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

Good morning. Today we'll be talking with you about our third 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 CEO; Chief Financial Officer, Dan Poston; Chief Credit Officer, Bruce Lee; Treasurer, Tayfun Tuzun; and Jim Eglseder of Investor Relations. [Operator Instructions] With that, I'll turn the call over to Kevin. Kevin?

Thanks, Jeff. Good morning, everyone. This morning, Fifth Third reported net income to common shareholders of $354 million and earnings per diluted share of $0.38. Results included charges related to the redemption of trust preferred securities as expected, which reduced EPS by $0.02. Results also included a negative valuation adjustment on our Vantiv warrant and a gain on sale of mutual funds, which generally offset one another. Third quarter return on assets was 1.23%, and return on tangible common equity was 13%. Core trends in our operations remained favorable as evidenced by continued loan growth in most categories and revenue strength, particularly in commercial banking, which was up 16% over last year, and mortgage banking, which was up 13% over a very strong quarter a year ago. These businesses continue to produce and have been important contributors during a difficult operating environment. Overall fee results were very good in the quarter, and the fourth quarter looks to be better. Average portfolio loans were up 5% from a year ago, driven by a 16% increase in residential mortgage loan and a 15% increase in C&I loans. Sequential loan growth was a bit lighter than the last several quarters, which reflected higher paydowns, as borrowers became more cautious and the ability to refinance in the capital markets remained strong. Based on our pipelines and seasonally strong production in the fourth quarter, we expect loan growth to be a bit stronger in the fourth quarter as we close in on year end and the election moves behind us. Net interest income was up $8 million from last quarter, excluding the benefit of several items that Dan will discuss in a moment. NII was consistent with last quarter. Obviously, the interest rate environment is extremely challenging, made more so by the impact of QE3…

Thanks, Kevin. I'll start with Slide 4 of the presentation. For the quarter, we reported net income of $363 million and recorded preferred dividends of $9 million. Net income to common was $354 million, and diluted earnings per share were $0.38. Third quarter results were reduced by $26 million of costs that are associated with our TruPS redemption or about $0.02 per share after tax and $16 million in losses on Vantiv warrants or $0.01 per share after tax. Those detriments totaled $42 million or $0.03 per share and were partially offset by $11 million of net benefit from the sale of certain Fifth Third mutual funds or $0.01 per share after tax. Quarterly results also included an additional $24 million of pretax charges related to the increase in our mortgage repurchase reserve. I'll touch on each of these items later in my discussion. Taking a look at the details of the quarter and turning to Slide 5. Tax equivalent net interest income increased $8 million sequentially to $907 million, and the net interest margin remained stable at 3.56%. Net interest income benefited from several items, including hedging effectiveness from the redeemed TruPS and income related to an auto securitization cleanup call. These items in total contributed $10 million to NII during the quarter and 4 basis points to the net interest margin. Otherwise, net interest income declined about $3 million versus the second quarter results and the margin declined 4 basis points, both about what we expected for the quarter. As expected, net interest income benefited by $6 million due to an additional day in the quarter, as well as from lower interest expense due to the redemption of $1.4 billion of Trust Preferred Securities that occurred in August. The TruPS redemption increased third quarter NII by about $4…

Thanks, Dan. We continued to see credit improvement across all categories in the third quarter. Credit results were the best we reported since prior to the crisis in 2007. Starting with charge-offs on Slide 11. Total net charge-offs of $156 million declined $25 million or 14% from the second quarter and $106 million or 40% from a year ago. The net charge-off ratio was 75 basis points for the quarter, the lowest in 5 years, not as low as it should be but it's getting there. Commercial net charge-offs of $62 million declined 21% sequentially and 54% from last year. At 53 basis points, this was the lowest level reported since the third quarter of 2007 [Audio Gap] $15 million sequentially, and commercial lease net charge-offs down $6 million from abnormally high quarter levels. Commercial real estate net charge-offs were up a combined $7 million from last quarter but continue to moderate in general. Total consumer net charge-offs were $94 million, down 9% sequentially and 25% from a year ago. Most of this improvement was in residential mortgage charge-offs, which dropped 28% from last quarter driven by improvements in Florida, which was down to 34% sequentially. This significant reduction was a result of improved early delinquencies throughout the year, and we believe this represents the level that we can continue to improve upon. Overall, it was another solid quarter for us from a credit perspective, and we continue to see improvement across the portfolio. Looking ahead to the fourth quarter, we currently expect net charge-offs to be down another $5 million to the $150 million range. Now moving to nonperforming assets on Slide 12. NPAs, including held-for-sale, totaled $1.5 billion at quarter-end, down $190 million or 11% from the second quarter. Excluding held-for-sales, NPAs were $1.4 billion on $173 million…

