Good morning. My name is Bradley and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp Earnings Conference Call. [Operator Instructions] Mr. Jeff Richardson, Director of Investor Relations, you may begin.

Thanks, Bradley. Good morning. Today, we'll be talking with you about our first quarter 2013 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: Our CEO, Kevin Kabat; and CFO, Dan Poston; as well as President, Greg Carmichael; Greg Schroeck from Credit; Tayfun Tuzun from Treasury; and Jim Eglseder from 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. Good morning, everyone. Fifth Third reported first quarter net income to common shareholders of $413 million and earnings per share of $0.46, was up 7% over last quarter and 2% from a year ago, which included Vantiv IPO results. Earnings this quarter included a benefit from a higher valuation on the Vantiv warrant and net securities gains partially offset by a higher tax rate from the expiration of options and a couple of other smaller items. Dan will discuss these in more detail in his remarks. Those items in total net to about $0.02, a positive impact on the quarter. Quarterly earnings a year ago included $0.09 in benefit from Vantiv's IPO. Excluding Vantiv in both quarter -- in both quarters, year-over-year earnings per share increased 22%. Return on assets was 1.41% and return on tangible common equity was 15.4%. In addition, tangible book value per share increased 2% sequentially and 8% from a year ago despite the impact of share repurchases. Average sequential loan growth was 2% with particular strength in C&I loans, which were up 6% versus last quarter. Total loan growth from a year ago was 5% despite continued modest runoff in commercial real estate and home equity. C&I and residential mortgage loans increased year-over-year by 16% and 12%, respectively. Period-end loans were reduced by a $500 million auto securitization and a $60 million jumbo mortgage sale in March. Loan growth was less robust than last quarter as expected, given normal seasonality in the impact of tax law changes that drove some of the year-end activity. Nevertheless, we still produced solid loan growth in the quarter and it should stack up pretty well. We continue to invest in our lending businesses over the past several years and to improve and leverage a core strength at…

Thanks, Kevin. I'll start with Slide 4 of the presentation and we'll discuss balance sheet, income and credit results for the first quarter before turning to the outlook for the end of my remarks. Overall, it was a strong quarter for Fifth Third. Earnings per share were $0.46, up $0.03 from last quarter. First quarter results included a $34 million positive valuation adjustment on the Vantiv warrant, which was about $0.025 per share on an aftertax basis. There were a number of other items affecting results, including a seasonally high tax rate and investment securities gains, which essentially offset one another. Those items are outlined in our release and I'll note them where applicable in my comments. As Kevin noted in his remarks, earnings per share increased 22% from a year ago, excluding the $0.09 benefit from Vantiv in the first quarter of 2012 and the $0.02 benefit this quarter. Turning to Slide 5. Tax equivalent net interest income decreased $10 million sequentially to $893 million and the net interest margin was 3.42% versus 3.49% last quarter. Those results were a bit better than expected, largely due to higher-than-expected mortgage warehouse balances and rates on those assets. The decline in net interest income was driven by a $12 million negative impact from 2 fewer days in the quarter. Additionally, repricing in the loan and securities portfolios contributed to the decline in NII, partially offset by the benefit from net loan growth during the quarter. Lastly, the full quarter impact of the FHLB debt termination in December provided a $9 million benefit to the sequential comparison. The decrease in net interest margin was driven by lower loan and securities yields, which was partially offset by a 3 basis point benefit from the fourth quarter FHLB debt termination and a 2 basis…

Thanks, Dan. I've been told that the webcast missed the first minute or 2 of our remarks. Just wanted to summarize that. During that time, Kevin summarized our overall results during the quarter, which I think Dan did a good job of addressing. I also observed that our forward-looking statements are subject to risks and uncertainties and encourage listeners to refer to our cautionary statement in the release. I understand that the replay will capture what was missed. Sorry about that. Bradley, could you open up the line for questions now?

