Jeff Richardson - Director of Investor Relations and Corporate Analysis Kevin T. Kabat - Vice Chairman, Chief Executive Officer, Member of Finance Committee and Member of Trust Committee Daniel T. Poston - Chief Financial Officer and Executive Vice President Tayfun Tuzun - Senior Vice President and Treasurer

Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division Matthew D. O'Connor - Deutsche Bank AG, Research Division Ken A. Zerbe - Morgan Stanley, Research Division Paul J. Miller - FBR Capital Markets & Co., Research Division Kenneth M. Usdin - Jefferies & Company, Inc., Research Division Stephen Scinicariello - UBS Investment Bank, Research Division Jack Micenko - Susquehanna Financial Group, LLLP, Research Division

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

Thanks, Alicia. Good morning. Today we'll be talking with you about our second 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; CFO, Dan Poston; as well as Greg Schroeck from Credit; Tayfun Tuzun from Treasury; 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? Kevin T. Kabat: Thanks, Jeff. Fifth Third reported second quarter net income to common shareholders of $594 million and earnings per diluted share of $0.66. Earnings this quarter included a benefit from gains on the sale of a portion of our Vantiv stake and a higher valuation on the Vantiv warrant, which, together, contributed about $0.22 of benefit. There were a few smaller items during the quarter that were modestly detrimental on a net basis, which Dan will discuss in more detail. Year-over-year, earnings per share increased 22% excluding the impact of Vantiv in both quarters. Return on assets and equity were strong with and without the Vantiv benefit, and tangible book value per share increased 1% sequentially and 7% from a year ago despite the fairly significant impact of share repurchases. Now turning to the business activity. Average sequential portfolio loan growth was 1%, with C&I loans up $1.2 billion. Average portfolio loan growth from a year ago was 5% with average C&I and Residential Mortgage portfolio loans up 15% and 9%, respectively. Period-end loans increased 2% sequentially and 6% from last year. These comparisons include the impact of a $500 million auto loan securitization during the first quarter. Average core deposits continued to grow and were up 4% from a year ago. Transaction deposits increased $4 billion or 5% including a very strong 13% growth in demand deposits, primarily in consumer, but with good growth in commercial as well. Fee income results reflected solid loan growth -- or solid growth from seasonal softness in the first quarter and we produced strong performance in nearly every line item. Corporate banking revenue, mortgage banking net revenue, deposit service charges and card and processing revenue were up mid single-digits. Certainly, things have changed in the mortgage business, but the second quarter for mortgage was still quite strong. And our other fee businesses continued to perform strongly. Dan will cover our expectations in the second half of the year in his remarks. Although there was noise during the quarter, expenses remain well controlled. We expect second half expenses to decline including the impact of lower mortgage origination costs. Credit trends continue to show steady improvement, with net charge-offs down another 16% sequentially and nonperforming assets down 5% to 132 basis points of loans. The charge-off ratio was 51 basis points for the quarter. It's the lowest since mid-2007. Total delinquencies continue to be at historically low levels, particularly on the commercial side, with 80 -- 30- to 89-day delinquencies of only $7 million and 90 days past due less than $1 million. Hard to improve on those numbers. Capital levels remained very strong with Tier 1 common of 9.4% and a leverage ratio of 10.4%. The updated pro forma estimate for Basel III Tier 1 common equity is 9.1%. Our ability to generate capital and our strong capital levels under Basel I and Basel III perspectives gives us the ability to retain the capital we need to support business -- our balance sheet growth while continuing to return capital to shareholders in a prudent manner. During the quarter, we announced the increase in our quarterly dividend to $0.12 and the repurchase of $539 million of common stock. We have approximately $600 million in remaining capacity left under our 2013 CCAR plan. Our continued ability to generate a relatively high level of profitability from loan growth and solid revenue results, ongoing expense discipline and credit improvement give us confidence that our strategies are working. We feel very good about how we are positioned going forward. Before turning it over to Dan, I'd like to thank our employees for their