Good morning. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bank Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Richardson. Sir, you may begin your conference.

Thanks, Rebecca. Good morning. Today, we'll be talking with you about our second quarter 2012 results. This call may contain certain forward-looking statements about Fifth Third 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 some of these factors in our forward-looking cautionary statement at the end of our earnings release and in other materials, and we encourage you to review them. Fifth Third undertakes no obligation and would not expect to update any such forward-looking statements after the date of this call. I'm joined on the call by several people, Kevin Kabat, our President and CEO; Chief Financial Officer Dan Poston; Chief Credit Officer Bruce Lee; Treasurer Tayfun Tuzun; 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?

Thanks, Jeff. Fifth Third reported strong second-quarter results that followed a very strong first quarter as well. Net income to common shareholders was $376 million, and earnings per diluted common share were $0.40, up 14% from a year ago. As outlined in the release, EPS results included $0.04 of benefit from gains in the warrant we hold in Vantiv, as well as the effect of seasonally high -- higher income tax expense, which reduced quarterly earnings by about $0.02. So earnings strength was also very evident underneath the headline results. Second quarter return on assets was 1.3%, and return on tangible common equity was 14%. Despite a sluggish economic environment, core trends in our operations remain favorable, as evidenced by solid loan growth, continued revenue strength, particularly in mortgage banking, and our ability to manage expenses during the quarter. In addition to mortgage, other revenue growth drivers included card and processing revenue, up 9% on higher transaction volumes, and corporate banking revenue is up 5% during the quarter, as lending volumes and associated business production remained healthy. We continue to generate solid loan growth, particularly in C&I loans, which were up 4% sequentially on an average basis. Average portfolio loans were up 6% from a year ago, driven by a 17% increase in both C&I and residential mortgage loans. Expenses were down 4%, reflecting both continued careful expense management and the benefit of a couple of unusual items. As a result, PPNR results were again very strong and north of 2% of assets despite the current interest rate headwinds for the industry. Credit trends also continue to improve. Quarterly charge-offs of $181 million were down 18% sequentially and 40% from a year ago, the lowest level we've seen since the end of 2007. And net charge-off ratio was 88 basis…

Thanks, Kevin. I'll start today with Slide 4 of the presentation. As Kevin discussed, second quarter results were strong, driven by favorable mortgage banking and corporate banking revenue results, continued expense discipline and lower charge-offs and provision. For the quarter, we reported net income of $385 million and recorded preferred dividends of $9 million. Net income to common shareholders was $376 million and diluted earnings per share were $0.40. Second quarter results included $56 million in gains on Vantiv warrants, or about $0.04 per share on an after-tax basis. Earnings were reduced by $19 million or about $0.02 per share from the seasonal effect of stock options expirations on income taxes. There were a number of other unusual items which we outlined in our release, which more or less offset one another from an earnings perspective. You'll recall that first quarter earnings per share of $0.45 included several income items related to Vantiv, that together contributed a total of $127 million in fee income for the quarter, or about $0.09 per share on an after-tax basis. All in all, we saw good momentum this quarter really across the whole company, which was born out in our earnings results. Taking a look at Slide 5, tax equivalent net interest income increased -- excuse me, decreased $4 million sequentially to $899 million, and the net interest margin decreased 5 basis points to 3.56%, both of those in line with our expectations. The decline in net interest income was primarily driven by asset yield compression in the securities portfolio in the loan book, but was partially offset by the net loan growth. Vantiv's refinancing in March reduced NII by $2 million, and higher purchase accounting incretion increased NII by $2 million. Interest expense declined as a result of lower hedge ineffectiveness and a…

