Good morning. My name is Takiya and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Mr. Richardson, you may begin your conference.

Thanks, Takiya. Hello and thanks for joining us this morning. We will be talking to you today about our first quarter 2009 results. This call may contain certain forward-looking statements about Fifth Third Bancorp pertaining to our financial condition, results of operations, plans and objectives. These statements involve certain risks and uncertainties. There are a number of factors that could cause results to differ materially from historical performance in these statements. We have identified a number of those factors in our forward-looking cautionary statement at the end of our earnings release and other materials and we encourage you to review those factors. Fifth Third undertakes no obligation and would not expect to update any such forward-looking statements after the date of this call. I am joined here in the room by several people. Kevin Kabat, our Chairman and CEO, Chief Financial Officer, Ross Kari, Chief Risk Officer, Mary Tuuk, our Controller, Dan Poston, our Treasurer, Mahesh Sankaran, and Jim Eglseder of Investor Relations. During the question-and-answer period, please provide your name and that of your firm to the operator. With that I’ll turn the call over to Kevin Kabat., Kevin.

Good morning, everyone, and thanks for joining us. There is a lot going on in the industry right now and I would like to address the impact of some of those macro issues to Fifth Third. I will also provide some highlights for the quarter before turning things over to Mary and Ross for a more detailed look at our financial performance. The major development in the quarter for Fifth Third was our announcement that we plan to sell 51% of our processing business to Advent International. The transaction values the business at $2.35 billion before about $50 million in valuation adjustments. This transaction brings us a partner to co-invest in a business that we believe has significant additional growth opportunities. And Advent’s substantial expertise in the payment space, particularly internationally will be beneficial as well. Additionally, we expect the transaction to generate a pre-tax gain of approximately $1.7 billion, a net income of nearly $1 billion dollars. Tier 1 and TCE ratios would increase by over 90 basis points and tangible book value per share would increase about $2 per share to $10.80 on a pro forma basis. In terms of the economic environment, for most of the past 18 months, it’s been a pretty steady drumbeat of negative news and developments, and things aren’t going to change immediately. However, recently we’ve seen a few signs that may be signaling that the rate of deterioration may be beginning to slow. The rate of new unemployment claims just dropped, housing inventories are beginning to come down in a few markets, and the housing affordability index has improved significantly over the past several months. Mortgage re-financings are high, increasing discretionary spending power. We saw an improvement in year-over-year processing revenue growth after several slowing quarters, and we expect that to continue,…

Thanks, Kevin. As you recall, during the fourth quarter, we sold or moved to held-for-sale, a portfolio of loans representing $1.6 billion of original balances. These loans were carried at the time at $1.3 billion and we wrote those loans down to $473 million last quarter. For purposes of my discussion, I’m going to focus on the loan portfolio itself, and then afterwards I’ll discuss the held-for-sale portfolio as a separate portfolio. I’ll start first with charge-offs. Commercial net charge-offs in the portfolio totaled $256 million, down $370 million from portfolio losses in the fourth quarter of 2008. C&I losses totaled $103 million, about half of those losses were charge-offs on loans to auto dealers at $26 million, and the real estate related industries about $28 million. That is down significantly from the $383 million of C&I charge-offs that we took during the fourth quarter. Commercial mortgage losses of $77 million were driven by the continued weakness in Florida and Michigan, which accounted for about two-thirds of the losses. Commercial mortgage losses in Florida were particularly high, with net charge-off ratio 7.1% for the quarter, compared with 2.5% in Michigan and 1.4% for the remainder of the footprint. Commercial construction net charge-off were $76 million, once again driven by Michigan and Florida, which on a combined basis accounted for approximately 42% of construction losses. Florida, again, is the most challenging market here, with loss rates running nearly double the rest of the footprint. Couple of general comments on commercial charge-offs. The growth in commercial real estate losses is moderated outside of Florida, and that is an important development. At the same time, C&I losses are reflecting the broader effects of the economy on a portfolio that generally held up fairly well. Although loss severities in those portfolio 142 basis points…

Thanks, Mary. Let me start with summary of earnings per share, and some of the unusual items in the quarter. As Kevin mentioned, we reported net income of $50 million, after payment of preferred dividends, the net loss to common shares was $26 million or $0.04 per share. Quarterly results were impacted by several unusual items. Those items were about $0.18 of benefit in total, and are outlined in the release. During the quarter, we took steps toward surrendering the BOLI policy that we talked about a good deal in the past. That led to the recognition of a $106 million tax benefit from previously recognized tax deductible losses related to the policy. We also incurred a $54 million charge this quarter related to this policy, $43 million of which was related to the establishment of a reserve related to the surrender. Additionally, results include a $55 million tax benefit related to our leverage lease settlement with the IRS. As Mary just mentioned, net charge-offs were substantially lower in the first quarter, and were similar to the third quarter levels. I would also note that our provision for loan and lease losses exceeded net charge-offs by $283 million for the quarter or approximately $0.32 per share on an after-tax basis. We don’t currently expect growth in the allowance to continue to be as high as it has been in recent quarters, therefore the impact on earnings should begin to subside in coming quarters. Now let me walk through our results in greater detail, starting with balance sheet. Average earning assets were up 1% during the quarter, driven by growth in investment securities and loans held-for-sale. As Kevin mentioned, we invested $2.9 billion in auto-backed and mortgage-backed securities and loans held-for-sale increased $1.2 billion, reflecting growth in the mortgage warehouse. Average…

