Good morning. My name is Filis, and I will be yourconference operator today. At this time, I would like to welcome everyone tothe Fifth Third Bancorp Third Quarter 2007 Earnings Conference Call. All lineshave been placed on mute to prevent any background noise. After the speakers'remark, there will be a question-and-answer session. (Operator Instructions).Thank you. Mr. Richardson, you may begin your conference.

Thanks, Filis. Hello everybody and thanks for joining usthis morning. We'll be talking with you this morning about our third quarter2007 results, as well as our outlook for the remainder of 2007. As a result, this call contains certain forward-lookingstatements about Fifth Third Bancorp, pertaining to our financial condition,results of operations, plans and objectives. These statements involve certainrisks and uncertainties. There are a number of factors that could cause resultsto differ materially from historical performance in these statements. FifthThird undertakes no obligation to update these statements after the date ofthis call. Now, I am joined here in the room by Kevin Kabat, ourPresident and CEO, and Chris Marshall, our CFO. During the question-and-answerperiod, please provide your name and that of your firm to the operator. Andwith that, I will turn the call oven to Kevin Kabat. Kevin?

Thanks, Jeff. Good morning and thanks for joining useveryone. I have few comments and then I will turn things over to Chris, whowill review our financial statements, our credit trends and also our outlookfor the rest of 2007. I would like to start off saying that this was a solidquarter for us and we are pleased with the results, particularly given the macroenvironment that we are operating in. We showed strong revenue growth and expenses were wellcontrolled. Fee growth was outstanding and NII growth was also quite good andwe hope we'll continue to benefit from wider, more rational spreads. We doexpect some further deterioration of credit as we manage our way through thecycle. However, we've been able to generate core performance that's allowed usto earn through a higher provision and still grow EPS. That will stand us ingood stead when the cycle turns in the next year or so. Our payments business had another strong quarter, up 16%year-over-year. Last quarter we mentioned the signing of Walgreen's credit cardprocessing business. They were converted to our system during latter part ofthis quarter. U.S. Treasury business isabout half way converted and that will becoming on through the first quarter of2008. Additionally, we just won the rest of the EFT business for our largestfinancial institution client. We continue to feel very good about this businessas we significantly outpaced all of our peers in organic growth and expect tomaintain our strong mid-teens growth rate. Results continue to exceed our expectations in the creditcard business. We really focused our management team and resources from lot ofareas of the bank into this and that demonstrates the power of that focus.Credit card account originations were up 83% and balances were up 57%year-over-year, despite having sold 89 million of non-strategic receivableslast quarter. We have an enormous opportunity here that…

Thanks, Kevin. Good morning everyone. Well I'd agree withKevin that it had been a pretty tough quarter for the industry. Our financialresults were pretty solid and hopefully that is beginning to demonstrate to allof you that while we continue to suffer from the same issues as the rest of theindustry. We also continue to make significant progress in improvingproductivity and the profitability of our businesses. Now, before I get to the details of the financial statementsin our outlook, let me try to say you some trouble digging through our releaseby recapping the major drivers of our EPS. As you've seen earnings per sharewas $0.71, which we feel reasonably good about. Our results were characterizedby strong growth in revenue and pre-tax income before provision, which was up3% sequentially and 9% versus a year ago. Now, growth in provision obviously offset a good bit of thebottom-line benefit, but we continue to show respectable EPS despite that. Sowhile credit costs are masking some of the growth we're experiencing we feelgood about where we are because as Kevin said the credit cycle will turn andwhen it does we will retain the benefit of having raised our earnings capacity. I'm going to discuss each of these items more fully in myremarks later, but in terms of the major items; third quarter resultsincluded a number of offsetting issuesincluding, starting with our fee income. In fee income we had about $0.03 total benefit fromsecurities gains which total about $13 million. We also had $15 million ingains from the sale of FDIC deposit insurance credits. And those gains offsetlosses of almost a $0.01 were $6 million on auto loans held for sale that wewere planning to securitize this quarter. As well as significantly lower ourmortgage banking income. Our mortgage banking income was down $15 million or $0.02for the…

(Operator Instructions) Your first question comes from theline of Mike Mayo with Deutsche Bank.

Good morning, Mike.

Good morning.

