditions of this Plan, including the time and form of payment established in compliance with Code section 409A.

ARTICLE 5

OTHER RETIREMENT ARRANGEMENT BENEFIT

If a Participant who is eligible for an Other Retirement Arrangement Benefit terminates employment with SunTrust and all Affiliates on or after the date the Participant is vested in such benefit, his or her eligibility for the Other Retirement Arrangement Benefit, if any, to which such Participant is entitled and the eligibility for any survivor benefits payable on such Participant’s behalf under such Other Retirement Arrangement shall be determined under the terms of such Other Retirement Arrangement; provided, however, to the extent any portion of such Other Retirement Arrangement Benefit or survivor benefits is subject to Code section 409A, the time and form of payment of such amounts shall be determined in accordance with Section 4.2.

ARTICLE 6

FORFEITURE

The Committee, in its sole discretion, may make any payments under this Plan subject to forfeiture on such terms and conditions as the Committee deems appropriate under the circumstances to protect the interests of SunTrust. Further, if the Participant is terminated from employment with SunTrust or one of its Affiliates for Cause, the Committee in its discretion may forfeit entirely any benefits payable under this Plan. Forfeiture under this Article 6 shall be in addition to any other remedies which may be available to SunTrust or an Affiliate at law or in equity.

ARTICLE 7

SOURCE OF BENEFIT PAYMENTS

All benefits payable under the terms of this Plan shall be paid by SunTrust from its general assets. No person shall have any right or interest or claim whatsoever to the payment of a benefit under this Plan from any person whomsoever other than SunTrust, and no Participant or Beneficiary shall have any right

or interest whatsoever to the payment of a benefit under this Plan which is superior in any manner to the right of any other general and unsecured creditor of SunTrust.

ARTICLE 8

NOT A CONTRACT OF EMPLOYMENT

Participation in this Plan does not grant to any individual the right to remain an employee of SunTrust or any Affiliate for any specific term of employment or in any specific capacity or at any specific rate of compensation.

ARTICLE 9

NO ALIENATION OR ASSIGNMENT

A Participant, a spouse or a Beneficiary under this Plan shall have no right or power whatsoever to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of any benefit otherwise payable under this Plan, and SunTrust shall have the right, in the event of any such action, to terminate permanently the payment of benefits to, or on behalf of, any Participant, spouse or Beneficiary who attempts to do so.

ARTICLE 10

ERISA

SunTrust intends that this Plan come within the various exceptions and exemptions to ERISA for a plan maintained for a “select group of management or highly compensated employees” as described in ERISA sections 201(2), 301(a) (3), and 401(a) (1), and any ambiguities in this Plan shall be construed to affect that intent.

ARTICLE 11

AMENDMENT AND TERMINATION

11.1

Amendment or Termination . SunTrust reserves the right to amend or terminate the Plan when, in the sole discretion of SunTrust, such amendment or termination is advisable, pursuant to a resolution or other action taken by the Committee. The Plan may also be amended pursuant to a written instrument executed by SunTrust’s senior most human resources officer to the extent

such amendment is required under applicable law or is required to avoid having amounts deferred under the Plan included in the income of Participants or beneficiaries for federal income tax purposes prior to distribution.

Notwithstanding the foregoing, no amendment of the Plan shall apply to the Grandfathered Amounts, unless the amendment specifically provides that it applies to such amounts. The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent “material modification” under Code section 409A to the Grandfathered Amounts.

11.2

Effect of Amendment or Termination . Except as provided in the next sentence, no amendment or termination of the Plan shall be applied retroactively to deprive a Participant of benefits accrued under this Plan to the date of such amendment or termination. Upon termination of the Plan, distribution of Plan benefits shall be made to Participants and beneficiaries in the manner and at the time described in Article 4, unless SunTrust determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A. Upon termination of the Plan, no further benefit accruals shall occur.

ARTICLE 12

ADMINISTRATION

12.1

General Administration . The Committee shall be responsible for the operation and administration of the Plan and for carrying out the provisions hereof. The Committee shall have the full authority and discretion to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with this Plan. Any such action taken by the Committee shall be final and conclusive on any party. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by SunTrust with respect to the Plan. The Committee may, from time to time, employ agents and delegate to such agents, including employees of SunTrust, such administrative or other duties as it sees fit. The Committee also shall have the power to delegate the exercise of all or any part of such powers to such other person or persons as the Committee deems appropriate under the circumstances.

12.2	Claims for Benefits . The Committee shall adopt claims procedures in compliance with 29 C.F.R. § 2560.503-1, which shall be furnished automatically in a separate document to the Participant, without charge, following a Participant’s request to the Committee, or its delegate.

12.3

Indemnification . SunTrust and its Affiliates (to the extent permissible under law and consistent with their charters and bylaws) shall indemnify and hold harmless the Committee, each individual member of the Committee and any Employee authorized to act on behalf of the Committee, SunTrust or any Affiliate under this Plan for any liability, loss, expense, assessment or other cost of any kind or description whatsoever, including legal fees and expenses, which they actually incur for their acts and omissions, past, current or future, in the administration of the Plan.

ARTICLE 13

CHANGE IN CONTROL

13.1

Purpose . The purpose of this Article 13 is to provide for an increase in the SERP Benefit payable under this Plan to a Participant who is adversely affected by a Change in Control (as defined below) and thus to encourage each Participant to continue to work for SunTrust in the face of a possible Change in Control and to continue while doing so to act in the best interests of SunTrust and its shareholders.

13.2	Definitions . For purposes of this Article 13, the following terms shall have the meaning set forth opposite such terms for purposes of this Article 13:

(a)

Cause - means (subject to Section 13.2(a)(5)) with respect to an individual Participant:

(1)

The willful and continued failure by the Participant to perform satisfactorily the duties of the Participant’s job;

(2)

The Participant is convicted of a felony or has engaged in a dishonest act, misappropriation of funds, embezzlement, criminal conduct or common law fraud;

(3)

The Participant has engaged in a material violation of the Code of Business Conduct and Ethics of SunTrust or the Code of Conduct of an Affiliate; or

(4)

The Participant has engaged in any willful act that materially damages or materially prejudices SunTrust or a SunTrust Affiliate or has engaged in conduct

or activities materially damaging to the property, business or reputation of SunTrust or an Affiliate; provided, however,

(5)

No such act, omission or event shall be treated as “Cause” under this Section 13.2(a) unless (1) the Participant has been provided a detailed, written statement of the basis for SunTrust’s belief that such act, omission or event constitutes “Cause” and an opportunity to meet with the Committee (together with the Participant’s counsel if the Participant chooses to have the Participant’s counsel present at such meeting) after the Participant has had a reasonable period in which to review such statement and, if the allegation is under Section 13.2(a)(1), has had at least a thirty (30) day period to take corrective action and (2) the Committee after such meeting (if the Participant meets with the Committee) and after the end of such thirty (30) day correction period (if applicable) determines reasonably and in good faith and by the affirmative vote of at least two-thirds of the members of the Committee then in office at a meeting called and held for such purpose that “Cause” does exist under this Section 13.2(a).

(b)

Change in Control - means a change in control of SunTrust of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act as in effect at the time of such “change in control”, provided that such a change in control shall be deemed to have occurred at such time as (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of SunTrust or any successor of SunTrust; (ii) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board of SunTrust cease, for any reason, to constitute at least a majority of such Board, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) there is a consummation of any reorganization, merger, consolidation or share exchange as a result of which the common stock of SunTrust shall be changed, converted or exchanged into or for securities of another corporation (other than a merger with a wholly-owned subsidiary of SunTrust) or any dissolution or liquidation of SunTrust or any sale or the disposition of 50% or more of the assets or business of SunTrust; or (iv) there is a consummation of any reorganization, merger, consolidation or share exchange unless (A) the persons who were the beneficial owners of the outstanding shares of the

common stock of SunTrust immediately before the consummation of such transaction beneficially own more than 65% of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (B) the number of shares of the common stock of such successor or survivor Company beneficially owned by the persons described in Section 13.2(b)(iv)(A) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of SunTrust’s common stock immediately before the consummation of such transaction, provided (C) the percentage described in Section 13.2(b)(iv)(A) of the beneficially owned shares of the successor or survivor corporation and the number described in Section 13.2(b)(iv)(B) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of SunTrust by the persons described in Section 13.2(b)(iv)(A) immediately before the consummation of such transaction.

(c)

Exchange Act - means the Securities Exchange Act of 1934, as amended.

(d)

Good Reason - means (subject to Section 13.2(d)(5)) with respect to an individual Participant:

(1)

SunTrust or any Affiliate after a Change in Control but before the end of the Participant’s Protection Period reduces the Participant’s base salary or opportunity to receive comparable incentive compensation or bonuses without the Participant’s express written consent;

(2)

SunTrust or any Affiliate after a Change in Control but before the end of the Participant’s Protection Period reduces the scope of the Participant’s principal or primary duties, responsibilities or authority without the Participant’s express written consent;

(3)

SunTrust or any Affiliate at any time after a Change in Control but before the end of the Participant’s Protection Period (without the Participant’s express written consent) transfers the Participant’s primary work site from the Participant’s primary work site on the date of such Change in Control or, if the Participant subsequently consents in writing to such a transfer from the primary work site which was the subject of such consent, to a new primary work site which is outside the “standard metropolitan statistical area” which then includes the

Participant’s then current primary work site unless such new primary work site is closer to the Participant’s primary residence than the Participant’s then current primary work site; or

(4)

SunTrust or any Affiliate after a Change in Control but before the end of the Participant’s Protection Period fails (without the Participant’s express written consent) to continue to provide to the Participant health and welfare benefits, deferred compensation and retirement benefits, stock option and restricted stock grants that are in the aggregate comparable to those provided to the Participant immediately prior to the Change in Control; provided, however,

(5)

No such act or omission shall be treated as “Good Reason” under this Article 13(d) unless --

(i)

(A) The Participant delivers to the Committee a detailed, written statement of the basis for the Participant’s belief that such act or omission constitutes Good Reason, (B) the Participant delivers such statement before the later of (x) the end of the ninety (90) day period which starts on the date there is an act or omission which forms the basis for the Participant’s belief that Good Reason exists or (y) the end of the period mutually agreed upon for purposes of this Section 13.2(d)(5)(i)(B) in writing by the Participant and the Chairman of the Committee, (C) the Participant gives the Committee a thirty (30) day period after the delivery of such statement to cure the basis for such belief and (D) the Participant actually submits the Participant’s written resignation to the Committee during the sixty (60) day period which begins immediately after the end of such thirty (30) day period if the Participant reasonably and in good faith determines that Good Reason continues to exist after the end of such thirty (30) day period, or

(ii)

SunTrust states in writing to the Participant that the Participant has the right to treat such act or omission as Good Reason under this Section 13(d) and the Participant resigns during the sixty (60) day period which starts on the date such statement is actually delivered to the Participant;

(6)

If (i) the Participant gives the Committee the statement described in Section 13.2(d)(5)(i)(A) before the end of the thirty (30) day period which immediately follows the end of the Protection Period and the Participant thereafter resigns

within the period described in Section 13.2(d)(5)(i)(D), or (ii) SunTrust provides the statement to the Participant described in Section 13.2(d)(5)(ii) before the end of the thirty (30) day period which immediately follows the end of the Protection Period and the Participant thereafter resigns within the period described in Section 13.2(d)(5)(ii), then (iii) such resignation shall be treated under this Section 13.2(d) as if made in the Participant’s Protection Period; and

(7)

If the Participant consents in writing to any reduction described in Section 13.2(d)(1) or Section 13.2(d)(2), to any transfer described in Section 13.2(d)(3) or to any failure described in Section 13.2(d)(4) in lieu of exercising the Participant’s right to resign for Good Reason and delivers such consent to SunTrust, the date such consent is delivered to SunTrust thereafter shall be treated under this definition as the date of a Change in Control for purposes of determining whether the Participant subsequently has Good Reason under this Article 13 to resign for Good Reason as a result of any subsequent reduction described in Section 13.2(d)(1) or Section 13.2(d)(2), any subsequent transfer described in Section 13.2(d)(3) or any subsequent failure described in Section 13.2(d)(4).

(e)

Protection Period - means (subject to Section 13.2(d)(6):

(1)

for a Tier 1 Participant, the three (3) year period which begins on a Change in Control, and

(2)

for a Tier 2 Participant, the two (2) year period which begins on a Change in Control.

13.3	Application. This Article 13 shall apply to a Participant if there is a Change in Control of SunTrust and

(a)

SunTrust or an Affiliate terminates the Participant’s employment without Cause during such Participant’s Protection Period, or

(b)

the Participant resigns for Good Reason during such Participant’s Protection Period.

13.4	Benefit Calculation for a Tier 1 Participant . If this Article 13 applies to a Tier 1 Participant pursuant to Section 13.3, such Participant’s SERP Benefit shall be calculated in accordance with the following special rules:

(a)

such Participant’s SERP Average Compensation shall be equal to the highest amount of his or her SERP Compensation received for any full calendar year during the ten (10) consecutive calendar years which end on or immediately before the termination of such Participant’s employment which is described in Section 13.3.

(b)

such Participant’s SERP Service automatically shall be increased by the greater of (1) or (2) below:

(1)

any additional SERP Service granted to such Participant in accordance with any individual agreement between such Participant and SunTrust or a SunTrust Affiliate; or

(2)

the lesser of (i) thirty-six (36) full months or (ii) the number of months between such Participant’s Retirement Date and the date of the termination of his or her employment which is described in Section 13.3.

(c)

if such Participant is not already vested in his or her SERP Benefit, such Participant’s Vested Date shall mean the first date this Article 13 applies to him or her.

(d)

such Participant’s age shall be such Participant’s actual age plus any additional years added to his or her age as provided in accordance with any individual agreement between such Participant and SunTrust or a SunTrust Affiliate.

(e)

such Participant’s entire SERP Benefit under this Plan (as calculated after taking into account the special rules set forth in Section 13.4(a) through Section 13.4(d)) shall be paid to him or her in accordance with Article 4, and the actuarial equivalent factors used to compute such SERP Benefit shall be the actuarial equivalent factors in effect under the Retirement Plan on the date of the Change in Control or, if more favorable to the Participant, the factors in effect under the Retirement Plan (or any successor to such plan) as in effect as of the date of the termination of his or her employment described in Section 13.3; provided, however, that the amount of the SERP Benefit payable to a Participant designated as eligible for the special lump sum calculation in Section 2.23(b) shall be calculated (after taking into account the special rules set forth in Section 13.4(a) through Section 13.4(d)) in accordance with Section 2.23(b) and; further provided, that if such termination of employment occurs before the date the Participant reaches age 60, the amount of the SERP Benefit called for under this Section 13.4(e) shall be reduced by .25% of such benefit for each full calendar month that the actual payment of such benefit precedes the month in which the Participant will reach age 60 (and in such case, no other

pre-age 60 reductions shall apply) and; further provided, that if any portion of the SERP Benefit is payable in a lump sum after the date of a Participant’s Separation from Service (including as a result of the six month delay in payment for a Key Employee), interest shall accrue from the date of determination of such amount in the same manner and at the same rate as would accrue on the Personal Pension Account under the Retirement Plan until the amount is paid under Article 4.

13.5	Benefit Calculation for a Tier 2 Participant . If this Article 13 applies to a Tier 2 Participant pursuant to Section 13.3, such Participant’s SERP Benefit shall be calculated in accordance with the following special rules:

(a)

(b)

such Participant’s SERP Service automatically shall be increased by any additional SERP Service granted to such Participant in accordance with any individual agreement between such Participant and SunTrust or a SunTrust Affiliate, including any interest that would have accrued during such additional SERP Service period in the same manner and at the same rate as would accrue on the Personal Pension Account under the Retirement Plan; provided, however, such additional SERP Service shall not impact the amount of the Tier 2 Frozen Benefit under Section 2.23.

(c)

such Participant’s Vested Date shall mean the first date this Article 13 applies to him or her pursuant to Section 13.3.

(d)

(e)

such Participant’s entire SERP Benefit under this Plan (as calculated after taking into account the special rules set forth in Section 13.5(a) through Section 13.5(d)) shall be paid to him or her in accordance with Article 4, and the actuarial equivalent factors used to compute such SERP Benefit shall be the actuarial equivalent factors in effect under the Retirement Plan on the date of the Change in Control or, if more favorable to the Participant, the factors in effect under the Retirement Plan (or any successor to such

plan) as in effect as of the date of the termination of his or her employment described in Section 13.3; provided, however, that if such termination of employment occurs before such Participant has attained (or is deemed to have attained) age 60, the amount of the SERP Benefit called for by this Section 13.5(e) shall be reduced by .25% of such benefit for each full calendar month that the actual payment of such benefit precedes the month in which the Participant will attain age 60 (and in such case, no other pre-age 60 reductions shall apply) and, further provided, that if any portion of the SERP Benefit is payable in a lump sum after the date of a Participant’s Separation from Service (including as a result of the six month delay in payment for a Key Employee), interest shall accrue from the date of determination of such amount in the same manner and at the same rate as would accrue on the Personal Pension Account under the Retirement Plan until such amount is paid under Article 4.

13.6

No Amendment . If there is a Change in Control, no amendment shall be made to this Plan thereafter which would adversely affect in any manner whatsoever the benefit payable under this Article 13 to any Participant absent the express written consent of all Participants who might be adversely affected by such amendment if this Article 13 were, or could become, applicable to such Participants, and SunTrust intends that each Participant rely on the protections which SunTrust intends to provide through this Section 13.6.

13.7

Denial of Claim for Benefits . If this Article 13 applies to a Participant and such Participant’s claim for a benefit under this Plan is denied in whole or in part under the appeal procedures established by the Committee for denied claims, any further challenge of such denial shall be determined by binding arbitration in accordance with Title 9 of the United States Code and the applicable set of arbitration rules of the American Arbitration Association. Judgment upon any award made in such arbitration may be entered and enforced in any court of competent jurisdiction. All statutes of limitation which would otherwise be applicable in a judicial action brought by a party shall apply to any arbitration or reference proceeding hereunder. Neither SunTrust, an Affiliate, the Committee nor a Participant shall appeal such award to or seek review, modification, or vacation of such award in any court or regulatory agency. Unless otherwise agreed, venue for arbitration shall be in Atlanta, Georgia.

13.8

Reimbursements . All of a Participant’s taxable reasonable costs and expenses incurred in connection with such arbitration shall be paid in full by SunTrust promptly on written demand from the Participant, including the arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees and attorneys’ fees; provided, however, SunTrust shall pay no more than $30,000 per year in attorneys’ fees unless a higher

figure is awarded in the arbitration, in which event SunTrust shall pay the figure awarded in the arbitration.

Reimbursement of reasonable costs and expenses under this Section 13.8 shall be administered consistent with the following additional requirements as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv): (1) a Participant’s eligibility for benefits in one year will not affect a Participant’s eligibility for benefits in any other year; (2) any reimbursement of eligible expenses will be made on or before the last day of the year following the year in which the expense was incurred; and (3) a Participant’s right to benefits is not subject to liquidation or exchange for another benefit. In the event the Participant is a Key Employee, reimbursement for benefits under this Section 13.8 shall commence in the seventh month following the date of the Participant’s Separation from Service. No reimbursement shall be made under this Section 13.8 for the same expenses that are reimbursed to a Participant under any other agreement between the Participant and SunTrust or an Affiliate.

13.9

Gross Up Payment . Furthermore, if either the Committee or the arbitrators determine that the Participant incurred such fees and expenses in good faith and that the Participant’s challenge was based on material and bona fide issue of fact or law, without regard to whether the challenge ultimately is resolved in favor of the Participant, then if any such reimbursement is treated as taxable income to the Participant, SunTrust shall make a gross up payment to the Participant in an amount which shall indemnify and hold the Participant harmless from any tax liability of any kind or description whatsoever attributable to such reimbursement, including any interest and penalties (the “Gross Up Payment”). Any Gross Up Payment made to or on behalf of the Participant under this Section 13.9 shall be made in compliance with Code section 409A and by the end of the year following the year that the related taxes are remitted to the applicable taxing authority. In the event the Participant is a Key Employee, payment of any Gross Up Payment under this Section 13.9 shall commence in the seventh month following the date of the Participant’s Separation from Service.

13.10

Application to Beneficiaries . If this Article 13 applies to a Participant pursuant to Section 13.3 and such Participant dies before receiving or beginning to receive such Participant’s SERP Benefit, the survivor benefit for such deceased Participant’s Beneficiary or beneficiaries shall be calculated taking into account the special rules in Section 13.4 if such Participant was a Tier 1 Participant or in Section 13.5 if such Participant was a Tier 2 Participant. In addition, the provisions of Section 13.6 and Section 13.7 shall apply to such Beneficiary or Beneficiaries.

ARTICLE 14

MISCELLANEOUS

14.1	Applicable Law . This Plan will be construed in accordance with the laws of the State of Georgia (without regard to its choice-of-law rules) except to the extent superseded by federal law.

14.2

Incapacity of Recipient . If any person entitled to a distribution under the Plan is deemed by the Committee to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, the Committee may provide for such payment or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of SunTrust and the Plan with respect to the payment.

14.3

Taxes . SunTrust or other payor may withhold from a benefit payment under the Plan or a Participant’s wages in order to meet any federal, state, or local tax withholding obligations with respect to Plan benefits. SunTrust or other payor may also accelerate and pay a portion of a Participant’s benefits in a lump sum equal to the Federal Insurance Contributions Act (“FICA”) tax imposed and the income tax withholding related to such FICA amounts. SunTrust or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

14.4

Binding Effect . This Plan shall be binding upon and inure to the benefit of any successor of SunTrust and any successor shall be deemed substituted for SunTrust under this Plan and shall assume the rights, obligations and liabilities of SunTrust hereunder and be obligated to perform the terms and conditions of this Plan. As used in this Plan, the term “successor” shall include any person, firm, corporation or other business entity or related group of such persons, firms, corporations or business entities which at any time, whether by merger, purchase, reorganization, liquidation or otherwise, or by means of a series of such transactions, acquires all or substantially all of the assets or business of SunTrust.

14.5	Unclaimed Benefits . Each Participant shall keep the Committee informed of his or her current address and the current address of his or her designated Beneficiary. The Committee shall not

be obligated to search for the whereabouts of any person if the location of a person is not made known to the Committee.

14.6	Severability . In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

14.7

Construction . The headings and subheadings in this Plan have been set forth for convenience of reference only and have no substantive effect whatsoever. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or in the singular, as the case may be, in all cases where they would so apply.

14.8

Regulatory Requirements. Regulatory agencies and federal laws and regulations may impose restrictions on SunTrust and its Affiliates with respect to the payment of compensation and benefits to certain employees who may be Participants in this Plan. These restrictions may be in the form of absolute prohibitions or penalties, which may include tax penalties on SunTrust and its Affiliates or on certain Participants. Notwithstanding any other provision of this Plan document, SunTrust may reduce, eliminate or delay the payment of a Participant’s benefits under this Plan or may take actions that subject such benefits to monetary or tax penalties, as determined by SunTrust in its sole discretion to be required under federal laws or regulations applicable to SunTrust and its Affiliates. In such event, neither SunTrust nor its Affiliates shall have any liability for such reduction, elimination, delay or penalty. Any delay in payment of a Participant’s benefits under this Plan will comply with Treas. Reg. § 1.409A-2(b)(7).

ARTICLE 15

EXECUTION

IN WITNESS WHEREOF, SunTrust has caused this amended and restated Plan to be executed by its duly authorized officer to evidence its adoption hereof effective as of January 1, 2011.


		SUNTRUST BANKS, INC.

		By:
				Donna D. Lange



		Title:

		Date:
		(SEAL)

Exhibit A

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Section 2.14, Other Retirement Arrangement

Pursuant to Section 2.14, Other Retirement Arrangement means the following plan, program, arrangement or agreement (a) that is maintained by SunTrust or an Affiliate, (b) that provides a benefit calculated as a defined-benefit type benefit and (c) in which a Participant also participates:

Crestar Financial Corporation Supplemental Executive Retirement Plan (“Crestar SERP”).

National Commerce Financial Corporation Retirement Plan including any predecessor plan.

National Commerce Financial Corporation Supplemental Executive Retirement Plan including any predecessor plan.

A-1

Exhibit B

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Section 2.23(b), Special Lump Sum Calculation

The Committee has designated the following Participants as eligible for the Special Lump Sum calculation described in Section 2.23(b) of the Plan document:

James M. Wells III

B-1

Exhibit C

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Section 2.24, SERP Compensation

For purposes of calculating SERP Compensation, as defined in Section 2.24 of the main text of this Plan, of a Tier 1 or Tier 2 Participant who is named in the following table, his base salary for the 2010 and 2011 calendar years, respectively, shall include the dollar amount set forth by his name. Such dollar value shall be pro rated, restricted or limited to the extent required by the terms of the Plan in calculating and applying SERP Compensation. The Plan shall not recognize any additional amount of, or value for, “salary shares.”


Status & Name	Value of Salary Shares to be Included as Part of 2010 Annual Base Salary	Value of Salary Shares to be Included as Part of 2011 Annual Base Salary
TIER 1 Participant
James M. Wells III	$ 1,799,091*	$498,251*
TIER 2 Participants
William H. Rogers, Jr.	$ 554,400	$236,250
Mark A. Chancy	504,000	$140,000
David F. Dierker	340,200	$94,950
Timothy E. Sullivan	438,442	$121,790
Thomas O. Kuntz	307,476	$94,950
Thomas E. Freeman	427,500	$118,750
Raymond D. Fortin	340,200	$94,950
C. T. Hill	353,808**	$98,280**

*This value for Mr. Wells is also used in the Crestar SERP benefit formula.

**This value for Mr. Hill is not used in the Crestar SERP benefit formula.

C-1

Exhibit D

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Sections 2.27 and 2.28, Tier 1 and Tier 2 Participants

The Committee designated the following executives as Tier 1 and Tier 2 Participants:


Name	Formula	Participation Date	Benefit Service Start Date	Special Features
James M. Wells III	Tier 1	1/1/2001	Hire	n Special lump sum (PBGC) n Special early retirement reduction (service prorate, 5% from age 60) n 100% vested on 1/1/2001, regardless of age and service n Restricted Stock substituted for PUP in 2003 – 2005 cycle n Effective 1/1/2005, PUP is limited to 2004 level (target, minimum, maximum) n Notwithstanding any elections or provisions to the contrary in this Plan or any Other Retirement Arrangement, the entire amount of the SERP Benefit under the Plan shall be subject to Code section 409A (no Grandfathered Amounts in this Plan or any Other Retirement Arrangement) and shall be equal to the larger of the amount calculated under: (a) the Tier 1 SERP Benefit formula or (b) the Crestar SERP benefit formula. Such amount shall be paid in a lump sum in accordance with Article 4.
Charles T. Hill	Tier 2	1/1/2001	Hire	Notwithstanding any provisions to the contrary in this Plan or any Other Retirement Arrangement, the entire amount of the SERP Benefit shall be subject to Code section 409A (no Grandfathered Amounts in this

D-1


Name	Formula	Participation Date	Benefit Service Start Date	Special Features
				Plan or any Other Retirement Arrangement) and shall be the larger of the amount calculated under: (a) the Tier 2 SERP Benefit formula or (b) the Crestar SERP benefit formula. Such amount shall be paid in a lump sum in accordance with the participant’s elections.
Dennis M. Patterson	Tier 2	1/1/2001	Hire
William H. Rogers, Jr.	Tier 2	1/1/2001	Hire
E. Jenner Wood, III	Tier 2	1/1/2001	Hire
Sterling Edmunds, Jr.	Tier 2	8/13/2002	Hire
Timothy E. Sullivan	Tier 2	1/7/2003	Hire
Raymond D. Fortin	Tier 2	11/8/2004	Hire
David F. Dierker	Tier 2	11/8/2004	Hire
Mark A. Chancy	Tier 2	11/8/2004	Hire
Thomas G. Kuntz	Tier 2	11/8/2004	Hire
Frances L. Breeden	Tier 2	2/14/2006	Hire
Thomas E. Freeman	Tier 2	2/14/2006	Hire

The following individuals who were former key officers of National Commerce Financial Corporation or its affiliates were designated by the Committee as Tier 2 Participants:

D-2

Name

Formula

Participation
Date

Benefit

Service Start

Date

Special Features

William L.

Reed, Jr.

Tier 2

1/1/2005

8/1/2001

n NCF SERP (before offsets) is a minimum to the Tier 2 SERP minus PIA (before other offsets).

n Tier 2 SERP benefit is offset by NCF SERP benefit.

n NCF SERP earnings (base plus bonus paid) will be used for years prior to 2005.

n SunTrust SERP earnings (base plus bonus earned) will be used for years after 2004.

n 2005 is a transition year for earnings. Depending on which calculation produces the larger FAE, either the 2004 or 2005 earnings will be adjusted as follows:

— 2004 earnings will be NCF SERP earnings (2004 base plus 2004 bonuses paid) plus 2005 MIP paid, or

— 2005 earnings will be SunTrust SERP earnings (2005 base plus 2005 MIP earned) plus 2005 MIP paid.

D-3

Exhibit E

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Section 2.29(a), Special Vested Date

The Committee designated the Participants listed below as being 100% vested in their SERP Benefits.