Thanks, Dan. As Kevin mentioned, we had a really good quarter in terms of continued credit improvement. Certainly, it is the best overall level of credit performance for Fifth Third since 2007, prior to the financial crisis. Starting with charge-offs on Slide 11. Total net charge-offs of $181 million declined $39 million, or 18%, from the first quarter and $123 million, or 40%, from a year ago. Commercial net charge-offs of $78 million declined 24% sequentially and 45% from last year. The 67 basis point of losses was the lowest level recorded since the fourth quarter of 2007. We saw improvement in C&I net charge-offs, down $8 million sequentially and in commercial net charge-offs down $5 million. However, the biggest improvement was in commercial construction net charge-offs, which were a net 0 compared with $18 million last quarter. I would also note that our home builder portfolio balances are down to $376 million, less than 12% of peak levels and representing less than 1% of total loans. Commercial lease charge-offs increased to $7 million due to 1 large charge-off that accounted for the entire amount. Total consumer net charge-offs were $103 million, down 13% sequentially and 37% from a year ago. Improvement was broad-based and reflects underlying trends in overall consumer credit environment and the impact of our previous portfolio management actions. All in, it was a good quarter for us from a credit perspective, and we continue to see steady improvement across our loan portfolios. Looking ahead to the third quarter, we currently expect net charge-offs to be down about $10 million or so. Now moving to nonperforming assets on Slide 12. NPAs, including those held for sale, totaled $1.7 billion at quarter end, down $111 million, or 6%, from the first quarter. Excluding held for sale, NPAs were…

Thanks, Bruce. As Dan and Bruce outlined, it was another strong quarter for Fifth Third. Our core businesses continued to perform well and have good momentum as we head into the second half of the year. Credit results also continue to trend favorably, and I appreciate the focus, the hard work of employees this quarter as we move forward. So that wraps up our remarks. Rebecca, can you open the line for questions?

[Operator Instructions] And your first question comes from the line of Paul Miller. Paul J. Miller - FBR Capital Markets & Co., Research Division: Yesterday, there was a couple of your competitors who were on a call said that Ohio, the Midwest, is some of the most competitive pricing out there for commercial loans. I was wondering if you could add some color to that?

As we talked about last quarter, I think that comment was made by competitors as well. And from our standpoint it is competitive. It continues to be competitive, although we feel like from our perspective and the growth that we've had that -- and as we mentioned, in terms of our comments earlier, pricing on new productions have been relatively stable, and we feel pretty good about kind of the value we're getting for prices paid from that perspective. So again from our standpoint, it is competitive out there. We're being disciplined, I think, and sensible, in terms of where we're targeted and where we're focused, in competing, I think, you see that relative to our commentary on the indirect auto paper, for example. But we feel really good about the value we're creating long-term for shareholders with the new business we're putting on at this point. Paul J. Miller - FBR Capital Markets & Co., Research Division: And just a quick follow-up, have you seen any slowdown in activity or loan demand given the recent news reports about the fiscal cliff and troubles in Europe, or is it the Midwest a little bit different?

What I'd tell you Paul is that we still see good solid growth. Our production continues to be good. Our pipelines continue to be good. We have seen some of the higher quality, larger credits going to the capital markets where they can refinance debt at historically low levels, but production continues to be good. I think there is generally a consensus out there and a tone of cautiousness in the marketplace. And I think people are watching and paying attention to what's going to happen later this year and some of the resolution of some significant issues that will have consequences on the economy directly in the first part of next year. But again from our standpoint, we're still seeing good activity to drive the momentum that we've had continuing.

Your next question comes from the line of Todd Hagerman with Sterne Agee. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Bruce, just a question on credit and your outlook, if you will. I think you mentioned that in terms of the credit quality improvement, it seems to be accelerating more than what you would expect it at this stage of the game. As I look at the metrics, NPL seemed to be stabilizing a bit, the reserve really seems to be slowing down, and your new NPLs ticked up a bit this quarter. I'm just curious, given that scenario, are we close to kind of reaching an inflection point as it relates to kind of provisions and the reserve release, which did slow this quarter relative to Q1?

First of all, I think we are starting to see a little bit of an inflection between the NPLs, although we think they will continue to decline next quarter, charge-offs will continue to decline as well. Reserve release is formula-driven. It clearly depends upon what our past history was, economic outlook, and we would expect to see continued release, although we do believe the pace will probably slow as the balance sheet continues to grow and we put more new loans on the sheet. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. In terms...