Good morning, Mike.

First, just on kind of your vision here, I mean youhighlighted that your footprint is kind of one-third in growth market and yousaid that was doubled what it was, not that long ago. Where do you want to takethat fraction and how do you define growth market?

Yeah, Mike, we have defined the growth markets reallyrelation to the demographic and population growth, exceeding the rest of thefootprint and exceeding national averages. So that's kind of a roughapproximation of how we define it. Our expectation and our orientation is really kind ofgetting a mix to more of a 50-50 split, if you will, a growth rate, if youwill. That's what we would expect to try and drive to through our growth andthrough the opportunities that we see before us, and probably not in the twodistant future, in a relatively short term. The progress that we've made in the last two to three years,we think we can continue that same type of expected progress. And as wementioned as well, most of that has been through our de novo expansion and wealso believe that strategically, we've said that up to continue to be able toinvest in those high growth markets again through organic expansion and the denovo strategy very well. So hope that helps in terms of some of ourperspective.

And in addition to the Southeast and Chicago, any other growth markets that are onyour radar screen?

Obviously, we do spill and look into the Mid-Atlanticarenas, but again we are going to be opportunistic as it evolves over the nextfew years. But there is a lot of work to be done in terms of where our platformis today, and we feel good about the positioning that we have the companyreally ready to take on so.

And so additional acquisitions possibly?

Yeah, as I mentioned, obviously, Mike, it's a challengingenvironment out there. Pricing hasn't changed a heck of a lot from thatperspective, but I think if you look at it overall, the combination of what we'vedone organically, specifically through the de novo strategy been very effectiveapproach for us. And so while we are open to that, we'll consider that andwill continue to be opportunistic in that route. We have a good organicplatform to drive off of that growth as well. So that's what you could expectus to continue to execute on.

And then one unrelated question over to credit quality. SoNPAs were up one-third and they should go up another one-third in the fourthquarter. Now, I guess your NPAs loans are kind of a above peer average at leastwhat I'm looking at, and I guess it will go up higher still. And Fifth Thirdhas a long history of having a good credit culture. How are you thinking aboutcredit quality today versus history? And also if you can just give a little more detail on theauto loans, you said some of the severe losses worse than you expected, and atthe same time, you are kind of growing it 14% year-over-year?

Mike, this is Chris. Let see, the first, the long terms NPAgrowth, I can't give you an exact number, but I think 34% is what we saw thisquarter. I think that was -- if you look at it in two pieces, the biggest pieceobviously credit deterioration is probably about 25% and 9% to 10% was due tothe troubled debt restructuring and the lack of an NPA sale. I can't tell you what we are going to do in the fourthquarter, but I would expect that not having an NPA sale is going to be unusualfor us. We would love to do those each quarter. So that would offset some ofthe NPA growth and then the trouble debt restructuring. While it's a little tooearly to tell how those credits are going to perform once they arerestructured. I put those in a slightly different category. So I might look atthe underlying NPA growth as a little bit lower than the 34%, more than 25%range. In terms of autos, I think the bigger while there was anincrease in severity of loss just given the earlier charge-offs in the '05vintages and I think you'd see some of that occurring in some of ourcompetitors across the country for some reason. There is higher charge-offs inthat vintage.

Why you think that is, I guess the quick question is theconsumer problems in mortgage going over to other areas and now we have auto toadd to that list or not?

It's a good question, but it's one I really couldn't giveyou a great answer on yet, but somewhat very focused on trying to figure outexactly what happened in 2005 that we drive that. By comparison if it was justas borrow for consumer, you'd expect that the 2007 vintage would continue todeteriorate even at this point in its maturity, and in fact the opposite ishappened is performed a little bit better. And then when we look at other consumer lending, like creditcard, we said balances were up, but, in fact, we don't see any stressing oncredit card at all. In fact that's performing very, very well. So, I am not sure if there was change in standards orsomething else in 2005. We are very focused on trying to figure out why that'soccurring. The bigger issue in the quarter is due to seasonality and the marketis always very weak in the third quarter and it's been even weaker this quarterbecause of the influx of inventory. So, I think that's the bigger driver. So if you look at the2007, vintage is performing well. The growth is we feel good about the stuff weare originating right now.