Thanks, Bruce. As Dan and Bruce outlined, our core businesses continue to perform well despite economic and regulatory headwinds. Our 21,000 employees remain focused on building strong relationships and offering our customers products and services that they genuinely find to be value added. We're finding and capitalizing on opportunities to make sure that we take share in our markets, and we expect that to continue to drive our results going forward. That wraps up our formal remarks. Operator, can you open up the line for questions?

[Operator Instructions] And your first question comes from the line of Ken Zerbe with Morgan Stanley.

Just a question on the outlook for C&I. I know you said it's going to pick up in fourth quarter because you have a stronger pipeline. Can you just comment about how, I guess, accurate looking at pipeline is in terms of actual -- translating into actual C&I growth? And maybe just for -- to help us understand the magnitude, I guess, what was the pipeline last quarter, and were you surprised going into third quarter by the slowdown in C&I, if that makes sense?

Ken, I'll give you a perspective. Bruce may chime in. But from our standpoint, the pipeline continues to be a good measure for us in looking at what future production anticipation is. These are deals, obviously, that we've got and understand explicitly where they are in development. And so while they can move a little bit, for the most part, we track them along from a progress standpoint. So production continues to be clear to us. The biggest -- I think the biggest challenge for us has been really kind of what happened with the capital markets and some of the paydowns, which is a little bit more difficult to forecast and to keep ahead of in terms of understanding impact from that standpoint. Obviously, we're in touch with our clients closely. But they're taking advantage of the marketplace, and quite frankly, in some cases, we're counseling them to. So that's really the challenge on a look-forward basis. That's, I think, will continue to be the challenge. I think we've been pretty transparent and open relative to what we see from a pipeline standpoint and production, and it's really then the challenge of the paydowns have continued to be kind of the variable. I don't know, Bruce, if you had...

Yes. We feel very good about the fourth quarter pipeline. We know exactly where it's coming from. We've been involved in those credits and the approvals. So we feel good about the fourth quarter. As Kevin did mention, there's been much more capital markets activities and refinancing in the bond market than maybe we had initially anticipated, but that's really what's going on. The production side is good, and we feel very confident in the accuracy of that.

And the only other thing I would add, Ken, is compared to where we were relative to last quarter and guidance given and what we see today in the pipeline, that's why we've given the guidance that we've given in terms of the fourth quarter. We feel good about that.

All right, that helps. And then just one quick one on resi. Can you just talk about your appetite for resi mortgage growth? Because I'm trying to reconcile that with your comments about security balances being relatively flat. Meaning, are you intentionally running off or, at least, keeping the -- you're growing resi at the expense, so to speak, of a flat securities portfolio, given where MBS yields are?

The resi portfolio clearly continues to be impacted by faster prepayments speeds. But at the same time, we do have our own branch mortgage product originations and jumbo originations that are cushioning that impact. So I would expect our resi portfolio to continue to grow, not like heroically, but I think we should see stable growth rates in that portfolio.

So you're finding resi to be a more attractive product than MBS at this point?

It is. I mean not to the extent that where we have decided to portfolio conforming mortgage loans. We've done that in the past, a couple of years ago, and we continue to evaluate that on a quarterly basis to replace prepaying mortgage-backed security balances with mortgage loans. But at this point, given the valuation of conforming loans, we don't see that as an attractive risk return trade-off. And we are also trying to manage our durations within reasonable limits, and keeping 30-year mortgages today does not seem like a good strategy to us.

