Good morning. My name is Kenya and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp fourth quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. (Operator Instructions) Mr. Richardson, you may begin your conference.

Thanks. Hello and thanks for joining us this morning. We’ll be talking with you today about fourth quarter 2009, and full year 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’ve identified a number of those factors in our forward-looking cautionary statements at the end of our earnings release and in other materials and we encourage you to review those factors. Fifth Third undertakes no obligation and 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 on the call by several people, Kevin Kabat, our Chairman, President and CEO, Chief Financial Officer, Dan Poston, Chief Risk Officer, Mary Tuuk, 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 will turn the call over to Kevin Kabat. Kevin?

Thanks Jeff. Good morning everyone and thanks for joining us. I’ll make some opening comments and then hand the call over to Mary and Dan for a more detailed discussion of our credit and financial performance. For the past two years credit trans of dominated our results they secure positive developments resulting from our continued focus on our strategic plans and core operations and while credit remains difficult and its impact remain significant very pleased with the improvement in trends we saw on the fourth quarter. Charge-offs was $708 million down $48 million from last quarter and NPA’s up just 1%. Total delinquencies were down 33%, including early and late stage. Those are welcomed improvements from recent trends. We saw a drop in commercial net charge-offs from the third quarter, which as you’ll recall, included the effect of the annual shared national credit exam. We expect commercial charge-offs to decline significantly in the first quarter and overall improved performance for all of 2010, as new problem assets generally have lower loss content than what we’ve been dealing with the past 12 months or 18 months. We also made great progress in dealing with commercial delinquencies this quarter. Loans 30 to 89 days past due were down 46% sequentially and loans past due 90 days or more were down 68% sequentially. This represented both improved flows during the quarter, as well as the efforts of our commercial banking and special asset groups to address delinquencies, get them resolved and current or to further the workout process. Commercial non-performing assets were down about 1% in the quarter, which was the first drop we’ve seen in quite sometime. We do expect commercial NPA’s to increase in the first quarter, but we continue to believe the general trend is slowing. NPA inflows are continuing…

Thanks, Kevin. As Kevin mentioned, overall credit trends were better than expected. Let me walk through results, starting with charge-offs. Total net charge-offs of $708 million decreased $48 million sequentially. Commercial net charge-offs declined $32 million to $468 million from $500 million last quarter. As you’ll recall, third quarter charge-offs were elevated due to higher losses related to the Shared National Credit exam. Florida and Michigan continued to represent a disproportionate share of charge-offs and while Florida will remain a challenging market for sometime, parts of our Michigan portfolio have begun to show signs of bottoming out. C&I net losses this quarter totaled $183 million, down $73 million with a sequential decline attributable to a broad base of industry segments and the effect of the SNC exam in the third quarter. Michigan and Florida accounted for 52% of C&I losses during the quarter, while representing 23% of C&I loans. Commercial construction net charge-offs were $135 million, up $9 million, with Michigan and Florida generating 61% of losses. Commercial mortgage losses of $142 million increased $24 million from the third quarter, with Michigan and Florida contributing 56% of losses. Across the portfolio, homebuilder developer losses totaled $110 million, which was flat versus the third quarter. You’ll recall that we suspended homebuilder originations two years ago, have already recognized significant charge-offs in that portfolio and worked to reduce our exposure. Portfolio balances are $1.6 billion, less than half of their peak levels. We expect losses there to comedown, given the work we’ve done on that portfolio. As Kevin touched on earlier, our current expectations are for commercial charge-offs to comedown again in the first quarter. While commercial charge-offs can be somewhat lumpy, we believe they will be down about $100 million in the first quarter give or take, from $468 million this…