Thanks, Ross. We appreciate your time this morning. I know you have a busy morning ahead. The environment remains challenging, but the actions we have taken over the past year will help provide us with the flexibility to make our way through the economic crisis and merge a stronger company on the other side. Our employees continue to focus on day-to-day execution despite the significant distractions they faced with, on a day-to-day basis and I think that shows through in our core results. With that, operator it’s time to turn it over for questions.

(Operator Instructions) Your first question comes from Betsy Graseck - Morgan Stanley.

Couple of questions, one could you talk through a little bit about the new loan growth that you’re generating and the degree to which it is sourced from existing customers, existing lines of credit versus new customers versus, maybe existing customers and completely new lines of credit. What I’m trying to get a sense of, is the degree to which you’re new lending is based on old pricing or based on new pricing?

A couple of things I’d say in general Betsy on that, one is we are seeing both. We are bringing in new customers as well as renewing and extending lines with current relationships, particularly strong relationships. I’d tell you generally, we are seeing and getting higher pricing even through the renewal, as well as well as our focus has been on broadening relationships particularly in the commercial book. So beyond pricing, we are also getting the ancillary services, treasury management services, more deposit relationships et cetera. I can’t give you a specific breakout in terms of dollar for dollar, new prospects versus renewals and originations in that way, but we are seeing both in that regard.

And the degree, which the pricing ability that you have is increasing or decreasing as you kind of think through the last six months. I mean there has been a change in the competitive dynamic in your footprints. So it’ll be helpful to understand the degree which you can either take advantage of that or not?

I think that’s exactly a very good point and we’ve been able to take advantage of that and I think that shown really on both sides of the balance sheet for us, both our pricing from a yield on assets and customers that way, but also our expectations and what we’ve seen in pricing even on the deposit and liability side. So you’re exactly right that’s beginning to happen in both sides, we’ve seen that specifically.

I’ll just reinforce that the projected increases in net interest margin for the second quarter and continued throughout the year, as Kevin said do reflect a better pricing environment for both deposits and loans, and we are very focused on making sure we realize that.

And that’s 15 to 20 bps increase was by year end, is that right?

No.

That was each quarter.

That’s the second quarter and we should continue to see some improvement beyond that.

Okay and then separate question on thinking through stress, up to now you can’t say much about it, the journal had some suggestions as to what the stress requirements were in the journal yesterday. Could you just comment as to whether or not those numbers that you would feel confident with?

Betsy, your information is at same place, as we are then from the publications. But, we can’t comment on that. We don’t know what the expectations will be. As you know, from that standpoint, we feel very good about our strengthened capital ratios in positions today, and that’s about the extent of what I can comment on right now.

And then just lastly, there are programs to help institutions move to stress test their off-balance sheet through the PPIP and the bad assets off, how do you think about those programs and the degree at which you’d be interested or not?

Clearly the PPIP is something where we are interested in especially with respect to the assets that we have marked as held-for-sale, we feel like we’ve taken aggressive marks, we feel like the activity in the first quarter actually confirms that and the PPIP should hopefully bring more buyers into the markets and hopefully support a little improvement in the prices on those, so clearly looking at possibly using PPIP for those assets as well as some other distressed assets.

Would you be willing to use PPIP even if it generated a loss for a portfolio or only if it’s generated a gain or flat?

Well, we’d have to look at it on an asset-by-asset basis, but clearly we feel that we have large portfolio of loans that we’ve marked aggressively that wouldn’t generate a loss and may generate a gain. There are other assets where we have to look at what pricing ended up being through PPIP but we’re surely interested in identifying that.

The other thing Betsy, just as a reminder, our fourth quarter actions was, we attacked aggressively our worst performing pieces of those portfolios. So we have taken a lot of actions that we think have well positioned us for where we are today, but again, I think, we went after the worst performing of our bucket in our portfolio.

It also reinforce from Mary’s comments that for the NPA’s that we’re still holding for investment. Those on average are marked down to $0.63 on the dollar. Even when we manage through normal NPA process, we’ve been pretty aggressive in taking charges on those and therefore it’s worth consideration of whether any of those assets could be sold even without an additional loss.

And the other thing I would add to the overall comments is that we also have a lot of other vehicles before us for purposes of additional flexibility. So we have been able to take advantage of local market opportunities for sales of smaller pools of assets as well as some other larger pool opportunities. To Ross’s point, that we started on already in the fourth quarter and we saw some continuation of that in the first quarter.

Your next question comes from the Brian Foran - Goldman Sachs.