How long does it for an auto loan usually to go back, I mean'07?

They begin charging off, I mean you see the charge-offs evenat very well levels from the time you write the loans, so you see 90 days out.Loans are already starting to be delinquent and starting to fail. We don't see that as badly in this new vintage as we did in'05 and '06 toward a lower level.

Your questions are very good question and you are right onthe right point, it's just -- I would not assume that just because '05 and '06are poor vintages, that that's going to continue through this year.

All right. Thank you.

Thanks Mike.

Your next question comes from the line of Matthew O'Connorwith UBS.

Hi, Kevin and Chris.

Good morning Matt.

Good morning, Matt.

Chris, when we met in September, you had mentioned that ifmortgage spreads remained wide, which they have, you might add some securitiesin the fourth quarter. Are you buying securities, and if so, what types?

Well, if they remain wide up mortgages, the mortgage poolshave actually come down little bit. Securities are probably now where we wouldwant them to be before we stated to add. If we saw our spreads, maybe, widenedby about another 30, 40 basis points than I think they would at or about thepoint where we would to start to add things. Right now, the returns will stillbe a little tight for us.

Okay. And is it dependent on your view on what the Fedscould do, so if you thought the feds was going to cut one or two more times,you would look to add now or is it risk premium?

No. Exactly, is it that, that the outlook for the Fed gets alittle clear than things would look a little more advertising.

Okay. And just separately you've talked about securitizingor selling some lower spreads out that's the thing from the auto book in thepast, obviously this I think I had done in 3Q. What are the plans going forwardthere as you think about '08 and what you intend to do to free that capital?

Well. First of all, it's not a tremendous amount of capital,and I am not sure we have this specific use for that capital other than stayingat our 6.5% target given the three purchases we are going have to make. So,this first securitization is already factored into completing thosetransactions and still staying at 6.5%. Long-term and that is opposed to the next quarter or two, weare going to build out an auto securitization platform. We're very committed tothat. We think that's the right way to run the business and so we will do that.In the short-term, though, the timing of the transaction is going to beentirely dependent on market pricing.

And over time would you like to bring down your autoexposure relative to all of loans?

Yes.

Do you have any target in mind?

Yes. I'd said, while we don't talk a whole lot about of thespecific target, we would start it maybe half the size of what the book istoday.

Okay. And then just lastly, I am sorry if I missed it, butwhat percentage of your home equity is brokered?

Hang on, let's see. I am going to say it's about -- I don'thave the exact number, but it's about somewhere between 20% in the quarter,maybe low 20s.

Okay. Thanks very much.

Thanks Matt.

Your next question comes from the line of John McDonald withBanc of America Securities.

Hi, good morning guys.

Good morning, John.

Good morning, John.

Chris, I was wondering if you could give us a little bit ofcolor on kind of what the drivers are of the level of the reserve build. Iguess with NPAs and charge-off ratio going up, why don't we see a growth in theratio of reserved loans?

Well, I would give you a general answer to that John. Imean, there is not a linear relationship, as you know, between NPAs andreserves. It really has to do with the expected loss from those loans that aremoving into NPA status. And in our case the vast majority of them arecommercial loans and our loss expectation on those loans are all factored intothe calculation. In fact, we not only look at what our loss experience hasbeen, over the last couple of quarter we've really tightened that up to makesure we are looking at what our loss experience has been in the immediatelyproceeding quarter as opposed to looking over the average of a year or two. So,I think we're looking very accurately at credit-by-credit or pool-by-poolwhat's flowing into NPA or what deteriorates have been and what the expectedlosses are and that's how the allowance is built.

Okay. I guess I just figured with the charge-offs forecastgoing up, is this for everyone, you would see more in terms of reserve building.But, are you just saying it's a bottoms up and that's what [fits out].

Yes. It is very much a bottoms up.

And just to clarify one of your other answers, did you saythat the NPA sale market has gotten a little better from virtually staying downover the summer?

I really don't know. You really can't tell until you put aportfolio out to market what pricing is. It turned out that when we waited justhappened to be the way it happened, and so we put a portfolio out it was at theend of the quarter. We expected to sell it and I think everybody in a broadercame to market in the same week and so pricing was poor and we pulled it. Ithink pricing could have improved by now, maybe it hasn't, I don't know. But,we have to hold those loans, we will hold them, if we can sell them at theright price, we will. But, we are not going to give them away.