Participant

Special Vested Date

¡ James M. Wells III

1/1/2001

E-1

Exhibit F

SUNTRUST BANKS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

AMENDED AND RESTATED AS OF JANUARY 1, 2010

Sections 4.1(b)(4) and 4.3(c)(2)(iii), Designated Participant Reduction

The Committee designated the Participants listed below as eligible for the special retirement reduction described in Section 4.1(b)(4) and in Section 4.3(c)(2)(iii):

James M. Wells III

F-1

Exhibit 10.8

2011 Amendments

SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

AMENDED AND RESTATED EFFECTIVE AS OF

January 1, 2011

SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

TABLE OF CONTENTS


				Page

ARTICLE 1	ESTABLISHMENT AND PURPOSE				1

ARTICLE 2	DEFINITIONS				1

	2.1	Actuarial Equivalent or Actuarially Equivalent			2

	2.2	Affiliate			2

	2.3	Annual Compensation Limit			2

	2.4	Annuity Option			2

	2.5	Beneficiary			2

	2.6	Beneficiary Designation Form			2

	2.7	Cause			3

	2.8	Code			3

	2.9	Committee			4

	2.10	Corporation			4

	2.11	Deferred Compensation Plan			4

	2.12	Disabled or Disability			4

	2.13	ERISA			4

	2.14	Excess Benefit			4

		(a)	Excess Plan Participant Before 2008 Receiving Traditional Benefit		4

		(b)	Excess Plan Participant Before 2008 Receiving PPA Benefit		5

		(c)	Excess Plan Participant After 2007 Receiving Traditional Benefit		5

		(d)	Excess Plan Participant After 2007 Receiving PPA Benefit		5

		(e)	Tier 1 Participants Receiving Excess Plan Traditional Benefit		6

	2.15	Excess Plan PPA Benefit			6

	2.16	Excess Plan Traditional Benefit			7

	2.17	Frozen Excess Benefit			7


	2.18	Grandfathered Amounts			7

	2.19	Key Employee			7

	2.20	Key Employee Delay			7

	2.21	Newly Eligible Employee			7

	2.22	Normal Retirement Date			8

	2.23	Participant			8

	2.24	Plan			8

	2.25	Plan Year			8

	2.26	PPA Benefit			8

	2.27	Retirement Plan			8

	2.28	Separation from Service or Separates from Service			8

	2.29	SERP			8

	2.30	Subsequent Deferral Election			8

	2.31	Tier 1 Participant			8

	2.32	Traditional Benefit			9

	2.33	Vested Date			9

ARTICLE 3	ELIGIBILITY AND PARTICIPATION				9

	3.1	Committee Designation Prior to 2011			9

	3.2	Eligibility and Participation After 2010			9

	3.3	Committee Revocation			9

ARTICLE 4	AMOUNT AND DISTRIBUTION OF EXCESS BENEFIT				10

	4.1	Amount of Excess Benefit			10

	4.2	Reductions			10

	4.3	Distributions			11

		(a)	Separation from Service		11

		(b)	Disability		11

	4.4	Key Employee Delay			11

	4.5	Distributions Upon Death			12

		(a)	Payment of Death Benefit		12

		(b)	Calculation of Pre-Retirement Death Benefit		12

			(1)	Excess Plan Participant Before 2008 Receiving Traditional Benefit	12

			(2)	Excess Plan Participant Before 2008 Receiving PPA Benefit	13


			(3)	Excess Plan Participant After 2007 Receiving Traditional Benefit	13

			(4)	Excess Plan Participant After 2007 Receiving PPA Benefit	14

			(5)	Tier 1 Participants	14

	4.6	Form of Payment Election			14

		(a)	Special One-Time Elections		14

		(b)	Initial Distribution Election for Newly Eligible Employee		15

	4.7	Subsequent Deferral Election			15

	4.8	Permitted Form of Payment Options			16

	4.9	Effect of Early Taxation			17

	4.10	Separation Before Vested Date			17

ARTICLE 5	FORFEITURE				17

ARTICLE 6	SOURCE OF BENEFIT PAYMENTS				17

ARTICLE 7	NOT A CONTRACT OF EMPLOYMENT				18

ARTICLE 8	NO ALIENATION OR ASSIGNMENT				18

ARTICLE 9	ERISA				18

ARTICLE 10	AMENDMENT AND TERMINATION				18

	10.1	Amendment or Termination			18

	10.2	Effect of Amendment or Termination			19

ARTICLE 11	ADMINISTRATION				19

	11.1	General Administration			19

	11.2	Claims for Benefits			20

	11.3	Indemnification			20

ARTICLE 12	MISCELLANEOUS				20

	12.1	Applicable Law			20

	12.2	Incapacity of Recipient			20

	12.3	Taxes			21

	12.4	Binding Effect			21

	12.5	Unclaimed Benefits			21

	12.6	Severability			21

	12.7	Construction			21

	12.8	Regulatory Requirements			22

iii



APPENDIX A	Tier 1 Participants	A-1

APPENDIX B	Grandfathered Amounts	B-1

APPENDIX C	Salary Shares Included as Base Salary	C-1

SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

AMENDED AND RESTATED

AS OF January 1, 2010

ARTICLE 1

Establishment and Purpose

SunTrust Banks, Inc. (the “Corporation”) hereby amends and restates the SunTrust Banks, Inc. ERISA Excess Retirement Plan (the “Plan”), effective as of January 1, 2010. This Plan was originally effective as of August 13, 1996. The purpose of this Plan is to restore to certain executives of the Corporation and its Affiliates those retirement benefits that cannot be paid from the SunTrust Banks, Inc. Retirement Plan (“Retirement Plan”) as a result of the limitations imposed by sections 401(a)(17) and 415 of the Internal Revenue Code of 1986, as amended (“Code”).

The Plan is amended and restated in this document, effective as of January 1, 2010. It is intended to comply with Code section 409A and official guidance issued thereunder (except with respect to amounts covered by Appendix B ). Notwithstanding anything herein to the contrary, this Plan shall be interpreted, operated and administered in a manner consistent with this intention.

ARTICLE 2

Definitions

All capitalized terms used in this Plan and not defined in this document (including an Appendix) shall have the same meaning as in the Corporation’s Retirement Plan, as amended from time to time. The following capitalized terms will have the meanings set forth in this Article 2 whenever such capitalized terms are used throughout this Plan:

2.1	Actuarial Equivalent or Actuarially Equivalent means a form of benefit payment having an equivalent value computed in accordance with the actuarial assumptions then in effect under the Retirement Plan for determining the value of such form of payment.

2.2

Affiliate means as of any date any organization which is a member of a controlled group of corporations (within the meaning of Code section 414(b) which includes the Corporation or a controlled group of trades or businesses (within the meaning of Code section 414(c)) which includes the Corporation.

2.3

Annual Compensation Limit means the maximum Compensation that may be used for a Plan Year under the Plan to compute a Participant’s Excess Benefit. For Plan Years prior to 2006, the Annual Compensation Limit shall be $300,000. Effective for Plan Years beginning on and after January 1, 2006, for any Participant who retires or terminates employment with the Corporation and its Affiliates after December 31, 2005, unless otherwise excepted by the Committee for a Tier 1 Participant, the Annual Compensation Limit shall be two (2) times the annual compensation limit for qualified plans under Code section 401(a)(17), as adjusted annually for increases in the cost-of-living.

2.4	Annuity Option means one of the Actuarially Equivalent annuity forms set forth in Section 4.8(b).

2.5

2.6	Beneficiary Designation Form means the form that a Participant uses to name his Beneficiary or Beneficiaries for purposes of this Plan.

2.7	Cause means for purposes of this Plan and as determined by the Committee, in its sole discretion, one or more of the following actions that serves as the primary reason(s) for the termination of the Participant’s employment with the Corporation or an Affiliate:

(a) the Participant’s willful and continued failure to perform his job duties in a satisfactory manner after written notice from the Corporation to Participant and a thirty (30) day period in which to cure such failure;

(b) the Participant’s conviction of a felony or engagement in a dishonest act, misappropriation of funds, embezzlement, criminal conduct or common law fraud;

(c) the Participant’s material violation of the Code of Business Conduct and Ethics of the Corporation or the Code of Conduct of an Affiliate;

(d) the Participant’s engagement in an act that materially damages or materially prejudices the Corporation or an Affiliate or the Participant’s engagement in activities materially damaging to the property, business or reputation of the Corporation or an Affiliate; or

(e) the Participant’s failure and refusal to comply in any material respect with the current and any future amended policies, standards and regulations of the Corporation, any Affiliate and their regulatory agencies, if such failure continues after written notice from the Corporation to the Participant and a thirty (30) day period in which to cure such failure, or the determination by any such governing agency that the Participant may no longer serve as an officer of the Corporation or an Affiliate.

Notwithstanding anything herein to the contrary, if a Participant is subject to the terms of a change in control agreement with the Corporation (the “Change in Control Agreement”) at the time of his termination of employment with the Corporation or an Affiliate, solely for purposes of such Participant’s benefits under the Plan, “Cause” shall have the meaning provided in the Change in Control Agreement.

2.8	Code means the Internal Revenue Code of 1986, as amended.

2.9	Committee means the Compensation Committee of the Board of Directors of the Corporation.

2.10	Corporation means SunTrust Banks, Inc. or any successor thereto.

2.11	Deferred Compensation Plan means the SunTrust Banks, Inc. Deferred Compensation Plan, as in effect from time to time, or its successor plan.

2.12

Disabled or Disability means a Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Participant’s employer and, in addition, has begun to receive benefits under the Corporation’s Long-Term Disability Plan.

2.13	ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.14

Excess Benefit means as of any date the benefit calculated under this Plan as the excess of the amount the Participant would have received under the Retirement Plan, from the date of his participation in this Plan, had no federal tax code restrictions applied to the calculation of his Retirement Plan benefit, but applying the Annual Compensation Limit and subtracting the actual benefit the Participant is eligible to receive from the Retirement Plan. The Excess Benefit is determined in accordance with the following rules for different categories of Participants.

(a) Excess Plan Participant Before 2008 Receiving Traditional Benefit. A Participant in this Plan with an accrued Excess Benefit at December 31, 2007, who accrues a benefit under the Retirement Plan after 2007 under the Traditional Benefit formula has an Excess Benefit in this Plan equal to the sum of:

(1)

his Frozen Excess Benefit, plus

(2)

his Excess Plan Traditional Benefit.

The Excess Plan Traditional Benefit is calculated using actual service and base salary (or benefits base), if applicable, each as recognized under the terms of the Retirement Plan.

(b) Excess Plan Participant Before 2008 Receiving PPA Benefit. A Participant in this Plan with an accrued Excess Benefit at December 31, 2007, who accrues a benefit under the Retirement Plan after 2007 under the PPA Benefit formula has an Excess Benefit in this Plan equal to the sum of:

(1)

his Frozen Excess Benefit, plus

(2)

his Excess Plan PPA Benefit beginning January 1, 2008.

Notwithstanding anything in the Retirement Plan to the contrary, for purposes of this Section 2.14(b), a Participant who is named on Appendix C and who would otherwise have PPA Compensation in the 2010 or 2011 Plan Year, as applicable, that is less than the Annual Compensation Limit shall include the dollar amount set forth by the Participant’s name for the applicable Plan Year in Appendix C as PPA Compensation for 2010 or 2011, up to the Annual Compensation Limit for that Plan Year. Such dollar amount represents the value of “salary shares” that the Committee has denominated as part of each such Participant’s 2010 or 2011 base salary, respectively, to be used in calculating benefits under this Plan.

(c) Excess Plan Participant After 2007 Receiving Traditional Benefit. A Participant who enters this Plan after 2007 and who accrues a benefit under the Retirement Plan after 2007 under the Traditional Benefit formula has an Excess Benefit based on the Traditional Benefit formula beginning on the date of the Participant’s commencement of participation in this Plan. The Excess Benefit and the offset Retirement Plan benefit will be calculated using the Participant’s actual service earned beginning on the date of participation in this Plan and base salary (or benefits base, if applicable) earned both before and after the date of participation in this Plan.

(d) Excess Plan Participant After 2007 Receiving PPA Benefit. A Participant who enters this Plan after 2007 and who accrues a benefit under the Retirement Plan

after 2007 under the PPA Benefit formula has an Excess Plan PPA Benefit based on pay credits earned beginning on the date of the Participant’s commencement of participation in this Plan and total years of vesting service with the Corporation and its Affiliates earned before, during and after participation in this Plan. The PPA Benefit offset which is used to calculate the Excess Plan PPA Benefit is also calculated using pay credits earned beginning on the date of participation in this Plan and total years of vesting service. Notwithstanding anything in the Retirement Plan to the contrary, for purposes of this Section 2.14(d), a Participant who is named on Appendix C and who would otherwise have PPA Compensation in the 2010 or 2011 Plan Year, as applicable that is less than the Annual Compensation Limit shall include the dollar amount set forth by the Participant’s name for the applicable year in Appendix C as PPA Compensation for 2010 or 2011 up to the Annual Compensation Limit for that Plan Year. Such dollar amount represents the value of “salary shares” that the Committee has denominated as part of each such Participant’s 2010 or 2011 base salary, respectively, to be used in calculating benefits under this Plan.

(e) Tier 1 Participant Receiving Excess Plan Traditional Benefit. A Tier 1 Participant who began participating in this Plan before 2008 and who accrues benefits under the Traditional Benefit formula under the Retirement Plan after 2007 has an Excess Benefit in this Plan based on the sum of the following:

(1)

his Frozen Excess Benefit, plus

(2)

his Excess Plan Traditional Benefit (adjusted, if applicable, for future pay increases).

The Excess Plan Traditional Benefit is calculated using actual service and base salary (or benefits base), if applicable. The Annual Compensation Limit does not apply to Tier 1 Participants.

2.15

Excess Plan PPA Benefit means the Excess Benefit calculated under this Plan for periods of participation after the later of: (a) the date a Participant becomes eligible to participate in this Plan; or (b) December 31, 2007, for a Participant whose Retirement Plan benefit accruing after such date is based on the PPA Benefit formula.

2.16

Excess Plan Traditional Benefit means the Excess Benefit calculated under this Plan for periods of participation after the later of: (a) the date a Participant becomes eligible to participate in this Plan; or (b) December 31, 2007, for a Participant whose Retirement Plan benefit accruing after such date is based on the Traditional Benefit formula.

2.17	Frozen Excess Benefit means the Participant’s accrued benefit under this Plan as of December 31, 2007, based on the applicable formula under the Retirement Plan as of that date, and which, if the formula so provides, will be increased by future pay increases after 2007.

2.18

Grandfathered Amounts mean Plan benefits that were earned and vested as of December 31, 2004 within the meaning of Code section 409A and pursuant to the terms of the Plan in effect on October 3, 2004. Grandfathered Amounts are exempt from Code section 409A and subject to the distribution rules in effect under the Plan on October 3, 2004 and summarized in Appendix B .

2.19

Key Employee means an employee treated as a “specified employee” as of his Separation from Service under Code section 409A(a)(2)(B)(i) (i.e., a key employee (as defined in Code section 416(i) without regard to section (5) thereof)) if the common stock of the Corporation or an Affiliate is publicly traded on an established securities market or otherwise. Key Employees shall be determined in accordance with Code section 409A using a December 31 identification date. A listing of Key Employees as of an identification date shall be effective for the twelve (12) month period beginning on the April 1 following the identification date.

2.20	Key Employee Delay means the period of delay in distribution set forth in Section 4.4.

2.21

Newly Eligible Employee means an executive employed by the Corporation or an Affiliate who first meets the criteria for participation in the Plan on or after January 1, 2010, provided that an executive who has worked for the Corporation or an Affiliate prior to such date will only qualify as a “Newly Eligible Employee” if he meets the requirements of Treas. Reg. § 1.409A-2(a)(7)(ii) or any successor thereto.

2.22	Normal Retirement Date means for each Participant, his “normal retirement date” under the Retirement Plan, which is the later of five (5) Years of Vesting Service or attainment of age sixty-five (65).

2.23	Participant means each executive of the Corporation or an Affiliate described in Article 3.

2.24	Plan means this SunTrust Banks, Inc. ERISA Excess Retirement Plan, as amended from time to time.

2.25	Plan Year means the calendar year.

2.26	PPA Benefit means the benefit under the Retirement Plan effective January 1, 2008 that is based on a cash balance formula providing pay credits and interest credits to a Personal Pension Account.

2.27	Retirement Plan means either the SunTrust Banks, Inc. Retirement Plan or the SunTrust Banks, Inc. Retirement Plan for Inactive Participants, in which the Participant has an accrued benefit, as such plan is amended and restated from time to time, and any successor plan.

2.28	Separation from Service or Separates from Service means a “separation from service” within the meaning of Code section 409A.

2.29	SERP means the SunTrust Banks, Inc. Supplemental Executive Retirement Plan, as amended and restated effective as of January 1, 2009, and as subsequently amended, or its successor.

2.30	Subsequent Deferral Election means an election to change the form of payment of a Participant’s benefit under the Plan pursuant to Section 4.7.

2.31	Tier 1 Participant means each Participant listed on Appendix A .

2.32	Traditional Benefit means the traditional defined benefit calculated under the Retirement Plan effective January 1, 2008, that is based on the 1% times base pay formula.

2.33	Vested Date means the date a Participant becomes vested in his benefit under the Retirement Plan.

ARTICLE 3

Eligibility and Participation

3.1

Committee Designation Prior to 2011. Prior to 2011, each executive of the Corporation or an Affiliate who is designated by the Committee as eligible for Excess Benefits under this Plan will become a Participant in this Plan and will remain a Participant until all such benefits are paid to or on behalf of such Participant in accordance with Article 4 or forfeited in accordance with Article 5.

3.2

Eligibility and Participation After 2010. Each executive of the Corporation or an Affiliate who is in Grade 54 or higher shall be eligible to participate and accrue benefits in the Plan on the latest to occur of: (a) January 1, 2011, (b) the first day of the month following the executive’s completion of one Year of Vesting Service, (c) if the executive attains Grade 54 or higher on or prior to May 31, 2011, the first day of the month following the executive’s attainment of Grade 54 or higher or (d) if the executive attains Grade 54 or higher after May 31, 2011, the January 1 ^st following the calendar year in which the executive attains Grade 54 or higher.

3.3	Committee Revocation. The Committee in its absolute discretion may revoke an executive’s right to participate in the Plan at any time but no such revocation shall be applied retroactively to deprive an individual of benefits accrued under this Plan to the date of such revocation.

ARTICLE 4

Amount and Distribution

of Excess Benefit

The distribution provisions of this Article 4 shall apply only to amounts subject to Code section 409A. Distribution rules applicable to the Grandfathered Amounts are summarized in Appendix B .

4.1

Amount of Excess Benefit. If a Participant terminates employment with the Corporation and all Affiliates on or after such Participant’s Vested Date, such Participant’s Excess Benefit shall be determined as a lump sum amount as follows: (a) the Excess Plan PPA Benefit, if any, will be determined as of the date he or she terminates employment, and (b) the Excess Plan Traditional Benefit, if any, will be determined as a lump sum that is the Actuarially Equivalent of the single life annuity payable as of the later of the date he or she terminates employment or attains age fifty-five (55) (taking into account the reductions under Section 4.2 if the Participant terminates before his or her Normal Retirement Date). If any portion of the Excess Benefit is payable after the date of a Participant’s Separation from Service pursuant to Section 4.3(a) (including as a result of the Key Employee Delay), interest shall accrue from the date of determination on such portion in the same manner and at the same rate as would accrue on the Personal Pension Account under the Retirement Plan until such amount is paid or commences under this Article 4.

4.2

Reductions. The Excess Plan Traditional Benefit portion of the Excess Benefit, if any, payable to a Participant before his or her Normal Retirement Date will be determined as if such Participant’s benefit under the Retirement Plan was payable as of the later of the date he or she terminates employment or attains age fifty-five (55) taking into account applicable early commencement reduction factors as used under the Retirement Plan.

4.3

Distributions. Subject to Section 4.4 and absent any effective elections under Section 4.6 or 4.7, the Actuarially Equivalent present value of a Participant’s vested Excess Benefit shall be distributed, as set forth below, in a lump sum payment upon the earlier of: (i) the date a Participant becomes Disabled; or (ii) the date a Participant Separates from Service.

(a) Separation from Service. In the event the Participant’s Separation from Service occurs first:

(1)

Except as provided in Section 4.3(a)(3), if such Separation from Service occurs prior to the Participant’s attainment of age fifty-five (55), payment shall be made in the second month after the date the Participant attains age fifty-five (55); or

(2)

Except as provided in Section 4.3(a)(3), if such Separation from Service occurs on or after the Participant’s attainment of age fifty-five (55), payment shall be made in the second month after the Participant Separates from Service; and

(3)

If the Participant first becomes eligible to participate in the Plan on or after January 1, 2011, payment shall be made in the second month after the Participant Separates from Service.

(b) Disability. In the event a Participant’s Disability occurs first, payment shall be made in the month after the date the Participant attains age sixty-five (65).

4.4

Key Employee Delay. Notwithstanding anything herein to the contrary, in the event that a Participant is a Key Employee as of the date of his or her Separation from Service, any distributions to such Participant upon his or her Separation from Service shall not commence earlier than six (6) months following the date of such Separation from Service (or, if earlier, the date of the Participant’s death) (the “Key Employee Delay”). Amounts payable to the Participant during such period of delay shall be accumulated and paid in the seventh month following the Participant’s Separation from Service (or, if earlier, in the month after the Participant’s death).

4.5	Distributions Upon Death.

(a) Payment of Death Benefit. Notwithstanding any provision in the Plan to the contrary, in the event of the death of the Participant after his or her Vested Date and before any benefit payments under the Plan have been made to the Participant, the amount of the pre-retirement death benefit determined below in Section 4.5(b) will be distributed to the Participant’s Beneficiary in a lump sum in the month after the date of the Participant’s death (provided that any payments that would occur before such month shall be paid as scheduled). In the event of the death of the Participant after any benefit payments have been made in a form elected by the Participant under Sections 4.6 or 4.7, death benefits under the Plan will be payable to the Participant’s Beneficiary only to the extent provided under the form of distribution elected by the Participant.

(b) Calculation of Pre-Retirement Death Benefit. Effective January 1, 2008, for all Participants who are vested and die before receiving any benefit payments under this Plan, the survivor benefit payable under this Plan based on the Excess Benefit other than Grandfathered Amounts shall be determined as follows:

(1)

Excess Plan Participant Before 2008 Receiving Traditional Benefit. The pre-retirement death benefit a the Participant described in Section 2.14(a) is a lump sum equal to the Actuarial Equivalent of the monthly Excess Benefit which would have been payable to the Participant’s Beneficiary under a 50% joint and survivor annuity (a 100% joint and survivor annuity if the Participant began participating in this Plan before August 13, 1996 or if the Participant is an active employee of the Corporation or an Affiliate on or after October 1, 2010), as if the Participant had terminated immediately prior to death; provided, however, any increase in the survivor benefit attributable to the amendment of this section changing the benefit from a 50% to a 100% joint and survivor annuity is subject to Code section 409A and shall be paid in accordance with Section 4.5(a). If the benefit is payable before the Participant would have reached age sixty-five (65), it is reduced for early commencement in

the same manner as determined under the Retirement Plan for early retirement.

(2)

Excess Plan Participant Before 2008 Receiving PPA Benefit. The pre-retirement death benefit for a Participant described in Section 2.14(b) is the sum of two lump sums. The first lump sum is equal to the Actuarial Equivalent of the monthly Frozen Excess Benefit which would have been payable to the Participant’s Beneficiary under a 50% joint and survivor annuity (a 100% joint and survivor annuity if the Participant began participating in this Plan before August 13, 1996 or if the Participant is an active employee of the Corporation or an Affiliate on or after October 1, 2010), as if the Participant had terminated immediately prior to death; provided, however, any increase in the survivor benefit attributable to the amendment of this section changing the benefit from a 50% to a 100% joint and survivor annuity is subject to Code section 409A and shall be paid in accordance with Section 4.5(a). The second lump sum is 100% of the Participant’s Excess Plan PPA Benefit. If the benefit is payable before the Participant would have reached age sixty-five (65), the Frozen Excess Benefit is reduced for early commencement in the same manner as determined under the Retirement Plan for early retirement. The Excess Plan PPA Benefit is not reduced for early commencement.

(3)

Excess Plan Participant After 2007 Receiving Traditional Benefit. The pre-retirement death benefit for a Participant described in Section 2.14(c) is a lump sum equal to the Actuarial Equivalent of the monthly Excess Benefit which would have been payable to the Participant’s Beneficiary under a 50% joint and survivor annuity (a 100% joint and survivor annuity if the Participant is an active employee of the Corporation or an Affiliate on or after October 1, 2010), as if the Participant had terminated immediately prior to death; provided, however, any increase in the survivor benefit attributable to the amendment of this section changing the benefit from a 50% to a 100% joint and survivor annuity is subject to Code section 409A and shall be paid in accordance with Section 4.5(a). If the benefit is payable before the Participant would have

reached age sixty-five (65), it is reduced for early commencement in the same manner as determined under the Retirement Plan for early retirement.

(4)

Excess Plan Participant After 2007 Receiving PPA Benefit. The pre-retirement death benefit for a Participant described in Section 2.14(d) is equal to 100% of the Excess Plan PPA Benefit. The Excess Plan PPA Benefit is not reduced for early commencement.

(5)

Tier 1 Participants. The pre-retirement death benefit for a Participant described in Section 2.14(e) is a lump sum equal to the Actuarial Equivalent of the monthly Excess Benefit which would have been payable to the Participant’s Beneficiary under: (i) a 100% joint and survivor annuity, if the Participant began participating in this Plan before August 13, 1996; or (ii) a 100% joint and survivor annuity for the Frozen Excess Benefit accrued through December 31, 2007 and a 50% joint and survivor annuity for any portion of the Excess Benefit accrued after 2007, if the Participant was a Crestar Rule of 60 Grandfathered Participant (as defined in the Retirement Plan), or (iii) a 50% joint and survivor annuity (a 100% joint and survivor annuity if the Participant is an active employee of the Corporation or an Affiliate on or after October 1, 2010); as if the Participant had terminated immediately prior to death; provided, however, any increase in the survivor benefit attributable to the amendment of this section changing the benefit from a 50% to a 100% joint and survivor annuity is subject to Code section 409A and shall be paid in accordance with Section 4.5(a). If the benefit is payable before the Participant would have reached age sixty-five (65), it is reduced for early commencement in the same manner as determined under the Retirement Plan for early retirement.

4.6	Form of Payment Election.

(a) Special One-Time Election. Notwithstanding any prior elections or Plan provisions to the contrary, a Participant who was an employee of the Corporation and its

Affiliates (including on a paid leave of absence) may have made an election to receive all or a specified portion of his or her Excess Benefit in any permitted form of payment provided in Section 4.8(b). Any such election must have become irrevocable on or before December 31, 2008 and must have been made in accordance with the procedures and distribution rules established by the Committee and rules under Code section 409A. If elected, any benefit paid in a form other than a life only annuity shall be Actuarially Equivalent to the life only annuity benefit that would have been paid to such Participant.

(b) Initial Distribution Election for Newly Eligible Employee. Effective January 1, 2011, if an individual becomes a Newly Eligible Employee, the Committee, or its delegate, has the sole discretion to determine whether such individual may file an initial distribution election for the Excess Benefit under the Plan. Under certain limited circumstances, the Newly Eligible Employee may elect (i) the time of payment and/or (ii) the form of payment (from among the forms provided in Section 4.8(b)) for the payment of the Excess Benefit in accordance with the procedures established by the Committee and set forth in the election form, provided such election is delivered to the Committee no later than thirty (30) days after the first day of the calendar year immediately following the first year such Newly Eligible Employee accrues a benefit under the Plan in accordance with Treas. Reg. § 1.409A-2(a)(7)(iii). In the event of an initial distribution election under this Section 4.6(b), such election shall apply to the entire Excess Benefit under the Plan. Notwithstanding the foregoing, this Section 4.6(b) shall not apply to a Newly Eligible Employee who (1) is receiving salary shares in the first year he accrues a benefit under the Plan, or (2) terminates from employment with the Corporation and its Affiliates prior to making an election under this section.

4.7

Subsequent Deferral Election. A Participant may make a Subsequent Deferral Election on or after January 1, 2009 in accordance with the procedures and distribution rules established by the Committee. An election under this Section 4.7 shall become irrevocable on the date the election is filed with the Committee, or its delegate, and any election to change the time or form of a distribution shall be effective only if the following conditions are satisfied:

(a) The election may not take effect until at least twelve (12) months after the date on which the election is made;

(b) In the case of an election to change the time or form of a distribution under Section 4.3, a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made; and

(c) In the case of an election to change the time or form of a distribution related to a payment at a specified time or pursuant to a fixed schedule, the election must be made at least twelve (12) months before the date the distribution is scheduled to be paid.

Any election (including changes solely among the Annuity Options) with respect to the form of payment under the Plan after the Participant’s third Subsequent Deferral Election shall be null and void and have no force or effect. Notwithstanding anything herein to the contrary, a Subsequent Deferral Election solely to change the form of payment from one Annuity Option to another Annuity Option listed in Section 4.8(b) shall not be subject to the conditions set forth in Sections 4.7(a)-(c) above. In the event any portion of the Excess Benefit is ultimately payable in a lump sum after the Participant made one or more Subsequent Deferral Elections under this Section 4.7, interest shall accrue on such portion during the period commencing on the Participant’s Separation from Service and ending on the date of payment at the same rate as would accrue on the Personal Pension Account under the Retirement Plan until such amount is paid or commences under this Article 4.