continued focus and drive and our customers for their continued business and partnership with Fifth Third. With that, I'll ask Dan to discuss operating results and give some comments about our outlook. Dan? Daniel T. Poston: Thanks, Kevin. I'll start with Slide 4 of the presentation, and I'll discuss results for the second quarter before turning to the outlook toward the end of my remarks. Overall, we posted strong results this quarter. Earnings per share were $0.66, up $0.20 from last quarter. There were a number of items affecting second quarter results, including a $242 million gain on the sale of Vantiv shares and the $76 million positive valuation adjustment on the Vantiv warrant, which, in aggregate, benefited earnings per share by $0.22 for the second quarter. Vantiv warrant gains were $0.02 benefit in the first quarter. There were several other smaller items that affected earnings in the quarter, which are all outlined in our release, and I'll note those throughout my comments. Turning to Slide 5. Tax equivalent net interest income decreased $8 million sequentially to $885 million, in line with our expectations, and the net interest margin was 333 basis points versus 342 basis points last quarter. The decline in net interest income included a $12 million negative impact from maturities of interest rate floors and a $6 million benefit from higher quarterly day count. Otherwise, the remaining $2 million decline was driven by loan repricing, partially offset by the benefit of net loan growth, higher yields on investment securities and lower long-term debt expense. The 9 basis point decline in the net interest margin included a 5 basis point reduction due to the maturity of interest rate floors and a 1 basis point reduction from the day count effect. On the loan side, yields declined primarily in the C&I and auto portfolios. Reported C&I portfolio yields were sequentially lower, although 13 basis points of the decline was the result of the maturity in the interest rate floors previously discussed. The remaining decline was driven by repricing within the portfolio, combined with a continued mix shift toward higher quality loans. In the indirect auto portfolio, the average yield declined 13 basis points in the quarter, largely reflecting the portfolio effect of replacing older higher-yielding loans with new lower-yielding loans. In the taxable securities portfolio, yields increased 11 basis points, reflecting lower premium amortization, given the rise in rates, as well as the benefit from reinvestment in higher-yielding securities. Turning to the balance sheet on Slide 6. Average earning assets increased $709 million sequentially driven by an $804 million increase in average portfolio loans and leases and $116 million increase in securities and short-term investment balances. These increases were partially offset by a $211 million decline in average loans held-for-sale, largely reflecting the impact on sequential averages in the auto loans that were in held-for-sale before their securitization in sale at the end of March. Looking at each loan portfolio. Average commercial loans held for investment increased $902 million or 2% from the first quarter and increased $3.6 billion or 8% from last year. C&I loans of $37.6 billion increased $1.2 billion or 3% from last quarter and increased $4.9 billion or 15% from a year ago. C&I production remains broad-based across industries with strong production in the large and mid-corporate space. We continue to see contributions from our investments in the health care and energy verticals as well as in the manufacturing industry. Commercial mortgage balances declined $347 million sequentially or 4%. Commercial construction balances increased modestly, the first increase in 5 years. As a result, these portfolios are beginning to stabilize, and we may begin to see net commercial real estate loan growth by the end of this year. Average consumer portfolio loans of $36.2 billion were relatively flat sequentially, but increased $494 million or 1% from a year ago. The average comparisons include the impact of the $500 million securitization of auto loans that took place in the first quarter. The full quarter impact of this securitization reduced this quarter's average portfolio loans by $338 million compared with the first quarter. Residential Mortgage loans held for investment were up 1% from the first quarter, reflecting continued retention of shorter-term, high-quality residential mortgages originated through our retail branch system. Average auto loans were down 1% sequentially, reflecting the impact of the auto securitization in March, but were up 1% from the prior year. Average home equity loan balances were down 3% sequentially, and average credit card balances were flat