Okay, thanks, Mary. As Kevin noted, while this quarter still reflects a difficult environment, we did see significant progress not only on the credit front, but in operating results as well. For the quarter, we’ve reported a net loss of $98 million and paid preferred dividends of $62 million, which resulted in a loss of $160 million on an available to common shareholders basis. Last quarter, our net loss was $97 million, or $159 million to common. Excluding the effects of Visa, on a core basis, the net loss last quarter was $303 million, compared with this quarter’s $98 million net loss. That $200 million after tax improvement was driven by three factors. The first was a lower provision, which was down $176 million pre-tax, reflecting both lower charge-offs, as well as a lower reserve bill. The second was lower credit related cost in revenues and expenses, which was down $60 million pre-tax., and then the third was our favorable operating trends. As Kevin and Mary noted, we expect the first quarter charge-offs to come down again and we don’t expect much of a reserve build, if any next quarter, beyond the effect of FAS 166 and 167. So, we’re currently expecting earnings trends to improve again in the first quarter as we move closer to turning that bottom line positive. Some of the major themes for the quarter outside of credit were continued net interest margin expenses, lower credit related costs, and strong deposit growth. Net interest margin increased 12 basis points sequentially to 3.55%. As with previous quarters, the expansion was driven by maturities of high rate CDs put on the sheet in the fall of 2008. Net interest income was up $8 million, or 1%, with the margin benefit of strong deposit growth offset by asset growth…

(Operator Instructions) Your first question comes from Craig Siegenthaler - Credit Suisse.

Some more detail on the commercial side, where we’ve seen a pickup in restructured loans and has this been a shift in strategy in terms of becoming more aggressive restructured commercial loans, or is this really the lag nature of the serial lost cycle?

Craig, sorry, we could not hear the first part of your question. Could you repeat that? I’m sorry.

Sure. Can you guys hear me better? I just switched to speaker. What I was asking about is restructured loan trends. We seeing it kind of now what’s going on the consumer side, we’re on the commercial side, that’s been picking up recently. What I want to know is if that was really a function of regulatory pressure or maybe a change in strategy, if there’s something more kind of near term, or is this just really the aging in the serial lost cycle? Meaning, you have more potential problem loans on the commercial real estate side so, it’s more potential to restructure them?

Yes, Craig, I would characterize it really more in alignment with how we’re working through the cycle. We continue to evaluate opportunities for restructuring on the commercial side on a case by case basis, where it makes economic sense. One of the specific characteristics that are important to that decision is the amount of cash flow that’s available behind that credit. So in earlier stages of the cycle, where we had situations that were more purely collateral-dependent, it wouldn’t make sense. As we move through the cycle, we will continue to see additional opportunities for that kind of restructuring on a case by case basis, given the characterization of the types of credit workout situations that we’re working through right now. So, there’s no regulatory pressure behind it pre say it just a general reflection of our business strategy.

Is there any capacity constrain from restriction loans like man power, people power, work out team, or regulatory pressure, now is in favor of more share we workouts we saw last quarter. Is there any constraint there?

The regulatory guidance that was issued last quarter, we felt was really in alignment with how we would view these situations anyway, so again, no specific callouts from that perspective. In terms of our staffing and resources, we’ve been very aggressive in making sure that we’ve got appropriate staffing levels to work through our issues and we continue to evaluate and monitor that closely, as we continue to move through different stages of the cycle, but we’re well positioned in terms of our overall staffing capabilities.

Your next question comes from Matthew O’Connor - Deutsche Bank. Matthew O’Connor - Deutsche Bank: You provided some commentary in terms of how you’re thinking of the securities book and wanted to stay relatively neutral. I guess my question is, if you look on a period end basis, there’s a big increase in the security book and I know there’s always a lot of excess deposits at quarter end. So, is that more indicative of the securities level going forward, or is it kind of artificially high on a period end basis?

Hi, Matt this is Dan. I think if you look at the investment securities balances, there are some investment balances that are impacted by quarter end liquidity. Those would tend to show up in the line other short term investments and that primarily just represents excess cash most of which is just held of the fed. If you look at the available for sale and held for maturity investment, securities balances, those are up about $2.5 billion and I think those are the increases that would tend to be more permanent and represent additional investment made during the quarter, along the lines of the comments we made in our prepared remarks. Matthew O’Connor - Deutsche Bank: I guess one concern that a lot of us have is that some of the deposit growth in the industry isn’t going to be as sticky as we’ve seen in the past so that the deposits were priced more than expect its rate rise and then some of you fixed rate assets that are being added, the securities book in all funding cost go up pretty meaningful and so I guess I’m just wondering how you think about deposit for pricing and, how you balance some of those risks?