4.8	Permitted Form of Payment Options. Subject to the requirements of Sections 4.4, 4.6 and 4.7, the Participant may elect the manner in which his or her vested Excess Benefit shall be paid from between the following options:

(a) Lump sum; or

(b) One of the following Annuity Options the payments under which shall be determined as the Actuarial Equivalent of the single life annuity:

(1)

Single life annuity;

(2)

50% joint and survivor annuity;

(3)

75% joint and survivor annuity;

(4)

100% joint and survivor annuity;

(5)

10-Year Certain and Life; or

(6)

20-Year Certain and Life.

4.9	Effect of Early Taxation. If the Participant’s benefits under the Plan are includible in income pursuant to Code section 409A, such benefits shall be distributed immediately to the Participant.

4.10	Separation Before Vested Date. Notwithstanding anything herein to the contrary, no benefit will be payable to or on behalf of a Participant who terminates employment with the Corporation and all Affiliates before his Vested Date.

ARTICLE 5

Forfeiture

The Committee, in its sole discretion, may make any payments under this Plan subject to forfeiture on such terms and conditions as the Committee deems appropriate under the circumstances to protect the interests of the Corporation. Further, if the Participant is terminated from employment with the Corporation or one of its Affiliates for Cause, the Committee in its discretion may forfeit entirely any benefits payable under this Plan. Forfeiture under this Article 5 shall be in addition to any other remedies which may be available to the Corporation or an Affiliate at law or in equity.

ARTICLE 6

Source of Benefit Payments

All benefits payable under the terms of this Plan shall be paid by the Corporation from its general assets. No person shall have any right or interest or claim whatsoever to the payment of a benefit under this Plan from any person whomsoever other than the Corporation, and no Participant or Beneficiary shall have any right or interest whatsoever to the payment of a benefit

under this Plan which is superior in any manner to the right of any other general and unsecured creditor of the Corporation.

ARTICLE 7

Not a Contract of Employment

Participation in this Plan does not grant to any individual the right to remain an employee of the Corporation or any Affiliate for any specific term of employment or in any specific capacity or at any specific rate of compensation.

ARTICLE 8

No Alienation or Assignment

A Participant, a spouse or a Beneficiary under this Plan shall have no right or power whatsoever to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of any benefit otherwise payable under this Plan, and the Corporation shall have the right, in the event of any such action, to terminate permanently the payment of benefits to, or on behalf of, any Participant, spouse or Beneficiary who attempts to do so.

ARTICLE 9

ERISA

The Corporation intends that this Plan come within the various exceptions and exemptions to ERISA for a plan maintained for a “select group of management or highly compensated employees” as described in ERISA sections 201(2), 301(a) (3), and 401(a) (1), and any ambiguities in this Plan shall be construed to affect that intent.

ARTICLE 10

Amendment and Termination

10.1

Amendment or Termination. The Corporation reserves the right to amend or terminate the Plan when, in the sole discretion of the Corporation, such amendment or termination is advisable, pursuant to a resolution or other action taken by the Committee. The Plan may also be amended pursuant to a written instrument executed by the Corporation’s senior most human resources officer to the extent such amendment is required under applicable law or is required to avoid having amounts deferred under the Plan included

in the income of Participants or beneficiaries for federal income tax purposes prior to distribution.

10.2

Effect of Amendment or Termination. No amendment or termination of the Plan shall be applied retroactively to deprive a Participant of benefits accrued under this Plan to the date of such amendment or termination. Upon termination of the Plan, distribution of Plan benefits shall be made to Participants and beneficiaries in the manner and at the time described in Article 4, unless the Corporation determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A. Upon termination of the Plan, no further benefit accruals shall occur.

ARTICLE 11

Administration

11.1

General Administration. The Committee shall be responsible for the operation and administration of the Plan and for carrying out the provisions hereof. The Committee shall have the full authority and discretion to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions, including interpretations of this Plan, as may arise in connection with this Plan. Any such action taken by the Committee shall be final and conclusive on any party. To the extent the Committee has been granted discretionary authority under the Plan, the Committee’s prior exercise of such authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Corporation with respect to the Plan. The Committee may, from time to

time, employ agents and delegate to such agents, including employees of the Corporation, such administrative or other duties as it sees fit. The Committee also shall have the power to delegate the exercise of all or any part of such powers to such other person or persons as the Committee deems appropriate under the circumstances.

11.2	Claims for Benefits. The Committee shall adopt claims procedures in compliance with 29 C.F.R. § 2560.503-1, which shall be furnished automatically in a separate document to the Participant, without charge, following a Participant’s request to the Committee, or its delegate.

11.3

Indemnification. The Corporation and its Affiliates (to the extent permissible under law and consistent with their charters and bylaws) shall indemnify and hold harmless the Committee, each individual member of the Committee and any employee authorized to act on behalf of the Committee, the Corporation or any Affiliate under this Plan for any liability, loss, expense, assessment or other cost of any kind or description whatsoever, including legal fees and expenses, which they actually incur for their acts and omissions, past, current or future, in the administration of the Plan.

ARTICLE 12

Miscellaneous

12.1	Applicable Law. This Plan will be construed in accordance with the laws of the State of Georgia (without regard to its choice-of-law rules) except to the extent superseded by federal law.

12.2

Incapacity of Recipient. If any person entitled to a distribution under the Plan is deemed by the Committee to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, the Committee may provide for such payment or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of

such person and a complete discharge of any liability of the Corporation and the Plan with respect to the payment.

12.3

Taxes. The Corporation or other payor may withhold from a benefit payment under the Plan or a Participant’s wages in order to meet any federal, state, or local tax withholding obligations with respect to Plan benefits. The Corporation or other payor may also accelerate and pay a portion of a Participant’s benefits in a lump sum equal to the Federal Insurance Contributions Act (“FICA”) tax imposed and the income tax withholding related to such FICA amounts. The Corporation or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

12.4

Binding Effect. This Plan shall be binding upon and inure to the benefit of any successor of the Corporation and any successor shall be deemed substituted for the Corporation under this Plan and shall assume the rights, obligations and liabilities of the Corporation hereunder and be obligated to perform the terms and conditions of this Plan. As used in this Plan, the term “successor” shall include any person, firm, corporation or other business entity or related group of such persons, firms, corporations or business entities which at any time, whether by merger, purchase, reorganization, liquidation or otherwise, or by means of a series of such transactions, acquires all or substantially all of the assets or business of the Corporation.

12.5

Unclaimed Benefits. Each Participant shall keep the Committee informed of his or her current address and the current address of his or her designated Beneficiary. The Committee shall not be obligated to search for the whereabouts of any person if the location of a person is not made known to the Committee.

12.6	Severability. In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

12.7	Construction. The headings and subheadings in this Plan have been set forth for convenience of reference only and have no substantive effect whatsoever. Whenever

any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or in the singular, as the case may be, in all cases where they would so apply.

12.8

Regulatory Requirements. Regulatory agencies and federal laws and regulations may impose restrictions on the Corporation and its Affiliates with respect to the payment of compensation and benefits to certain employees who may be Participants in this Plan. These restrictions may be in the form of absolute prohibitions or penalties, which may include tax penalties on the Corporation and its Affiliates or on certain Participants. Notwithstanding any other provision of this Plan document, the Corporation may reduce, eliminate or delay the payment of a Participant’s benefits under this Plan or may take actions that subject such benefits to monetary or tax penalties, as determined by the Corporation in its sole discretion to be required under federal laws or regulations applicable to the Corporation and its Affiliates. In such event, neither the Corporation nor its Affiliates shall have any liability for such reduction, elimination, delay or penalty. Any delay in payment of a Participant’s benefits under this Plan will comply with Treas. Reg. § 1.409A-2(b)(7).

Executed this day of May, 2011.


Attest:	SUNTRUST BANKS, INC.

By:	By:
		Donna D. Lange

Title:	Title:

APPENDIX A

TO THE SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

Tier 1 Participants

The following list of Participants each shall be a Tier 1 Participant:

•

James M. Wells III

A-1

APPENDIX B

TO THE SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

Grandfathered Amounts

Distribution of Grandfathered Amounts shall be made in accordance with the Plan terms as in effect on October 3, 2004 (the “Grandfathered Terms”) and as summarized in this Appendix B . Capitalized terms used in this Appendix B , but not defined herein, will have the same meaning as defined by the Plan in effect on October 3, 2004.

B.1	Timing and Amount .

(a)

Normal or Delayed Retirement Benefit . If a Participant terminates employment with the Corporation and all Affiliates on or after such Participant’s Normal Retirement Date, the entire vested benefit, if any, to which such Participant is entitled under this Plan automatically, will be paid to such Participant in the form described in Section B.2 beginning as soon as practicable following the date such Participant terminates employment with the Corporation and all Affiliates.

(b)

Early Retirement Benefit .

(1)

General . If a Participant terminates employment with the Corporation and all Affiliates on or after such Participant’s Vested Date but before his or her Normal Retirement Date, such Participant’s entire vested Excess Benefit, if any, will be determined (taking into account the reductions under Section B.1(b)(2)) as of the date he or she terminates employment. The benefit automatically will be paid to the Participant beginning as of the first day of the month coinciding with or next following the date he or she terminates employment; however,

(i)

if a Participant terminates employment after his or her Vested Date but before his or her earliest “early retirement date” under the Retirement Plan, payment automatically will be made at his or her earliest “early retirement date” under the Retirement Plan, and

B-1

(ii)

if a Participant is eligible for a “disability retirement benefit” (as described in the Retirement Plan), payment of his or her vested Excess Benefit automatically will be paid or begin to be paid at the same time as his or her disability retirement benefit under the Retirement Plan.

(2)

Reductions . The Excess Benefit, if any, payable to a Participant before his or her Normal Retirement Date will be determined as if such Participant’s benefit under the Retirement Plan was payable on the date as of which his or her Excess Benefit is paid under Section B.1(b)(1) taking into account applicable early commencement reduction factors under the Retirement Plan.

(c)

Termination Before Vested Date . No benefit will be payable to or on behalf of a Participant who terminates employment with the Corporation and all Affiliates before his or her Vested Date.

B.2	Form of Benefit .

(a)

Normal Form . Except as provided in Section B.2(b), a Participant’s vested Excess Benefit will be paid in a lump sum benefit which is Actuarially Equivalent to the benefit that would have been paid to such Participant in the form of a life only annuity.

(b)

Other Benefit Forms . A Participant may make a written election to have his or her entire vested Excess Benefit paid in any form of benefit available under the Retirement Plan and such Excess Benefit shall be paid in the form specified in the Participant’s most recent election; provided, however, that such an election shall not be effective unless made at least one year before his or her Excess Benefit is paid under this Plan. If an election is not effective, the Excess Benefit shall be paid in a lump sum. Any benefit paid in a form other than a life only annuity shall be Actuarially Equivalent to the benefit that would have been paid to such Participant in the form of a life only annuity.

B-2

B.3	Survivor Benefit.

(a)

General . If a Participant dies before he or she terminates employment with the Corporation and all Affiliates and, as a result of his or her death, a survivor benefit is payable on behalf of such Participant under the Retirement Plan, then a survivor income benefit automatically will be payable on such deceased Participant’s behalf under this Plan to the person who is the Participant’s designated beneficiary as specified, or, in the absence of such written designation or in its ineffectiveness, then to his or her estate.

(b)

Annuity Basis .

(1)

Exhibit A . For all Participants listed on Exhibit A under the Grandfathered Terms, the survivor benefit payable under this Plan shall be equivalent to the excess of A over B below, where

A =

the monthly survivor benefit that would be payable to such spouse or would form the basis for the benefit payable to such beneficiary under the Retirement Plan if the benefit under the Retirement Plan was not limited by Code section 401(a)(17) or section 415 and the Participant had selected a 100% joint and survivor annuity which is Actuarially Equivalent to the life only annuity, and

B =

the monthly survivor benefit that actually would be payable to the spouse or would form the basis for the benefit payable to such beneficiary under the Retirement Plan if the benefit had been paid in a 100% joint and survivor annuity taking into account the limitations under Code section 401(a)(17) and section 415.

(2)

Other Participants . For all other Participants, the survivor benefit payable under this Plan shall be equivalent to the excess of A over B below, where

B-3

A =

B =

the monthly survivor benefit that actually would be payable to such spouse or would form the basis for the benefit payable to such beneficiary under the Retirement Plan taking into account the limitations under Code section 401(a)(17) and section 415.

(3)

Reductions and Assumptions . If the survivor benefit is paid before the date the Participant would have reached his or her Normal Retirement Date, the benefit described in this Section B.3(b) above will be reduced using the factors then in effect to reduce early retirement benefits under the Retirement Plan. Further, any survivor benefit payable under this Section B.3 shall be reduced by the Actuarial Equivalent value of any survivor benefits payable to a Participant under a Special Survivor Benefit under the SERP. Finally, a survivor benefit payable to a non-spouse beneficiary will be calculated based on the assumption that the beneficiary is the same age as the Participant was at his or her death.

(c)

Form of Benefit . The survivor benefit will be paid in a lump sum that is Actuarially Equivalent to the monthly benefit determined under Section B.3(b).

(d)

Timing . The survivor benefit will be paid as soon as practicable after the Participant’s death.

(e)

No Post-Retirement Survivor Benefits . No survivor benefit will be paid on behalf of a Participant who dies after he or she begins receiving benefits under this Plan except to the extent such survivor benefit is payable under the form of benefit being paid to the Participant at his or her death.

B-4

B.4	Administration, Amendment and Termination .

The Committee shall have all powers necessary to administer this Plan, to amend this Plan from time to time in any respect whatsoever and to terminate this Plan at any time; provided, however, that any such amendment or termination shall not be applied retroactively to deprive a Participant of benefits accrued under this Plan to the date of such amendment or termination. The Committee also shall have the power to delegate the exercise of all or any part of such powers to such other person or persons as the Committee deems appropriate under the circumstances. This Plan shall be binding on any successor in interest to the Corporation.

B-5

APPENDIX C

TO THE SUNTRUST BANKS, INC.

ERISA EXCESS RETIREMENT PLAN

Sections 2.14(b) and (d), Salary Shares Included as Base Salary

For purposes of calculating the Excess Benefit under Section 2.14(b) or Section 2.14(d), each Participant named in the table below who received “salary shares” in 2010 or 2011 as part of his base salary shall have the dollar amount set forth by his name included as part of his PPA Compensation. Such dollar value shall be prorated, restricted or limited to the extent required by the terms of the Plan in calculating the Excess Benefit. Except as provided below, the Plan shall not recognize any additional amount of, or value for, “salary shares.”


Name	Value of Salary Shares to be Included as Part of 2010 Base Salary	Value of Salary Shares to be Included as Part of 2011 Base Salary
Mark A. Chancy	$504,000	$140,000
David F. Dierker	340,200	$94,950
Timothy E. Sullivan	438,442	$121,790
Thomas E. Freeman	427,500	$118,750
Raymond D. Fortin	340,200	$94,950

C-1

Exhibit 10.9

2011 Amendments

SUNTRUST RESTORATION PLAN

Amended and Restated Effective May 31, 2011

SUNTRUST RESTORATION PLAN

(Effective May 31, 2011)

The SunTrust Restoration Plan was adopted effective January 1, 2011 by SunTrust Banks, Inc. to provide supplemental retirement benefits to Eligible Employees pursuant to the terms and provisions set forth below. The Plan is amended and restated effective May 31, 2011.

The Plan is intended (1) to comply with Code section 409A and official guidance issued thereunder, and (2) to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

ARTICLE I

DEFINITIONS

All capitalized terms used in this Plan and not defined in this document shall have the same meaning as in the Qualified Plan. Wherever used herein, the following terms shall have the meanings hereinafter set forth:

“ Account ” means the bookkeeping account established by the Company for each Participant in the Plan. A Participant’s Account shall be utilized solely as a device for the determination and measurement of the amount of the Restoration Benefit to be paid to the Participant pursuant to this Plan. A Participant’s Account shall not constitute or be treated as a trust fund of any kind.

“ Affiliate ” means any corporation or other entity that is treated as a single employer with the Company under section 414 of the Code.

“ Annual Compensation Limit ” means the limit equal to the product of two (2) times the limit under Code section 401(a)(17) in effect for the Plan Year.

“ Annuity Option ” means one of the Actuarial Equivalent annuity forms set forth in Section 4.6(b).

“ Benefit Commencement Date ” means the date a Participant (or his beneficiary in the case of death) is first scheduled to receive a payment of the Restoration Benefit accrued under the Plan.

“ CEO ” means the Chief Executive Officer of the Company.

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Committee ” means the Compensation Committee of the Company’s Board of Directors or such other committee as may be appointed by the Board of Directors from time to time.

“ Company ” means SunTrust Banks, Inc. or any successor corporation or other entity.

“ Compensation ” means the amount an Eligible Employee’s compensation for a Plan Year determined as the difference between (1) the Eligible Employee’s PPA Compensation for the Plan Year but determined without regard to the limitation imposed under Code section 401(a)(17), minus (2) the Annual Compensation Limit for such Plan Year. Notwithstanding the foregoing, during a Newly Hired Eligible Employee’s first year of participation in the Plan, the amount of Compensation shall be determined under subsection (1) of the immediately preceding sentence without regard to the Annual Compensation Limit. The Plan will not prorate the Annual Compensation Limit for a Participant who participates in the Plan for less than a full Plan Year.

“ Crediting Period ” means the applicable semi-monthly period from the first day of a calendar month through the 15th of the month, or from the 16th of the month through the last day of the month.

“ Date of Hire ” means the date of an Employee’s first day of active employment with the Company or an Affiliate.

“ Disabled ” means a Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s employer and, in addition, has begun to receive benefits under SunTrust’s Long-Term Disability Plan. The Participant will not be entitled to disability benefits under Section 3.4 if his impairment was caused by military service; an act of war, riot or civil insurrection; or employment with or service for any entity other than the Company or an Affiliate.

“ Eligible Employee ” means an Employee, generally, in Grade 57 or higher, who is recommended by the CEO, and who is approved by the Committee for participation in the Plan. The approval of the Committee regarding whether an Employee is an Eligible Employee shall be final and binding for all Plan purposes.

“ Employee ” means an individual who is a regular employee on the U.S. payroll of the Company or its Affiliates. The term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant, or a person otherwise designated by the Company or an Affiliate as not eligible to participate in the Plan, even if such person is determined to be an “employee” of the Company or an Affiliate by any governmental or judicial authority.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ Initial Distribution Election ” means an initial distribution election regarding the form of payment of a Particiapnt’s Restoration Benefit pursuant to Section 4.5(a).

“ Interest Credits ” mean the credits made to Participants’ Accounts, as such term is defined in Section 3.3.

“ Key Employee ” means an Employee treated as a “specified employee” as of his Separation from Service under Code section 409A(a)(2)(B)(i) ( i.e. , a key employee (as defined in Code section 416(i) without regard to section (5) thereof)) if the common stock of the Company or an Affiliate is publicly traded on an established securities market or otherwise. Key Employees shall be determined in accordance with Code section 409A using a December 31 identification date. A listing of Key Employees as of an identification date shall be effective for the twelve (12) month period beginning on the April 1 following the identification date.

“ Newly Hired Eligible Employee ” means an individual who is hired by the Company or an Affiliate, who is not a current or former Employee and who meets the criteria for an Eligible Employee on his Date of Hire.

“ Participant ” means an Eligible Employee with an accrued benefit under the Plan.

“ Pay Credits ” mean the credits made to Participants’ Accounts, as such term is defined in Section 3.2.

“ Plan ” means the SunTrust Restoration Plan, as set forth herein and as amended from time to time.

“ Plan Administrator ” means the party responsible for administering the Plan, or its delegate, as provided in Section 5.1.

“ Plan Year ” means the calendar year.

“ Qualified Plan ” means the SunTrust Banks, Inc. Retirement Plan, as amended and restated from time to time, and any successor plan.

“ Restoration Benefit ” means the benefit defined in Article III.

- 2 -

“ Separation from Service ” or “ Separates from Service ” means a “separation from service” within the meaning of Code section 409A.

“ Subsequent Distribution Election ” means an election to change the time or form of payment of a Participant’s Restoration Benefit pursuant to Section 4.5(b).

“ Vested Date ” means the date a Participant becomes 100% vested in his Restoration Benefit, as such term is defined in Section 3.5.

“ Vesting Service ” means a Participant’s whole and partial “Years of Vesting Service,” as defined in the Qualified Plan. If a Participant became an Eligible Employee in connection with a corporate merger or acquisition, the Plan Administrator shall determine upon the date such Participant becomes an Eligible Employee to what extent, if any, such Participant’s service with the predecessor employer shall be included as Vesting Service under this Plan.

ARTICLE II

PARTICIPATION

Participation in the Plan shall be limited to Eligible Employees. The Plan Administrator, or its delegate, shall notify any Employee of his status as an Eligible Employee at such time and in such manner as the Plan Administrator shall determine.

ARTICLE III

RESTORATION BENEFIT

3.1 Amount of Restoration Benefit . An Eligible Employee shall become entitled to receive the benefits determined under this Article III on and after the first day of the month following the date he becomes an Eligible Employee (the “Restoration Benefit”). An Account shall be established for each Participant. The Account shall be credited with Pay Credits and Interest Credits pursuant to the provisions of this Article III. Notwithstanding the foregoing, a Newly Hired Eligible Employee shall not earn or accrue any benefits under this Article III until the first day of the month following or coincident with the 31st day after his Date of Hire.

3.2 Pay Credits . Pay Credits shall be determined and credited in accordance with this Section 3.2 to the Account of each Participant who is an Eligibile Employee during a Plan Year (“Pay Credits”). Pay Credits shall be determined for each Participant as the amount obtained by multiplying such Participant’s Compensation received during a Crediting Period by the percentage, based on the Participant’s Points, indicated in the table below. Pay Credits shall be credited to a Participant’s Account as of the last day of each Crediting Period during the Plan Year in which he receives Compensation. If a Participant terminates employment with the Company and all Affiliates and is subsequently rehired by the Company or an Affiliate, such Employee shall not accrue any additional Pay Credits following his or her reemployment unless the Committee again approves him as an Eligible Employee.


Points		Pay Credit Rate
Less than 30		2.5%
30 – 39.999		3.0%
40 – 49.999		4.0%
50 and over		5.0%

3.3 Interest Credits . As of the last day of each Crediting Period, each Account shall be credited with an Interest Credit (“Interest Credits”) equal to the product of the Account balance as of the end of the prior Crediting Period multiplied by the rate which, if compounded each Crediting Period for an entire calendar year,

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would yield an effective annual rate equal to the interest rate applicable to the Plan Year in which such Crediting Period begins. The applicable interest rate for a Plan Year shall be equal to the monthly average for 30-year Treasury bond rates for the month of December in the immediately preceding Plan Year, as published in the Federal Reserve Statistical Release. Notwithstanding the foregoing, the applicable interest rate for each Plan Year shall not be lower than 3%. Participants shall continue to receive Interest Credits to their Accounts through the end of the Crediting Period immediately preceding their Benefit Commencement Date.

3.4 Disability Benefit . A Participant who becomes Disabled while employed as an Eligible Employee shall continue to be eligible to receive Pay Credits, based on his Compensation, until the time he or she ceases to receive benefits under an Employer-sponsored long-term disability program, or, if earlier, as of the time he or she elects to receive distribution of his or her benefits under the Qualified Plan. Such Participant’s Points shall be updated annually in accordance with the Qualified Plan. For purposes of this Section 3.4, Compensation shall be determined by replacing PPA Compensation in the definition of Compensation (as set forth in Article I) with PPA Compensation determined in accordance with Section 1.38B(c) of the Qualified Plan.

3.5 Vesting . A Participant shall be 100% vested in his Restoration Benefit on the date he completes ten (10) years of Vesting Service and reaches age sixty (60) (the “Vested Date”), provided that such Participant remains employed by the Company or an Affiliate through such date.

3.6 Change in Position Prior to Distribution Event . Notwithstanding anything herein to the contrary, in the event a Participant changes from a position as an Eligible Employee to one that is not an Eligible Employee for any reason, such Participant shall not receive any additional Pay Credits following the date of such change; provided, however, such Participant shall continue to earn Interest Credits until the Benefit Commencement Date and shall continue to vest in the Restoration Benefit during his continued service as an Employee.

3.7 Separation Before Vested Date . Notwithstanding anything herein to the contrary, no benefit will be payable to or on behalf of a Participant who terminates employment with the Company and all Affiliates before his Vested Date.

ARTICLE IV

DISTRIBUTION OF BENEFITS

4.1 Distribution Upon Separation . Absent an effective election under Section 4.5, the Partcipant’s Restoration Benefit shall normally be distributed to him in a lump sum payment during the second month after the month in which the the Participant Separates from Service. Notwithstanding any elections by a Participant, if the amount of a Participant’s Restoration Benefit is less than the applicable dollar amount under section 402(g)(1)(B) of the Code at the time the Participant Separates from Service, the benefit shall be distributed in a lump sum payment during the second month after the month in which the the Participant Separates from Service.

4.2 Key Employee . In the event that a Participant is a Key Employee as of the date of his or her Separation from Service, any distributions to such Participant under Section 4.1 shall not commence earlier than six (6) months following the date of such Separation from Service (or, if earlier, the date of the Participant’s death). Amounts otherwise payable to the Participant during such period of delay shall be accumulated and paid in the seventh month following the Participant’s Separation from Service (or, if earlier, the first day of the month after the Participant’s death). Interest Credits shall continue to accrue on the Restoration Benefit during the period of delay following the Participant’s Separation from Service until the Benefit Commencement Date.

4.3 Distribution Upon Disability . Notwithstanding any provision in the Plan to the contrary, if a Participant becomes Disabled prior to his or her Separation from Service, the Restoration Benefit will be distributed in a lump sum payment in the month after the month in which the Participant attains age sixty-five (65).

4.4 Distributions Upon Death . Notwithstanding any provision in the Plan to the contrary, in the event of the death of the Participant before benefits have commenced, the Restoration Benefit will be distributed in a lump sum payment in the second month after the month of death to the Participant’s beneficiary. In the event of the death of the Participant after benefits have commenced in a form elected by the Participant under section 4.5, death

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benefits under the Plan will be payable to the Participant’s beneficiary in accordance with the form of distribution elected by the Participant. A Participant shall designate his beneficiary in a writing delivered to the Plan Administrator prior to death in accordance with procedures established by the Plan Administrator. If a Participant has not properly designated a beneficiary or if no designated beneficiary is living on the date of distribution, such amount shall be distributed to the Participant’s estate.

4.5 Changes in Time or Form of Distribution . In order to elect to change the time or form of distribution of the Restoration Benefit, a Participant shall file an Initial Distribution Election or Subsequent Distribution Election, written or electronic, in accordance with procedures established by the Plan Administrator. A distribution election under this Section 4.5 shall become irrevocable on the date the election is filed with the Plan Administrator.

(a)

Initial Distribution Election for Newly Hired Eligible Employee . If an individual becomes a Newly Hired Eligible Employee after the beginning of a Plan Year, the Plan Administrator has the sole discretion to determine whether such individual may file an Initial Distribution Election for the Restoration Benefit. Under certain limited circumstances, the Newly Hired Eligible Employee may elect the form of payment of the Restoration Benefit in accordance with the procedures established by the Plan Administrator, provided such election is delivered to the Plan Administrator no later than thirty (30) days after the Employee’s Date of Hire. In the event of an Initial Distribution Election under this Section 4.5(a), such election shall apply to the Restoration Benefit earned for services performed on and after the first day of the month following or coincident with the 31st day after his Date of Hire.

(b)

Subsequent Distribution Election . In addition to the requirements the Plan Administrator may establish, a Participant may make a Subsequent Distribution Election after the thirty (30) day period set forth in Section 4.5(a) above, if applicable. An election under this Section 4.5(b) shall become irrevocable on the date the election is filed with the Plan Administrator and any election to change the time or form of a distribution shall be effective only if the following conditions are satisfied:

(i)

The election may not take effect until at least twelve (12) months after the date on which the election is made;

(ii)

In the case of an election to change the time or form of a distribution under Sections 4.1 or 4.5, a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made; and

(iii)

In the case of an election to change the time or form of a distribution related to a payment at a specified time or pursuant to a fixed schedule, the election must be made at least twelve (12) months before the date the distribution is scheduled to be paid.

Any election (including changes solely among the Annuity Options) with respect to the form of payment under the Plan after the Participant’s third Subsequent Distribution Election shall be null and void and have no force or effect. Notwithstanding anything herein to the contrary, a Subsequent Distribution Election solely to change the form of payment from one Annuity Option to another Annuity Option listed in Section 4.6(b) shall not be subject to the conditions set forth in Sections 4.5(b)(i)-(iii) above. In the event the Restoration Benefit is payable after the Participant made one or more Subsequent Distribution Elections under this Section 4.5(b), Interest Credits shall continue to accrue on the Restoration Benefit following the Participant’s Separation from Service until the Benefit Commencement Date.