sequentially. Moving on to deposits. We continue to see solid deposit trends with the average core deposits up $617 million or 1% from the first quarter. Transaction deposits, which exclude consumer CDs, increased $740 million or 1% sequentially and $4.1 billion or 5% from a year ago. As Kevin mentioned, we've seen strength, particularly in demand deposits, up 4% sequentially and 13% from a year ago. Both commercial and consumer deposits have grown nicely with particular strength on the consumer side. Consumer CDs declined 3% in the quarter. Turning to fees, which are outlined on Slide 7. Second quarter noninterest income was $1.1 billion compared with $743 million last quarter. As I mentioned earlier, current quarter fee income results included a $242 million gain on the sale of Vantiv shares and a $76 million positive valuation adjustment on the Vantiv warrant. In addition, second quarter results included a $10 million benefit from the settlement of one of our BOLI policies that we've previously surrendered, a $5 million -- and a $5 million charge related to the valuation of the Visa total return swap. You'll recall that first quarter fee income included about $50 million of noteworthy items, with the Vantiv warrant and investment securities gains being the largest, all of which are detailed in the release. Excluding all of these items, fee income of $737 million increased $45 million or 7% sequentially, reflecting higher mortgage banking revenue, corporate banking revenue and deposit service charges. Looking at each line item in detail. Deposit service charges increased 4% sequentially and 4% from the prior year. The sequential increase was primarily driven by increased retail service charges, which were up 10% sequentially and 4% from the prior year as a result of the completion of our conversion to the new deposit product offerings. This transition has gone well and we believe that it provides a solid foundation for our retail business going forward. Corporate banking revenue of $106 million increased 7% from the first quarter and 4% from a year ago. The sequential increase was driven by higher syndication, derivatives and foreign exchange fees, partially offset by lower institutional sales revenue. Mortgage banking net revenue of $233 million increased 6% from the first quarter and 28% from a year ago. Originations were a record $7.5 billion this quarter compared with $7.4 billion last quarter. Purchase volume was $1.8 billion, up significantly from the $1.0 billion in the first quarter. Gain on sale revenue was $150 million, down $19 million from the prior quarter, reflecting lower gain on sale margins during the quarter, partially offset by stronger HARP volumes with higher margins. MSR valuation adjustments, including hedges, were a positive $72 million in the second quarter compared with a positive $43 million last quarter. Investment advisory revenue of $98 million was down 2% from record first quarter levels and increased 6% from the prior year. The sequential decline was primarily due to seasonal tax-related fees that were recognized in the first quarter. The year-over-year increase reflects strong wealth management and record brokerage revenue as well as the benefit of higher market values. Card and processing revenue was $67 million, a 4% increase from the first quarter and a 6% increase from a year ago, reflecting higher sale in transaction volumes. This business continues to produce strong, steady growth. The net investment portfolio securities gains were 0 this quarter compared with $17 million in the first quarter and $3 million a year ago. We also realized $6 million in net securities gains that were related to nonqualified MSR hedges. Those were $2 million last quarter and 0 in the second quarter of 2012. Turning next to other income within fees. Other income was $414 million this quarter versus $109 million last quarter and included the Vantiv-related gains that I've discussed earlier. Excluding Vantiv gains in both quarters, other noninterest income of $96 million in the second quarter increased $21 million sequentially. Credit costs recorded in other noninterest income were $6 million in the second quarter compared with $10 million last quarter and $17 million a year ago. Turning to expenses which are on Slide 8. Noninterest expense was $1.0 billion compared with $978 million last quarter. Expense results this quarter included $33 million in charges to increase litigation reserves and a $2 million benefit from the sale of affordable housing investments. You'll recall that prior quarter results included a $9 million benefit from the sale of affordable housing investments and $9 million in charges to increase litigation reserves. Excluding these items from both quarters, noninterest expense of $986 