[Operator Instructions] Your first question comes from Ryan Nash of Goldman Sachs.

To start off, in terms of the loan growth, you had a fairly strong quarter in 1Q relative to peers. Can you just give us a sense where the growth is coming from? Is it more from turning commitments into new client relationships? It seems that utilization still remains low and I guess when you think about the broader loan growth outside of C&I, can you help us just understand where you feel the most comfortable in terms of your expectations for the rest of the year?

Ryan, this is Kevin. I'll make a couple of comments in terms of where we saw it. I think we were explicit in terms of trying to tell you that the investments that we've made, particularly in energy, health care. We've seen it also in manufacturing as well as what we've continued to do in terms of some of the consumer space. All are continuing to add to our focus on loan growth, so we feel good about the investments made and seeing that. I would tell you that you're correct in that we haven't seen an increase in utilization. Our utilization rates are still relatively flat and have been for a long period of time. And so, it's coming from our taking more business as well as some additional extension within our clients. But really more in terms of the market share, we've been able to gather and gain through the investments that we've made of the focus on our strategic businesses. So that's where we see most of it. And again, we still feel good about while it was a little bit lighter than what we experienced in fourth quarter, fourth quarter was very, very strong. We still feel good about where our pipelines are and some of the activity that we see in the markets today. We started the quarter off a little bit light and we feel like it's been building a little bit from that standpoint. So we feel, still feel good about our year-long guidance. I don't know if, Dan, if there's anything you'd add to that?

No, I think the only other thing I would add is that Kevin mentioned some of the industries that showed some strength. You were asking, Ryan, kind of where we felt most comfortable, where we were seeing good results. I think it is pretty broad based, not only on an industry basis, but also on geography basis. I think virtually every one of our markets showed positive loan growth this quarter. So I think it's pretty broad based across markets and industries. The only other area I think where we have made investments and we've seen strength is in the mid-corporate area. We improved or invested in resources in that area in terms of RMs and also invested to increase our capital markets capabilities, which are important to customers in that size range. And we continue to see very strong results in the mid-corporate area, which is good for loan growth, but also good for generation of fee income.

Great. And If I could just ask one question on the mortgage business. Just wanted to get a little bit more color on the outlook. It sounds like the near-term trend should be pretty consistent and we could potentially see it tapering off later in the year. Can you just give us a sense, I know you talked about mix shift as what's driving lower margins. But can you just give us a sense of how much of your mix shift played in to the decline in your margin and when you think about gain on sale, it looks like it's roughly 2.3%. Where do you see that eventually leveling off over the next couple of quarters?

Yes, Ryan, we did see, like everyone, I think, margins contracts pretty significantly in the first quarter. Some of that was due to mix change. I think a much larger factor was the rate environment. I think, particularly early in the quarter as secondary rates increased, we saw margins contract pretty significantly. Contributing to that, we did see some mix shift. So the percentage of HARP originations, I think, dropped several basis or several percentage points this quarter. And that had a slight negative impact on margin. But I think the bigger picture from a margin perspective is just the rate environment and not so much mix. As we go forward, I think we saw or we've seen margins firm up a bit later in the quarter. So while we expect relatively stable results first quarter and the second, it probably reflects slightly better margins perhaps slightly lower volumes. Volumes were strong in the first quarter. We had about a 5% or 6% increase in volumes as we increase from about $7 billion to $7.4 billion and that mitigated some of that margin compression. So second quarter, we think, well you heard our guidance from an overall basis maybe slightly better in terms of gain on sale. The rest of the year, a lot will be determined by rates. But based on kind of the current rate expectations, we would expect that perhaps volumes would begin to tail off as we go through the second half of the year.

Your next question comes from the line of Keith Murray of Nomura.

Can I just ask you, in the mortgage business, obviously, there's a lot of competition, a lot of new entrants trying to gain share. Are you seeing anything yet that would be a concern on underwriting? Or do you feel like, overall, it's still very high quality?