4.6 Permitted Form of Payment Options . Subject to the requirements of Sections 4.2 and 4.5, the Participant may elect the manner in which his or her vested Restoration Benefit shall be paid from between the following options:

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(a)

Lump sum; or

(b)

One of the following Annuity Options, the payments under which shall be determined as of the Benefit Commencement Date and be an Actuarial Equivalent to the lump sum value of the Restoration Benefit at such date:

(i)

Single life annuity;

(ii)

50% joint and survivor annuity;

(iii)

75% joint and survivor annuity;

(iv)

100% joint and survivor annuity;

(v)

10-Year Certain and Life; or

(vi)

20-Year Certain and Life.

4.7 Effect of Early Taxation . If the Participant’s benefits under the Plan are includible in income pursuant to Code section 409A, such benefits shall be distributed immediately to the Participant.

4.8 Permitted Delays . Notwithstanding the foregoing, any payment to a Participant under the Plan shall be delayed upon the Plan Administrator’s reasonable anticipation of one or more of the following events:

(a)

The Company’s deduction with respect to such payment would be eliminated by application of Code section 162(m); or

(b)

The making of the payment would violate Federal securities laws or other applicable law;

provided, that any payment delayed pursuant to this Section 4.8 shall be paid in accordance with Code section 409A.

ARTICLE V

ADMINISTRATION

5.1 General Administration . The Company is the sponsor of the Plan, and the Committee is the Plan Administrator responsible for the operation and administration of the Plan.

5.2 Responsibility of Administrator . The Plan Administrator shall have sole discretionary authority for the operation, interpretation and administration of the Plan. All determinations and actions of the Plan Administrator within its discretionary authority shall be final, conclusive and binding on all persons, except that the Plan Administrator may revoke or modify a determination or action it determines was previously made in error. In addition to the implied powers and duties that may be needed to carry out the administration of the Plan, the Plan Administrator shall have the following specific powers and responsibilities:

(a)

To establish, interpret, amend, revoke and enforce rules and regulations as required or desirable for the efficient administration of the Plan.

(b)

To review and interpret Plan provisions and to remedy provisions that are ambiguous or inconsistent or contain omissions.

(c)

To determine all questions relating to an individual’s eligibility to participate in the Plan and the validity of an individual’s elections.

(d)

To revoke an individual’s status as an Eligible Employee at any time; provided however, in no event shall such revocation be applied retroactively to deprive an Employee of benefits accrued under this Plan before such revocation.

(e)

To determine a Participant’s or beneficiary’s eligibility for benefits from the Plan and to authorize payment of benefits.

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(f)

To employ outside professionals and to enter into agreements on behalf of the Plan Administrator necessary or desirable for administration of the Plan.

(g)

To delegate any of the Plan Administrator’s rights, powers and duties to one or more Employees or officers of the Company or to a third-party administrator. Such delegation may include, without limitation, the power to execute any document on behalf of the Plan Administrator and to accept service of legal process for the Plan Administrator at the principal office of the Company.

5.3 Books, Records and Expenses . The Plan Administrator shall maintain books and records for purposes of this Plan, which shall be subject to the supervision and control of the Plan Administrator. SunTrust shall pay the general expenses of administering this Plan. The Plan Administrator shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by the Company with respect to the Plan.

5.4 Compensation . Neither the Plan Administrator nor any delegate who is an employee of the Company or an Affiliate shall receive any additional compensation for his services as Plan Administrator or delegate.

5.5 Indemnification . The Company (to the full extent permissible under law and consistent with its charters and bylaws) shall indemnify and hold harmless the Plan Administrator, each individual member of the Plan Administrator and any Employee authorized to act on behalf of the Plan Administrator, the Company or an Affiliate under this Plan for any liability, loss, expense, assessment or other cost of any kind or description whatsoever, including legal fees and expenses, which they actually incur for their acts and omissions, past, current or future, in the administration of the Plan.

5.6 Claims . The Plan Administrator shall establish a reasonable claims procedure consistent with the requirements under the Department of Labor regulations under section 503 of ERISA.

ARTICLE VI

AMENDMENT AND TERMINATION

6.1 Right to Amend or Terminate Plan . The Company expects to continue this Plan indefinitely, but reserves the right to amend or discontinue the Plan should it deem such an amendment or discontinuance necessary or desirable. The Company hereby authorizes and empowers the Committee, as Plan Administrator, to amend this Plan in any manner that is consistent with the purpose of this Plan as set forth in this document, without further approval of the Company’s Board of Directors, and to delegate authority to amend this Plan to one or more appropriate members of the Committee or officers of the Company, except as to any matter that the Committee determines may result in a material increased cost to the Company or its Affiliates, in which case the consent of the Committee shall be required. No amendment or discontinuance of this Plan shall reduce the vested balances credited to any Participant’s Account as of the date such amendment is adopted or the date of such discontinuance.

6.2 Distribution of Accounts . If the Company terminates the Plan, distribution of balances in Accounts shall be made to Participants and beneficiaries in the manner and at the time as provided in Article IV, unless the Company determines in its sole discretion that all such amounts shall be distributed upon termination of the Plan in accordance with the requirements under Code section 409A. Upon termination of the Plan, no further benefits shall be credited under the Plan.

ARTICLE VII

GENERAL PROVISIONS

7.1 Construction . The headings and subheadings in this Plan have been set forth for convenience of reference only and have no substantive effect whatsoever. Whenever any words in this document are used in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply;

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and whenever any words in this document are used in the singular or in the plural, they shall be construed as though they were used in the plural or in the singular, as the case may be, in all cases where they would so apply.

7.2 Severability . In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

7.3 No Alienation or Assignment . A Participant, a spouse or a beneficiary under this Plan shall have no right or power whatsoever to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of any benefit otherwise payable under this Plan, and the Company shall have the right, in the event of any such action, to terminate permanently the payment of benefits to, or on behalf of, any Participant, spouse or beneficiary who attempts to do so.

7.4 Incapacity of Recipient . If any person entitled to a distribution under the Plan is deemed by the Plan Administrator to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, the Plan Administrator may provide for all or part of such payment to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Company, its Affiliates and the Plan to the extent of such payment.

7.5 Unclaimed Benefits . Each Participant shall keep the Plan Administrator informed of his current address and the current address of his designated beneficiary. The Plan Administrator shall not be obligated to search for the whereabouts of any person if the location of a person is not made known to the Plan Administrator.

7.6 Not a Contract of Employment . Participation in this Plan does not grant to any individual the right to remain in the employ of the Company or any Affiliate for any specific term of employment or in any specific capacity or at any specific rate of compensation.

7.7 Unfunded Plan .

(a)

Contractual Liability of the Company. This Plan is an unfunded plan maintained primarily for a select group of management or highly compensated employees. The obligation of the Company to provide any benefits under the Plan is a mere contractual liability, and the Company is not required to establish or maintain any special or separate fund or segregate any assets for the payment of benefits under this Plan. Participants and their beneficiaries shall not have any interest in any particular assets of the Company by reason of its obligation under the Plan and they are at all times unsecured creditors of the Company with respect to any claim for benefits under the Plan. All amounts of compensation deferred under this Plan, all property and rights purchased with such amounts and any income attributable to such amounts, rights or property shall constitute general funds of the Company. Nothing contained in the Plan shall constitute a guarantee by the Company or any other person or entity that the assets of the Company will be sufficient to pay any benefits hereunder.

(b)

Rabbi Trust. The Company may, but is not required to, establish any special or separate fund or segregate any assets for the payment of benefits under this Plan. In the event the Company should establish a “rabbi” trust to assist in meeting the Company’s financial obligations under this Plan, the assets of such trust shall be subject to the claims of the general creditors of the Company in the event of the Company’s insolvency, as defined in such trust agreement, and Participants in this Plan and their beneficiaries shall have no preferred claim on, or any legal or equitable rights, claims or interest in any particular assets of such trust. To the extent payments of benefits under this Plan are actually made from any such trust or from any other source, the Company’s obligation to make such payments is satisfied, but to the extent not so paid, payment of benefits under this Plan remains the obligation of, and shall be paid by, the Company.

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7.8 Taxes . The Company or other payor may withhold from a benefit payment under the Plan or from a Participant’s wages in order to meet any federal, state, or local tax withholding obligations with respect to Plan benefits. The Company or other payor may also accelerate and pay a portion of a Participant’s benefits in a lump sum equal to the Federal Insurance Contributions Act (“FICA”) tax imposed and the income tax withholding related to such FICA amounts. The Company or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

7.9 Binding Effect . This Plan shall be binding upon and inure to the benefit of any successor of the Company and any successor shall be deemed substituted for the Company under this Plan and shall assume the rights, obligations and liabilities of the Company hereunder and be obligated to perform the terms and conditions of this Plan. As used in this Plan, the term “successor” shall include any person, firm, corporation or other business entity or related group of such persons, firms, corporations or business entities which at any time, whether by merger, purchase, reorganization, liquidation or otherwise, or by means of a series of such transactions, acquires all or substantially all of the assets or business of the Company.

7.10 Governing Law . The Plan and all actions taken pursuant to the Plan shall be governed by the laws of the State of Georgia (excluding its conflict-of-interest laws) except to the extent such laws are superseded by federal law.

7.11 Regulatory Requirements . Regulatory agencies and federal laws and regulations may impose restrictions on the Company and its Affiliates with respect to the payment of compensation and benefits to certain employees who may be Participants in this Plan. These restrictions may be in the form of absolute prohibitions or penalties, which may include tax penalties on the Company and its Affiliates or on certain Participants. Notwithstanding any other provision of this Plan document, the Company may reduce, eliminate or delay the payment of a Participant’s benefits under this Plan or may take actions that subject such benefits to monetary or tax penalties, as determined by the Company in its sole discretion to be required under federal laws or regulations applicable to the Company and its Affiliates. In such event, neither the Company nor its Affiliates shall have any liability for such reduction, elimination, delay or penalty. Any delay in payment of a Participant’s benefits under this Plan will comply with Section 4.8.

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Executed this day of May 31, 2011.


Attest:								SUNTRUST BANKS, INC.

By:								By:
								Donna D. Lange

Title:								Title:

- 10 -

Exhibit 10.10

2011 Amendments

SUNTRUST BANKS, INC.

DEFERRED COMPENSATION PLAN

AMENDED AND RESTATED EFFECTIVE AS OF

May 31, 2011

SUNTRUST BANKS, INC.

DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS


			Page

ARTICLE 1	ESTABLISHMENT AND PURPOSE			1

ARTICLE 2	DEFINITIONS			2

	2.1	Account		2

	2.2	Affiliate		3

	2.3	Base Salary		3

	2.4	Beneficiary		3

	2.5	Board		3

	2.6	Cause		3

	2.7	Change in Control		4

	2.8	Code		5

	2.9	Committee		5

	2.10	Company Contribution		5

	2.11	Company Contribution Account		5

	2.12	Date of Hire		5

	2.13	Deferral Election Form		5

	2.14	Designated Distribution Date		5

	2.15	Disabled or Disability		5

	2.16	Eligible Employee		6

	2.17	Eligible Income		6

	2.18	Eligible Plans		6

	2.19	Employee		6

	2.20	ERISA		6

	2.21	Incentive Award		6

	2.22	Investment Fund		7

	2.23	Key Employee		7

	2.24	Mandatory Deferral		7

	2.25	MIP		7

	2.26	Newly Hired Eligible Employee		7

	2.27	Participant		7

	2.28	Plan		7

	2.29	Plan Administrator		7

	2.30	Plan Year		7

	2.31	Restoration Plan Participants		8

-i-


	2.32	Retirement		8

	2.33	Retirement Plan		8

	2.34	Separation from Service or Separate from Service		8

	2.35	SERP		8

	2.36	SERP Account		8

	2.37	SERP Benefit		8

	2.38	Specified Date		8

	2.39	SunTrust		8

	2.40	Tier 1 and Tier 2 SERP Participants		8

	2.41	True-Up Contribution		8

	2.42	Valuation Date		8

	2.43	Years of Vesting Service		9

ARTICLE 3	PARTICIPATION AND CONTRIBUTIONS			9

	3.1	Participation		9

	3.2	Deferral Elections		9

		(a)	Base Salary	9

		(b)	Incentive Awards	9

	3.3	Time and Manner of Making Deferral Elections		9

		(a)	Newly Hired Eligible Employee	9

		(b)	No Commencement after Promotion or Rehire	10

	3.4	Mandatory Deferrals		10

	3.5	Company Contributions		10

	3.6	True-Up Contributions		11

	3.7	Cancellation of Deferral Election		11

	3.8	Transferred SERP Benefits		11

ARTICLE 4	INVESTMENTS			12

	4.1	Generally		12

	4.2	Default Investment		12

	4.3	No Actual Investment Required		12

	4.4	Compliance with Securities Laws		12

ARTICLE 5	ALLOCATION TO ACCOUNTS			12

	5.1	General		12

	5.2	Distributions and Forfeitures		13

	5.3	Earnings and Losses		13

ARTICLE 6	VESTING			13

	6.1	Generally		13

	6.2	Mandatory Deferrals		13

-ii-


	6.3	Change in Control		14

	6.4	Exception		14

	6.5	Vesting of Company Contribution Account		14

ARTICLE 7	DISTRIBUTIONS			14

	7.1	Normal Form of Payment and Commencement		14

	7.2	Alternate Form of Payment Election		15

		(a)	Procedure for Installment Election	15

		(b)	Cash-Out	15

	7.3	Key Employee Delay		15

	7.4	In-Service Distribution Election		15

		(a)	Earlier Separation from Service	16

		(b)	Sub-Account	16

		(c)	No Company Contributions	16

	7.5	Subsequent Deferral Election		16

	7.6	Payment of Death Benefit		16

	7.7	Disability		17

	7.8	Withdrawals for Unforeseeable Emergency		17

		(a)	Definition	17

		(b)	Participant Evidence	17

	7.9	Distribution of Mandatory Deferrals		17

	7.10	Effect of Taxation		18

	7.11	Permitted Delays		18

ARTICLE 8	PLAN ADMINISTRATION			18

	8.1	General Administration		18

	8.2	Responsibility of Administrator		18

	8.3	Books, Records and Expenses		19

	8.4	Compensation		19

	8.5	Indemnification		19

	8.6	Claims		19

ARTICLE 9	MISCELLANEOUS			20

	9.1	Construction		20

	9.2	Severability		20

	9.3	No Alienation or Assignment		20

	9.4	Incapacity of Recipient		20

	9.5	Unclaimed Benefits		20

	9.6	Not a Contract of Employment		20

	9.7	Unfunded Plan		21

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		(a)	Contractual Liability of SunTrust	21

		(b)	Rabbi Trust	21

	9.8	Right to Amend or Terminate Plan		21

		(a)	Distribution of Accounts	22

		(b)	Amendment Restrictions	22

	9.9	Taxes		22

	9.10	Binding Effect		22

	9.11	Governing Law		23

	9.12	Regulatory Requirements		23

ADDENDUM A	Amounts Deferred Under 401(k) Excess Plan			A-1

ADDENDUM B	Amounts Deferred Under the Prior Deferred Compensation Plan			B-1

-iv-

SunTrust Banks, Inc. Deferred Compensation Plan

Amended and Restated

Effective May 31, 2011

ARTICLE 1

Establishment and Purpose

The SunTrust Banks, Inc. Deferred Compensation Plan is hereby amended and restated effective January 1, 2011 (the “Plan”), and except as otherwise specifically noted, continues to provide a nonqualified and unfunded deferred compensation program to Eligible Employees pursuant to the terms and provisions set forth below, as subsequently amended from time to time. The Plan, as amended and restated in this document, reflects certain design changes adopted in 2010. In addition, the Plan was previously amended and restated effective January 1, 2010 to reflect authorized design changes in connection with the December 31, 2009 merger of the SunTrust Banks, Inc. 401(k) Excess Plan (the “401(k) Excess Plan”) and the prior SunTrust Banks, Inc. Deferred Compensation Plan (the “Prior Deferred Compensation Plan”), which were both previously amended and restated effective January 1, 2009 for compliance with section 409A of the Internal Revenue Code (“Code”).

SunTrust Banks, Inc. (“SunTrust”) originally established the Prior Deferred Compensation Plan effective October 1, 1999, by combining and restating the SunTrust Management Incentive Plan Deferred Compensation Plan Fund (the “MIP Fund”) and the SunTrust Performance Unit Plan Deferred Compensation Plan (the “PUP Fund”). All accounts in the MIP Fund and PUP Fund existing as of September 30, 1999 became subject to the terms of the Prior Deferred Compensation Plan. The Prior Deferred Compensation Plan was established to provide a single deferred compensation plan as the means whereby participants in the SunTrust Management Incentive Plan (“MIP”) and the SunTrust Performance Unit Plan (“PUP”) could defer receipt of all or a portion of their MIP awards and PUP awards as well as future awards provided by certain select bonus and incentive programs.

SunTrust established the 401(k) Excess Plan to provide benefits to certain highly compensated employees that were not otherwise allowed under SunTrust’s qualified 401(k) plan due to the limitations of Code sections 401(a)(17), 402(g) and 415(c). Effective July 1, 1999, the Crestar Additional Nonqualified Executive Plan (the “ANEX Plan”), a deferral plan similar to the 401(k) Excess Plan, was merged into the 401(k) Excess Plan and the existing account balances attributable to both the 401(k) Excess Plan and the ANEX Plan as of June 30, 1999, were frozen as to future contributions and renamed the “Excess Plan Frozen Balance” and the “ANEX Frozen Balance,” respectively.

The terms of the Plan, as set forth herein, shall govern the deferral and distribution of Eligible Income (as defined below) earned after 2009 with respect to services performed on and after January 1, 2010. In addition, the distribution of all amounts earned prior to 2010 and deferred under the 401(k) Excess Plan or the Prior Deferred Compensation Plan, including the benefits under the prior plans as described above, shall be made in accordance with the terms of the 401(k) Excess Plan and the Prior Deferred Compensation Plan as in effect immediately prior to the merger of these two plans on December 31, 2009, including any “grandfathered amounts” that were earned and vested (within the meaning of Code section 409A and regulations thereunder) under each plan prior to 2005 (and earnings thereon) (the “Grandfathered Amounts”). Benefits earned under the 401(k) Excess Plan and the Prior Deferred Compensation Plan prior to 2010 have been maintained in separate accounts. As provided by the Plan Administrator, all amounts credited under the Plan, including amounts credited under the 401(k) Excess Plan and the Prior Deferred Compensation Plan prior to 2010, shall be subject to the

A-5

investment provisions set forth in Article 4. The relevant terms of the 401(k) Excess Plan and the Prior Deferred Compensation Plan, including the provisions relating to the Grandfathered Amounts, on December 31, 2009 are summarized in Addenda A and B, respectively.

The Plan is intended (1) to comply with Code section 409A and official guidance issued thereunder (except with respect to any Grandfathered Amounts), (2) to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and (3) to comply with certain other regulatory requirements imposed upon SunTrust and its Affiliates, as described in Section 9.12. Notwithstanding any other provision of this Plan, this Plan shall be interpreted, operated and administered in a manner consistent with these intentions.

ARTICLE 2

Definitions

The following capitalized terms will have the meanings set forth in this Article 2 whenever such capitalized terms are used throughout this Plan (except for Addenda A and B):

2.1

Account means the bookkeeping account established by SunTrust for each Participant electing to defer Eligible Income or being credited with Mandatory Deferrals under the Plan. A Participant’s Account shall be utilized solely as a device for the determination and measurement of the amount of benefits to be paid to the Participant pursuant to this Plan. A Participant’s Account shall not constitute or be treated as a trust fund of any kind and may be divided into one or more sub-accounts, depending on the source of contributions, the type of Investment Fund selected or the distribution timing and payment method.

2.2	Affiliate means any corporation or other entity that is treated as a single employer with SunTrust under Code sections 414(b) or (c).

2.3

Base Salary means the pre-tax amount of an Eligible Employee’s regular base salary from SunTrust and all Affiliates as in effect from time to time during a Plan Year, disregarding any deferrals or withholdings from such base salary and including any compensation classified on the payroll as vacation pay or sick pay earned during that Plan Year. Base Salary shall not include any amount of an Eligible Employee’s base salary payable in a form denominated by the Committee as “salary shares” or “salary units.”

2.4

Beneficiary means one or more persons or one or more entities entitled to receive any benefits payable under this Plan at the Participant’s death. A Participant may name one or more primary Beneficiaries and one or more secondary Beneficiaries. A Participant may revoke a Beneficiary designation by filing a new beneficiary designation form or a written revocation with the Plan Administrator. If the Plan Administrator is not in receipt of a properly completed beneficiary designation form at the Participant’s death, or if none of the Beneficiaries named by the Participant survives the Participant or is in existence at the date of the Participant’s death, then the Participant’s Beneficiary shall be the Participant’s estate.

2.5	Board means the Board of Directors of SunTrust.

2.6	Cause means for purposes of this Plan and as determined by the Plan Administrator, in its sole discretion, one or more of the following actions that serves as the primary

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reason(s) for the termination of the Participant’s employment with SunTrust or an Affiliate:

(a)

(b)

the Participant’s conviction of a felony or engagement in a dishonest act, misappropriation of funds, embezzlement, criminal conduct or common law fraud;

(c)

the Participant’s material violation of the Code of Business Conduct and Ethics of SunTrust or the Code of Conduct of an Affiliate;

(d)

(e)

2.7

Change in Control means a change in control of SunTrust of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as in effect at the time of such “change in control”, provided that such a change in control shall be deemed to have occurred at such time as (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) directly or indirectly, of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of SunTrust or any successor of SunTrust; (ii) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board of SunTrust cease, for any reason, to constitute at least a majority of such Board, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) there is a consummation of any reorganization, merger, consolidation or share exchange as a result of which the common stock of SunTrust shall be changed, converted or exchanged into or for securities of another corporation (other than a merger with a wholly-owned subsidiary of SunTrust) or any dissolution or liquidation of SunTrust or any sale or the disposition of 50% or more of the assets or business of SunTrust; or (iv) there is a consummation of any reorganization, merger, consolidation or share exchange unless (A) the persons who were the beneficial owners of the outstanding shares of the common stock of SunTrust immediately before the consummation of such transaction beneficially own more than 65% of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such

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transaction and (B) the number of shares of the common stock of such successor or survivor of SunTrust beneficially owned by the persons described in Section 2.7(iv)(A) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of SunTrust’s common stock immediately before the consummation of such transaction, provided (C) the percentage described in Section 2.7(iv)(A) of the beneficially owned shares of the successor or survivor corporation and the number described in Section 2.7(iv)(B) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of SunTrust by the persons described in Section 2.7(iv)(A) immediately before the consummation of such transaction.

2.8	Code means the Internal Revenue Code of 1986, as amended.

2.9	Committee means the Compensation Committee of the Board.

2.10	Company Contribution means the amount credited to a Participant’s Company Contribution Account, as described in Section 3.5.

2.11	Company Contribution Account means a bookkeeping account established by SunTrust for each Participant credited with Company Contributions or True-Up Contributions.

2.12	Date of Hire means the date of an Employee’s first day of active employment with SunTrust or an Affiliate.

2.13	Deferral Election Form means the form that a Participant uses to elect to defer receipt of all or a portion of his Eligible Income pursuant to this Plan.

2.14	Designated Distribution Date means the date determined by the Plan Administrator within the first quarter of the calendar year selected by a Participant as the Specified Date for payment of an in-service distribution pursuant to Section 7.4.

2.15

2.16

Eligible Employee means an Employee who is selected by the Plan Administrator as eligible to make a deferral election under this Plan and who belongs to a “select group of management or highly compensated employees,” as such phrase is defined under ERISA. Generally, an Eligible Employee means an Employee participating in the MIP and in Grade 52 or higher, an Employee in Grade 53 or higher, or an Employee otherwise designated by the Plan Administrator based on other eligibility criteria, such as a minimum compensation level or prior participation in the 401(k) Excess Plan or the Prior Deferred Compensation Plan. The Plan Administrator, in its sole discretion, may: (a) change such requisite grade level and may determine other appropriate grade levels for elective deferrals to this Plan on an individual basis, (b) establish minimum compensation levels required for Eligible Employees, and (c) determine whether an Eligible Employee may defer Base Salary.

2.17	Eligible Income means Base Salary and Incentive Awards.

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2.18

Eligible Plans mean the MIP and the functional incentive plans sponsored by SunTrust or an Affiliate and approved by the Plan Administrator that provide for bonus, incentive, commission or similar variable pay to Employees, which pay is approved as eligible for voluntary or mandatory deferral under this Plan.

2.19

Employee means an individual who is a regular, common-law employee on the U.S. payroll of SunTrust or an Affiliate. The term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant, or a person otherwise designated by SunTrust or an Affiliate as not eligible to participate in the Plan, even if such person is determined to be an “employee” of SunTrust or an Affiliate by any governmental or judicial authority.

2.20	ERISA means the Employee Retirement Income Security Act of 1974, as amended.

2.21

Incentive Award means the pre-tax amount of an Eligible Employee’s bonus, incentive or commission, or similar variable pay, disregarding any deferrals, offsets, or withholdings from such incentive award, which is earned under an Eligible Plan. Notwithstanding the foregoing, Incentive Awards shall exclude any bonus pay that is not earned under a pre-determined plan, such as any non-reoccurring promotional program, referral, signing or spot bonuses, and any bonus pay that is payable on a monthly basis under an Eligible Plan.

2.22

Investment Fund means each investment vehicle that, for bookkeeping purposes, is used to determine the earnings that are credited and the losses that are charged to each Participant’s Account and Company Contribution Account. The Plan Administrator shall be responsible for selecting the Investment Funds available and for adding or deleting Funds as the Plan Administrator deems appropriate from time to time.

2.23

Key Employee means an employee treated as a “specified employee” as of his Separation from Service under Code section 409A(a)(2)(B)(i) ( i.e. , a key employee (as defined in Code section 416(i) without regard to section (5) thereof)) if the common stock of SunTrust or an Affiliate is publicly traded on an established securities market or otherwise. Key Employees shall be determined in accordance with Code section 409A using a December 31 identification date. A listing of Key Employees as of an identification date shall be effective for the twelve (12) month period beginning on the April 1 following the identification date.

2.24	Mandatory Deferral means the amount defined in Section 3.4.

2.25	MIP means SunTrust Banks, Inc. Management Incentive Plan, as amended from time to time.

2.26	Newly Hired Eligible Employee means an individual who is hired by SunTrust or an Affiliate, who is not a current or former Employee and who meets the criteria for an Eligible Employee on his first Date of Hire.

2.27

Participant means (a) an Eligible Employee who has made a deferral election in accordance with the terms of the Plan; (b) an Employee who has had Mandatory Deferrals credited under the Plan; (c) an Employee who has a SERP Benefit credited under the Plan; or (d) an Employee or former Employee who continues to have a Plan benefit attributable to his participation in a prior plan that has not been distributed in full. An individual ceases to be a Participant when his entire benefit under the Plan has been distributed or forfeited.

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2.28	Plan means the SunTrust Banks, Inc. Deferred Compensation Plan as described in this document, including any Addenda attached, which are incorporated herein by reference, as amended from time to time.

2.29	Plan Administrator means the party responsible for administering the Plan, as provided in Section 8.1.

2.30	Plan Year means the calendar year.

2.31	Restoration Plan Participants mean, for purposes of determining the Company Contribution and True-Up Contribution, if any, the participants accruing “pay credits” in the SunTrust Banks, Inc. Restoration Plan, as amended and restated from time to time, for the applicable Plan Year.

2.32	Retirement means a Participant’s Separation from Service on or after attaining age fifty-five (55) and completing at least five (5) Years of Vesting Service.

2.33	Retirement Plan means the SunTrust Banks, Inc. Retirement Plan, as amended and restated from time to time, and any successor plan.

2.34	Separation from Service or Separate from Service means a “separation from service” with SunTrust and its Affiliates within the meaning of Code section 409A.

2.35	SERP means the SunTrust Banks, Inc. Supplemental Executive Retirement Plan, as amended and restated from time to time.

2.36	SERP Account means a bookkeeping account established by SunTrust for a Participant who changes from a position eligible to participate in the SERP to one that is not eligible and credited with a SERP Benefit under Section 3.8.

2.37	SERP Benefit means the benefit amount determined under the SERP that is subject to Code section 409A (excluding any “Grandfathered Amounts,” (as defined in the SERP)) and credited to a Participant’s SERP Account, as described in Section 3.8.

2.38	Specified Date means a time or a fixed schedule specified under the Plan in accordance with Treas. Reg. § 1.409A-3(a)(4).

2.39	SunTrust means SunTrust Banks, Inc. or any successor to SunTrust.

2.40	Tier 1 and Tier 2 SERP Participants mean, for purposes of determining the Company Contribution and True-Up Contribution, if any, the Tier 1 and Tier 2 participants accruing benefits in the SERP for the applicable Plan Year.

2.41	True-Up Contribution means the amount credited to a Participant’s Company Contribution Account, as defined in Section 3.6.

2.42

Valuation Date means the last day of each Plan Year and such other dates as the Plan Administrator may determine from time to time. For purposes of benefit distributions under the Plan, the Valuation Date for a distribution shall be the last date by which the Account (or sub-account) or Company Contribution Account must be valued in order to have the distribution of all or part of the Account (or sub-account) or Company Contribution Account paid on the scheduled payment date.