million increased $8 million or 1% from the first quarter. Current quarter results reflected a seasonal decline in FICA and unemployment benefits expense, partially offset by increased compensation-related expenses. Credit costs -- credit-related costs were $35 million this quarter versus $24 million last quarter. Included within credit-related costs were a net $6 million increase to the mortgage representation of warranty reserve. That was driven by a $9 million increase to the reserve, resulting from additional information obtained from Freddie Mac regarding changes to its selection criteria for future mortgage repurchases and file requests. Realized mortgage repurchase losses were $14 million versus $20 million in the prior quarter. Additionally, second quarter credit-related costs included a $2 million release from reserves for unfunded commitments versus an $11 million release last quarter. Moving on to Slide 9 and PPNR. Pre-provision net revenue was $923 million in the second quarter compared with $653 million in the first quarter. Excluding the items noted on this slide, adjusted PPNR in the second quarter was $631 million, up 5% from the prior quarter and up 6% from a year ago. Now turning to credit results. As Kevin mentioned, our credit trends continue to perform very well, as we saw solid credit improvement across every category in the second quarter. Starting with charge-offs, which are on Slide 10, total net charge-offs of $112 million declined $21 million or 16% from the first quarter and $69 million or 38% from a year ago. The net charge-off ratio was 51 basis points this quarter and is the lowest we reported in more than 5 years. Commercial net charge-offs of $45 million declined 17% sequentially and 42% from a year ago. At 36 basis points, this was the lowest level reported since the third quarter of 2007. The decrease was driven by commercial mortgage net charge-offs, which were down $16 million from last quarter, partially offset by an $8 million increase in C&I net charge-offs. Total consumer net charge-offs were $67 million or 73 basis points, down 15% sequentially and 35% from a year ago. This was the lowest net charge-off ratio for consumers since the second quarter of 2007. Improvement continues to be driven by lower home equity and residential mortgage losses, with improvements across most geographies. Auto loan net charge-offs were $5 million or just 16 basis points of loans. Moving to nonperforming assets on Slide 11. NPAs of $1.2 billion at quarter-end were down $60 million or 5% from the first quarter, with commercial NPAs down 4% and consumer NPAs down 7%. Commercial portfolio NPAs were $794 million and declined $34 million sequentially. The decrease was driven by a $63 million decline in commercial real estate NPAs, partially offset by a $29 million increase in C&I NPAs. Commercial TDRs on nonaccrual status included in NPAs were $140 million, down $19 million on a sequential basis. Commercial-accruing TDRs were up $34 million but remained fairly low at $475 million. In the consumer portfolio, NPAs of $356 million declined $26 million, driven by improvement in the residential mortgage portfolio. Non-accruing consumer TDRs included in these results were $162 million, down $12 million from last quarter. Accruing consumer TDRs were $1.7 billion, relatively consistent with last quarter. To date, Fifth Third has worked with over 10,000 borrowers to modify their loans to help them stay in their homes. Aggregate 12-month re-default rates are just over 25% and improves considerably as the modification program evolved following its inception in 2008. As you know, performing TDRs that included an interest rate modification cannot be reclassified out of TDR status unless they are refinanced on market terms. $1.4 billion of these loans are current, and $1 billion of them are current and have season for more than a year. We would expect that this portfolio will slowly decline over time as the opportunity and need to introduce new restructurings has declined, with improving residential real estate credit conditions. Before moving on, I did want to touch on our delinquency levels. Total delinquencies of $410 million were down $60 million or 13% from the first quarter. Loans 30 to 89 days past due were down $48 million, driven by a $30 million decline in commercial delinquencies and an $18 million decline in consumer delinquencies. Loans over 90 days past due were down $12 million from the first quarter, driven by improvement in consumer. And as Kevin noted, commercial 90-day-plus balances were less than $1 million. Commercial criticized asset levels also continue to improve, down about $200 million or 4% sequentially, and represented the ninth consecutive quarter of decline. The next slide, Slide 