Yes, I think those are clearly risks that we’re focused on as well. I think there are certain portions of the deposit gains that we’ve made that won’t be sticky we alluded to some of that with respect to public deposits in our comments. We’re mindful of that. That’s incorporated into our interest rate risk, management and on an overall basis, we remaining in a fairly neutral to slightly asset sensitive position. We’ve done that very thoughtfully. We added to some hedge positions during the quarter, which offset some of the impact of the securities that we’ve added in order to make sure that we maintain that position. So, we’re very mindful of the risks you’re talking about and we’re proactively taking steps to make sure we address those risks.

Matt, this is Kevin. The other thing I would mention is we feel very good about being out in front of it strategically, both in terms of really on both sides of the business, from a retail standpoint, as well as a commercial standpoint, which really calls for a lot of focus from our people recognizing the full value of the deposit relationship as we go forward from that standpoint. As well as, as Dan talked about in his comments, some of the strategic shift we’ve already begun with the bundling offerings and the value added services that we’re providing from that standpoint. I think that’s a pretty good start for us in terms of anticipating exactly the concerns you have. Matthew O’Connor - Deutsche Bank: Then just separately, if I can the regulatory impact on NSF and credit card, do you have a preliminary estimate of what that might be?

Well, obviously that situation’s fairly fluid and there are a number of things that aren’t final there. We did make some comments about the deposit fee trends this quarter and expectations next quarter and certainly that incorporates our views as to the impact of the anticipated impact of regulatory changes and from a bigger picture perspective as we go forward, our thoughts on deposit fees are that, beyond the impacts that we alluded to in the fourth quarter and first quarter, that any impacts would be offset by account growth going forward. So, relative to a specific estimate of that the overall impact of regulatory changes, I don’t think we’ve made a specific estimate of that that we’ve disclosed, but I think we are incorporating that into the guidance that we’ve talked about in the comments that we’ve made.

Your next question comes from Todd Hagerman - Collins Stewart.

Kevin, I was just wondering if you could just give us an update in terms of your thoughts on capital levels and repayment of TARP. As you know, recently there’s been seemingly a little bit more pressure from the government to have some of the banks, return the treasury money, but I’m just curious, kind of given your more favorable outlook, particularly as it relates to credit and the healthy capital levels that you have now, as well as kind of your update on the EPS cap results, kind of where you stand now in terms of capital and your thinking on repaying TARP and if it includes kind of a 2010 time line.

Todd, I guess from my standpoint, what I would tell you are we continued to evaluate our environment. We continue to have dialogue. I would tell you we don’t feel any pressure, except that we have a number of constituents with differing objectives and we feel good about the continuing improvements in our results and our capital levels, the environment, as we kind of highlighted for you today. What our objectives continue to be is to resolve TARP in a way that’s thoughtful and considers all of our constituents, including our shareholders and it remains a corporate priority. So, from my standpoint in terms of what we’ve discussed late last year and even into at this point we still feel about in the same position from that perspective and as we get better clarity on what expectations we feel would be the right way to handle it, we’ll communicate that, but we don’t feel a pressure at this stage really other than focus on continuing to do the things we know add value for the company at this point so.

I mean is it fair to assume, though again assuming the trends that we saw this quarter continue, that, it’s certainly possible that the TARP would be repaid in 2010?

Yes, Todd, I think that’s a fair statement. Again if expectations continue and we continue to improve and the environment continues to improve, I think that’s a fair assessment.

Your next question comes from Chris Mutascio - Stifel Nicolaus.

My question, you gave pretty explicit guidance and I appreciate that in terms of what first quarter may look forward to in terms of margin, fee income and revenue and getting to a pretax, pre-provision line item of roughly 530. I know that’s just for a first quarter and might be seasonally low, but that implies in order to breakeven that your loss rate would have to go from the 365 charge-off rate you had this quarter, almost down 100 points to about 265 in order for the pretax pre-provision earnings to cover losses. Is that a reasonable target to get down to 26 in terms of net charge-offs in 2010?

I didn’t quite follow the entire match.