2.43	Years of Vesting Service means “Years of Vesting Service,” as defined under the Retirement Plan.

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ARTICLE 3

Participation and Contributions

3.1

Participation. Participation in the Plan shall be limited to Eligible Employees and certain other Employees credited with Mandatory Deferrals or SERP Benefits. The Plan Administrator shall notify any Employee of his status as an Eligible Employee at such time and in such manner as the Plan Administrator shall determine. An Employee shall become a Participant by making a deferral election as an Eligible Employee under Section 3.2 or by being credited with a Mandatory Deferral under Section 3.4 or a SERP Benefit under Section 3.8.

3.2	Deferral Elections. An Eligible Employee may make an irrevocable election to defer the following types of Eligible Income in five (5) percent increments, as follows:

(a)

Base Salary. Certain Eligible Employees, as determined by the Plan Administrator, may elect to defer a portion of Base Salary each payroll period from 5% to 50%.

(b)

Incentive Awards. All Eligible Employees may elect to defer a portion of an Incentive Award from 20% to 90%.

Eligible Income deferred by a Participant under the Plan shall be credited to the Participant’s Account as soon as practicable after the amounts would have otherwise been paid to the Participant.

3.3

Time and Manner of Making Deferral Elections. In order to elect to defer Eligible Income earned during a Plan Year, an Eligible Employee shall file a Deferral Election Form, written or electronic, with the Plan Administrator before the beginning of such Plan Year and in accordance with procedures established by the Plan Administrator. A deferral election under this Section 3.3 shall become irrevocable once the deadline for filing such election has expired, except as provided in Section 3.7.

(a)

Newly Hired Eligible Employee. Notwithstanding the foregoing, if an individual becomes a Newly Hired Eligible Employee after the beginning of a Plan Year, the Plan Administrator has the sole discretion to determine whether such individual may submit a Deferral Election Form for that Plan Year. If allowed to participate, the Newly Hired Eligible Employee may make an election to defer Base Salary in accordance with the procedures established by the Plan Administrator, provided such election is delivered to the Plan Administrator no later than thirty (30) days after the Employee’s Date of Hire. In the event of a deferral election under this Section 3.3(a), the Deferral Election Form shall apply only to Base Salary earned for services performed on and after the first day of the month following the date the election is filed with the Plan Administrator.

(b)

No Commencement after Promotion or Rehire. If an employee becomes an Eligible Employee for purposes of this Plan after the beginning of a Plan Year, but is not a Newly Hired Eligible Employee, he may not participate in this Plan until the beginning of the next Plan Year, assuming that he is still an Eligible Employee and that he appropriately files a Deferral Election Form with the Plan Administrator.

3.4	Mandatory Deferrals. If any portion of an Incentive Award is subject to mandatory deferral as established prior to the beginning of the Plan Year in which the Incentive

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Award is earned or as otherwise determined by the Plan Administrator in compliance with Treas. Reg. § 1.409A-2(a)(2) (as provided in the applicable Eligible Plan) (each, a “Mandatory Deferral”), then each Mandatory Deferral shall be subject to the provisions of this Plan. With respect to each Mandatory Deferral, the terms of the Eligible Plan shall determine whether all or part of such Mandatory Deferral is subject to a vesting schedule and if so, what the vesting schedule is; and whether such Mandatory Deferral is subject to any special investment restrictions. Each Mandatory Deferral shall be credited to the Participant’s Account as soon as practicable after the amounts would have otherwise been paid and be paid in accordance with Section 7.9.

3.5

Company Contributions . Each Plan Year beginning on and after January 1, 2010, for a Participant eligible to defer Base Salary, SunTrust shall credit to the Participant’s Company Contribution Account an amount (the “Company Contribution”), if any, equal to his elective deferrals credited for such Plan Year under Section 3.2 up to a maximum of 5% of the difference between:

(a)

An amount equal to the lesser of: (i) the Participant’s Eligible Income paid or deferred during the Plan Year, or (ii) two (2) times the annual compensation limit under Code section 401(a)(17) for the Plan Year (i.e., $490,000 for 2010); provided, however, for Tier 1 and Tier 2 SERP Participants and Restoration Plan Participants, this amount shall be equal to the Participant’s Eligible Income paid or deferred during the Plan Year; minus

(b)

The annual compensation limit under Code section 401(a)(17) for such Plan Year ($245,000 for 2010).

Subject to the limitation above, each Participant’s Company Contribution Account shall be credited with Company Contributions as earned on a pay period basis after the total of such Participant’s Eligible Income from SunTrust or an Affiliate reaches the annual compensation limit under Code section 401(a)(17) for the Plan Year.

3.6

True-Up Contributions. As soon as practicable on or after the last payroll processing date of each Plan Year beginning on and after January 1, 2010, for a Participant eligible to defer Base Salary, SunTrust shall credit to the Participant’s Company Contribution Account an amount (the “True-Up Contribution”), if any, equal to the difference between (a) the Company Contribution for the Participant determined for such Plan Year under Section 3.5, regardless when the Participant reaches the annual compensation limit under Code section 401(a)(17), minus (b) the actual amount of any Company Contributions credited during the Plan Year. In no event shall this True-Up Contribution exceed the Participant’s total elective deferrals under Section 3.2 for such Plan Year.

3.7	Cancellation of Deferral Election. If a Participant becomes Disabled or obtains a distribution under Section 7.8 on account of an Unforeseeable Emergency, his outstanding deferral elections under this Plan shall be cancelled and no further Eligible Income will be deferred under such elections.

3.8

Transferred SERP Benefits. In the event an Employee changes from a position eligible to participate in the SERP to one that is not eligible for any reason, the Plan Administrator, or its delegate, shall determine, in its or his sole discretion, the SERP Benefit as of the date of such change and shall credit to the Participant’s SERP Account an amount equal to the present value of the SERP Benefit as soon as practicable following such date. Such Participant shall continue to vest in the SERP Account during his continued service as an Employee. Solely for purposes of Articles 4 and 5, the SERP Account shall be treated as a sub-account of the Participant’s Account. Notwithstanding anything herein to the contrary other than as specifically provided in the preceding sentence, the SERP Account shall be subject to the terms and conditions of the SERP.

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To the extent that a Participant satisfies the SERP vesting requirements prior to termination, the SERP Account shall be paid to the Participant in accordance with the time and form of payment established under the SERP.

ARTICLE 4

Investments

4.1

Generally. The Plan Administrator shall specify procedures to allow Participants to make elections among the Investment Funds as to the deemed investment of amounts newly credited to their Accounts and Company Contribution Accounts, as well as the deemed investment of amounts previously credited to these accounts (i.e., reallocation).

4.2

Default Investment. If a Participant fails to make an initial investment election pursuant to Section 4.1, his Account and Company Contribution Account shall be deemed to be invested in one or more Investment Funds selected by the Plan Administrator as the default investment. The Plan Administrator shall have no responsibility to any Participant or anyone claiming a benefit through a Participant if a Participant fails to make an investment election or to change any investment election.

4.3

No Actual Investment Required. Notwithstanding the preceding sections of this Article 4 and any other provision of this document, this Plan shall remain an unfunded plan and the description of Investment Funds in this Article 4, including any election rights of a Participant, shall not obligate SunTrust or any Affiliate to set aside any funds or to make any actual investments pursuant to this Plan. The purpose of the selection of the Investment Funds is to provide a means for measuring the value of a Participant’s Account and the Company Contribution Account, if any, which determines the amount of his Plan benefit.

4.4

Compliance with Securities Laws. Notwithstanding the foregoing provisions of this Article 4, if a Participant is subject to Section 16 of the Securities Exchange Act of 1934 (the “Exchange Act”), then such Participant’s investment elections shall be subject to such additional rules as may be established by the Plan Administrator as it deems necessary to ensure that transactions by such Participant comply with Rule 16b-3 of the Exchange Act (or any successor rules).

ARTICLE 5

Allocation to Accounts

5.1

General. A Participant’s benefit under this Plan is equal to the vested balance of his Account (including applicable sub-accounts) and the Company Contribution Account, if applicable. As of each Valuation Date, amounts shall be allocated to and charged against each Participant’s Account and Company Contribution Account in accordance with this Article 5.

5.2

Distributions and Forfeitures. The balances of a Participant’s Account and Company Contribution Account will be reduced, as applicable, by the amount of any distributions made under Article 7, by any forfeiture pursuant to Section 6.2, 6.4, or 6.5, and as required pursuant to Section 9.12. Any such distributions or forfeitures shall be deemed to reduce pro rata the deemed investment in each Investment Fund in the Participant’s Account and Company Contribution Account.

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5.3

Earnings and Losses. As of each Valuation Date selected by the Plan Administrator, each Participant’s Account and Company Contribution Account will be credited with earnings and gains or charged with losses occurring since the last Valuation Date, based on the results that would have been achieved had amounts credited to the Account and Company Contribution Account actually been invested in the Investment Funds selected by the Participant (or in the default Investment Fund, absent a Participant’s election). Earnings, gains and losses will continue to be credited or charged to the Participant’s Account and Company Contribution Account in accordance with this Section 5.3 until all amounts credited to such accounts are paid or forfeited. The amount of such deemed investment gain or loss shall be determined by the Plan Administrator and such determinations shall be final and conclusive upon all concerned.

ARTICLE 6

Vesting

6.1	Generally. Except as provided in Sections 6.2, 6.4 and 6.5, a Participant’s interest in his benefit under this Plan is one hundred percent (100%) vested and nonforfeitable at all times.

6.2

Mandatory Deferrals. If a Participant’s Account has been credited with any Mandatory Deferral that is subject to a vesting period (as set forth in the applicable Eligible Plan), and the Participant terminates employment with SunTrust and its Affiliates for any reason prior to meeting the vesting requirements for such Mandatory Deferral, then that portion of the Mandatory Deferral that is not vested, and the earnings on such nonvested portion shall be forfeited and deducted from the Participant’s Account. Notwithstanding the foregoing, unless approved by the Plan Administrator and otherwise specified in the Eligible Plan, upon a Participant’s death, Disability, Retirement or involuntary termination of employment resulting in the Participant’s eligibility to receive benefits under the SunTrust Banks, Inc. Severance Pay Plan (disregarding for purposes of determining eligibility, the Participant’s eligibility to receive severance benefits under another severance plan or individual agreement maintained by SunTrust or an Affiliate), the Participant’s nonvested Account balance shall fully vest as of the date such forfeiture would otherwise occur.

6.3

Change in Control. Unless an Eligible Plan provides for some other treatment, if a Participant’s employment with SunTrust or any Affiliate or their successors terminates for any reason, other than termination for Cause, within three (3) years following a Change in Control, any portion of the Participant’s Account or Company Contribution Account that was nonvested at the Change in Control and has not yet vested shall become fully vested immediately prior to the effective time of the Participant’s termination of employment. A Participant’s voluntary termination of employment, including a Participant’s Retirement or voluntary resignation, is not considered termination for Cause for purposes of vesting under this Section 6.3.

6.4

Exception . Notwithstanding the foregoing, a Participant and his Beneficiary shall forfeit the balance credited to his Company Contribution Account (as adjusted pursuant to Article 5) if the Participant is terminated for Cause by SunTrust or an Affiliate prior to a Change in Control. Forfeiture under this Section 6.4 shall be in addition to any other remedies which may be available to SunTrust or an Affiliate at law or in equity.

6.5

Vesting of Company Contribution Account. If a Participant’s Date of Hire occurs on or after January 1, 2011, and the Participant terminates employment with SunTrust and its Affiliates for any reason prior to completing two (2) Years of Vesting Service, then his Company Contribution Account and the earnings thereon shall be forfeited.

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Notwithstanding the foregoing, upon a Participant’s death, Disability, or involuntary termination of employment resulting in the Participant’s eligibility to receive benefits under the SunTrust Banks, Inc. Severance Pay Plan (disregarding for purposes of determining eligibility, the Participant’s eligibility to receive severance benefits under another severance plan or individual agreement maintained by SunTrust or an Affiliate), the Participant’s nonvested Company Contribution Account balance shall fully vest as of the date such forfeiture would otherwise occur.

ARTICLE 7

Distributions

7.1

Normal Form of Payment and Commencement. Except as otherwise provided in this Article 7, when a Participant Separates from Service for any reason, he shall be paid the vested balances of his Account and his Company Contribution Account, if any, under this Plan in a single lump sum cash payment during the first quarter of the calendar year immediately following the year in which his Separation from Service occurs.

7.2

Alternate Form of Payment Election. A Participant who does not wish to have his benefit under this Plan paid in a lump sum pursuant to Section 7.1 may elect on the first Deferral Election Form filed with the Plan Administrator to have the vested balances of his Account and his Company Contribution Account, if any, distributed in five (5) annual installments, with the first payment commencing in the first quarter of the calendar year immediately following the year in which the Participant Separates from Service. Each subsequent annual installment shall be paid during the first quarter of each of the subsequent four (4) calendar years.

(a)

Procedure for Installment Election. A Participant’s election to receive installment payments shall not be effective until received and approved by the Plan Administrator in accordance with Section 3.3.

(b)

Cash-Out. Notwithstanding any elections by a Participant, if the sum of a Participant’s total vested benefits under this Plan, including amounts credited under the 401(k) Excess Plan, the Prior Deferred Compensation Plan and any other account balance plan required to be aggregated with the Plan, as described in Treas. Reg. § 1.409A-1(c)(2)(i), is less than the applicable dollar amount under Code section 402(g)(1)(B) at the time payments commence under this Section 7.2, the vested balances of his Account and the Company Contribution Account shall be distributed in a lump sum payment during the first quarter of the calendar year immediately following the year in which he Separates from Service.

7.3

Key Employee Delay. Notwithstanding anything herein to the contrary, distributions may not be made to a Key Employee upon a Separation from Service before the date which is six (6) months after the date of the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key Employee). Any payments that would otherwise be made during this period of delay shall be accumulated and paid in the seventh month following the Participant’s Separation from Service and shall continue to be credited or charged with earnings, gains or losses in accordance with Section 5.3 until such amounts are paid or forfeited.

7.4

In-Service Distribution Election. Unless the Plan Administrator announces otherwise for a Plan Year, a Participant may elect on a Deferral Election Form to have the portion of his Account related to amounts deferred under such Deferral Election Form (and earnings thereon) paid to the Participant as of a Specified Date permitted on the Deferral

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Election Form. The deferred amount subject to this election will be paid in a lump sum on the Designated Distribution Date.

(a)

Earlier Separation from Service. If a Participant should Separate from Service before his Specified Date(s), any portion of his Account subject to an in-service distribution election pursuant to this Section 7.4 will be paid in a lump sum in accordance with Section 7.1 and will not be subject to an election, if any, under Section 7.2.

(b)

Sub-Account. The portion of a Participant’s Account to which an in-service distribution election applies pursuant to this Section 7.4 shall be maintained as a sub-account of the Participant’s Account unless all of the Participant’s elective deferrals under this Plan are subject to an in-service distribution election with the same Specified Date.

(c)

No Company Contributions. In no event shall an in-service distribution election pursuant to this Section 7.4 for a Plan Year apply to any Company Contributions or True-Up Contributions earned during such Plan Year.

7.5

Subsequent Deferral Election. A Participant may make one or more subsequent elections to change the time or form of a distribution for a deferred amount in accordance with the procedures and distribution rules established by the Plan Administrator. An election under this Section 7.5 shall become irrevocable on the date the election is filed with the Plan Administrator, and any election to change the time or form of a distribution shall be effective only if the following conditions are satisfied:

(a)

The new election may not take effect until at least twelve (12) months after the date on which the new election is made;

(b)

In the case of an election to change the time or form of a distribution under Section 7.1, 7.2, or 7.4, a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made; and

(c)

In the case of an election to change the time of a distribution under Section 7.4, the election must be made at least twelve (12) months before the date the distribution is scheduled to be paid.

7.6

Payment of Death Benefit. Notwithstanding any elections by the Participant or provisions of the Plan to the contrary, if a Participant dies at any time (including after his Separation from Service), the vested balances in the Account and the Company Contribution Account, if any, shall be distributed to the Beneficiary in a lump sum payment in the first quarter of the calendar year immediately following the year of the Participant’s death (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

7.7

Disability. Notwithstanding any elections by a Participant or provisions of the Plan to the contrary, if a Participant becomes Disabled at any time, then his vested balances in the Account and the Company Contribution Account, if any, will be distributed to the Participant in a lump sum payment in the first quarter of the calendar year immediately following the year in which the Participant becomes Disabled (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

7.8

Withdrawals for Unforeseeable Emergency. A Participant may withdraw all or any portion of the vested balances in his Account and Company Contribution Account, if any, for an Unforeseeable Emergency. The amount distributed with respect to an Unforeseeable Emergency may not exceed the amount necessary to satisfy such

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Unforeseeable Emergency plus the amount necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this Plan.

(a)

Definition. “Unforeseeable Emergency” means, for this purpose, a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

(b)

Participant Evidence. The Plan Administrator shall have the authority to require the Participant to provide such evidence as it deems necessary to determine whether distribution is warranted pursuant to this Section 7.8.

7.9

Distribution of Mandatory Deferrals. Notwithstanding any other provision of the Plan, the vested portion of an Account attributable to a Mandatory Deferral (as adjusted pursuant to Article 5) shall be paid in a lump sum on the Specified Date for each Mandatory Deferral set forth in the Eligible Plan or, if earlier, upon the Participant’s death or Disability in accordance with Section 7.6 or 7.7, respectively. In no event shall any Mandatory Deferrals be subject to an election under Section 7.2, 7.4 or 7.5, or to payment under Section 7.8.

7.10	Effect of Taxation. If a portion of the Participant’s balance credited to the Account or the Company Contribution Account is includible in income under Code section 409A, such portion shall be distributed immediately to the Participant.

7.11

Permitted Delays. Notwithstanding the foregoing, any payment to a Participant under the Plan shall be delayed upon the Plan Administrator’s reasonable anticipation that the making of the payment would violate Federal securities laws or other applicable law; provided that any payment delayed pursuant to this Section 7.11 shall be paid in accordance with Code section 409A on the earliest date on which SunTrust reasonably anticipates that the making of the payment will not cause a violation of Federal securities laws or other applicable law.

ARTICLE 8

Plan Administration

8.1	General Administration. SunTrust is the sponsor of the Plan, and the Committee is the Plan Administrator responsible for the operation and administration of the Plan.

8.2

Responsibility of Administrator. The Plan Administrator shall have sole discretionary authority for the operation, interpretation and administration of the Plan. All determinations and actions of the Plan Administrator within its discretionary authority shall be final, conclusive and binding on all persons, except that the Plan Administrator may revoke or modify a determination or action it determines was previously made in error. In addition to the implied powers and duties that may be needed to carry out the administration of the Plan, the Plan Administrator shall have the following specific powers and responsibilities:

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(a)

To establish, interpret, amend, revoke and enforce rules and regulations as required or desirable for the efficient administration of the Plan.

(b)

To review and interpret Plan provisions and to remedy provisions that are ambiguous or inconsistent or contain omissions.

(c)

To determine all questions relating to an individual’s eligibility to participate in the Plan, an individual’s right to defer Base Salary, and the validity of an individual’s elections.

(d)

To revoke an individual’s status as an Eligible Employee at any time; provided however, in no event shall such revocation cancel an irrevocable deferral election under the Plan or be applied retroactively to deprive an Employee of benefits accrued under this Plan before such revocation.

(e)

To determine a Participant’s or Beneficiary’s eligibility for benefits from the Plan and to authorize payment of benefits.

(f)

To delegate any of the Plan Administrator’s rights, powers and duties to one or more Employees or officers of SunTrust or to a third-party administrator. Such delegation may include, without limitation, the power to execute any document on behalf of the Plan Administrator and to accept service of legal process for the Plan Administrator at the principal office of SunTrust.

(g)

To employ outside professionals and to enter into agreements on behalf of the Plan Administrator necessary or desirable for administration of the Plan.

8.3

Books, Records and Expenses. The Plan Administrator shall maintain books and records for purposes of this Plan, which shall be subject to the supervision and control of the Plan Administrator. SunTrust shall pay the general expenses of administering this Plan. The Plan Administrator shall be entitled to rely conclusively upon all tables, valuations, certificates, opinions and reports furnished by any actuary, accountant, controller, counsel or other person employed or engaged by SunTrust with respect to the Plan.

8.4	Compensation. Neither the Plan Administrator nor any delegate who is an employee of SunTrust or an Affiliate shall receive any additional compensation for his services as Plan Administrator or delegate.

8.5

Indemnification. SunTrust (to the full extent permissible under law and consistent with its charters and bylaws) shall indemnify and hold harmless the Plan Administrator, each individual member of the Plan Administrator and any Employee authorized to act on behalf of the Plan Administrator, the Plan Sponsor or any Affiliate under this Plan for any liability, loss, expense, assessment or other cost of any kind or description whatsoever, including legal fees and expenses, which they actually incur for their acts and omissions, past, current or future, in the administration of the Plan.

8.6	Claims. The Plan Administrator shall establish a reasonable claims procedure consistent with the requirements under the Department of Labor regulations under section 503 of ERISA.

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ARTICLE 9

Miscellaneous

9.1

Construction. The headings and subheadings in this Plan have been set forth for convenience of reference only and have no substantive effect whatsoever. Whenever any words in this document are used in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and whenever any words in this document are used in the singular or in the plural, they shall be construed as though they were used in the plural or in the singular, as the case may be, in all cases where they would so apply.

9.2	Severability. In the event any provision of the Plan shall be held invalid or illegal for any reason, any illegality or invalidity shall not affect the remaining parts of the Plan, but the Plan shall be construed and enforced as if the illegal or invalid provision had never been inserted.

9.3

No Alienation or Assignment. A Participant, a spouse or a Beneficiary under this Plan shall have no right or power whatsoever to alienate, commute, anticipate or otherwise assign at law or equity all or any portion of any benefit otherwise payable under this Plan, and SunTrust shall have the right, in the event of any such action, to terminate permanently the payment of benefits to, or on behalf of, any Participant, spouse or beneficiary who attempts to do so.

9.4

Incapacity of Recipient. If any person entitled to a distribution under the Plan is deemed by the Plan Administrator to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until a claim for such payment shall have been made by a duly appointed guardian or other legal representative of such person, the Plan Administrator may provide for all or part of such payment to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of SunTrust, its Affiliates and the Plan to the extent of such payment.

9.5

Unclaimed Benefits. Each Participant shall keep the Plan Administrator informed of his current address and the current address of his designated Beneficiary. The Plan Administrator shall not be obligated to search for the whereabouts of any person if the location of a person is not made known to the Plan Administrator.

9.6	Not a Contract of Employment. Participation in this Plan does not grant to any individual the right to remain in the employ of SunTrust or any Affiliate for any specific term of employment or in any specific capacity or at any specific rate of compensation.

9.7	Unfunded Plan.

(a)

Contractual Liability of SunTrust. This Plan is an unfunded plan maintained primarily for a select group of management or highly compensated employees. The obligation of SunTrust to provide any benefits under the Plan is a mere contractual liability, and SunTrust is not required to establish or maintain any special or separate fund or segregate any assets for the payment of benefits under this Plan. Participants and their Beneficiaries shall not have any interest in any particular assets of SunTrust by reason of its obligation under the Plan and they are at all times unsecured creditors of SunTrust with respect to any claim for benefits under the Plan. All amounts of compensation deferred under this Plan, all property and rights purchased with such amounts and any income attributable to such amounts, rights or property shall constitute general funds of SunTrust.

(b)

Rabbi Trust. SunTrust may, but is not required to, establish any special or separate fund or segregate any assets for the payment of benefits under this Plan. In the event SunTrust should establish a “rabbi” trust to assist in meeting

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SunTrust’s financial obligations under this Plan, the assets of such trust shall be subject to the claims of the general creditors of SunTrust in the event of SunTrust’s insolvency, as defined in such trust agreement, and Participants in this Plan and their Beneficiaries shall have no preferred claim on, or any legal or equitable rights, claims or interest in any particular assets of such trust. To the extent payments of benefits under this Plan are actually made from any such trust or from any other source, SunTrust’s obligation to make such payments is satisfied, but to the extent not so paid, payment of benefits under this Plan remains the obligation of, and shall be paid by, SunTrust.

9.8

Right to Amend or Terminate Plan. SunTrust expects to continue this Plan indefinitely, but reserves the right to amend or discontinue the Plan should it deem such an amendment or discontinuance necessary or desirable. SunTrust hereby authorizes and empowers the Committee, as Plan Administrator, to amend this Plan in any manner that is consistent with the purpose of this Plan as set forth in this document, without further approval of the Board, and to delegate authority to amend this Plan to one or more appropriate members of the Committee or officers of SunTrust, except as to any matter that the Committee determines may result in a material increased cost to SunTrust or its Affiliates, in which case the consent of the Committee shall be required. No amendment or discontinuance of this Plan shall reduce the vested balances credited to any Participant’s Account (including applicable sub-accounts) or Company Contribution Account, if applicable, as of the later of the date such amendment is adopted or the effective date of such amendment or discontinuance.

(a)

Distribution of Accounts. If SunTrust terminates the Plan, distribution of balances in Accounts and Company Contribution Accounts shall be made to Participants and Beneficiaries in the manner and at the time as provided in Article 7, unless SunTrust determines in its sole discretion that all such amounts shall be distributed upon termination of the Plan in accordance with the requirements under Code section 409A.

(b)

Amendment Restrictions. If there is a Change in Control, no amendment shall be made to this Plan thereafter which would adversely affect in any manner whatsoever the benefits payable under this Plan to any Participant absent the express written consent of all Participants who might be adversely affected by such amendment. Any amendment, effective on or after a Change in Control, to merge this Plan with or into another deferred compensation plan shall be deemed to adversely affect the benefits payable under this Plan. Notwithstanding the foregoing, on or after a Change in Control, SunTrust or the Committee may amend this Plan without Participant consent to the extent such an amendment is required by law or is necessary or desirable to prevent adverse tax consequences to Participants or their Beneficiaries provided that SunTrust or the Committee obtains the written opinion of outside counsel that such an amendment is required by law or is necessary or desirable to prevent adverse tax consequences to Participants or their Beneficiaries.

9.9

Taxes. SunTrust or other payor may withhold from a benefit payment under the Plan or from a Participant’s wages in order to meet any federal, state, or local tax withholding obligations with respect to Plan benefits. SunTrust or other payor may also accelerate and pay a portion of a Participant’s benefits in a lump sum equal to the Federal Insurance Contributions Act (“FICA”) tax imposed and the income tax withholding related to such FICA amounts. SunTrust or other payor shall report Plan payments and other Plan-related information to the appropriate governmental agencies as required under applicable laws.

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9.10

Binding Effect. This Plan shall be binding upon and inure to the benefit of any successor of SunTrust and any successor shall be deemed substituted for SunTrust under this Plan and shall assume the rights, obligations and liabilities of SunTrust hereunder and be obligated to perform the terms and conditions of this Plan. As used in this Plan, the term “successor” shall include any person, firm, corporation or other business entity or related group of such persons, firms, corporations or business entities which at any time, whether by merger, purchase, reorganization, liquidation or otherwise, or by means of a series of such transactions, acquires all or substantially all of the assets or business of SunTrust.

9.11	Governing Law. The Plan and all actions taken pursuant to the Plan shall be governed by the laws of the State of Georgia (excluding its conflict-of-interest laws) except to the extent such laws are superseded by federal law.

9.12

Executed this 31st day of May, 2011.


Attest:		SUNTRUST BANKS, INC.

By:	By:
		Donna D. Lange

Title:		Title:

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SUNTRUST BANKS, INC.

DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of May 31, 2011

ADDENDUM A

AMOUNTS DEFERRED UNDER

401(K) EXCESS PLAN

The following provisions in this Addendum A summarize the distribution and certain other rules in effect during the stated periods under the SunTrust Banks, Inc. 401(k) Excess Plan, amended and restated effective as of January 1, 2009 (the “401(k) Excess Plan”). However, nothing in this Addendum A shall change or alter the terms of the 401(k) Excess Plan in effect as of any date. All capitalized terms in this Addendum A shall be defined in accordance with the terms of the 401(k) Excess Plan as in effect immediately prior to the plan merger with the SunTrust Banks, Inc. Deferred Compensation Plan (the “Prior Deferred Compensation Plan”) on December 31, 2009, and all Section references in this Addendum A shall refer to Sections in this Addendum A or the Section of the 401(k) Excess Plan in effect as of a certain date.

Distribution of amounts deferred (and earnings thereon) under the 401(k) Excess Plan that were earned and vested (within the meaning of Code section 409A) prior to 2005 and that are exempt from the requirements of Code section 409A (the “401(k) Excess Plan Grandfathered Amounts”) shall be made in accordance with the terms of the 401(k) Excess Plan as in effect on October 3, 2004, and as summarized in Part A1 of this Addendum A.

Distribution of amounts deferred (and earnings thereon) under the 401(k) Excess Plan that were earned for services performed during the period from January 1, 2005 to December 31, 2009 (“401(k) Excess Plan 2005-2009 Amounts”) shall be made in accordance with the terms of the 401(k) Excess Plan as in effect immediately prior to the plan merger with the Prior Deferred Compensation Plan on December 31, 2009, and as summarized in Part A2 of this Addendum A.