And your next question comes from the line of Todd Hagerman with Sterne Agee. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Kevin, just kind of a follow-up on the loan growth commercial question. You referenced the election in your prepared remarks and production being very strong going in the quarter. If you could just help me better understand, just as you reference the challenges with the payoffs in capital markets, could you be more specific in terms of where the production, really the strength is relative to that kind of headwind, if you will? And the reference to the election, is this something that's kind of more back-end loaded, or just -- I'm just trying to get a little bit more clarity in terms of the outlook.

Yes. Todd, generally, what I would say -- a couple of things to your question. One is where we're seeing some of the activity is really fairly broad based, and we talked about, specifically in the manufacturing healthcare space, that's true, but it is fairly widespread and broad based. We are hearing, seeing that uncertainty does impact and has been impacting reflections on managements on what they do and where they are. So we hope that as we get more clarity and the election being significant in this time period, that brings more clarity and decisiveness in terms of the actions posed we're considering or being considered by our clients and by the marketplace in general. So that's kind of the impact we're seeing and hearing from this, from our standpoint. So and again, with regard to them taking advantage of the marketplace, again, some of it's through our counseling, some of it is their own desire to strengthen and manage their balance sheets, and we continue to work with them from that standpoint. I think as we get more clarity, there potentially is some pent-up demand. We're -- we see that continually. You've heard it in terms of the industry broadly relative to deposits bases and deposits on -- in banks, where they're not really looking to put that capital to work. And so we're hopeful that as we get more clarity and may not be simply a next item, but as we get into later next year, that clarity becomes a matter of confidence that they begin to move forward with. So that's all we're hearing. That's all we're seeing. We saw some of the -- some of that play through our production and through our paydowns, and I think that's going to continue to be a trend as we move through this time period, so. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay, that's helpful. And just on that point in the -- in terms of the paydowns. Could you just give us a sense of kind of where that's been trending? If I look at Q2 relative to Q3, what the trend there has been in terms of the payoffs?

Yes. In the C&I space, it's clearly escalated in the third quarter. Again, as the capital markets open up and as interest rates -- as QE3 is talked more about, long-term interest rates, people are going to the bond market. We're suggesting they go there. It helps their capital stack, and it will reduce their costs long term and provide them with some fixed rate funding. So that's what we're seeing. We saw it escalate in the third quarter, and we think that we have a much better idea what it will be in the fourth quarter and it's been built into our guidance. Todd L. Hagerman - Sterne Agee & Leach Inc., Research Division: Okay. But relative to some of the other categories, if I think about the commercial real estate, that sort of thing, is that significantly different than what you're seeing within the large corporate or no?

Yes, it's very different. Some of that real estate, that's being -- that we're seeing the reduction here is there's some refinancing going on, but there's also some assets being sold by our borrowers. So we expect that paydown to be consistent in the fourth quarter with the third quarter.

Your next question comes from Paul Miller with FBR. Thomas LeTrent - FBR Capital Markets & Co., Research Division: This is actually Thomas LeTrent on behalf of Paul. I had a quick question, I guess sort of on the loan growth front. But one of your competitors the other day was talking positively about Michigan and the trends they're seeing there. And given your size there, I just wanted to get your thoughts on sort of what you're seeing in that market.

Tom, what I would tell you again, I don't -- as we look at kind of the geography, we feel good about the broad diversification that we have. Obviously, when we talk about manufacturing, Michigan falls into that category, as does a good portion of our upper Midwest profile. So we are seeing good activity. We are seeing kind of a good area of recovery from that standpoint. I don't know of -- I wouldn't say it's outsized relative to the rest of our footprint and the rest of what we're seeing as you overlay kind of the manufacturing profile across our geographies. So that would be kind of our commentary relative to Michigan and what we see from that standpoint. Thomas LeTrent - FBR Capital Markets & Co., Research Division: Okay. And a quick clarification point, because I sort of caught it but I didn't catch all of it. The repurchase reserves in this quarter, that was related to sort of Freddie and FHA read-through and not related to Fannie, correct?