12, concludes a roll-forward of nonperforming loans. Commercial inflows in the second quarter were $151 million, a bit higher than the first quarter, but down $52 million or 26% from a year ago. Consumer inflows for the quarter were $116 million, down 36% from last year. Total inflows of $267 million remained at relatively low levels. We generally expect continued improvement in both the commercial and consumer portfolios. The provision and the allowance are outlined on Slide 13. Provision expense of $64 million in the quarter was up $2 million from the first quarter and included a reduction in the loan loss allowance of $48 million. Allowance coverage remains strong at 191% of nonperforming loans and 3.9x annualized net charge-offs. Slide 14 outlines our recent mortgage repurchase experience. As expected, we saw a slight uptick in claims associated with GSEs as Freddie Mac is now reviewing all nonperforming loans for potential putback. However, claims are still 45% below levels we were experiencing a year ago. As I mentioned earlier, we increased the reserve for these loans during the quarter based on additional Freddie Mac guidance received. We've provided a detailed breakout of loans sold by vintage and remaining balance. Repurchase request and losses have been concentrated in the 2004-2008 vintages, about 84% of the total. Those vintages represent just 9% of the total remaining balances on sold loans. Turning to capital on Slide 15. Capital levels continue to be very strong and included the impact of the $600 million preferred stock issuance and approximately $539 million in common share repurchases that were announced during the quarter. The Tier 1 common equity ratio was 9.4%, down 26 basis points from last quarter. The Tier 1 capital ratio increased 24 basis points and total risk-based capital was consistent with last quarter. Tangible equity ratios also continue to be strong, with a 9.0% TCE ratio, including unrealized after-tax gains of $149 million and an 8.8% TCE ratio, if you exclude those gains. As you are aware, the U.S. banking regulators have approved final Basel III capital rules. Our current pro forma estimate for the Tier 1 common equity ratio is 9.1%. That calculation assumes an exclusion of AOCI components from capital, which is subject to an election on our part, in early 2015. That pro forma estimate would be about 9.2% if we included AOCI. As a result, our capital position is well in excess of the minimum required ratios, including capital conservation buffers, and the additional clarity on the rules will hopefully make the CCAR process a bit more transparent going forward. A couple of reminders. We have about $600 million of repurchase capacity remaining under our 2013 CCAR plan that runs through March 31 of 2014. Also, you'll need to take note of the timing of preferred dividends going forward. First, the Series G convertible preferred stock has been redeemed, so that dividend has been eliminated, and we will have no scheduled preferred dividend in the third quarter of 2013. Our May preferred stock issuance carries a semiannual dividend, which will not be payable until the fourth quarter. That dividend would normally be about $15 million every other quarter. The fourth quarter dividend will actually be a bit larger, about $19 million, because it will include the stub period from May and June. Turning to updated full year 2013 outlook, which is summarized on Slide 16. We've made a number of modest adjustments to our full year outlook, with the primary changes in the mortgage banking revenue as you might expect. I'll start with net interest income and net interest margin. We continue to expect full year 2013 NII to be relatively consistent with 2012 NII of $3.6 billion, and we expect full year NIM to be in the 335 basis point range. We expect third quarter NII to increase by about $5 million to $10 million. That reflects the benefit to the higher rate environment on the securities portfolio and securities yields, as well as loan growth and higher day count, offset by loan repricing and the full quarter effect of the interest rate floors that matured during the second quarter. Day count adds about $6 million, and the floor maturities will cost us about $5 million. As we've previously discussed, we expect NIM compression to subside in the second half of the year and to begin stabilizing. We currently expect third quarter net interest margin to decline a few basis points, with 1 basis point of detriment from day count and 2 basis points from the full effect of the matured floors. And we'd expect fourth quarter NII and margin to improve, and that will include the benefit of $800 million in maturing CDs from 2008 that mature over the second half of the year. We expect full year loan growth versus 