PART A1

401(K) EXCESS PLAN GRANDFATHERED AMOUNTS

Article 6

Distributions

A1-6.1

Normal Form of Payment and Commencement . Except as otherwise provided in this Section A1-6.1, when a Participant separates from service with the Corporation and its Affiliates for any reason, he shall be paid his 401(k) Excess Plan benefit in a single lump-sum cash payment during the first quarter of the calendar year immediately following the year of his separation. The amount payable to the Participant shall be equal to the balance of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution, less withholding for applicable federal and state taxes.

A1-6.2

Alternate Form of Payment Election. A Participant may elect, in lieu of the lump-sum payment described in Section A1-6.1, to receive payment of his total benefit under this 401(k) Excess Plan in five (5) substantially equal annual installments, payable in cash; provided that such election is effective, as set forth below, at least twelve (12) months before the scheduled payment date following the Participant’s separation from service. The initial installment shall be paid during the first quarter of the calendar year immediately following the year of his separation. Each subsequent annual installment

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shall be paid during the first quarter of each of the subsequent four calendar years. Each installment payment shall be determined based on the balance of the Participant’s Account as of the Valuation Date immediately preceding the date of payment and shall be reduced by withholding for applicable federal and state taxes. A Participant’s election to receive installment payments of his 401(k) Excess Plan benefit pursuant to this Section A1-6.2 shall be made in writing on such forms as may be provided by the Compensation Committee and shall not be effective until received and approved by the Compensation Committee.

A1-6.3

Death . In the event of a Participant’s death, the Compensation Committee shall authorize payment to the Participant’s Beneficiary of any benefits due hereunder but not paid to the Participant prior to his death. Payment shall be made at the same time as if the Participant had retired on the date of his death and in accordance with the Participant’s distribution election in effect at his death. The Beneficiary may request a change in the form of payment by making a written request to the Compensation Committee prior to January 1 of the calendar year in which the benefit will be paid. The Compensation Committee has sole discretion and authority to approve or deny the Beneficiary’s request, taking into account such factors as the Compensation Committee may deem appropriate.

If a Participant dies after having received one or more installments but before all installment payments have been made, the remaining annual installment payments shall be paid to his Beneficiary at the same time they would otherwise have been paid to the Participant. The Beneficiary may request an accelerated payment in the form of a lump-sum cash payment by making a written request to the Compensation Committee prior to the January 1 of the calendar year in which the benefit will be paid. The Compensation Committee has sole discretion and authority to approve or deny the Beneficiary’s request.

A1-6.4

Disability . A Participant shall be entitled to payment of his 401(k) Excess Plan benefit in the event of his Total Disability only if the conditions of Subsections A1-6.4.1 and A1-6.4.2 are met. In such situation, payment of the Participant’s benefit shall commence pursuant to Sections A1-6.1 or A1-6.2 as if the Participant separated from service on the date all such conditions are met. A Participant shall be considered to have a Total Disability only if:

A1-6.4.1

The Participant has incurred a “Total Disability” as such term is defined in the SunTrust Banks, Inc. Long-Term Disability Plan (or any successor plan), which entitle the Participant to disability payments under such Plan; and

A1-6.4.2

The Compensation Committee determines, in its sole discretion, based upon medical evidence furnished by the Participant, that the disability is anticipated to be a permanent disability.

A1-6.5

Extreme Financial Hardship . A Participant may request a distribution of all or part of his vested 401(k) Excess Plan benefit prior to the date specified in Sections A1-6.1 through A1-6.4 due to an extreme financial hardship, by submitting a written request to the Compensation Committee with evidence satisfactory to the Compensation Committee to demonstrate the circumstances constituting the extreme financial hardship. The Compensation Committee, in its sole discretion, shall determine whether an extreme financial hardship exists. An extreme financial hardship means an immediate, catastrophic financial need of the Participant occasioned by (i) a tragic event, such as the death, total disability, serious injury or illness of a Participant or the Participant’s spouse, child or dependent; or (ii) an extreme financial reversal or other impending catastrophic event which has resulted in, or will result in, harm to the

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Participant or the Participant’s spouse, child or dependent. A distribution for extreme financial hardship may not exceed the amount required to meet the hardship and may be made only if the Compensation Committee finds the extreme financial hardship may not be alleviated from other resources reasonably available to the Participant, including without limitation, liquidation of investment assets or luxury assets, or loans from financial institutions or other sources. The Compensation Committee shall have the authority to require the Participant to provide such evidence as the Committee deems necessary to determine whether distribution is warranted pursuant to this Section A1-6.5. The Compensation Committee shall use uniform and nondiscriminatory standards in reviewing any requests for distributions to meet an extreme financial hardship.

A1-6.5.1

Form and Commencement . A hardship distribution to a Participant pursuant to this Section A1-6.5 shall be made in a single lump-sum cash payment (less withholding for applicable federal and state taxes) as soon as practicable after the Compensation Committee approves the hardship request. Amounts distributed for hardship shall be deemed to reduce pro rata the deemed investment in each Investment Fund, including any Employer Stock, in the Participant’s Account.

A1-6.5.2

Accelerated Installment Payments . A Participant who has commenced receiving installment payments pursuant to Section A1-6.2 may request acceleration of such payments in the event of an extreme financial hardship. The Compensation Committee may permit accelerated payments to the extent such accelerated payment does not exceed the amount necessary to meet the extreme financial hardship.

A1-6.6

Payment to Guardian, Legal Representative or Other . If a benefit hereunder is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of his property, the Compensation Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Compensation Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the benefit. A payment pursuant to this Section A1-6.6 shall completely discharge the Compensation Committee and the Corporation from all liability with respect to such benefit.

Article 9

Miscellaneous

A1-9.8

Right to Amend or Terminate Plan . The Corporation expects to continue this 401(k) Excess Plan indefinitely, but reserves the right to amend or discontinue the 401(k) Excess Plan should it deem such an amendment or discontinuance necessary or desirable, subject to the restrictions on amendments after a Change in Control. The Corporation hereby authorizes and empowers the Compensation Committee to amend this 401(k) Excess Plan in any manner that is consistent with the purpose of this 401(k) Excess Plan as set forth above, without further approval from the Board except as to any matter that the Compensation Committee determines may result in a material increased cost to the Corporation. However, if the Corporation or Compensation Committee should amend or discontinue this 401(k) Excess Plan, the Corporation shall be liable for any contributions and earnings thereon that have accrued and are vested as of the date of such action.

PART A2

401(K) EXCESS PLAN 2005-2009 AMOUNTS

Article 5

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Vesting

A2-5.1

Generally . Except as provided in Section 4.3 with respect to excess matching contributions which are deemed a forfeiture and in Section A2-5.2, a Participant’s interest in his benefit under the 401(k) Excess Plan is one hundred percent (100%) vested and nonforfeitable at all times.

A2-5.2

Exception . A Participant and his Beneficiary shall completely forfeit that portion of his benefit under the 401(k) Excess Plan attributable to Employer matching contributions pursuant to Sections 4.3 and 4.6 (whenever allocated) if the Participant is terminated for Cause by the Corporation or an Affiliate. Forfeiture under this Section A2-5.2 shall be in addition to any other remedies which may be available to the Corporation or an Affiliate at law or in equity. This Section A2-5.2 shall not apply to any Participant to whom Article 7 applies or to any ANEX Plan Frozen Balance.

Article 6

Distributions

A2-6.1

Normal Form of Payment and Commencement . Except as otherwise provided in this Article 6, when a Participant Separates from Service with the Corporation and its Affiliates for any reason, he shall be paid his 401(k) Excess Plan benefit in a single lump-sum cash payment during the first quarter of the calendar year immediately following the year of his Separation from Service. The amount payable to the Participant shall be equal to the balance of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution, less any required withholding for applicable federal and state income taxes and employment taxes in accordance with Section 9.9.

A2-6.2

Alternate Form of Payment Election . A Participant who does not wish to have his benefit under this 401(k) Excess Plan paid in a lump sum pursuant to Section A2-6.1 may elect on a Deferral Election Form to have the portion of his Account related to amounts deferred pursuant to the Deferral Election Form (and earnings thereon) distributed in five (5) annual installments, with the first payment commencing in the first quarter of the calendar year immediately following the year in which the Participant’s Separation from Service occurs. Each subsequent annual installment shall be paid during the first quarter of each of the subsequent four (4) calendar years.

A2-6.2.1

Procedure for Installment Election . A Participant’s election to receive installment payments of the portion of his Account described above in Section A2-6.2 shall be made on such forms, written or electronic, as may be provided by the Compensation Committee and shall not be effective until received and approved by the Compensation Committee by the relevant Election Date in accordance with Section 2.1. Each installment payment shall be determined based on the vested balance of such portion of the Participant’s Account as of the Valuation Date immediately preceding the date of payment.

A2-6.2.2

Cash-Out . Notwithstanding any elections by a Participant, effective on and after January 1, 2009, if the sum of a Participant’s vested Account balance under this 401(k) Excess Plan and any other account balance plan, as described in Treas. Reg. § 1.409A-1(c)(2)(i), is less than the applicable dollar amount under Code section 402(g)(1)(B) at the time of payment, the full vested Account balance shall be distributed in a lump sum payment during the first quarter of the calendar year immediately following the year in which his Separation from Service occurs, subject to the delay for Key Employee as set forth in Section A2-6.3.

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A2-6.3

Key Employee Delay . Notwithstanding anything herein to the contrary, distributions may not be made to a Key Employee upon a Separation from Service before the date which is six (6) months after the date of the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key Employee). Any payments that would otherwise be made during this period of delay shall be accumulated and paid in the seventh month following the Participant’s Separation from Service.

A2-6.4

Subsequent Deferral Election . A Participant may make one or more subsequent elections to change the time or form of a distribution for a deferred amount in accordance with the procedures and distribution rules established by the Compensation Committee, but any change in the election shall be effective only if the following conditions are satisfied:

A2-6.4.1

The new election may not take effect until at least twelve (12) months after the date on which the new election is made;

A2-6.4.2

In the case of an election to change the time or form of a distribution under Section A2-6.1 (lump sum payment after Separation from Service) or A2-6.2 (installments after Separation from Service), a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made; and

A2-6.4.3

The new election must be made at least twelve (12) months before the date the distribution is scheduled to be paid.

A2-6.5

Payment of Death Benefit . Notwithstanding any elections by the Participant or provisions of the 401(k) Excess Plan to the contrary, if a Participant dies at any time (including after his Separation from Service), the Compensation Committee shall authorize payment to the Participant’s Beneficiary of any vested benefits due under the 401(k) Excess Plan but not paid to the Participant prior to his death. Payment of the Participant’s vested Account balance shall be distributed to the Beneficiary in a lump sum payment in the first quarter of the calendar year immediately following the year of the Participant’s death (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

A2-6.6

Disability . Notwithstanding any elections by a Participant or provisions of the 401(k) Excess Plan to the contrary, if a Participant becomes Disabled at any time, then his vested Account balance will be distributed to the Participant in a lump sum payment in the first quarter of the calendar year immediately following the year in which the Participant becomes Disabled (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

A2-6.7

Withdrawals for Unforeseeable Emergency . A Participant may withdraw all or any portion of his vested Account balance for an Unforeseeable Emergency. The amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this 401(k) Excess Plan.

A2-6.7.1

Definition . “Unforeseeable Emergency” means, for this purpose, a severe financial hardship to a Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the

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Participant.

A2-6.7.2

Participant Evidence . The Compensation Committee shall have the authority to require the Participant to provide such evidence as it deems necessary to determine whether distribution is warranted pursuant to this Section A2-6.7. The Compensation Committee shall use uniform and nondiscriminatory standards in reviewing any requests for distributions to meet an Unforeseeable Emergency. Amounts distributed under this Section A2-6.7 shall be deemed to reduce pro rata the deemed investment in each Investment Fund in the Participant’s Account.

A2-6.7.3

Accelerated Payments . A Participant who has commenced receiving installment payments pursuant to Section A2-6.2 shall receive an accelerated payment of such installments under this Section A2-6.7.3 to the extent such accelerated payment does not exceed the amount necessary to meet the Unforeseeable Emergency.

A2-6.8

Special One-Time Election . Notwithstanding any prior elections or 401(k) Excess Plan provisions to the contrary, a Participant who was an employee of the Corporation and its Affiliates (including on a paid leave of absence) may have made an election to receive all or a specified portion of his or her Account pursuant to Section A2-6.1 and A2-6.2. Any such election must have become irrevocable on or before December 31, 2008 and must have been made in accordance with the procedures and distribution rules established by the Compensation Committee and the transition rules under Code section 409A.

A2-6.9

Pre-2005 Deferrals . Notwithstanding the foregoing, Part A1 of this Addendum A governs the distribution of amounts that were earned and vested (within the meaning of Code section 409A and regulations thereunder) under the 401(k) Excess Plan prior to 2005 (and earnings thereon) and are exempt from the requirements of Code section 409A.

A2-6.10

Effect of Taxation . If a portion of the Participant’s Account balance is includible in income under Code section 409A, such portion shall be distributed immediately to the Participant.

A2-6.11

Permitted Delays . Notwithstanding the foregoing, any payment to a Participant under the 401(k) Excess Plan shall be delayed upon the Compensation Committee’s reasonable anticipation that the making of the payment would violate Federal securities laws or other applicable law; provided that any payment delayed pursuant to this Section A2-6.11 shall be paid in accordance with Code section 409A on the earliest date on which the Corporation reasonably anticipates that the making of the payment will not cause a violation of Federal securities laws or other applicable law.

Article 7

Change in Control

A2-7.1

Purpose . The purpose of this Article 7 is to provide protection for the benefits payable under this 401(k) Excess Plan to a Participant who is affected by a Change in Control (as defined below).

A2-7.2

Definitions . The following terms shall have the meanings set forth opposite such terms for purposes of this Article 7.

A2-7.2.1

Affiliate means as of any date any organization which is a member of a controlled group of corporations (within the meaning of Code section 414(b)) which includes the Corporation or a controlled group of trades or businesses (within the meaning of Code section 414(c)) which includes the Corporation.

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A2-7.2.2

Change in Control means a “change in control” of the Corporation of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 as amended and in effect at the time of such “change in control” (the “Exchange Act”), provided that such a change in control shall be deemed to have occurred at such time as (i) any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities representing 20% or more of the combined voting power for election of directors of the then outstanding securities of the Corporation or any successor of the Corporation; (ii) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constitute the Board cease, for any reason, to constitute a majority of the Board, unless the election or nomination for election of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; (iii) there is a consummation of any reorganization, merger, consolidation or share exchange as a result of which the common stock of the Corporation shall be changed, converted or exchanged into or for securities of another corporation (other than a merger with a wholly-owned subsidiary of the Corporation) or any dissolution or liquidation of the Corporation or any sale or the disposition of 50% or more of the assets or business of the Corporation; or (iv) there is a consummation of any reorganization, merger, consolidation or share exchange unless (A) the persons who were the beneficial owners of the outstanding shares of the common stock of the Corporation immediately before the consummation of such transaction beneficially own more than 65% of the outstanding shares of the common stock of the successor or survivor corporation in such transaction immediately following the consummation of such transaction and (B) the number of shares of the common stock of such successor or survivor corporation beneficially owned by the persons described in Section A2-7.2.2(iv)(A) immediately following the consummation of such transaction is beneficially owned by each such person in substantially the same proportion that each such person had beneficially owned shares of the Corporation’s common stock immediately before the consummation of such transaction, provided (C) the percentage described in Section A2-7.2.2(iv)(A) of the beneficially owned shares of the successor or survivor corporation and the number described in Section A2-7.2.2(iv)(B) of the beneficially owned shares of the successor or survivor corporation shall be determined exclusively by reference to the shares of the successor or survivor corporation which result from the beneficial ownership of shares of common stock of the Corporation by the persons described in Section A2-7.2.2(iv)(A) immediately before the consummation of such transaction.

A2-7.3

Amendment Restrictions . If there is a Change in Control, no amendment shall be made to this 401(k) Excess Plan thereafter which would adversely affect in any manner whatsoever the benefit payable under this 401(k) Excess Plan to any Participant absent the express written consent of all Participants who might be adversely affected by such amendment if this Article 7 were, or could become, applicable to such Participants, and the Corporation intends that each Participant rely on the protections which the Corporation intends to provide through this Article 7. Notwithstanding the foregoing, the Corporation may amend this 401(k) Excess Plan without Participant consent to the extent such an amendment is required by law or is necessary or desirable to prevent adverse tax consequences to Participants or their Beneficiaries provided that the Corporation obtains the written opinion of outside counsel that such an amendment is required by law or is necessary or desirable to prevent adverse tax consequences to

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Participants or their Beneficiaries.

Article 9

Miscellaneous

A2-9.8

Right to Amend or Terminate Plan . The Corporation expects to continue this 401(k) Excess Plan indefinitely, but reserves the right to amend or discontinue the 401(k) Excess Plan should it deem such an amendment or discontinuance necessary or desirable. The Corporation hereby authorizes and empowers the Compensation Committee appointed to administer this 401(k) Excess Plan to amend this 401(k) Excess Plan in any manner that is consistent with the purpose of this 401(k) Excess Plan as set forth above, without further approval from the Board or the Compensation Committee except as to any matter that the Compensation Committee determines may result in a material increased cost to the Corporation or its Affiliates. However, if the Corporation or Compensation Committee should amend or discontinue this 401(k) Excess Plan, the Corporation shall be liable for payment of any amounts deferred under this 401(k) Excess Plan and earnings thereon that have accrued and are vested as of the date of such action.

A2-9.8.1

Distribution of Accounts . If the Corporation terminates the 401(k) Excess Plan, distribution of balances in Accounts shall be made to Participants and Beneficiaries in the manner and at the time as provided in Article 6, unless the Corporation determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A.

A2-9.8.2

409A Requirements . Notwithstanding the foregoing, no amendment of the 401(k) Excess Plan shall apply to amounts that were earned and vested (within the meaning of Code section 409A and regulations thereunder) under the 401(k) Excess Plan prior to 2005, unless the amendment specifically provides that it applies to such amounts. The purpose of this restriction is to prevent an 401(k) Excess Plan amendment from resulting in an inadvertent “material modification” to amounts that are “grandfathered” and exempt from the requirements of Code section 409A.

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SUNTRUST BANKS, INC.

DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of May 31, 2011

ADDENDUM B

AMOUNTS DEFERRED UNDER

THE PRIOR DEFERRED COMPENSATION PLAN

The following provisions in this Addendum B summarize the distribution and certain other rules in effect during the stated periods under the SunTrust Banks, Inc. Deferred Compensation Plan, amended and restated effective January 1, 2009 (the “Prior Deferred Compensation Plan”). However, nothing in this Addendum B shall change or alter the terms of the Prior Deferred Compensation Plan in effect as of any date. All capitalized terms in this Addendum B shall be defined in accordance with the terms of the Prior Deferred Compensation Plan as in effect immediately prior to the plan merger with the SunTrust Banks, Inc. 401(k) Excess Plan (the “401(k) Excess Plan”) on December 31, 2009, and all Section references in this Addendum B shall refer to Sections in this Addendum B or the Section of the Prior Deferred Compensation Plan in effect as of a certain date.

Distribution of amounts deferred (and earnings thereon) under the Prior Deferred Compensation Plan that were earned and vested (within the meaning of Code section 409A) prior to 2005 and that are exempt from the requirements of Code section 409A (the “Prior Deferred Compensation Plan Grandfathered Amounts”) shall be made in accordance with the terms of the Prior Deferred Compensation Plan as in effect on October 3, 2004, and as summarized in Part B1 of this Addendum B.

Distribution of amounts deferred (and earnings thereon) under the Prior Deferred Compensation Plan that were earned for services performed during the period from January 1, 2005 to December 31, 2009 or that were earned for services prior to 2005 and vested after 2004 (the “Prior Deferred Compensation Plan 2005-2009 Amounts”) shall be made in accordance with the terms of the Prior Deferred Compensation Plan as in effect immediately prior to the plan merger with the 401(k) Excess Plan on December 31, 2009, and as summarized in Part B2 of this Addendum B.

PART B1

PRIOR DEFERRED COMPENSATION PLAN GRANDFATHERED AMOUNTS

Article 6

Distributions

B1-6.1.

Normal Form of Payment and Commencement . Except as otherwise provided in this Section B1-6.1, when the Participant separates from service with SunTrust and its Affiliates for any reason, he shall be paid his vested benefit under this Plan in a single lump sum cash payment during the first quarter of the calendar year immediately following the year of his separation. The amount payable to the Participant shall be equal to the vested balance of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution, less withholding for applicable federal and state taxes.

B1-6.2

Alternate Form of Payment Election . A Participant may elect, in lieu of the lump-sum payment described in Section B1-6.1, to receive payment of his total vested benefit under

B-1

this Plan in five (5) substantially equal annual installments, payable in cash; provided that such election is effective, as set forth below, at least twelve (12) months before the scheduled payment date following the Participant’s separation from service. The initial installment shall be paid during the first quarter of the calendar year immediately following the year of his separation. Each subsequent annual installment shall be paid during the first quarter of each of the subsequent four (4) calendar years. Each installment payment shall be determined based on the balance of the Participant’s Account as of the Valuation Date immediately preceding the date of payment and shall be reduced by withholding for applicable federal and state taxes. A Participant’s election to receive installment payments of his Plan benefit pursuant to this Section B1-6.2 shall be made in writing on such forms as may be provided by the Committee and shall not be effective until received and approved by the Committee.

B1-6.3

In-Service Distribution Election without Reduction . A Participant may file an election with the Committee for a future in-service distribution of his deferred Award(s) for each Plan Year without incurring a penalty, provided the election is made no less than four (4) years and no more than fifteen (15) years prior to the Designated Distribution Date. A Participant’s election for an in-service distribution pursuant to this Section B1-6.3 shall be a part of his Deferral Election Form and shall be filed with the Committee on or before the Election Date for the applicable Plan Year.

A Participant’s Award to which an in-service distribution election applies pursuant to this Section B1-6.3 shall be maintained as a sub-account of the Participant’s Account unless all of the Participant’s Awards deferred pursuant to this Plan are subject to an in-service distribution election with the same Designated Distribution Date. Awards deferred and not subject to an in-service distribution election are distributed pursuant to Section B1-6.1 or B1-6.2.

B1-6.3.1

Form and Commencement . An in-service distribution shall be paid in a single lump-sum cash payment during the first quarter of the calendar year in which the Designated Distribution Date occurs, based on the value of the Participant’s vested sub-account which is to be distributed in that year, as of the Valuation Date immediately preceding the date of such distribution. The amount of an in-service distribution shall be reduced by applicable withholding for federal and state taxes.

B1-6.3.2

Revoking In-Service Distribution Election . A Participant may revoke an election for an in-service distribution by filing a written revocation with the Committee at least one (1) year prior to the Designated Distribution Date. Upon such revocation, the provisions of Section B1-6.1 shall apply, unless the Participant makes a valid installment election payment pursuant to Section B1-6.2.

B1-6.3.3

Effect of Termination or Death . If a Participant should die or otherwise separate from service with SunTrust and its Affiliates before his Designated Distribution Date(s), any and all outstanding in-service distribution elections shall be automatically revoked, and any portion of his Account subject to an in-service distribution election pursuant to this Section B1-6.3 shall be paid in accordance with Section B1-6.1 or B1-6.2.

B1-6.4

Death . In the event of a Participant’s death, the Committee shall authorize payment to the Participant’s Beneficiary of any vested benefits due hereunder but not paid to the Participant prior to his death. Payment shall be made at the same time as if the Participant had retired on the date of his death and shall be made in accordance with Section B1-6.1, or if the Participant has a valid installment election in effect at his death, then in accordance with Section B1-6.2. The Beneficiary may request a change to the

B-2

form of payment by making a written request to the Committee prior to the January 1 of the calendar year in which the benefit will be paid. The Committee has sole discretion and authority to approve or deny the Beneficiary’s request, taking into account such factors as the Committee may deem appropriate.

If a Participant dies after having received one or more installment payments but before all installment payments have been made, the remaining annual installment payments shall be paid to his Beneficiary at the same time they would otherwise have been paid to the Participant. The Beneficiary may request an accelerated payment in the form of a lump-sum cash payment by making a written request to the Committee prior to the January 1 of the calendar year in which the benefit will be paid. The Committee has sole discretion and authority to approve or deny the Beneficiary’s request.

B1-6.5

Disability . A Participant shall be entitled to payment of his Plan benefit in the event of his Total Disability only if the conditions of Sections B1-6.5.1 and B1-6.5.2 are met. In such situation, payment of the Participant’s benefit shall commence pursuant to Section B1-6.1 or B1-6.2 as if the Participant separated from service on the date all such conditions are met. A Participant shall be considered to have a Total Disability only if:

B1-6.5.1

The Participant has incurred a “Total Disability” as such term is defined in SunTrust Banks, Inc. Long-Term Disability Plan (or any successor plan), which entitles the Participant to disability payments under such plan; and

B1-6.5.2

The Committee determines, in its sole discretion, based upon medical evidence furnished by the Participant, that the disability is anticipated to be a permanent disability.

B1-6.6

Extreme Financial Hardship . A Participant may request a distribution of all or part of his vested Plan benefit prior to the date specified in Sections B1-6.1, B1-6.2, B1-6.3, and B1-6.5 due to an extreme financial hardship, by submitting a written request to the Committee with evidence satisfactory to the Committee to demonstrate the circumstances constituting the extreme financial hardship. The Committee, in its sole discretion, shall determine whether an extreme financial hardship exists. An extreme financial hardship means an immediate, catastrophic financial need of the Participant occasioned by (i) a tragic event, such as the death, total disability, serious injury or illness of a Participant or the Participant’s spouse, child or dependent; or (ii) an extreme financial reversal or other impending catastrophic event which has resulted in, or will result in, harm to the Participant or the Participant’s spouse, child or dependent. A distribution for extreme financial hardship may not exceed the amount required to meet the hardship and may be made only if the Committee finds the extreme financial hardship may not be alleviated from other resources reasonably available to the Participant, including without limitation, liquidation of investment assets or luxury assets, or loans from financial institutions or other sources. The Committee shall have the authority to require the Participant to provide such evidence as the Committee deems necessary to determine whether distribution is warranted pursuant to this Section B1-6.6. The Committee shall use uniform and nondiscriminatory standards in reviewing any requests for distributions to meet an extreme financial hardship.

B1-6.6.1

Form and Commencement . A hardship distribution to a Participant pursuant to this Section B1-6.6 shall be made in a single lump-sum cash payment (less withholding for applicable federal and state taxes) as soon as practicable after the Committee approves the hardship request. Amounts distributed for hardship shall be deemed to reduce pro rata the deemed investment in each Investment Fund in the Participant’s Account.

B1-6.6.2

Accelerated Installment Payments . A Participant who has commenced

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receiving installment payments pursuant to Section B1-6.2 may request acceleration of such payments in the event of an extreme financial hardship. The Committee may permit accelerated payments to the extent such accelerated payment does not exceed the amount necessary to meet the extreme financial hardship.

B1-6.7

Early Withdrawal Election with 10% Reduction . A Participant may file a written election with the Committee to receive an early withdrawal of any vested portion of his Account, provided, however, that such early withdrawal payment shall be subject to a 10% forfeiture, which shall reduce the balance of the Participant’s Account. An early withdrawal payment shall be made in a single lump-sum cash payment (less applicable withholding for federal and state taxes) as soon as practicable after the Committee receives and approves a written request for early withdrawal. Amounts withdrawn under this Section B1-6.7 shall be deemed to reduce pro rata the deemed investment in each Investment Fund in the Participant’s Account. A Participant who receives an early withdrawal may not make an election under Section 3.2 of the Plan to defer his Award(s) for a one (1) year period beginning on the first date at which the application of such cancellation would not violate Code section 409A.

B1-6.8

Payment to Guardian, Legal Representative or Other . If a benefit hereunder is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of his property, the Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit. A payment pursuant to this Section B1-6.8 shall completely discharge the Committee and SunTrust from all liability with respect to such benefit.

Article 8

Miscellaneous

B1-8.7

Right to Amend or Terminate Plan . The amendment or termination of the Plan with respect to the Grandfathered Amounts shall be made in accordance with the Plan terms as in effect on October 3, 2004 and as summarized in this Section B1-8.7. SunTrust expects to continue this Plan indefinitely, but reserves the right to amend or discontinue the Plan should it deem such an amendment or discontinuance necessary or desirable. SunTrust hereby authorizes and empowers the Committee to amend this Plan in any manner that is consistent with the purpose of this Plan as set forth above, without further approval from the Board except as to any matter that the Committee determines may result in a material increased cost to SunTrust. However, if SunTrust or Committee should amend or discontinue this Plan, SunTrust shall be liable for payment of any Awards deferred under this Plan and earnings thereon that have accrued and are vested as of the date of such action.

PART B2

PRIOR DEFERRED COMPENSATION PLAN 2005-2009 AMOUNTS

Article 6

Vesting

B2-6.1

Generally . Except as provided in Section B2-6.2, a Participant’s interest in his benefit under this Plan is one hundred percent (100%) vested and nonforfeitable at all times.

