Good evening. My name is Daniella, and I will be your conference operator today. At this time, I would like to welcome everyone to the Fifth Third Bancorp Fourth Quarter 2010 Earnings Conference Call. [Operator Instructions] At this time, I would now like to turn the call over to Mr. Jeff Richardson, director of Investor Relations. Sir, you may begin your conference.

Thanks. Hello, and thanks for joining us this evening. Today, we'll be talking with you about our full year and fourth quarter 2010 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 a number of these factors in our forward-looking cautionary statement, at the end of our earnings release and on 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'm joined on the call by several people: Kevin Kabat, our 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'll turn the call over to Kevin Kabat. Kevin?

Thanks, Jeff. Good evening and thanks for joining us. We appreciate your time and expect you seeing both that we announced earnings after the market closed today and also that we have announced an offering to issue $1.7 billion in common stock, with the intention of using the proceeds of that offering, a planned senior debt offering and other available funds to fully repay our TARP Preferred Stock of $3.4 billion, subject to notification and approval of the U.S. Treasury. This action would eliminate the annual $170 million reduction to net income to shareholders from the preferred dividend, plus another approximately $11 million in discount accretion that runs through the preferred dividend line every quarter. I'd note that the warrant associated with the TARP investment will remain outstanding after TARP is repaid, but we plan to engage the U.S. Treasury in discussions about their repurchase. If we can't reach agreement on their value, we'd evaluate participating in the auction. I'll make a few remarks about our plans, but before we continue our discussion of earnings and our outlook, although those remarks will be limited because we've launched a Securities offering. We have discussed with you for the past year or so our thoughts about TARP repayment. We believed it was important that we generate the kind of results that we have been generating and have just reported, that we allow time for the demonstration that economic trends were well-established and that we await more clarity related to capital standards and industry capital levels, clarity that was important for ourselves and also for regulators. We have had ongoing dialogue with regulators on this topic, including these plans. We believe that the conditions we were waiting for now exist and that now is the right time for us to repay TARP. We…

Thanks, Kevin. As Kevin mentioned, we had a very strong quarter and we've got many positive operating trends to discuss. If you turn to Slide 4 of the presentation, in the fourth quarter, we reported net income of $333 million, and paid preferred dividends of $63 million. This resulted in $270 million of net income available to common shareholders or $0.33 per diluted share. Compared with the third quarter, this is a 40% increase in net income and a 50% increase in diluted earnings per share. You'll notice that our average diluted share count was up this quarter by almost 40 million shares. That simply represents the effect of the if converted method of computing diluted EPS as the share is underlying our Series G convertible preferred stock and our warrants were now included on our fully diluted share count. This resulted from increased profitability, but reduced the EPS by about $0.05 for the quarter. These strong results were driven by $583 million of PPNR, which reflected solid fee and net interest income result and by significantly reduced net charge-offs and provision expense as our credit profile continue to approve. Before I turn to detailed results, let me stop here for just a moment. In my comments, I will provide information relating to our outlook for the first quarter results and for trends going forward. The offering we've announced and the TARP repayment may affect some of those expectations. In the interest of clarity, our providing outlook, excluding effects of those actions rather than incorporating them into our guidance. We've provided several slides that outline our plans and provide pro forma effects of those plans. Those slides are in the appendix to the presentation, that part of our earnings materials and those effects are pretty simple to calculate. So turning…

Thanks, Dan. We continued to see progress in most of our loan portfolios during the quarter. Nonperforming inflows continue to remain more moderate. Charge-offs were down significantly on both the reported and core basis. And as expected, dropped below 2% in the fourth quarter. We sold the majority of the loans we moved to held-for-sale last quarter at prices consistent with our mark. And delinquencies continue to improve, and our outlook for all key credit metrics continues to be for improving trends going forward. Let's get into the details, starting with charge-offs on Slide 11. Total net charge-offs of $356 million dropped $600 million from the third quarter, which included $510 million in charge-offs related to our credit actions. Those included the sale of residential mortgage loans on non-accrual status and the transfer of commercial NPAs to held-for-sale. On a core basis, net charge-offs were $446 million last quarter and thus, the sequential core improvement was $90 million or a 20% reduction. That was better than we were expecting coming into the quarter. I'm going to exclude the impact of these third quarter credit actions in my remaining discussion of net charge-offs trends by portfolio in order to provide a better feel for trends in the ongoing portfolio. Total commercial net charge-offs were $173 million compared with portfolio commercial net charge-offs of $240 million in the third quarter, a 28% decline. C&I portfolio net charge-offs were $85 million, down 34% from the third quarter. Commercial mortgage portfolio charge-offs were $80 million for the quarter compared with $66 million in the third quarter. Approximately 58% of the losses came from Michigan and Florida. Commercial Construction portfolio charge-offs were $11 million, down 75% on a sequential quarter basis. I'd note that Commercial Construction balances are down to $2 billion on an end-of-period…

Thanks, Mary. Just wanted to finish by saying 2010 was a year of great progress for Fifth Third, including a return to solid profitability, significant improvement, credit results and trends, market share gains and higher customer sat scores. In fact, in the most recent survey of Fifth Third customers by the University of Michigan, our overall customer satisfaction score broke our previous record. Our score exceeded that of any large bank in the industry published under Michigan's broad industry survey. We're focused on deepening customer relations, growing our customer base through the strength of the Fifth Third brand. We can either focus on the strategic initiatives that are helping us drive revenue growth. I want to thank all of the hard work of our employees. And at this point, I want to open it up then for any questions.