2012 full year averages in the mid single-digits or a little better, which reflects the $500 million in loans we securitized last quarter and the ongoing sale of 30-year jumbo mortgages. We expect transaction deposits and core deposits to grow in the mid single-digits range compared with 2012 averages. Now moving onto overall fee income and expense expectations for 2013. Just as a reminder, we've adjusted 2012 comparative results on this slide to exclude all Vantiv-related impacts as well as debt termination charges, which were the largest unusual items last year. In the first half of 2013, Vantiv transactions contributed $352 million to fee income, which are also excluded. Those adjustments are listed in the footnote on this slide. Overall, we currently expect fee income to be relatively consistent with 2012 adjusted fee income. That would reflect mid or high single-digit growth across all major fee categories other than mortgage which, of course, is being compared to record 2012 levels. So looking at the details of our overall fee expectations, we expect to see mid single-digit growth in deposit fees. That's a bit lower than we previously expected as many consumers continue to maintain higher deposit balances that defray fees. We're obviously seeing that benefit in our deposit trends. For the third quarter, we're looking for mid single-digit sequential deposit fee growth. We expect mid to high single-digit annual growth in the investment advisory revenue, corporate banking revenue and card and processing revenue. Corporate banking results in the third quarter should be quite strong. Turning to mortgage banking revenue. Obviously, the change in the rate environment this quarter has resulted in changes to our expectations for mortgage revenue and its makeup. As I discussed earlier, second quarter mortgage banking revenue was $233 million or $161 million, excluding the MSR gains of $72 million. Relative to that $161 million base level, for the third quarter, we currently expect mortgage banking revenue to decline about 20% to 25% sequentially, reflecting lower volumes and some margin compression, which will be partially offset by lower servicing asset amortization. That outlook does not include any MSR valuation adjustments, which will depend on the rate environment at the end of the quarter. For the full year, our current forecasts for total mortgage banking revenue is in the $700 million range, which would be down about 18% from record levels in 2012. Our quarterly base expectation for other income caption would continue to be in the $75 million range, plus or minus, absent significant unusual items, which will occur from time to time. If we turn to our overall expectations for third quarter fee income, we currently expect fee income in the $630 million to $640 million range, with the sequential reduction reflecting second quarter Vantiv gains of $72 million in MSR gains this quarter and lower mortgage production revenues, with increases across most other fee lines otherwise. Turning to expenses. We currently expect third quarter noninterest expense of $940 million, plus or minus, reflecting lower mortgage-related expenses and the impact of elevated litigation-related costs in the second quarter. We expect an efficiency ratio in the 61% to 62% range, a bit higher than we were previously forecasting due to the change in the expected mortgage environment. We continue to expect full year noninterest expense to be relatively consistent with adjusted 2012 expenses. We will continue to manage our expenses carefully and aggressively, in line with the revenue results and the economic environment. In terms of PPNR, as reflected in my remarks to this point, our overall expectation for the year is consistent with 2012 levels. And that's despite a rate environment that remains challenging and comparisons for the record year for mortgage revenue. Turning to the credit outlook, we expect overall credit trends to remain favorable in the second half, with full year net charge-offs currently expected to be down about $200 million to $225 million. We currently expect the net charge-off ratio for 2013 to be in the 55 basis point range compared with the 85 basis points that we reported in 2012. We continue to anticipate lower NPAs, down about 20% during 2013, with continued resolution of commercial NPAs being the largest driver of the reduction. On the loan loss allowance, we expect continued reductions in 2013 with the ongoing benefit of improvement in credit results, partially offset by new reserves related to loan growth. In summary, we have good momentum in many of our core businesses that we expect to help us generate continued solid results. That wraps up our remarks. Operator, could you open up the line for questions, please?