B2-6.2

Exception . If a Participant’s Account has been credited with an amount that is subject to

B-4

a vesting period (as defined in the Eligible Plan), and the Participant terminates employment with SunTrust and its Affiliates for any reason prior to meeting the vesting requirements for such amount, then that portion of the amount that is not vested, and the earnings on such nonvested portion shall be forfeited and deducted from the Participant’s Account. Notwithstanding the foregoing: (1) an Eligible Plan may provide that the nonvested portion of a Participant’s Account shall not be forfeited if the Participant is terminated without Cause within three (3) years following a Change in Control, and, in such case, the provisions of Section B2-6.3 of this Plan shall control unless the Eligible Plan provides otherwise; and (2) upon a Participant’s death, Disability, Retirement or involuntary termination of employment resulting in the Participant’s eligibility to receive benefits under SunTrust Banks, Inc. Severance Pay Plan (disregarding for purposes of determining eligibility, the Participant’s eligibility to receive severance benefits under another severance plan or individual agreement maintained by SunTrust or an Affiliate), the Participant’s nonvested Account balance shall fully vest as of the date that forfeiture would otherwise occur. The second clause of the preceding sentence shall apply to any Mandatory Deferral credited under the Plan after June 30, 2007, unless the Eligible Plan in connection with such Mandatory Deferral specifically provides one or all of the events described in the second clause shall not result in full vesting.

B2-6.3

Change in Control . Unless an Eligible Plan provides for some other treatment, if a Participant’s employment with SunTrust or any Affiliate or their successors is terminated without Cause within three (3) years of a Change in Control, any portion of the Participant’s Account that was nonvested at the Change in Control and has not yet vested shall become fully vested immediately prior to the effective time of the Participant’s termination of employment. A Participant’s voluntary termination of employment, including a Participant’s Retirement or voluntary resignation, is not considered termination for Cause for purposes of vesting under this Section B2-6.3.

Article 7

Distributions

B2-7.1

Normal Form of Payment and Commencement . Except as otherwise provided in this Article 7, when a Participant Separates from Service for any reason, he shall be paid his vested benefit under this Plan in a single lump sum cash payment during the first quarter of the calendar year immediately following the year in which his Separation from Service occurs. The amount payable to the Participant shall be equal to the vested balance of the Participant’s Account as of the Valuation Date immediately preceding the date of distribution.

B2-7.2

Alternate Form of Payment Election. A Participant who does not wish to have his benefit under this Plan paid in a lump sum pursuant to Section B2-7.1 may elect on a Deferral Election Form to have the portion of his Account related to amounts deferred pursuant to the Deferral Election Form (and earnings thereon) distributed in five (5) annual installments, with the first payment commencing in the first quarter of the calendar year immediately following the year in which the Participant’s Separation from Service occurs. Each subsequent annual installment shall be paid during the first quarter of each of the subsequent four (4) calendar years.

B2-7.2.1

Procedure for Installment Election. A Participant’s election to receive installment payments of the portion of his Account described above in Section B2-7.2 shall be made on such forms, written or electronic, as may be provided by the Committee and shall not be effective until received and approved by the Committee by the relevant Election Date in accordance with Section 3.2. Each installment payment shall be determined based on the vested balance of such portion of the Participant’s Account as of the Valuation Date immediately

B-5

preceding the date of payment.

B2-7.2.1

Cash-Out. Notwithstanding any elections by a Participant, effective on and after January 1, 2009, if the sum of a Participant’s vested Account balance under this Plan and any other account balance plan, as described in Treas. Reg. § 1.409A-1(c)(2)(i), is less than the applicable dollar amount under Code section 402(g)(1)(B) at the time of payment, the full vested Account balance shall be distributed in a lump sum payment during the first quarter of the calendar year immediately following the year in which his Separation from Service occurs, subject to the delay for Key Employee as set forth in Section B2-7.3.

B2-7.3

Key Employee Delay. Notwithstanding anything herein to the contrary, distributions may not be made to a Key Employee upon a Separation from Service before the date which is six (6) months after the date of the Key Employee’s Separation from Service (or, if earlier, the date of death of the Key Employee). Any payments that would otherwise be made during this period of delay shall be accumulated and paid in the seventh month following the Participant’s Separation from Service.

B2-7.4

In-Service Distribution Election. Unless the Committee announces otherwise for a Plan Year, a Participant may elect on a Deferral Election Form to have the portion of his Account related to amounts deferred under such Deferral Election Form (and earnings thereon) paid to the Participant as of a Specified Date. The deferred amount subject to this election will be paid in a lump sum on the Designated Distribution Date, based on the value of the Participant’s vested sub-account which is to be distributed, as of the Valuation Date immediately preceding the date of such distribution.

B2-7.4.1

Filing with Committee. A Participant’s election for an in-service distribution pursuant to this Section B2-7.4 shall be a part of his Deferral Election Form and shall be filed with the Committee on or before the Election Date for the applicable Plan Year in accordance with Section 3.2. If a Participant should Separate from Service with SunTrust and its Affiliates before his Designated Distribution Date(s), any portion of his Account subject to an in-service distribution election pursuant to this Section B2-7.4 shall be paid in accordance with Sections B2-7.1 and B2-7.3.

B2-7.4.2

Sub-Account. The portion of a Participant’s Account to which an in-service distribution election applies pursuant to this Section B2-7.4 shall be maintained as a sub-account of the Participant’s Account unless all of the amounts deferred pursuant to this Plan are subject to an in-service distribution election with the same Designated Distribution Date. Amounts deferred and not subject to an in-service distribution election shall be distributed pursuant to Section B2-7.1 or B2-7.2.

B2-7.5

Subsequent Deferral Election. A Participant may make one or more subsequent elections to change the time or form of a distribution for a deferred amount in accordance with the procedures and distribution rules established by the Committee, but any change in the election shall be effective only if the following conditions are satisfied:

B2-7.5.1

The new election may not take effect until at least twelve (12) months after the date on which the new election is made;

B2-7.5.2

In the case of an election to change the time or form of a distribution under Section B2-7.1 (lump sum payment after Separation from Service), B2-7.2 (installments after Separation from Service), or B2-7.4 (in-service

B-6

distribution), a distribution may not be made earlier than at least five (5) years from the date the distribution would have otherwise been made; and

B2-7.5.3

In the case of an election to change the time or form of an in-service distribution under Section B2-7.4, the election must be made at least twelve (12) months before the date the distribution is scheduled to be paid.

B2-7.6

Payment of Death Benefit. Notwithstanding any elections by the Participant or provisions of the Plan to the contrary, if a Participant dies at any time (including after his Separation from Service), the Committee shall authorize payment to the Participant’s Beneficiary of any vested benefits due under the Plan but not paid to the Participant prior to his death. Payment of the Participant’s vested Account balance shall be distributed to the Beneficiary in a lump sum payment in the first quarter of the calendar year immediately following the year of the Participant’s death (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

B2-7.7

Disability. Notwithstanding any elections by a Participant or provisions of the Plan to the contrary, if a Participant becomes Disabled at any time, then his vested Account balance will be distributed to the Participant in a lump sum payment in the first quarter of the calendar year immediately following the year in which the Participant becomes Disabled (provided that any payment that would occur before such calendar quarter shall be paid as scheduled).

B2-7.8

Withdrawals for Unforeseeable Emergency. A Participant may withdraw all or any portion of his vested Account balance for an Unforeseeable Emergency. The amounts distributed with respect to an Unforeseeable Emergency may not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this Plan.

B2-7.8.1

B2-7.8.2

Participant Evidence . The Committee shall have the authority to require the Participant to provide such evidence as it deems necessary to determine whether distribution is warranted pursuant to this Section B2-7.8. The Committee shall use uniform and nondiscriminatory standards in reviewing any requests for distributions to meet an Unforeseeable Emergency. Amounts distributed under this Section B2-7.8 shall be deemed to reduce pro rata the deemed investment in each Investment Fund in the Participant’s Account.

B2-7.8.3

Accelerated Payments . A Participant who has commenced receiving installment payments pursuant to Section B2-7.2 shall receive an accelerated payment of such installments under this Section B2-7.8.3 to the extent such accelerated payment does not exceed the amount necessary to meet the Unforeseeable Emergency.

B2-7.9

Distribution of Mandatory Deferrals . Unless otherwise elected by a Participant in

B-7

accordance with Section 3.2 and the procedures and distribution rules established by the Committee, the vested portion of each Mandatory Deferral shall be paid in a lump sum upon the earlier of: (a) the Specified Date for each Mandatory Deferral set forth in the Eligible Plan; or (b) the Participant’s Separation from Service. In the event the Participant’s Separation from Service occurs before any such Specified Date, the lump sum payment shall be made in the first quarter of the calendar year immediately following the year of the Participant’s Separation from Service, subject to the delay in payment for Key Employees as set forth in Section B2-7.3.

B2-7.10

Special One-Time Election . Notwithstanding any prior elections or Plan provisions to the contrary, a Participant who was an employee of SunTrust and its Affiliates (including on a paid leave of absence) may have made an election to receive all or a specified portion of his or her Account pursuant to Section B2-7.1, B2-7.2, or B2-7.4. Any such election must have become irrevocable on or before December 31, 2008 and must have been made in accordance with the procedures and distribution rules established by the Committee and the transition rules under Code section 409A.

B2-7.11

Pre-2005 Deferrals . Notwithstanding the foregoing, Part B1 of this Addendum B governs the distribution of amounts that were earned and vested (within the meaning of Code section 409A and regulations thereunder) under the Plan prior to 2005 (and earnings thereon) and are exempt from the requirements of Code section 409A.

B2-7.12

Effect of Taxation . If a portion of the Participant’s Account balance is includible in income under Code section 409A, such portion shall be distributed immediately to the Participant.

B2-7.13

Permitted Delays . Notwithstanding the foregoing, any payment to a Participant under the Plan shall be delayed upon the Committee’s reasonable anticipation that the making of the payment would violate Federal securities laws or other applicable law; provided that any payment delayed pursuant to this Section B2-7.13 shall be paid in accordance with Code section 409A on the earliest date on which SunTrust reasonably anticipates that the making of the payment will not cause a violation of Federal securities laws or other applicable law.

Article 9

Miscellaneous

B2-9.8

Right to Amend or Terminate Plan . SunTrust expects to continue this Plan indefinitely, but reserves the right to amend or discontinue the Plan should it deem such an amendment or discontinuance necessary or desirable. SunTrust hereby authorizes and empowers the Committee appointed to administer this Plan to amend this Plan in any manner that is consistent with the purpose of this Plan as set forth above, without further approval from the Board of Directors or the Compensation Committee of SunTrust except as to any matter that the Committee determines may result in a material increased cost to SunTrust or its Affiliates. However, if SunTrust or Committee should amend or discontinue this Plan, SunTrust shall be liable for payment of any amounts deferred under this Plan and earnings thereon that have accrued and are vested as of the date of such action.

B2-9.8.1

Distribution of Accounts . If SunTrust terminates the Plan, distribution of balances in Accounts shall be made to Participants and Beneficiaries in the manner and at the time as provided in Article 7, unless SunTrust determines in its sole discretion that all such amounts shall be distributed upon termination in accordance with the requirements under Code section 409A.

B2-9.8.2

409A Requirements. Notwithstanding the foregoing, no amendment of the Plan shall apply to amounts that were earned and vested (within the meaning

B-8

of Code section 409A and regulations thereunder) under the Plan prior to 2005, unless the amendment specifically provides that it applies to such amounts. The purpose of this restriction is to prevent a Plan amendment from resulting in an inadvertent “material modification” to amounts that are “grandfathered” and exempt from the requirements of Code section 409A.

B-9

Exhibit 10.11

UNITED STATES OF AMERICA

BEFORE THE

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

WASHINGTON, D.C.



In the Matter of	Docket No.	11-021-B-HC
		11-021-B-SM
SUNTRUST BANKS, INC.		11-021-B-DEO
Atlanta, Georgia

SUNTRUST BANK
Atlanta, Georgia and

SUNTRUST MORTGAGE, INC.
Richmond, Virginia

CONSENT ORDER

WHEREAS, SunTrust Banks, Inc., Atlanta, Georgia (“SunTrust”), a registered bank holding company, owns and controls SunTrust Bank, Atlanta, Georgia (the “Bank”), a state-chartered bank that is a member of the Federal Reserve System, and the Bank owns SunTrust Mortgage, Inc., Richmond, Virginia (“SunTrust Mortgage”);

WHEREAS, SunTrust Mortgage services residential mortgage loans that are held in the portfolios of (a) the Bank and SunTrust Mortgage; (b) the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Government National Mortgage Association (collectively, the “GSEs”); and (c) various investors, including securitization trusts pursuant to Pooling and Servicing Agreements and similar agreements (collectively, the “Servicing Portfolio”). SunTrust Mortgage has substantial responsibilities with respect to the Servicing Portfolio for the initiation and handling of foreclosure proceedings and

loss mitigation activities (“Loss Mitigation” or “Loss Mitigation Activities” include activities related to special forbearances, repayment plans, modifications, short refinances, short sales, cash-for-keys, and deeds-in-lieu of foreclosure);

WHEREAS, SunTrust Mortgage is the eighth largest servicer of residential mortgages in the United States and services a portfolio of more than 950,000 residential mortgage loans. During the recent financial crisis, a substantially larger number of residential mortgage loans became past due than in earlier years. Many of past due mortgages have resulted in foreclosure actions. From January 1, 2009 to December 31, 2010, SunTrust Mortgage initiated 41,543 foreclosure actions;

WHEREAS, in connection with the process leading to certain foreclosures involving the Servicing Portfolio, SunTrust Mortgage allegedly:

(a) Filed or caused to be filed in state courts and in connection with bankruptcy proceedings in federal courts numerous affidavits executed by employees of SunTrust Mortgage or employees of third-party providers making various assertions, such as the ownership of the mortgage note and mortgage, the amount of principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such knowledge or review;

(b) Filed or caused to be filed in courts in various states and in connection with bankruptcy proceedings in federal courts or in the local land record offices, numerous affidavits and other mortgage-related documents that were not properly notarized, including those not signed or affirmed in the presence of a notary;

(c) Litigated foreclosure and bankruptcy proceedings and initiated non-judicial foreclosures without always confirming that documentation of ownership was in order at the appropriate time, including confirming that the promissory note and mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party;

(d) Failed to respond in a sufficient and timely manner to the increased level of foreclosures by increasing financial, staffing, and managerial resources to ensure that SunTrust Mortgage adequately handled the foreclosure process, and failed to respond in a sufficient and timely manner to the increased level of Loss Mitigation Activities by increasing management and staffing levels to ensure timely, effective and efficient communication with borrowers with respect to Loss Mitigation Activities and foreclosure activities and full exploration of Loss Mitigation options or programs prior to completion of foreclosure activities; and

(e) Failed to have adequate internal controls, policies and procedures, compliance risk management, internal audit, training, and oversight of the foreclosure process, including sufficient oversight of outside counsel and other third-party providers handling foreclosure-related services with respect to the Servicing Portfolio.

WHEREAS, the practices set forth above allegedly constitute unsafe or unsound banking practices;

WHEREAS, as part of a horizontal review of various major residential mortgage servicers conducted by the Board of Governors, the Federal Deposit Insurance Corporation (the “FDIC”), the Office of the Comptroller of the Currency, and the Office of Thrift Supervision,

examiners from the Federal Reserve Bank of Atlanta (the “Reserve Bank”) have reviewed foreclosure-related processes at SunTrust Mortgage;

WHEREAS, it is the common goal of the Board of Governors, the Reserve Bank, SunTrust, the Bank, and SunTrust Mortgage to ensure that SunTrust Mortgage operates in a safe and sound manner and in compliance with the terms of mortgage loan documentation and related agreements with borrowers, all applicable state and federal laws (including the U.S. Bankruptcy Code and the Servicemembers Civil Relief Act), rules, regulations, and court orders, as well as the Membership Rules of MERSCORP, Inc. and MERS, Inc. (collectively, “MERS”), servicing guides with GSEs or investors, and other contractual obligations including those with the Federal Housing Administration and those required by the Home Affordable Modification Program (“HAMP”), and loss share agreements with the FDIC (collectively, “Legal Requirements”);

WHEREAS, after the conduct set forth above became known, the Bank and SunTrust have been taking steps to remediate the filing of and reliance on inaccurate affidavits in foreclosure and bankruptcy proceedings;

WHEREAS, the boards of directors of SunTrust, the Bank, and SunTrust Mortgage, at duly constituted meetings, authorized and approved William H. Rogers, Jr., William H. Rogers, Jr., and Jerome T. Lienhard, II to enter into this Consent Order to Cease and Desist (the “Order”) on behalf of SunTrust, the Bank, and SunTrust Mortgage, respectively, and consenting to compliance with each and every applicable provision of this Order by SunTrust, the Bank, and SunTrust Mortgage, and their institution-affiliated parties, as defined in sections 3(u) and 8(b)(3) of the Federal Deposit Insurance Act, as amended (the “FDI Act”) (12 U.S.C. §§ 1813(u) and 1818(b)(3)), and waiving any and all rights that SunTrust, the Bank, and SunTrust Mortgage may have pursuant to section 8 of the FDI Act (12 U.S.C. § 1818), including, but not

limited to: (i) the issuance of a notice of charges; (ii) a hearing for the purpose of taking evidence on any matters set forth in this Order; (iii) judicial review of this Order; (iv) contest the issuance of this Order by the Board of Governors; and (v) challenge or contest, in any manner, the basis, issuance, validity, terms, effectiveness or enforceability of this Order or any provision hereof.

NOW, THEREFORE, before the filing of any notices, or taking of any testimony or adjudication of or finding on any issues of fact or law herein, and without this Order constituting an admission by SunTrust, the Bank, or SunTrust Mortgage or their subsidiaries of any allegation made or implied by the Board of Governors in connection with this matter, and solely for the purpose of settling this matter without a formal proceeding being filed and without the necessity for protracted or extended hearings or testimony, it is hereby ordered by the Board of Governors that, pursuant to sections 8(b)(1) and (3) of the FDI Act (12 U.S.C. §§1818(b)(1)) and 1818(b)(3)), SunTrust, the Bank, SunTrust Mortgage, and their institution-affiliated parties shall cease and desist and take affirmative action as follows:

Source of Strength

1. The board of directors of SunTrust shall take appropriate steps to fully utilize SunTrust’s financial and managerial resources, pursuant to section 225.4(a) of Regulation Y of the Board of Governors (12 C.F.R. § 225.4(a)), to serve as a source of strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with the applicable provisions of this Order.

Board Oversight

2. Within 60 days of this Order, the boards of directors of SunTrust, the Bank, and SunTrust Mortgage shall submit to the Reserve Bank an acceptable written plan to strengthen the

boards’ oversight of SunTrust Mortgage, including the boards’ oversight of risk management, internal audit, and compliance programs concerning residential mortgage loan servicing, Loss Mitigation, and foreclosure activities conducted by SunTrust Mortgage. The plan shall also describe the actions that the boards of directors will take to improve SunTrust Mortgage’s residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations, and a timeline for actions to be taken. The plan shall, at a minimum, address, consider, and include:

(a) Policies to be adopted by the board of directors of SunTrust that are designed to ensure that SunTrust’s enterprise-wide risk management (“ERM”) program provides proper risk management with respect to SunTrust Mortgage’s residential mortgage loan servicing, Loss Mitigation, and foreclosure activities particularly with respect to compliance with the Legal Requirements, and supervisory standards and guidance of the Board of Governors as they develop;

(b) policies and procedures adopted by SunTrust to ensure that the ERM program provides proper risk management of independent contractors, consulting firms, law firms, or other third parties who are engaged to support residential mortgage loan servicing, Loss Mitigation, or foreclosure activities or operations, including their compliance with the Legal Requirements and SunTrust’s, the Bank’s, and SunTrust Mortgage’s internal policies and procedures, consistent with supervisory guidance of the Board of Governors;

(c) steps to ensure that SunTrust’s ERM, audit, and compliance programs have adequate levels and types of officers and staff dedicated to overseeing SunTrust Mortgage’s residential mortgage loan servicing, Loss Mitigation, and foreclosure activities, and that these

programs have officers and staff with the requisite qualifications, skills, and ability to comply with the requirements of this Order;

(d) steps to improve the information and reports that will be regularly reviewed by the boards of directors of SunTrust and the Bank or authorized committees of the boards of directors regarding residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations, including, compliance risk assessments, and the status and results of measures taken, or to be taken, to remediate deficiencies in residential mortgage loan servicing, Loss Mitigation, and foreclosure activities, and to comply with this Order;

(e) funding for personnel, systems, and other resources as are needed to carry out SunTrust Mortgage’s residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations in full compliance with the Legal Requirements and the requirements of this Order, taking into consideration the current and expected volume of past due loans;

(f) funding for personnel, systems, and other resources as are needed to operate risk management and compliance programs that are safe and sound and that are commensurate with the risk profile of SunTrust Mortgage;

(g) steps to ensure that SunTrust Mortgage has adequate levels and types of officers and staff to carry out residential mortgage loan servicing, Loss Mitigation, and foreclosure activities in compliance with Legal Requirements and the requirements of this Order, and taking into account the size and complexity of the Servicing Portfolio; that they have officers and staff with the requisite qualifications, skills, and ability to comply with the requirements of this Order; and a timetable for hiring any necessary additional officers and staff.

(h) periodic reviews of the adequacy of the levels and types of officers and staff to carry out residential mortgage servicing, Loss Mitigation, and foreclosure activities in

light of changes in the Servicing Portfolio or the Legal Requirements. To conduct this review, the plan shall establish metrics to measure and ensure the adequacy of staffing levels relative to existing and future Loss Mitigation and foreclosure activities, such as limits for the number of loans assigned to a Loss Mitigation employee, including the single point of contact as hereinafter defined, and deadlines to review loan modification documentation, make loan modification decisions, and provide responses to borrowers;

(i) steps to ensure that the risk management, audit, and compliance programs for SunTrust Mortgage have adequate levels and types of officers and staff and that they have officers and staff with the requisite qualifications, skills, and ability to comply with the requirements of this Order, and a timetable for hiring any necessary additional officers and staff;

(j) workload reviews of residential mortgage loan servicing, Loss Mitigation, and foreclosure personnel who are responsible for handling individual loan issues (including single point of contact personnel), including an initial review within 90 days of this Order, and then annual reviews thereafter. Such reviews, at a minimum, shall assess whether the workload levels are appropriate to ensure compliance with the requirements of paragraphs 2(g) and 6 of this Order. Promptly following completion of such reviews, SunTrust Mortgage shall adjust workload levels to ensure compliance with the requirements of paragraphs 2(g) and 6 of this Order;

(k) policies to ensure that the risk management, audit, and compliance programs have the requisite authorities and status within the organization to effectively operate the programs, and that there is adequate coordination with respect to these programs to ensure that any problems or deficiencies that are identified in SunTrust Mortgage’s residential mortgage

servicing, Loss Mitigation, and foreclosure activities and operations are comprehensively reviewed and remedied; and

(l) steps to improve the information and reports that will be regularly reviewed by SunTrust’s, the Bank’s, and SunTrust Mortgage’s boards of directors to assess the performance of mortgage servicing, Loss Mitigation, and foreclosure activities and operations, as well as the risk management and compliance programs and associated functions including, compliance risk assessments, and the status and results of measures taken, or to be taken, to remediate mortgage servicing, Loss Mitigation, and foreclosure deficiencies, and to comply with this Order.

Foreclosure Review

3. (a) Within 45 days of this Order, the Bank and SunTrust Mortgage shall retain one or more independent consultant(s) acceptable to the Reserve Bank to conduct an independent review of certain residential foreclosure actions (including judicial and non-judicial foreclosures and related bankruptcy proceedings, and other related litigation) regarding individual borrowers with respect to the Servicing Portfolio. The review shall include actions or proceedings (including foreclosures that were in process or completed) for loans serviced by SunTrust Mortgage, whether brought in the name of the Bank, SunTrust Mortgage, the investor, or any agent for the mortgage note holder (including MERS) that have been pending at any time from January 1, 2009 to December 31, 2010, as well as residential foreclosure sales that occurred during this time period (“Foreclosure Review”). The purpose of the Foreclosure Review shall be to determine, at a minimum:

(i) whether, at the time the foreclosure action was initiated or the pleading or affidavit filed (including in bankruptcy proceedings and in defending suits brought

by borrowers), the foreclosing party or agent of the party had properly documented ownership of the promissory note and mortgage (or deed of trust) under relevant state law, or was otherwise a proper party to the action as a result of agency or other similar status;

(ii) whether the foreclosure was in accordance with applicable state and federal laws, including but not limited to, the Servicemembers Civil Relief Act and the U.S. Bankruptcy Code;

(iii) whether, with respect to non-judicial foreclosures, the procedures followed with respect to the foreclosure sale (including the calculation of the default period, the amounts due, and compliance with notice periods) and post-sale confirmation were in accordance with the terms of the mortgage loan and state law requirements;

(iv) whether a foreclosure sale occurred when the borrower had requested a loan modification or other loss mitigation and the request was under consideration; when the loan was performing in accordance with a trial or permanent loan modification; or when the loan had not been in default for a sufficient period to authorize foreclosure pursuant to terms of the mortgage loan documentation and related agreements;

(v) whether any delinquent borrower’s account was charged fees or penalties that were not permissible under the terms of the borrower’s loan documents, state or federal law, or were otherwise unreasonable. For purposes of this Order, a fee or penalty is “otherwise unreasonable” if it was assessed: (i) for the purpose of protecting the secured party’s interest in the mortgaged property, and the fee or penalty was assessed at a frequency or rate, was of a type or amount, or was for a purpose that was in fact not needed to protect the secured party’s interest; (ii) for services performed and the fee charged was substantially in excess of the fair market value of the service; (iii) for services performed, and the services were not actually

performed; or (iv) at an amount or rate that exceeds what is customarily charged in the market for such a fee or penalty, and the mortgage instruments or other documents executed by the borrower did not disclose the amount or rate that the lender or servicer would charge for such a fee or penalty;

(vi) whether Loss Mitigation Activities with respect to foreclosed loans were handled in accordance with the requirements of HAMP, if applicable, and consistent with the policies and procedures applicable to SunTrust Mortgage’s proprietary loan modifications or other Loss Mitigation programs, such that each borrower had an adequate opportunity to apply for a Loss Mitigation option or program, any such application was handled appropriately, and a final decision was made on a reasoned basis and was communicated to the borrower before the foreclosure sale; and

(vii) whether any errors, misrepresentations, or other deficiencies identified in the Foreclosure Review resulted in financial injury to the borrower or the owner of the mortgage loan.

(b) The independent consultant(s) shall prepare a written report detailing the findings of the Foreclosure Review (the “Foreclosure Report”). The Bank and SunTrust Mortgage shall provide to the Reserve Bank a copy of the Foreclosure Report at the same time that the report is provided to them.

(c) Within 45 days of receipt of the Foreclosure Report, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable plan to:

(i) remediate, as appropriate, errors, misrepresentations, or other deficiencies in any foreclosure filing or other proceeding;

(ii) reimburse or otherwise provide appropriate remediation to the borrower for any impermissible or otherwise unreasonable penalties, fees or expenses, or for other financial injury identified in paragraph 3 of this Order;

(iii) make appropriate adjustments for the account of the Bank, the GSEs, or any investor; and

(iv) take appropriate steps to remediate any foreclosure sale where the foreclosure was not authorized as described in paragraph 3.

(d) Within 60 days after the Reserve Bank accepts the plan described in paragraph 3(c), SunTrust Mortgage shall make all reimbursement and remediation payments and provide all credits required by such plan, and provide the Reserve Bank with a report detailing such payments and credits.

4. Within 5 days of the engagement of the independent consultant(s) described in paragraph 3 of this Order, but prior to the commencement of the Foreclosure Review, the Bank, and SunTrust Mortgage shall submit to the Reserve Bank for approval an engagement letter that sets forth:

(a) The methodology for conducting the Foreclosure Review, including: (i) a description of the information systems and documents to be reviewed, including the selection criteria for cases to be reviewed; (ii) the criteria for evaluating the reasonableness of fees and penalties under paragraph 3(a)(v); (iii) other procedures necessary to make the required determinations (such as through interviews of employees and third parties and a process for the receipt and review of borrower claims and complaints); and (iv) any proposed sampling techniques. In setting the scope and review methodology, the independent consultant may consider any work already done by SunTrust, the Bank, SunTrust Mortgage or other third-parties

on behalf of SunTrust, the Bank, or SunTrust Mortgage. With respect to sampling techniques, the engagement letter shall contain a full description of the statistical basis for the sampling methods chosen, as well as procedures to increase the size of the sample depending on the results of initial sampling;

(b) the expertise and resources to be dedicated to the Foreclosure Review;

(d) a written commitment that any workpapers associated with the Foreclosure Review will be made available to the Reserve Bank upon request.

5. Within 60 days of receipt of the Foreclosure Report, the Bank and SunTrust Mortgage shall submit to the Reserve Bank acceptable written policies and procedures for residential foreclosure actions. The policies and procedures shall, address, consider, and include:

(a) Foreclosure procedures for portfolio loans and each category of serviced loans;

(b) detailed procedural guidance on all required steps in the foreclosure process;

(c) standardized desk procedures to ensure that employees involved in the foreclosure processes have sufficient information and personal knowledge to complete assignments of mortgages, affidavits, or other legal documents required for foreclosure proceedings; and

(d) minimum qualifications for affidavit signers.