That is correct.

Your next question comes from Craig Siegenthaler with Credit Suisse.

Nick Karzon standing in for Craig this morning. I guess just first, kind of following up on the mortgage rep and warranty and the reserve there. Can you give us a little bit more color on the expectations on that going forward? And a lot of your peers have taken kind of full -- kind of built their reserve to the extent that they don't expect to take further reserves for that 2005 to 2008 vintage. And are there plans to meet with Fannie to potentially sit down and have a similar discussion to get to that level of confidence?

Yes. Craig, this is Dan. Certainly, we continue to have discussions with both Fannie and Freddie and incorporate into our reserving methodology all the current information that we have based on those discussions. So I don't want to give the impression that we haven't had any discussions with Fannie Mae. We have those discussions all the time and attempt to get the best information we can with respect to what their intentions are and what we should expect going forward. I think the -- what occurred with Freddie Mac this quarter, which really, frankly, started last quarter. You'll recall, last quarter, we talked about the fact that Freddie Mac had been signaling that we should expect an increase in file requests on a going-forward basis. At that point in time, we didn't have the clarity that we do now with respect to when those requests would increase, how much they would increase and more importantly, what methodology or selection criteria they were using or they would -- they expected to be using to arrive at those higher levels of file requests. So we now understand better what criteria they're using, and we can use that criteria to -- as a component of our reserving methodology. So now we have reserves on the books, not only for file requests that we've received, but also file requests that we expect to receive based on those revised criteria. So that's the kind of clarity we got this quarter that allowed us to incorporate that information to -- into our reserving methodology with respect to Freddie Mac. We continue to have discussions with Fannie Mae. And like Freddie Mac, our reserves for put-back from Fannie Mae reflect all of the information that we've received up to this point from Fannie Mae. We just thought…

Got it. I guess a second question is how much room do you see on the deposit cost side, and are there any large upcoming CD maturities that we should be aware of?

Yes. I think, clearly, with rates where they are, there's probably less room on deposit pricing than there has been in the past. But that being said, I think we continue to see some room there as we monitor those rates, monitor what competitors are doing. So that's something that we look at all the time, and we will continue to look at. I think with respect to any large amounts of repricing, we've talked in the past about CD repricing, primarily CDs that were put on the books in '08, at the end of '08, during the liquidity crisis that had some higher rates. Most of that is behind us. However, there were -- or there was a slug of those put on at the end of '08 that have 5-year maturities. And therefore, toward the latter half, third, fourth quarter of 2013, we'll see a little bit of activity in terms of some high-rate CDs that mature in that timeframe. But that's a few quarters off yet.

And your next question comes from the line of Vivek Juneja of JPMorgan. Vivek Juneja - JP Morgan Chase & Co, Research Division: With everything going on this morning, I think I missed part of the comment about the OCC-related guidance. Did I hear you say $150 million loans are impacted but you said you aren't able to estimate the charge-offs? Do you have a sense of when you might be able to do so, and what's holding that back?

Yes, Vivek, this is Dan. You did hear that right. We believe that there's about $150 million of loans that we will need to analyze. This is recently issued guidance. And as I think you probably know, the guidance is that there should be charge-downs of those loans to the appraised values. We don't have current appraised values on our entire portfolio. So as we analyze what the potential impact of this item is, one of the things that we need to do is to go get current appraisal information for those loans. So that's the reason that we're unable to estimate that at this time. It's just simply the fact that it's very recent guidance and we haven't received that information yet. Our understanding is that our regulators, the Fed and the FDIC, are considering that guidance, and we will have a clearer view as to what the expectations of us are as we go into the fourth quarter. And certainly, we would anticipate having that information in the fourth quarter to enable us to respond to whatever that guidance is that we receive.