[Operator Instructions] Your first question comes from the line of Matt Burnell of Wells Fargo. Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division: I guess, I'm just curious, first of all, in terms of what you're seeing in terms of demand for commercial loans. Obviously, C&I loans were growing a little bit faster than the rest of the portfolio. I guess, as you look across your geographic footprint, are there any particular markets that are seeing a stronger growth or have you seen any effect from some of the currency fluctuations that might have dampened demand across your footprint over the quarter? Kevin T. Kabat: Thanks, Matt, this is Kevin. Let me kind of address that and Dan, if you got any additional comments, you can make them. But what I would tell you is that we've seen demand pretty broad-based. I wouldn't tell you that it was specific in terms of any geography. We're also seeing it broad across industry types. And so we're relatively pleased given the environment. We did see a little bit of increase in pay downs in the first -- or in the second quarter. I think -- and in reaction to kind of the Fed's announcements, I think CFOs were really kind of looking at their debt and trying to lock in or pay down some of the low cost that they had. But for the most part, pipelines continue to be robust and, again, broad-based across both geography and industry type from our standpoint. So I don't know if there's anything else Dan, that you'd add to that commentary. Daniel T. Poston: No. I guess, the only comment, I agree the growth has been pretty broad-based. But I think we have seen particular success in the southern regions where we continue to capture market share, so I think we've probably got a little bit of bias to growth to some of the markets in the South but, in general, making good progress and seeing growth across our geographies. Kevin T. Kabat: And the only other thing I'd add, too, Matt, is we -- the investments that we made and have continued to make in our verticals continues to pay dividend for us. Whether it's the energy vertical, the health care vertical, those continue to be good opportunities for us. And we still are winning fairly well in that space. So we feel good about those investments and our outlook there. Daniel T. Poston: Yes. I think to follow up on that, in the areas where we've made investments specifically in mid-corporate capabilities, the health care vertical, the energy vertical, we're seeing growth rates in those areas significantly in excess of the overall growth rates in C&I. So those investments continue to pay pretty good dividends for us. Kevin T. Kabat: And then the last comment I would make is, as we mentioned in our scripting upfront, we saw -- although it's a much smaller portfolio than it has been historically for us, we saw a growth in our construction space that, obviously, will mature. And to our commercial mortgage, we've been quite deliberate in our focus around that space. And our expectation is that, that will no longer -- by the end of the year or first part of next year, that it will no longer kind of drain assets from the balance sheet, but we think that we can -- are finding attractive enough projects and beginning to invest in that, that we can be either be the end of its decline and hopefully, again, be an opportunity for us to increase a little bit of our exposure as we look out. Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division: That's very helpful. And if I can just shift the gears a little bit to the mortgage side of things. I appreciate the detail you provided in your outlook relative to mortgage banking revenues. But I guess I'm just curious if you could provide a little more color in terms of how you're thinking about taking the cost out of that business, as the refi boom comes -- slows back down. Is it -- are you thinking more in terms of sort of a 1- to 2-quarter lag or is it potentially a little bit longer than that? Daniel T. Poston: Well, we've talked a bit about this in the past, and there's a fair amount of expense within the mortgage business that is variable with respect to, in particular, the compensation-related pieces that vary with originations and with revenue. Beyond that, there are some fulfillment expenses that are variable that -- but that do require actions on the part of management to actively manage those expenses, and do involve or require some time in order to make those adjustments. So as mortgage revenues and expectations for mortgage revenues have declined, we have begun actively managing those expenses. We have plans to take out temporary labor, contract labor, reduce our FTE through reductions of those kind of third-party headcount as well as reductions in overtime. And we will be working over the quarter to bring down overall expense levels in the mortgage environment to be consistent with the revenue expectations. As we sit here right now, if you look at our revenue guidance, we've talked about a 20 to 25 basis -- or excuse me, 20% to 25% decline from the $162 million in non-MSR related mortgage revenue in the second quarter. That's about $40 million in round numbers. Our expense revenue or our expense expectations for the third quarter would be that we can take expenses down equal to about 2/3 of that revenue, which is pretty much in line with the overall kind of efficiency levels in that business. So that's about $25 million in the third quarter. And we will continue to evaluate other opportunities to make further changes in the mortgage business that are consistent with our kind of the intermediate and longer-term expectations for what that business contributes. Kevin T. Kabat: Yes, Matt, I'd kind of put a finer point in terms of your question. I think Dan has given you kind of a good overview. I'd just make a couple of comments there. One, this isn't a surprise to us. It shouldn't be to you either in terms of the mortgage refi business changing. So obviously, we've been anticipating the turn and when that was going to happen. We'll be aggressive in managing our business and we expect to get, as Dan kind of highlighted to you, most of that expense out quickly and no more than 2 quarters in terms of addressing that business, dependent upon the sustained level of demand. That's what we'll size the business to from that perspective. So you'll see us all over that.