I think an inflection point suggests turning the other way, and I think what you've seen over the last 2 years and I think what we expect is consistent with that, which is improvement continues, the pace can't -- either pace must slow. But I don't think we're near an inflection point so much as we're just staying at continued improvement, but at a pace that reflects having gotten lots of problems behind us. But we still got more that we'll be able to get resolved in the future. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Right. And again, the point being just in terms as I look at the balance sheet growth relative to the stabilization, some of the credit metrics, that it appears that yet again that reserve release would intuitively begin to slow at this stage of the game?

Yes, I think that's fair. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: And then just quickly on the mortgage side, could you just quickly on the statistics in terms of just the gain on sale margins, again, expanded this quarter. Just curious kind of if you can make the comparison Q1 to Q2, exactly kind of what you're seeing relative to the production in the mix?

Sure. So overall, our mortgage results continue to be at near record levels, driven by low interest rates in the HARP program. We saw really good results and we ramped up quickly to take advantage of the refi wave in the fourth and the first quarters. This quarter, I think we saw a continuation of similar results. From a spread standpoint, I think our margins for the quarter were up probably 40 to 50 basis points. That was driven by a number of things, the market conditions were very favorable, obviously. We were also able to shift some of our capacity to the retail line of business, to the HARP program and less of our capacity was allocated to the wholesale channel. So that had a positive impact on margins overall as we shifted some of that volume to the more profitable segment of the business. As I mentioned earlier, we ramped up pretty quickly in the first and -- or in the fourth and first quarters, and probably captured more than our fair share of business during that period of time. I think the environment has gotten more competitive as rates have continued to move lower and others have ramped up their capacity and that competition shows both in terms of competition for business as well as for personnel. So as we go forward, I think we expect volumes in the third quarter, as we mentioned, to be slightly higher, and perhaps that to have a slight dampening effect on overall margins. But for margins continue to remain very, very strong and for overall results to be slightly stronger in the third quarter than in the second. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: So that, I'm assuming that implies not much change in terms of the rate environment, in terms of your outlook?

That's correct.

And your next question comes from the line of Erika Penala with Bank of America.

Actually Stephen Austin on behalf of Erika. Just a couple of questions on your NIM, I just wanted to kind of talk a little bit about big picture. I know -- I appreciate the guidance on the second half, and I know you've got some room on the CD repricing as well as the TRUPs in the third quarter. And I'm just wondering kind of further out, is there anything you're thinking about that kind of offsets some of the pressure that we're likely to see given the likelihood of lower for longer on rates?

I think for the last sort of 2 or 3 quarters, we've talked about the fact that it's difficult to fight yield compression with sort of actions other than growing your earning assets, and that remains the most powerful tool to keep NII stability. We continued obviously, to manage the liability side of the balance sheet, and there are always opportunities. If this lower rate environment continues, we will see those opportunities. We've seen those in Q1, we've seen those in Q2, and I suspect that there will be further opportunities beyond just the redemption of trust preferreds on the liability side. On the asset side clearly, the fight is against sort of repricing, higher coupon loans and higher coupon investment securities. And there unfortunately, we don't expect the rate environment to change between now and year end, as we see sort of the continued Fed's commitment to keep rates low, potentially executing another QE, which may include keeping the rates low beyond their current plan. So in that environment, I think again, the best tool remains growing loans, growing your earning assets prudently and managing NII.

Okay. And nothing else out there like a swaps expiring or anything else we should be thinking about?

Nothing big.

Okay. And then just kind of a quick question on post the Visa and MasterCard settlement and the temporary reduction on the interchange. Do you guys expect any impact from that?

Well, there will obviously be an impact that will apply to us as well as others in the industry. It is a relatively modest reduction, it's 10 basis points. And it relates only to credit card interchange not to debit card interchange. So it does have an impact on us, but we expect that to be relatively modest.

And there are no more questions at this time.

Okay. Thanks, everyone, for your call.

This concludes today's conference call. You may now disconnect.