Well, I guess if you supply, you can back into what the loan loss provision expense to get below 530 and your loss rates, if you do a back of the envelope on $80 billion of loans, your charge-offs would have to drop 2.6% of loans in order for provision expense to drop down and match charge-offs provision expense to get to 530. You’ve talked about improvement in 2010 can we see that good of improvement in losses for 2010?

Yes, I mean I think on an overall basis. Mary made some comments relative to our baseline expectations for the year, would be for charge-offs to be lower and I think from a big picture perspective, I don’t think that the levels that you’re talking about there are something that would be unreasonable as an expectation right now.

We indicate in our remarks, we expect charge-offs to be over the $2.6 billion. The other thing I would just add, we also indicated that we expect PPNR to bounce back in the second quarter to above this quarter’s levels, which were 560.

I wasn’t talking about $2.6 billion. I was talking about 2.6% in charge-offs. Can you give more color on the tax? It looks like there was a fairly significant tax benefit and if you’ve talked about this in the call, forgive me, there’s four different banks reporting this morning, but the tax rate was pretty significant on that. Any more color going forward?

I think the quarterly tax calculations I think in an environment like the one that we’re in can get to be a little complex in the tax. The taxes that are recorded each quarter really reflect an estimate of what the year end overall tax, tax rate will be depending on levels of taxable income and that’s impacted by credits and permanent items, which have a bigger impact on the effective rate, depending on how much income you have. So I think our overall tax provision this quarter, it was really reflective of just working through those year end calculations and is kind of the final true up for the year, there was not any significant adjustments included in there. We did have some significant period items related to leasing litigation and bank owned life insurance that were in the first quarter that impacted the overall effective rate for the year and contributed to a very low effective rate overall. I think as you look forward, the best way to look at our taxes is that we have about $100 million in tax credits that we would anticipate for 2010 and then our marginal tax rate on income that we earned is about 36%. So depending on the level of income, if you put that $100 million in tax credits with a provision of 36% of expected income, you would come up with a tax rate that won’t be 36%, would likely be less than that given the impact of the credits, but exactly what that rate would end up being will be a function of what taxable income for the year end would be.

Your next question comes from Paul Miller - FBR Capital Markets.

Given the fact that your capital levels have improved and credit’s getting better and you have talked about in the past about doing FDIC assisted transactions. Have you started to get more involved in that? Have you studied that more or you just haven’t seen anything that’s come out to interest you at this point?

Paul, this is Kevin. As we’ve talked about in the past, FDIC deals could be interesting, could make sense to us as long as, they fit with our existing franchise financially. As we talked about in terms of kind of the internal qualitative measure is really, these transactions involve significant amount of workout resources and those folks for us, as we reported today, are doing important work for us right now. So as we see that balance load continue to improve and shift, which would give us capacity that would be in my mind, the driver in terms of increased appetite and interest from our standpoint. So that’s really kind of the whole way we’re looking at it right now, Paul.

The other issue, I mean I don’t want to put you on the spot here, but you definitely got great credit trends and you’re in some of the toughest states, being Michigan and Florida, your operations in the country unfortunately. Have you seen improvement in the unemployment rate? That’s some of the things that we like to look at or is it just that you’re seeing stabilization in businesses and stabilization with your customer base, but not necessarily stabilization with the job growth in the areas that you’re in?

I guess, Paul, you would like to put me on the spot, but the way I’d respond to that, if you look at it across our footprint, we’re not seeing improvement yet, but we are seeing some stabilization. I think that’s the key element for us in those markets specifically that you mentioned. So I think that’s relevant to us at this point in the cycle.

Your next question comes from Dennis Klaeser - Raymond James.

Two related questions with regards to loan loss reserves. When you look further out into 2010, would you expect you would get to a point where the provision expense would be less than the charge-offs? Then secondly, longer term what would you think I think would be a good ballpark estimate for your normalized level of loan loss reserve to total loans?

As we’ve indicated in our earlier prepared comments, what we’re seeing at this point clearly would be significant improvement in the credit trends as we’ve discussed. We also talked about a very large build that we’ve made to the reserve in prior quarters. So at this point, although there may be some build left to the reserves, we would see it as being much less significant. In terms of the actual timing of that, that’s still to be determined. Clearly, we have to look at that in the context of a number of different factors, but we do definitely see a trend of much less significant build and just don’t have an exact time line for that yet.