[Operator Instructions] Your first question comes from the line of Bob Patten with Morgan Keegan. Robert Patten - Morgan Keegan & Company, Inc.: FDIC insurance wasn't broken out. Is it the same as the third quarter?

This is Jeff. I think FDIC expense is big enough to be a reportable category.

Kevin, can you just review hypothetically, assuming your plans get done and executed as you want, what your prioritization of capital uses is going to be over the next six to 12 months?

Let me turn that over to Dan to address for you, Bob.

Bob, and some of this is included in the earnings power point deck, specifically on Page 25. We have outlined some elements of how we would seek to manage capital on a going forward basis. First and foremost, I think we have some pretty significant organic growth opportunities. We are starting to see some growth in the low portfolios, I think particularly in the C&I area. We were very encouraged in the most recent quarter of the demand of there. So we think there's organic growth opportunity. We also think there are strategic opportunities that are on the horizon. Whether that be via acquisition or whether that be through de novo expansions, we believe that the opportunities for growth, particularly in the recovering economy, are pretty significant. Relative to capital management policy going forward. We believe that our current earnings position as well as our capital position both now and even more so in the future based on the plans that we have would support a return to a more normalized dividend policy. And as we look forward, that's certainly something that would be included in our plans. Share repurchases, in our minds, I think, will probably be at the bottom of the list to the extent that the other deployments of capital I just mentioned, if those left us still with excess capital as we go down the road, share repurchases would be something we would evaluate but we would expect that, that would be something that would be on the longer-term nature.

You guys have done two dividend reductions. Under the way that the rules work, you guys have repaid TARP, can you increase it back to $0.15 a quarter without permission?

I think there's kind of two levels of restrictions right now. One restriction that's embedded into the actual TARP document itself, I believe that restriction says that we can't increase it to any level above the level at which it was when we entered into TARP. And then beyond that, based on the Fed's recent announcement relative to capital management policies and the CCPR process, those types of changes would be subject to approval through that process as well. So I think the CCPR process effectively trumps whatever the restrictions in the TARP document themselves are and all dividend increases would need to go through that process --

Our next question comes from the line of Brian Foran with Nomura.

I know you spent a lot of time upfront addressing the why now question on TARP, but maybe I've gotten the same question from several people so maybe I'll just ask the way they ask it which is, you needed $1.7 billion, you made $270 million this quarter, why not wait a few quarters and raise half as much?

Brian, as you said, I think we did address that somewhat. We've talked in the past about being patient. I think we have been patient. But that wasn't just to be patient because there were certain things we thought were important in order for us to have the right environment for TARP repayment to make sense. And those were improvements in our earnings, improvement in our credit, a more solid economy, a more well-established recovery, and perhaps, most significantly, increased clarity on future revelatory. I think all of those things, particularly in the fourth quarter, started to come into fruition and come into existence with a fair amount of clarity. So in the fourth quarter, I think we're really started to believe that the time for us to repay TARP was right. The time for us to consider that issue more significantly with our regulators was right, so we've been involved in discussions with our regulators since that time. And we think we have those things created the right time for us to make the decision. And with our discussions with the regulators, with our observation of what regulators have apparently asked others to do, we thought that the amount of capital the we've decided to raise and the resulting capital levels of 9.0% were the right levels for us at bigger point in time. All that, I think, was also impacted by the new the CCPR process. The fact that the reinstatement of dividends was something that is becoming more important for the industry, as well as the sense that opportunities were becoming closer and closer on the horizon, whether those were opportunities related to continuing economic recovery or opportunities related to strategic opportunities that might become available as M&A activity took place. So those were all things, I think, that contributed to our evaluation of this being an appropriate time for us to make this move.

As we think about normalized earnings power, I had always had 60 bps provision rate in for you guys based on 50 bps for everything but cards, and then 500 bps for cards. I guess where you are now and still heading lower suggest maybe that's a little high. But I don't know, can you give us any thoughts on what you think of as a normal provisioning run rate for the company overall has been?

Brian, this is Jeff. I think in the situation we're in right now with the announcement that we've made, we haven't commented on in any direct way about what we think our normalized provision would be. We talked about ranges of reasonable assumptions for dividends just for purposes of explaining where we thought we could get to, but I don't feel like we ought to -- I feel like we can't answer that question right now. I apologize. I understand your thinking behind the way you came up with your result. I'm sorry.

We have reached the allotted time for questions. This concludes today's teleconference. You may now disconnect at this time.