And your next question comes from the line of Kevin Barker with Compass Point. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Declines in the savings and checking accounts, and if there is a change in strategy to allow may be some core -- some deposits to come down in order to manage your net interest income? Or is there something going on there where you will allow some funds to run-off? Is there something there?

Kevin, I think we missed the first part of your question. Can you please repeat that? Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Could you discuss some of the declines in the checking and savings account balances?

Okay. I don't think that there is any sort of trends that we are seeing. It's sort of normal fluctuations. We're not necessarily strategically guiding them down or up. We obviously are very interested in deposit growth, continue to be interested in deposit growth, and the DDAs were up quite a bit this quarter. And obviously, our clients, both on the corporate side as well as the consumer side, continue to hold quite a bit of liquidity, and I think we're taking our market share. And we're also trying to be smart about those deposits that are interest bearing and make sure that we are managing interest costs efficiently. So I don't think that this -- the balances indicate any trends or strategic direction at this point. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. And then on auto lending. What rates are you seeing out there for new auto loans, and what type of ranges are you seeing for new auto loans right now?

Rates have continued to inch down from second quarter to the third quarter. Clearly, the third quarter from just the base swap rate perspective has been very volatile. Typically, sort of a 5-year auto loan to the high FICO score, 760-plus type FICO score borrowers is probably around 3% today. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Now what about the lower FICO scores? Are you…

We don't do lower FICO scores, so it's difficult for me to give you guidance on that. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. Are you seeing much more competition out there for auto loans? Is it something that's really going to be pushing rate? Is it going to continue to go lower?

There is competition. I mean, I think Fed's commitment to keep these low rates lower for longer period of time continues to fuel that competition. We are doing the business smartly, and we've been in that business for a long time. So we're managing the risk profiles within our normal traditional guidelines, and we have good established relationships with dealers, which is enabling us to keep rates stable at this point. But competition clearly is picking up. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: Okay. And then finally, most of the originations on the mortgage banking side, was that -- what was the breakout between retail and wholesale originations this quarter?

Hang on just a minute. Let me see if we have that here. Kevin Barker - Compass Point Research & Trading, LLC, Research Division: What I'm trying to get at, where was most of the growth in originations?

Yes, most of the growth has been in retail. In terms of our originations...

About 60% of our originations were retail this quarter, and that was a little higher than last quarter.

Your next question comes from the line of Jon Arfstrom.

Just 2 quick questions. What's the plan for the rest of the buyback that's not part of the accelerated program?

Yes. Jon, this is Dan. As you know, we had a $350 million accelerated share repurchase program that was initiated in August. We have approval for about $250 million in additional repurchases over the balance of our CCAR period which, as you know, goes through the end of the first quarter. So fourth quarter or first -- fourth quarter of '12 or first quarter of '13, there's about $250 million in additional capacity. And we would expect that barring unforeseen market conditions, that those repurchases would take place ratably over that period, would probably be the most likely result at this point in time.

Okay. And just to clarify, the high end of your targeted combined payout range is still 80% in terms of dividend plus buybacks?

Yes. I think that's probably a good estimate of the high end of the range, yes.

Okay, good. And then just one unrelated question. But I believe you had a leadership change in Chicago, and I'm just curious to how you feel you're doing in that market and if there's any change in approach in terms of how you go about your business in Chicago.

Jon, yes, I mean, for the most part, our leadership team in Chicago's been fairly stable. I'm not sure if there's a specific individual or a specific person you're referencing, but we feel really good about that marketplace. We feel really good about what Bob Sullivan has been doing in that marketplace. I think we've really had great results and continued momentum in that marketplace, and Bob is doing a fantastic job for us up there. So no -- I guess that's what I'd say unless there's something specific you'd want.

Yes. We can take it offline. That's fine.

Sounds good.

Bob's been in Chicago 2 -- or has headed up Chicago 2 years. He'd obviously had senior positions in the company for many years.