Yes, I mean the environment is competitive. I think that competition, I don't think manifest itself in lessening underwriting. I think all participants in the mortgage market now are very focused on underwriting very closely to GSE standards. That's something that, obviously, has gotten a lot of focus with the magnitude of put-back exposures that everyone is dealing with. So I don't think we've seen that competitive pressure manifest itself in deteriorating underwriting in any fashion at all.

Okay. And then as we think about the eventual, hopefully, someday increase in interest rates, how do you guys assume your deposit mix would change? Or do you assume you'll get some outflow on some of the deposits?

I think if the reason -- this is Tayfun. If the reason behind higher interest rates is economic growth, clearly, we would expect to see outflows on the commercial side as those depositors will find a better way to utilize their cash. On the other hand, I think we would expect the consumer space to be more stable. And as we move into that environment, I also would expect us to utilize our branch base very efficiently and maintain a good part of those deposits and if not, grow those deposits. That's our historical experience. We would expect that to play out the same way.

Your next question comes from the line of Erika Penala of Bank of America.

My first question is on the expense side. We really appreciate the detailed outlook. I guess I'm wondering if the production revenues on mortgage for the balance of the year in the second half come in lighter than expected or normalize more quickly, how much flexibility do you have on the expense base to minimize the impact on the bottom line?

Erika, I think in terms of the guidance that we've given, I think our expense guidance incorporates into it the expected decline in mortgage activity that we refer to in our guidance as well. If mortgage volumes come off more than our guidance suggests, I think we do have a tremendous amount of flexibility to adjust the expense base. As we built the mortgage business, I think we have done so with the idea that someday we would have to take down some of those costs. So a lot of our capacity from a mortgage perspective to deal with the refi boom comes from things like temporary labor over time, outsourcing some functions that enables us to react pretty quickly to changes and volumes and adjust the expense base accordingly.

Got it. And my follow-up question is actually a follow on to Ryan's question about your C&I growth. Should we interpret from your response to him that the lion's share of what drove the increase in C&I this year came from middle market rather than large corporate?

Well, I think overall, we saw growth across the board. I think the concentration in growth, I think, is probably in that mid-corporate and up space. I talked a bit about the impact of the investments that we have made in the mid-corporate area. So we've seen outsized growth in the mid-corporate area in this quarter and that would be expected to be a contributor to our growth as we go forward.

This is Jeff. Mid-corporate to us is -- middle market is kind of a big space and so this is the upper end of middle market that we're talking about when we say mid-corporate.

And what's the average loan size?

Mid-corporate's probably in the several tens of millions. 10 million-ish, kind of?

Yes, 30 million to 50 million, probably.

Your next question comes from the line of Brian Foran of Autonomous.

Not to be the dead horse on this corporate loan growth issue, but just with some of the other banks being pretty vocal around abstaining from the leverage loan market, I wondered if you could just kind of outline your activity there and maybe some of the investments you've made in people and specific protocols. Just kind of how do you think about doing that business differently and how should investors think about your approach versus the peer argument that maybe banks should just steer clear of leverage loans altogether?

The thing that I would tell you, Brian, is for the most part, our leverage lending portfolio, while we participate, is really not very large in this scheme of things. We're kind of a middle-market lender in the leverage lending space. And so we're not active in large corporate leverage lending, so we don't have a significant impact. The driver of our growth and the driver of what we've been bringing to the table is really around the investments that we've made in terms of different verticals. And you've heard us talk about the success we've had both in the health care space, the energy space, which we feel very good about the team and talent that we've lifted out this past year. We think we're on the early stages of seeing the benefit of that to us, so we think there's some legs there for us to continue to run with. And then also in -- that the manufacturing space, that's more broadly we're seeing impact of that and opportunity of that and particularly, in the upper Midwest part of our geography. We think we also will see some additional opportunity in the commercial real estate. We still see, as you've seen in terms of our reporting this quarter, a run-off in the commercial real estate portfolio. We think that at some point that levels out and begins to not detract from overall loan growth for us going forward. We're doing that business in very different way. We've got it, I think, in a much more disciplined and focused perspective, in terms of the way we're approaching it going forward. And we'd expect that we don't know when and we don't have the crystal ball in terms of the timing on it, but we are seeing more and better type of transactions in that space. So we think that, again, that might be an opportunity for us later this year to be contributory to the outstandings as well. So I hope that addresses your question, Brian.