Can I ask the Advent transaction, when I read the put language within the Advent transaction, it seemed to imply that with the limitations around selling all of Fifth Third and the limitations around the government ownership being above 20% or I shouldn’t say limitations, with those things triggering the put option. It seemed like the message we should take away is you are fairly confident that between pre-provision earnings, your existing capital stack and maybe some other things like your asset management business that you’re very confident, you can generate any capital you need this cycle from organic measures. So one is that the right conclusion to take away from that put option language, and then two is there any relative preference between, are you thinking about more business disposition still or STP asset or are you still thinking about potentially converting the convertible preferred or is that off the table with the Advent transaction? Just different things you are thinking about in terms of the capital outlook from here?

I’ll just say that with respect to the Advent transaction, I think the conclusion should be that we are confident in our current capital position. We are confident in our ability to maintain an appropriate capital position, and leave it at that. So with respect to other capital generation ideas, last quarter, I think we mentioned a couple other alternatives that are out there, they are still out there. We still recognize those. I think that we feel very good about where we are now and especially after the Advent transaction closes.

And then the follow-up, you are the second or third bank to specifically mention net interest margins bottoming in January. Can you give us a little bit more color, maybe where the exit run rate for the quarter is relative to January and also why? I understand the general idea of why the first quarter could be a bottom, but is January just the inflection point, where rates have been in zero percent for a while and new loan pricing starts to come in? Or was it something about deposit pricing that happened and inflected in January? Why is January the inflection point?

Well, I think about the way deposits reprice and what the environment was like in the third and fourth quarter last year. I think that the rate environment was very, very competitive and there was a real race to build liquidity. As a result, a lot of CDs went on balance sheet pretty narrow spreads high rates in the third and fourth quarter, last year, as that competitive rate environment eases pretty dramatically. We ended up with all of a sudden a number of those CDs that are rolling over in the first quarter and in the second quarter end up pricing down reasonably substantial rates. So, I think the January was the inflection point, plus with bringing in TARP funds and the benefit from that, at the end of the year that also has a little impact. If you think about how the trend would move and what it would look like at the end of the quarter, I’d just say simply that, with January is a low point, the major impact is going to be, assets are renewing throughout the end of the first quarter and early second quarter and then deposits are rolling over. It’s a heavy roll over quarter in the second quarter on deposits. You’re going to see a fairly continuous lift in net interest margin from January through the end of the second quarter.

Your final next question comes from Mike Mayo - Deutsche Bank.

Just you said you thought the reserve building might be a little bit less next quarter and I was interested in why that would be the case? Or do you think the pace of increase in NPAs might be less? I just look at the reserve to NPA ratio, which went down linked quarter and just wonder what gives you a little extra confidence and also a few banks you talked about seasonality in terms of credit and that seasonality might hurt some credit trends in next quarter, if you could comment on that too?

I will just say that, as we look out to the second quarter and we always feel pretty good visibility in to the next three months. We think the building NPAs is going to flow of new NPAs is slowing and that would be the major driver for future trends in charge-offs and hence that’s why we feel confident making that comment.

The couple of other comments that I’d add to that, as you know we took some very significant credit actions in the fourth quarter to really take the most significant loss risk out of the portfolio. So, to that end, we think that we have been very aggressive in particular with respect to the homebuilder portfolio and we saw obviously much better trends in our homebuilder performance for that portfolio in the first quarter. We also think that the geographies that we’ve had the largest concentration and with respect to real estate being particularly the Eastern Michigan geography as well as the Florida geography saw some the economic stress earlier and so, we feel better about how we are positioned relative to the timing of some of those economic deterioration trends that we saw in the geographies, coupled with the aggressive nature of the fourth quarter credit actions that we also took.

This is Jeff. One last thing I think I have just noticed that our reserve levels are very strong and in the sense that reserves there are the cut to absorb losses. Our reserves are about 150% of our first quarter annualized charge-offs, not many of our peers would have reserves that are better that much or that strong relative to the charge-off levels.

Then just one short follow-up, the NPAs went up by one-third even with the big fourth quarter clean up just I know you covered some of this, but just a short reason why that was the case?

The overall non-accrual trends that we saw in the consumer book were actually very, very good. The growth was actually almost flat exclusive of the loan modification activity that we saw and in terms of the areas, where we saw a little bit more weakness in the portfolio. As you would expect, there is still kind of two primary reasons for the weakness. One would be some of the additional deterioration in the real estate performance that we’ve seen and then in addition, we’re also focus to looking at some of the other industries that would have more of a correlation to the general economic trends, and we saw some of the trends there in terms of the projected non-accrual growth.

You’d mentioned industries with consumer spending in commercial. What did you mean by that, which industries?

Any industries that would have a more direct correlation to the deterioration in economic trends that would affect the customers discretionary spend. So, to that example one of the things we’d look at as an example would be the accommodation and food industry. To the extent that there is a much more direct correlation to the customer’s discretionary spend, we are seeing a little bit more weakness in that kind of an example.

Being outside accommodation do you mean like food and hotel or…?

Yes. Restaurants, hotels

Okay. All right, thank you

There are no further questions at this time. Are there any closing remarks?

I’d just like to thank everybody for the time this morning and have a great day.

This concludes today’s conference. You may now disconnect.