And your final question comes from the line of Ken Usdin with Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Two follow-ups, one on just the NII and NIM outlook. I know that all banks are going to be pressured, but we didn't see a lot of earning asset growth this quarter also. So I just wanted to see if you can help us understand. As you look out into next year, you mentioned that you think that NIM and NII challenges are manageable. But can you guys grow NII next year? Do you anticipate that the pace of loan growth and earning asset growth will be able to stem the tide of the obvious NIM challenges for the industry?

Ken, as you remembered, actually, I understand why these NIM and NII questions are a hot topic this time around. But we started talking about this early this year, and we said that NIM takes a second seat to NII growth. And I think all year, we focused on growing earning assets, and we're giving you guidance for Q4. I wouldn't read too much into that. We're not giving you guidance for 2013, but that's because our typical update happens this quarter and there are a couple of obviously unknowns with respect to the elections and the fiscal cliff. But we will be updating that. We're still confident that our earning asset growth will cushion NIM contraction. Although when you look at our numbers, our Q4 guidance is probably on the low side of what other banks are guiding their NIM. We've been able to manage both sides quite successfully this year. We're going to end up this year with most likely a higher NII than we did last year in a very difficult market environment. And we've focused on this all year, and I think we are pretty confident that going forward, that same focus will benefit our numbers. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And then my second question, just relating to as you think -- as you guys go into the next stress test, obviously, you've just given -- I want to just get some perspective on your takeaways from how this year's process went. You obviously did resubmit and were allowed to proceed or non-objected to. I know we haven't seen -- you guys haven't seen the data yet. But just any different thought process as you go into next year's stress test in terms of that -- even that 80% top line that Jon asked about before in terms of -- is there any -- do you anticipate there being any pushback or change, given what you guys had to experience this year?

Ken, this is Dan. I think as we go into this year's process, as you pointed out, we're still waiting for the scenarios and final guidance and so forth, so we will have to react to that and incorporate that into our expectations. But as we sit here today, I don't believe there's any significant change in our thought process relative to what is an appropriate capital return plan and what might be reflected in that. I think -- I don't think there's a strong bias that the level of our returns of capital would go up or down from the prior year based on where we sit today, because I think we continue to have very strong capital levels. We continue to have strong capital accretion from strong earnings. And so on an overall basis, I think our expectations would be that it would look pretty similar to last year unless there are changes in the process that we've yet to see. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And my last one is just related to another capital question. Any update with regards to Vantiv? I know we saw just the negative warrant account this quarter. But can you just give us just a quick thought on core performance of Vantiv, and again, just how you guys are thinking about the stake versus opportunities versus what Vantiv's own strategy is with regard to liquidity and the holding and et cetera.

Yes. I think, overall, we're very pleased with the progress that Vantiv is making, pleased with their results. I think they have good growth plans in place, which has included some level of acquisitions. I think they're in an industry that has opportunities to grow from that perspective, and we believe that they have taken advantage of those opportunities very well thus far and are likely to continue to do so. So we think that that's an attractive holding for us. Relative to plans going forward, we don't have any definitive plans at this particular point in time. So that will -- that's something that we think is an attractive holding, and we think we have a lot of flexibility now that it's a public company, as to how we approach that going forward, we will continue to evaluate going forward. So we did have a bit of a negative mark this quarter. As you know, that follows some fairly large positive marks over the preceding quarter. So there's a little bit of volatility now that it's a publicly traded company and the stock price moves around a little bit. But overall, their stock has performed very well, and we're very comfortable with our position.

I mean, just as a -- the warrant is a warrant to purchase Vantiv stock. It is for 15 years. So the way we look at that warrant is as a 15-year instrument. The accounting for it is it changes in value every quarter, but it doesn't change in value every quarter from our perspective. But it is -- it can be volatile. And as Vantiv stock moves, you can see that clearly in the market because they're publicly traded. And that's going to have an impact positive or negative as their stock moves each quarter on our earnings, and we'll be clear about what the impact was. But you have the ability really to estimate that every quarter.

And we've now reached our allotted time for questions. Are there any closing remarks?

No. Thanks, Polly. Appreciate it.

Thanks, everyone.

Thanks, everyone.

And thank you for your participation. This concludes today's conference. You may now disconnect.