One follow-up on -- and I apologize if I missed this already, but just as we think about the ROA guidance and the base that kind of apply that to -- should we expect assets to, I guess the disconnect I'm getting at, is loans were up this quarter, assets were down marginally. So your outlook for the medium-term net assets will just kind of bounce around in this $121 billion range? Or was there just kind of a 1 quarter swap out of securities cash and into loans?

Yes, I think in terms of total assets, I think that the assumption relative to total balance sheet size should probably be that it would increase consistent with what our loan growth guidance is. I think the fact that there was a disconnect on those this quarter is probably just a quarter-to-quarter average.

Your next question comes from the line of Ken Zerbe of Morgan Stanley.

Just wanted to talk a little bit about -- more about mortgage banking. Just if I can pin you down on the numbers here. So if you were $220 million this quarter, you think gain on sale was up $10 million to $15 million, you take out the $40 million from the hedging, you serve down to like the $190-ish million range. Is -- and then should we also be applying the reduction in volumes to that same -- or is that, I guess that might be incorporated in gain on sale. I'm trying to think about that versus say, your prior guidance of, I think it was 175 by midyear, because it seems that we're almost in a better environment based on the numbers that we're seeing. Is that fair way to look at it?

Yes, I think that's fair. The math that you did, I think makes sense. I think the number that you arrive at is inclusive of our expectation on both margins and volumes. And that probably is slightly better than what we had anticipated when we gave -- we initially gave our full year guidance back in January. So application volumes, while initially weak in early in the first quarter, improved pretty significantly in March. And so we're optimistic about second quarter results. That's reflected on our guidance, still cautious about the second half of the year.

And then just one follow-up, on the loan growth, the guidance there. Did you, in your guidance from last quarter, did you anticipate sort of the strong average growth and then the flat period end? Because I guess what I'm trying to figure out is, you obviously were higher we were expecting on the average basis. But that kind of also implies slower growth from here to still reach the kind of the midpoint of your guidance? Is that also, is that consistent with what you're seeing? I guess we did have flat period end growth this quarter.

Yes, our period end growth was flat this quarter. Some of that is due to some securitization said activity that occurred in the first quarter that was not anticipated to occur in the first quarter. So we securitized $500 million worth of auto loans. We also sold $60 million worth of jumbo mortgages in the quarter, which wouldn't have been reflected in the guidance earlier. Overall, I think we did expect a fairly strong growth in average balances with not as strong of growth in the period imbalances due to the impact of the very, very strong fourth quarter results.

And seasonality in the first quarter, which we almost always see.

So I think the expectations are generally in line with what we were seeing at the beginning of the year with the exception of some of that securitization in sale activity. And we would expect, as we go forward, pipelines feel good. Activity coming in to the second quarter feels good and we expect to continue to post results from a loan-growth perspective on an average balance basis that's consistent with what we saw in the first quarter.

Your next question comes from the line of Ken Usdin of Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: First question just also another loan question. Just wanted to gauge your appetite for continuing to grow the auto book and also to potentially give -- contemplate additional securitizations like you did this quarter.