Single Point of Contact

6. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable plan, along with a timeline for actions to be taken, for strengthening coordination of communications between SunTrust Mortgage and borrowers, both oral and written, related to Loss Mitigation and foreclosure activities to ensure: (i) that communications are timely and effective, and are designed to avoid confusion to borrowers; (ii) continuity in the handling of borrowers’ loan files during the Loss Mitigation and foreclosure processes by personnel knowledgeable about the borrower’s situation; and (iii) that decisions concerning Loss Mitigation options or programs continue to be made and communicated in a timely fashion. Prior to submitting the plan, SunTrust Mortgage shall conduct a review to determine: (i) whether processes involving past due mortgage loans or foreclosures overlap in such a way that they may impair or impede a borrower’s efforts to effectively pursue a Loss Mitigation option or program, and (ii) that employee incentive compensation practices do not discourage Loss Mitigation. The plan shall, at a minimum, provide for:

(a) Measures to ensure that staff processing a borrower’s Loss Mitigation request routinely communicates and coordinates with staff processing the foreclosure on the borrower’s property;

(b) appropriate deadlines for responses to borrower communications and requests for consideration of Loss Mitigation, including deadlines for decisionmaking on Loss Mitigation Activities, with the metrics established not being less responsive than the timelines in HAMP;

(c) establishment of an accessible and reliable single point of contact for the borrower so that the borrower has access to an employee of SunTrust Mortgage to obtain information throughout the Loss Mitigation and foreclosure processes;

(d) a requirement that written communications with the borrower identify by name the primary single point of contact along with one or more direct means of communication with the primary single point of contact, together with information about secondary points of contact in the event that the primary single point of contact is unavailable;

(e) measures to ensure that the single point of contact has access to current information and personnel (in-house or third-party) sufficient to timely, accurately, and adequately inform the borrower of the current status of the Loss Mitigation and foreclosure activities;

(f) procedures and controls to ensure that a final decision regarding a borrower’s Loss Mitigation request (whether on a trial or permanent basis) is made and communicated to the borrower in writing, including the reason(s) why the borrower did not qualify for the trial or permanent modification and, if applicable, the net present value calculations utilized by SunTrust Mortgage, and that involve the single point of contact within a reasonable time before any foreclosure sale occurs;

(g) procedures and controls to ensure that when the borrower’s loan has been approved for modification on a trial or permanent basis, (i) no foreclosure or further legal action predicate to foreclosure occurs, unless the borrower is past due on two or more payments postdating the trial or permanent modification; and (ii) the single point of contact remains available to the borrower and continues to be referenced on all written communications with the borrower;

(h) policies and procedures to enable borrowers to make complaints regarding the Loss Mitigation process, denial of Loss Mitigation requests, the foreclosure process, or foreclosure activities that prevent a borrower from pursuing Loss Mitigation options, and a process for making borrowers aware of the complaint procedures;

(i) procedures for the prompt review, escalation, and resolution of borrower complaints, including a process to communicate the results of the review to the borrower on a timely basis;

(j) policies and procedures to consider loan modification or other Loss Mitigation Activities with respect to junior lien owned by SunTrust, the Bank, or SunTrust Mortgage where SunTrust Mortgage services the associated first lien mortgage and becomes aware that such first lien mortgage is delinquent or has been modified;

(k) policies and procedures to ensure that timely information about Loss Mitigation options is sent to the borrower in the event of a delinquency or default, including plain language notices about the pendency of loan modification and foreclosure proceedings; and

(l) policies and procedures to ensure that foreclosure and related documents provided to borrowers and third parties are appropriately maintained and tracked, and that borrowers generally will not be required to resubmit the same documented information that has already been provided, and that borrowers are notified promptly of the need for additional information.

Third Party Management

7. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank acceptable policies and procedures for the outsourcing of any residential mortgage servicing, Loss Mitigation, or foreclosure functions, by SunTrust Mortgage to any independent

contractor, consulting firm, law firm, property manager, or other third party (including any subsidiary or affiliate of SunTrust) (collectively, “Third-Party Providers”). Third-Party Providers include local counsel in foreclosure or bankruptcy proceedings retained to represent the interests of owners of mortgages in the Servicing Portfolio (“Foreclosure Counsel”). The policies and procedures shall, at a minimum, address, consider, and include:

(a) Appropriate oversight of Third-Party Providers to ensure that they comply with the Legal Requirements, supervisory guidance of the Board of Governors, and the Bank’s and SunTrust Mortgage’s policies and procedures;

(b) processes to prepare contingency and business continuity plans that ensure the continuing availability of critical third-party services and business continuity of SunTrust Mortgage, consistent with supervisory guidance of the Board of Governors, both to address short-term and long-term service disruptions and to ensure an orderly transition to new service providers should that become necessary;

(c) measures to ensure that all original records transferred by SunTrust Mortgage to Third-Party Providers (including the originals of promissory notes and mortgage documents) remain within the custody and control of the Third-Party Provider (unless filed with the appropriate court or the loan is otherwise transferred to another party), and are returned to SunTrust Mortgage or designated custodians at the conclusion of the performed service, along with all other documents necessary for SunTrust Mortgage’s files;

(d) measures to ensure the accuracy of all documents filed or otherwise utilized on behalf of SunTrust Mortgage or the owners of mortgages in the Servicing Portfolio in any judicial or non-judicial foreclosure proceeding, related bankruptcy proceeding, or in other

foreclosure-related litigation, including, but not limited to, documentation sufficient to establish ownership of the note and right to foreclose at the time the foreclosure action is commenced;

(e) processes to perform appropriate due diligence on potential and current Third-Party Provider qualifications, expertise, capacity, reputation, complaints, information security, document custody practices, business continuity, and financial viability; and measures to ensure the adequacy of Third-Party Provider staffing levels, training, work quality, and workload balance;

(f) processes to ensure that contracts provide for adequate oversight, including requiring Third-Party Provider adherence to SunTrust Mortgage foreclosure processing standards, measures to enforce Third-Party Provider contractual obligations, and processes to ensure timely action with respect to Third-Party Provider performance failures;

(g) processes to ensure periodic reviews of Third-Party Provider work for timeliness, competence, completeness, and compliance with all applicable Legal Requirements, and SunTrust Mortgage’s contractual obligations to GSEs and investors, and to ensure that foreclosures are conducted in a safe and sound manner;

(h) processes to review customer complaints about Third-Party Provider services;

(i) a review of fee structures for Third-Party Providers to ensure that the method of compensation considers the accuracy, completeness, and legal compliance of foreclosure filings and is not based solely on increased foreclosure volume or meeting processing timelines; and

(j) a periodic certification process for law firms (and recertification of existing law firm providers) that provide residential mortgage foreclosure and bankruptcy

services for the Mortgage Servicing Companies as qualified to serve as Third-Party Providers to SunTrust Mortgage, including that attorneys are licensed to practice in the relevant jurisdiction and have the experience and competence necessary to perform the services requested.

Compliance Program

8. Within 60 days of this Order, SunTrust shall submit to the Reserve Bank an acceptable written plan to enhance its enterprise-wide compliance program (“ECP”) with respect to its oversight of residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations. The enhanced program shall be based on an evaluation of the effectiveness of SunTrust’s current ECP in the areas of residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations, and recommendations to strengthen the ECP in these areas. The plan shall, at a minimum, be designed to:

(a) Ensure that the fundamental elements of the ECP and any enhancements or revisions thereto, including a comprehensive annual risk assessment, encompass residential mortgage loan servicing, Loss Mitigation, and foreclosure activities;

(b) ensure compliance with the Legal Requirements and supervisory guidance of the Board of Governors; and

(c) ensure that policies, procedures, and processes are updated on an ongoing basis as necessary to incorporate new or changes to the Legal Requirements and supervisory guidance of the Board of Governors.

9. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable compliance program and timeline for implementation to ensure that the operations of SunTrust Mortgage, including, but not limited to, residential mortgage servicing, Loss Mitigation, and foreclosure, comply with the Legal Requirements, as well as

SunTrust Mortgage’s internal policies, procedures, and processes and are conducted in a safe and sound manner. The program shall, at a minimum, address, consider, and include:

(a) The duties and responsibilities of line of business staff, other staff, and Third-Party Providers regarding compliance;

(b) policies for developing and communicating compliance-related roles and responsibilities across SunTrust Mortgage’s organization and to Third-Party Providers;

(c) policies, procedures, and processes to ensure that SunTrust Mortgage has the ability to locate and secure all documents, including original promissory notes, necessary to perform mortgage servicing, Loss Mitigation, and foreclosure functions and to comply with contractual obligations;

(d) compliance with supervisory guidance of the Board of Governors, including, but not limited to the guidance entitled, “Compliance Risk Management Programs and Oversight at Large Banking Organizations with Complex Compliance Profiles,” dated October 16, 2008 (SR 08-08/CA 08-11);

(e) compliance with Legal Requirements, including:

(i) processes to ensure that all factual assertions made in pleadings, declarations, affidavits, or other sworn statements filed by or on behalf of SunTrust Mortgage are accurate, complete, and reliable; and that affidavits and declarations are based on personal knowledge or a review of SunTrust Mortgage’s books and records when the affidavit or declaration so states;

(ii) processes to ensure that affidavits filed in foreclosure proceedings and other foreclosure-related documents are executed and notarized in accordance with applicable state legal requirements, including jurat requirements;

(iii) processes to ensure that SunTrust Mortgage has properly documented ownership of the promissory note and mortgage (or deed of trust) under applicable state law, or is otherwise a proper party to the action (as a result of agency or other similar status) at all stages of foreclosure and bankruptcy litigation; and

(iv) processes to ensure that a clear and auditable trail exists for all factual information contained in each affidavit or declaration, in support of each of the charges that are listed, including whether the amount is chargeable to the borrower or claimable by the investor;

(f) policies and procedures to ensure that payments are credited in a prompt and timely manner; that payments, including partial payments to the extent permissible under the terms of applicable legal instruments, are applied to scheduled principal, interest, and escrow before fees, and that any misapplication of borrower funds is corrected in a prompt and timely manner;

(g) compliance with contractual obligations to the owners of the mortgages in the Servicing Portfolio;

(h) compliance with the contractual limitations in the underlying mortgage note, mortgage, or other customer authorization with respect to the imposition of fees, charges and expenses, and compliance with Legal Requirements concerning the imposition of fees, charges, and expenses;

(i) processes to ensure that foreclosure sales (including the calculation of the default period, the amounts due, and compliance with notice requirements) and post-sale confirmation are in accordance with the terms of the mortgage loan and applicable state and federal law requirements;

(j) procedures to ensure compliance with bankruptcy law requirements, including a prohibition on collection of fees in violation of bankruptcy’s automatic stay (11 U.S.C. § 362), the discharge injunction (11 U.S.C. § 524), or any applicable court order;

(k) the scope and frequency of independent testing for compliance with the Legal Requirements, supervisory guidance of the Board of Governors, and the requirements of SunTrust Mortgage’s internal policies, procedures, and processes by qualified parties with requisite knowledge and ability (which may include internal audit) who are independent of SunTrust Mortgage’s business lines and compliance function;

(l) measures to ensure that policies, procedures, and processes are updated on an ongoing basis as necessary to incorporate new or changes to Legal Requirements and supervisory guidance of the Board of Governors; and

(m) the findings and conclusions of the independent consultants that were engaged by SunTrust, the Bank, or SunTrust Mortgage under paragraph 3 to review SunTrust Mortgage’s foreclosure processes.

Mortgage Electronic Registration System

10. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit an acceptable plan to ensure appropriate controls and oversight of SunTrust Mortgage’s activities with respect to the Mortgage Electronic Registration System and compliance with MERS’ membership rules, terms, and conditions (“MERS Requirements”) (“MERS Plan”). The MERS Plan shall include, at a minimum:

(a) Processes to ensure that all mortgage assignments and endorsements with respect to mortgage loans serviced or owned by SunTrust Mortgage out of MERS’ name are executed only by a certifying officer authorized by MERS and approved by SunTrust Mortgage;

(b) processes to ensure that all other actions that may be taken by MERS certifying officers (with respect to mortgage loans serviced or owned by SunTrust Mortgage) are executed by a certifying officer authorized by MERS and approved by SunTrust Mortgage;

(c) processes to ensure that SunTrust Mortgage maintain up-to-date corporate resolutions from MERS for all SunTrust Mortgage employees and third-parties who are certifying officers authorized by MERS, and up-to-date lists of MERS certifying officers;

(d) processes to ensure compliance with all MERS Requirements and with the requirements of the MERS Corporate Resolution Management System;

(e) processes to ensure the accuracy and reliability of data reported to MERS, including monthly system-to-system reconciliations for all MERS mandatory reporting fields, and daily capture of all rejects/warnings reports associated with registrations, transfers, and status updates on open-item aging reports. Unresolved items must be maintained on open-item aging reports and tracked until resolution. SunTrust Mortgage shall determine and report whether the foreclosures for loans serviced by SunTrust Mortgage that are currently pending in MERS’ name are accurate and how many are listed in error, and describe how and by when the data on the MERS system will be corrected;

(f) an appropriate MERS quality assurance workplan, which clearly describes all tests, test frequency, sampling methods, responsible parties, and the expected process for open-item follow-up, and includes an annual independent test of the control structure of the system-to-system reconciliation process, the reject/warning error correction process, and adherence to the MERS Plan; and

(g) inclusion of MERS in SunTrust Mortgage’s third-party vendor management process, which shall include a detailed analysis of potential vulnerabilities, including information security, business continuity, and vendor viability assessments.

Management Information Systems

11. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable plan and timeline for the review and remediation, as necessary, of SunTrust Mortgage’s management information systems (“MIS”) for their residential mortgage loan servicing, Loss Mitigation, and foreclosure activities to ensure the timely delivery of complete and accurate information to permit effective decision-making. The plan shall, at a minimum, provide for:

(a) A description of the various MIS used or to be used by SunTrust Mortgage;

(b) a timetable for completion of the review;

(d) new systems or enhancements to the MIS to:

(i) monitor compliance with the Legal Requirements, supervisory guidance of the Board of Governors, and the requirements of this Order;

(ii) ensure the ongoing accuracy of records for all serviced mortgages, including, but not limited to, records necessary to establish ownership and the right to foreclose by the appropriate party for all serviced mortgages, outstanding balances, and fees assessed to the borrower;

(iii) ensure that the Loss Mitigation and foreclosure staffs have sufficient and timely access to information provided by the borrower regarding Loss Mitigation and foreclosure activities; and

(iv) ensure that the single point of contact has sufficient and timely access to information provided by the borrower regarding Loss Mitigation and foreclosure activities; and

(e) testing the integrity and accuracy of the new or enhanced MIS to ensure that reports generated by the system provide necessary information for adequate monitoring and quality controls.

Training

12. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable written plan, and timeline for implementation, to improve the training of all appropriate officers and staff of SunTrust Mortgage regarding the Legal Requirements, supervisory guidance of the Board of Governors, and SunTrust Mortgage’s internal policies and procedures regarding residential mortgage servicing, Loss Mitigation, and foreclosure, and the policies and procedures adopted regarding a single point of contact described in paragraph 6 of this Order. The plan shall also include:

(a) A requirement that training be conducted and documented no less frequently than annually; and

(b) procedures to timely inform appropriate officers and staff of any new or changes to the Legal Requirements and supervisory guidance of the Board of Governors related to residential mortgage loan servicing, Loss Mitigation, or foreclosure.

Risk Assessment

13. Within 10 days of this Order, the Bank and SunTrust Mortgage shall retain an independent consultant acceptable to the Reserve Bank to conduct a comprehensive assessment of SunTrust Mortgage’s risks, including, but not limited to, operational, compliance, transaction, legal, and reputational risks particularly in the areas of residential mortgage loan servicing, Loss Mitigation, and foreclosure. The independent consultant shall prepare a written risk assessment and provide it to SunTrust, the Bank, and SunTrust Mortgage within 90 days of this Order, and SunTrust, the Bank, and SunTrust Mortgage shall provide it to the Reserve Bank at the same time that it is provided to SunTrust, the Bank, and SunTrust Mortgage. The risk assessment shall, at a minimum, address, consider, and include:

(a) The scope and complexity of SunTrust Mortgage’s activities and operations regarding residential mortgage loan servicing, Loss Mitigation, and foreclosure, including functions outsourced to Third-Party Providers;

(b) an evaluation of risk exposures, taking into account risks inherent in SunTrust Mortgage’s business activities and in outsourcing to Third-Party Providers;

(c) an assessment of the effectiveness of established controls designed to mitigate each type of risk and identify residual risks; and

(d) recommendations for improving risk management.

14. Within 5 days of the engagement of the independent consultant described in paragraph 13 of this Order, but prior to the commencement of the comprehensive risk assessment, the Bank and SunTrust Mortgage shall submit to the Reserve Bank for approval an engagement letter that sets forth:

(a) The scope and methodology for conducting the risk assessment, including a detailed description of the areas to be reviewed;

(b) the expertise and resources to be dedicated to the risk assessment; and

(c) a commitment that any or workpapers associated with the risk assessment will be made available to the Reserve Bank upon request.

Risk Management

15. Within 60 days of submission of the comprehensive risk assessment conducted pursuant to paragraph 13 of this Order, SunTrust shall submit to the Reserve Bank an acceptable written plan to enhance its ERM program with respect to its oversight of residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations. The enhanced program shall be based on an evaluation of the effectiveness of SunTrust’s current ERM program in the areas of residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations, and recommendations to strengthen the risk management program in these areas. The plan shall, at a minimum, be designed to:

(a) Ensure that the fundamental elements of the risk management program and any enhancements or revisions thereto, including a comprehensive annual risk assessment, encompass residential mortgage loan servicing, Loss Mitigation, and foreclosure activities;

(b) ensure that the risk management program complies with supervisory guidance of the Board of Governors, including, but not limited to, the Board of Governors’ guidance entitled, “Compliance Risk Management Programs and Oversight at Large Banking Organizations with Complex Compliance Profiles,” dated October 16, 2008 (SR 08-08/CA 08-11); and

(c) establish limits for compliance, legal, and reputational risks and provide for regular review of risk limits by appropriate senior management and the board of directors or an authorized committee of the board of directors.

16. Within 60 days of submission of the comprehensive risk assessment conducted pursuant to paragraph 13 of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable, comprehensive risk management program for SunTrust Mortgage. The program shall provide for the oversight by the Bank’s and SunTrust Mortgage’s boards of directors and senior management, including the Bank’s and SunTrust Mortgage’s senior risk managers, of the development and implementation of formalized policies and mitigation processes for all identified risks to SunTrust Mortgage. The program shall, at a minimum, address, consider, and include:

(a) The structure and composition of the Bank’s and SunTrust Mortgage’s board risk management committees and a determination of the optimum structure and composition needed to provide adequate oversight of SunTrust Mortgage’s firm-wide risk management;

(b) a detailed description of the responsibilities of the line-of-business staff, legal department, and internal audit department regarding risk assessment and management, including, but not limited to, compliance and legal risks;

(d) processes to adequately identify risk levels and trends;

(e) processes to adequately identify and control risks arising from incentive compensation programs;

(f) processes to document, measure, assess, and report key risk indicators;

(g) controls to mitigate risks;

(h) procedures for the escalation of significant matters related to risks to appropriate senior officers and board committees;

(i) the scope and frequency of comprehensive risk assessments;

(j) a formal method to ensure effective communication of established risk management policies, procedures, and standards to all appropriate business line and other staff;

(k) periodic testing of the effectiveness of the risk management program; and

(l) the findings and recommendations of the independent consultant described in paragraph 13 of this Order regarding risk management.

Audit

17. Within 60 days of this Order, SunTrust shall submit to the Reserve Bank an acceptable written plan to enhance the internal audit program with respect to residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations. The enhanced plan shall be based on an evaluation of the effectiveness of SunTrust’s current internal audit program in the areas of residential mortgage loan servicing, Loss Mitigation, and foreclosure activities and operations, and shall include recommendations to strengthen the internal audit program in these areas. The plan shall, at a minimum, be designed to:

(a) Ensure that the internal audit program encompasses residential mortgage loan servicing, Loss Mitigation, and foreclosure activities;

(b) periodically review the effectiveness of the ECP and ERM with respect to residential mortgage loan servicing, Loss Mitigation, and foreclosure activities, and compliance with the Legal Requirements and supervisory guidance of the Board of Governors;

(c) ensure that adequate qualified staffing of the audit function is provided for residential mortgage loan servicing, Loss Mitigation, and foreclosure activities;

(d) ensure timely resolution of audit findings and follow-up reviews to ensure completion and effectiveness of corrective measures;

(e) ensure that comprehensive documentation, tracking, and reporting of the status and resolution of audit findings are submitted to the audit committee; and

(f) establish escalation procedures for resolving any differences of opinion between audit staff and management concerning audit exceptions and recommendations, with any disputes to be resolved by the audit committee.

18. Within 60 days of this Order, the Bank and SunTrust Mortgage shall submit to the Reserve Bank an acceptable enhanced written internal audit program to periodically review compliance with applicable Legal Requirements and supervisory guidance of the Board of Governors that shall, at a minimum, provide for:

(a) An annual written, risk-based audit plan approved by the boards of directors of the Bank and SunTrust Mortgage, or authorized committees of those boards, that encompasses all appropriate areas of audit coverage;

(b) the scope and frequency of audits;

(d) inclusion in the audit scope of reviews of internal controls, MIS, and compliance with SunTrust Mortgage’s internal policies, procedures, and processes, including, but not limited to, the Loss Mitigation and foreclosure processes;

(e) adequate testing and review of MIS used in servicing, Loss Mitigation, and foreclosure activities to ensure compliance with the Legal Requirements;

(f) controls to ensure that audits are completed on a timely basis in accordance with the approved audit plan;

(g) adequate staffing of the audit function by qualified staff;

(h) timely resolution of audit findings and follow-up reviews to ensure completion and effectiveness of corrective measures;

(i) comprehensive documentation, tracking, and reporting of the status and resolution of audit findings to the audit committee, at least quarterly; and

(j) establishment of escalation procedures for resolving any differences of opinion between audit staff and management concerning audit exceptions and recommendations, with any disputes to be resolved by the audit committee.

Approval, Implementation, and Progress Reports

19. (a) SunTrust, the Bank, and SunTrust Mortgage, as applicable, shall submit written plans, programs, policies, procedures, and engagement letters that are acceptable to the Reserve Bank within the applicable time periods set forth in paragraphs 2, 3(c), 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, and 18 of this Order. Independent consultants acceptable to the Reserve Bank shall be retained by the Bank and SunTrust Mortgage within the applicable periods set forth in paragraphs 3(a) and 13 of this Order.

(b) Within 10 days of approval by the Reserve Bank, SunTrust, the Bank, and SunTrust Mortgage, as applicable, shall adopt the approved plans, programs, policies, and procedures. Upon adoption, SunTrust, the Bank, and SunTrust Mortgage, as applicable, shall implement the approved plans, programs, policies, and procedures, and thereafter fully comply with them.

(c) During the term of this Order, the approved plans, programs, policies, procedures, and engagement letters shall not be amended or rescinded without the prior written approval of the Reserve Bank.

(d) During the term of this Order, SunTrust, the Bank, and SunTrust Mortgage, as applicable, shall revise the approved plans, programs, policies, and procedures as necessary to incorporate new or changes to the Legal Requirements and supervisory guidance of the Board of Governors. The revised plans, programs, policies, and procedures shall be submitted to the Reserve Bank for approval at the same time as the progress reports described in paragraph 20 of this Order.

20. Within 30 days after the end of each calendar quarter following the date of this Order, SunTrust’s, the Bank’s, and SunTrust Mortgage’s boards of directors shall jointly submit to the Reserve Bank written progress reports detailing the form and manner of all actions taken to secure compliance with the provisions of this Order and the results thereof. The Reserve Bank may, in writing, discontinue the requirement for progress reports or modify the reporting schedule.

21. Within 15 months after the date of this Order, SunTrust, the Bank, and SunTrust Mortgage shall submit a validation report prepared by an independent third-party consultant with respect to compliance with the Order during the first year after the Order becomes effective. The independent third-party consultant shall be acceptable to the Reserve Bank, and shall be engaged not more than nine months after the effective date of this Order. The engagement letter retaining the independent third-party consultant shall be subject to the Reserve Bank’s approval. At a minimum the validation report shall include the results of a testing program acceptable to the

Reserve Bank that, among other things, will evaluate the effectiveness of the various programs, policies and procedures implemented as a result of this Order.

Notices

22.

All communications regarding this Order shall be sent to:

(a)

Richard B. Gilbert

Assistant Vice President

Federal Reserve Bank of Atlanta

1000 Peachtree Street, N.E.

Atlanta, Georgia 30309-4470

(b)

James M. Wells III

Chairman and Chief Executive Officer

SunTrust Banks, Inc. and SunTrust Bank

SunTrust Plaza

303 Peachtree Street NE

30th Floor; MC 0645

Atlanta Georgia 30308

(c)

Jerome T. Lienhard, II

President and Chief Executive Officer

SunTrust Mortgage, Inc.

901 Semmes Avenue

Richmond, Virginia 23224

Miscellaneous

23. The provisions of this Order shall be binding on SunTrust, the Bank, and SunTrust Mortgage, and each of their institution-affiliated parties in their capacities as such, and their successors and assigns.

24. Each provision of this Order shall remain effective and enforceable until stayed, modified, terminated, or suspended in writing by the Reserve Bank.

25. Notwithstanding any provision of this Order, the Reserve Bank may, in its sole discretion, grant written extensions of time to SunTrust, the Bank, and SunTrust Mortgage to comply with any provision of this Order.

26. If SunTrust, the Bank, or SunTrust Mortgage believes that compliance with any provision of paragraphs 6, 7, 9, or 10 of this Order would not be legally permissible or would require it to breach any existing contractual obligation to an investor, SunTrust, the Bank, or SunTrust Mortgage, as applicable, may make a written submission to the Board of Governors and the Reserve Bank. The written submission shall include the following: (1) specific identification of the legal requirement or contractual or obligation that would be breached, and the likely consequences of any such breach; (2) a complete description of all good faith efforts undertaken by it to secure a modification of the contractual obligation or a waiver of its applicability in order to avoid any conflict between the requirements of this Order and the contractual obligation; and (3) any alternative approaches to satisfying the intent of the provision of the Order involved that would not cause a breach of the legal requirement or contractual obligation. Any such submission shall include a detailed opinion of experienced counsel with respect to the asserted conflict between compliance with this Order and the legal requirement or contractual obligation, a copy of the contract involved, and such other information as is necessary to evaluate the submission. A submission pursuant to this paragraph shall be made no later than 30 days before the deadline for submitting an otherwise acceptable plan, policies and procedures, or program with respect to the applicable paragraph. Such a submission in no way relieves SunTrust, the Bank, and SunTrust Mortgage from fully complying with this Order, including the applicable paragraph. Following review of the submission, the Board of Governors, in its discretion, pursuant to authority delegated to the Director of the Division of Banking Supervision and Regulation, and the General Counsel, may modify this Order or may require that SunTrust, the Bank, or SunTrust Mortgage, as applicable, comply with this Order.

27. The provisions of this Order shall not bar, estop, or otherwise prevent the Board of Governors, the Reserve Bank, or any other federal or state agency from taking any further or other action affecting SunTrust, the Bank, SunTrust Mortgage, or any of their current or former institution-affiliated parties or their successors or assigns.

28. Nothing in this Order, express or implied, shall give to any person or entity, other than the parties hereto, and their successors hereunder, any benefit or any legal or equitable right, remedy, or claim under this Order.

By Order of the Board of Governors effective this 13 ^th day of April, 2011.


SUNTRUST BANKS, INC.		BOARD OF GOVERNORS OF THE
		FEDERAL RESERVE SYSTEM

By:	/s/ William H. Rogers, Jr.	By:	/s/ Jennifer J. Johnson
	William H. Rogers, Jr.		Jennifer J. Johnson
	President and Chief Operating Officer		Secretary of the Board

SUNTRUST BANK

By:	/s/ William H. Rogers, Jr.
	William H. Rogers, Jr.
	President and Chief Operating Officer

SUNTRUST MORTGAGE, INC.

By:	/s/ Jerome T. Lienhard, II
	Jerome T. Lienhard, II
	President and Chief Executive Officer

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

SEC RELEASE NO. 33-8124

I, William H. Rogers, Jr., certify that:

(1)

I have reviewed this quarterly report on Form 10-Q of SunTrust Banks, Inc.;

(2)

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3)

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4)

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5)

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9 ^th , 2011.

/s/ William H. Rogers, Jr.

William H. Rogers, Jr.,

President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

SEC RELEASE NO. 33-8124

I, Aleem Gillani, certify that:

(1)

I have reviewed this quarterly report on Form 10-Q of SunTrust Banks, Inc.;

(2)

(3)

(4)

(5)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9 ^th , 2011.


/s/ Aleem Gillani
Aleem Gillani,
Corporate Executive Vice President and Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of SunTrust Banks, Inc. (the “Company”) for the quarter ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William H. Rogers, Jr., President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9 ^th , 2011.

/s/ William H. Rogers, Jr.

William H. Rogers, Jr.,

President and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of SunTrust Banks, Inc. (the “Company”) for the quarter ended June 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Aleem Gillani, Corporate Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9 ^th , 2011.


		/s/ Aleem Gillani
		Aleem Gillani,
		Corporate Executive Vice President and Chief Financial Officer