Okay. Thanks, Chris.

Terrific, John.

Your next question comes from the line of Ed Najarian with MerrillLynch.

Hello. Good morning.

Good morning, Ed.

Good morning, Ed.

First question has to do with credit quality and withrespect to commercial mortgage loans and commercial construction loans. We sawthat that was one of the biggest drivers of the increase in NPAs this quarter.Yet when we look at the charge-off ratios, commercials mortgage loanscharge-offs 26 basis points down from 56 basis points in the second quarter andcommercial, construction 35 basis points down from 48. So, it would have appear like potentially you are deferringsome of the loss recognition of I these NPAs and commercial mortgages andcommercial construction? Can you just speak to the very low charge-off ratiosthat you recorded this quarter in those two categories?

Well, I guess I could talk to it, but Ed, I guess I respondinitially, you can't differ loss recognition and we are certainly not in anywaydoing that. So if you specifically, if you want me to reconcile theamount of NPA inflow to the charge-off ratio, I don't think I can do that rightat this moment. I'm gladly trying to get you some more data off-line. But Ithink the loss recognition we had in the quarter is accurate and our charge-offratios in the rest of our lines had moved around quite a bit and I don't thinkyou can try to reconcile them one to one.

But I guess when we should think about it is that a lot ofthe migration to NPA that we saw this quarter was not written down materially.Would that be correct, because if it would have been, we would have seen higherloss ratios in those categories?

The one thing I would say is had we done a charge-off sale,which we expect to, we would have seen higher charge-off, I mean I'm sorry inNPA sale. We expected to do NPA sale of about $60 million and that was the salethat didn't happen. If I had to guess, the loss might have been 10% of that.And so we would have seen higher losses to a tune of $10 million on that stuff thatwe would have sold. The rest of the step that flowed in, I couldn't reconcilewhat that would have done to charge-offs in the quarter.

Okay. And then secondarily you've spoken a lot about the denovo branch expansion in a way. I think you talked previously about opening 50branches in Chicagonext year and then some other de novo expansion in some other markets. Couldyou just put some color on how you expect that to impact the growth in youroperating expenses outside of sort of the typical growth and the corefranchise?

Yeah, well, I'll give you some top level numbers. As Kevinsaid, we are going to bring on 59 stores this year. Next year, our currentplanning would say, we bring on about 80, so about 20 additional stores. In terms of the numbers, there won't be 15 in Chicago. They're probablybe about 50% of those stores in Floridaand Southeast now. There is probably going to be 20 or so in Chicago and then20 stores are probably be spread through out other parts of franchise like Tennessee and otherareas. So, there is probably a couple cents of dilution, maybe an extra pennyfrom the extra 20 stores may be $0.02.

So, I mean could you give us a sense of those 80 stores,what kind of operating cost that entails opening those 80 stores on ayear-over-year basis, or on a percentage basis, how much (inaudible)?

On a percentage basis, well, I am telling you that assumingthat we have already got roughly 60 stores opening this year. So that's in ourrun rate. We will have about 20 more next year and that will cost us about$0.02 in incremental dilution next year from the expense drag from bringingthose stores on.

Okay. And then last question in terms of the First Charteracquisition, do you have the percentage of their loan portfolio, there is anyconstruction or residential and commercial construction on land developmentlending?

We do have, but I don't have it with me yet. But I wouldgladly ask them to follow up with you after the call.

Okay. Thank you.

Sure. One more.

Operator?

Your next question comes from the line of [Andy Walker withNew Age Capital].

Good morning Andy. Is Andy still with us?

Andy Walker your line is open.

Any other questions?

At this time sir, there are no further questions.

Hi, let me just close it down, then thanking everybody forjoining us. As we've said at the beginning of the call, there are lot of reallypositive developments and a very tough quarter for the industry andparticularly in terms of the credit challenges before us. But we feel thatreally good about the improvements we are making in the business are going tostay with us. So, we thanks for your attention and we'll talk to you nextquarter.

This concludes today's Fifth Third Bancorp third quarter2007 earnings conference call. You may now disconnect.