Yes, I would add in response to the second part of the question relative to what we would anticipate that reserve allowances being going forward on a more normalized basis, of course those determinations need to be made at the time based on the condition of the portfolio and economic conditions at the time. Historically I guess for some context, that figure in more normalized times has ranged from about 1% to maybe 1.4%, or 1.5% in more normalized times. I know that’s a pretty wide range, but I think that’s probably pretty good historical perspective to base expectations of a normalized future on that.

Again, I know it’s difficult to predict and you got to put yourself in that position at that point in time, but that level could be a 2012, 2013 type level?

Just too early to call, Dennis, we love to be able to tell you exactly, and I will once we’re perhaps in a quarter or two, but too early to call.

You may have mentioned this earlier, but in terms of the competition of a loan loss reserve now, what portion of it is a specific reserve versus the fast five reserves?

I don’t have those numbers in front of me. I think the specific reserve portion of that is a much lower portion that the lion share of that reserve is the kind of FAS 5 kind of reserves. The 10-Q, when we file it, will have a fair amount of detail about the components of the reserve that frankly I just don’t have with me right now, but the specific reserves are relatively small, probably 10% or less of the reserve.

Your final question comes from Heather Wolf - UBS.

Just a couple of questions on credit, Mary, you mentioned that you do expect redefault rates on modifications to accelerate. Do you have any feel for where those might peak out or what you guys are forecasting for that level?

We haven’t forecasted any specific peaks per say, but what we are looking at is general trends, particularly with respect to loan modification activity in our mortgage portfolio. So as we look at that, clearly we have done quite a bit of that activity really since inception of the program. We continue to make sure that our loan modifications make good business sense, but also meet the needs of the borrowers at the same time. As you would expect, there would be some natural re-aging effect that would come out of that, and as we look at what that effect might be, we will continue to evaluate and analyze to make sure that the activity that we do continue to engage in would make best economic sense for the bank, as well as for the borrower.

Do you have a quantification regarding principal forgiveness on those modifications you’ve done?

We would very, very rarely forgive principal. It’s highly unusual.

Heather, just to be clear in terms of your question, we’d expect our performance on a percentage basis to continue and we’ve been pleased with that. The dollars will be greater because the pool’s greater.

So you don’t expect the rate to accelerate, since the dollar value of redefault.

At this point, we do not.

Just to give you some additional context on that, our redefault rates right now are inline with the industry, with a regard of different measures we employ to evaluate the effectiveness of the program.

Then one quick question on C&I, so excluding commercial real estate and commercial construction, I know that this is traditionally a pretty volatile category in terms of migration. What gives you guys the confidence in sort of the pipelines that you see that we won’t see a, another pickup in C&I losses or non-performers?

There are a couple of different factors that we look at. Clearly one factor would be the overall economic trends within the footprint. We also would evaluate whether we’re seeing any particular themes in certain industry segments within the C&I portfolio, and actually in the past, we have called out a couple of segments of the portfolio more specifically as we saw those segments driving higher losses. The best examples of that being real estate related industries within C&I, as well as the dealer portion of the portfolio. We’ve continued to see improvement in those areas and so as we look at the economic factors, as we look at the industry segments, we don’t see any particular theme coming out from an industry standpoint. There’s a fairly broad base that we look at. So at this point in time, that would be some of the consideration that would give rise to our comments. The other thing I would point out in terms of loss severities, there’s really kind of a descending priority, if you will with regards to loss severities, starting first in the commercial portfolio with the nature of the construction product and/or the homebuilder portfolio, looking then at other elements of the non-owner occupied portfolio going from there to the owner occupied portfolio. Then finally going to the CNI portion of the portfolio and because of the characteristics of the C&I portfolio, even as we may still see some additional stress there, the expectation would be that the loss severities in that portion of the portfolio would be far or less than what we experienced earlier in the cycle.

Thanks, everybody. I believe that ends our call. So, we appreciate it and we’ll talk to you next quarter. Thank you.

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