When we look forward, we see a pretty stable activity in our auto originations. The portfolio clearly is a mature portfolio. So the impact of monthly originations is not huge, but we would see similar trends going forward that we've seen over the past 3 or 4 quarters. In terms of securitizations, this was an off-balance sheet transaction to improve our capital usage in the business. And periodically, we may execute all balance sheet securitizations, but we will basically review the profile of our originations and determine if there is an opportunity for us to do the same thing. We may do on-balance sheet transactions going forward along with off-balance sheet transactions. So we will be opportunistic in that sense. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. Great. Got it. And then my second question is just coming back to the CCAR plans. And you guys had those extra potential activities. I just wanted to see if you can flush that out a little bit more for us and talk about whether or not you do expect to do that additional preferred issuance that you -- that was included in the press release at the time?

Yes, I'm not sure -- well, from a preferred perspective, we talked about $1 billion in preferred issuance made up of 2 pieces. $500 million of which was anchored to the Series G preferred stock conversion and then the buyback of those shares. So if that conversion occurs and we buy back the shares that preferred stock is converted into, we would anticipate issuing about $500 million of preferred related to that. And then, we also anticipate issuing another $500 million in preferred just to make progress toward what we perceive as the right mix of non-common Tier 1 as we move toward Basel III. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Well, that's a piece that I'm asking about. So you included it in the press release as a potential. And I guess, that's the question, then, is what's the decision tree on whether or not you do go forward with that, or is that just really a question of you will do it, it's just the question of when?

Yes, I think we will do that as we approach phase-in of Basel III. It is a question of when. It is included in the capital plan for this year. I think the timing of that transaction being executed will be based on our evaluation of the markets and when is the most appropriate time for us to do it from that perspective.

This is Jeff. So the Series G conversion is a contingent situation. So there are certain requirements that need to be met from a stock-price standpoint and that has a pricing period. And that pricing period is month or 2 from now. And so we can't say whether that will happen because it requires something to happen in the future. But if it does happen, then Dan talked about how we would fund that. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: My last question is just, on the funding cost side of things, you're still showing a nice continuous improvement on overall funding cost side. How much room still is there to continue to ratchet your overall funding cost lower?

There is remaining room, but clearly on the deposit side the improvement is marginal. But we also have other opportunities on the balance sheet in non-deposit items. And we will realize then as we see opportunities realize.

Your final question comes from the line of Paul Miller of FBR. Paul J. Miller - FBR Capital Markets & Co., Research Division: Can you touch base a little bit on the reps and warrants? I know there's been some on the mortgage side of the design. I know there's been some comments from FHFA they'd like to clear up by the end of this year. Have you gotten any guidance that this year would be it?

No. We've not -- we've not had any indication of that in any discussions that we've had relative to our own situation. We've, obviously, seen the same things you have in terms of press, what the press is reporting. But I think our discussions have been more along the lines of what we have talked about over the past few quarter, which has been that from a Freddie Mac perspective, Freddie Mac has been more explicit with us in terms of what the criteria are that they will use to determine whether loans should be put back. That has allowed us to make better estimates with respect to what our put-backs will be and that has led to some higher reserve balances in the third and fourth quarter. We have not yet seen fully the increase in put-backs but that information will would, but we still do continue to expect to see that, ultimately, and have the reserves available to provide for that increase in volume if it materializes. Paul J. Miller - FBR Capital Markets & Co., Research Division: And then also with respect to the mortgage banking side, can you remind us again what's your split between retail and correspondent? And is there any plans that go into the warehouse side of the business?

This is Jeff. I don't have the exact numbers here. Retail is -- retail and direct are about half of our originations, correspondent and wholesale being the other half.

It's about 50-50, Paul, when you consider correspondent and wholesale. Paul J. Miller - FBR Capital Markets & Co., Research Division: And do you do warehouse lending? I'm not -- I don't see it really broken out.

No, for all practice, intents and purposes, we really don't. Paul J. Miller - FBR Capital Markets & Co., Research Division: Any plans to do that going forward?

Not at this point, no.

We have reached the allotted time of today's call. Thank you for participating. And you may now disconnect.