This is Jeff. I would just -- one thing I would add, I think we've discussed this kind of 60-day lag between taking expenses out and revenue. That 60 days has kind of happened because this started in early May. And so we are acting in the third quarter just as you would expect, given that, that's happening. Matthew H. Burnell - Wells Fargo Securities, LLC, Research Division: Okay, that's helpful detail. And I guess one final question. We've started to see a little bit of M&A occur in smaller size banks within the Midwest and within a couple of specific markets within the Midwest where you have some operations. I guess I'm just curious, given your relatively strong capital position, if there is increased interest at this point heading into 2014, with the capital rules now sort of relatively well understood to increase your footprint penetration within the Western part of the Midwest. Kevin T. Kabat: Yes. I would tell you, Matt, clarity is helpful. And so getting that -- getting our arms around that is helpful as we look at it. As we've indicated and as we've talked about in the past, we grew up as an acquirer, we know that there'll be a time for consolidation that we'll be at the table for. We look at these things, obviously, in terms of use of capital and all of the other metrics we've outlined for you in the past relative to where we'd have to pass our hurdle rates. And obviously, if it's within footprint, we're both aware of it, understanding what's going on and look at that as opportunity to have greater density within our footprint. And we think that strategically makes the most sense to us as we look out. And so, again, I think that all of that fits within our purview, all of that fits within our strategic orientation and we'll continue to monitor what that looks like. If there's something that we think really is interesting and is -- fits within those parameters, yes, we would -- we'd take a real hard look at it.

And the one thing, you started this with our high capital levels, and I think we would not look at our high capital levels as increasing our desire to do M&A. I think we would look at M&A as something that we would do when the deals are right in the right time. But we can also buy back our own stock with that capital. And we have to look at the value of that trade versus buying somebody else's stock. So we'll -- we don't view that capital as something that we've got to get rid of.

Your next question comes from the line of Matt O'Connor of Deutsche. Matthew D. O'Connor - Deutsche Bank AG, Research Division: I've got a few just nuance questions here, so apologize in advance. But first on the share count, what share count should we be using whether it's 3Q or 4Q? You've got some forward settlements that -- there's a full impact that needs to come from that. I don't know if that includes the Vantiv gain. There's just a few different pieces in the buybacks so maybe give us some insight in terms of what's already been announced or already planned for, as we think about the share count on a diluted basis.

Well, so that's a tough one to answer because the third quarter share count is going to include things that we do in the third quarter. And we haven't just given -- we haven't given guidance on that, and we haven't acted on it. I think I would hesitate to give you a share count for the third quarter. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Okay. I mean, maybe putting some of the moving pieces out there.

You can take our CCAR plan and then kind of assume what you're going to assume for the timing of the remaining $600 million in repurchases, and then you'll come up with a share count that hopefully will be in the ballpark. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Right. So there's the $600 million remaining, there's still a $15 million benefit, I think, from what still needs to be settled that's in the period end, but not the average or something?

Yes, there's still a small settlement amount that -- $15 million, is that right?

Yes, it's always the stub amounts at the end of the completion period, that would create that. I mean, that's sort of related to how we execute our accelerated share buybacks. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Okay. And then the Vantiv gain that you realized this quarter, the $150 million in change, you would be allowed to buy back stock with that, in addition to the $600 million and the forward settlement that's still out there, right?

No. The $600 million incorporates the fact that we already have approval for Vantiv. So the share repurchase that we did in May, plus the $600 million equals the total for CCAR plus Vantiv. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Okay, all right, that's helpful. And then just separately, I know the tax rate's been coming in a little bit higher the first couple of quarters this year, but you're still sticking to the outlook of, I think, 28.5% for the full year, which obviously implies a decent decline in the rest of the year. I mean, I'm just trying to figure out kind of what's going on with the tax rate overall. And as we think out longer term, is that 28.5% kind of a good run rate to use?

I mean, the tax rate is -- we kind of reset it this year. It's been fairly stable in that 28.5% range. I think we were -- because we have seasonality in the first quarter, the tax rate's a little high. So second half of the year, 28.5%, 29%, somewhere in there seems about right. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Okay. And then just separately, actually one other small thing, so the preferred dividend is $15 million every other quarter. So we should just pencil -- that's the only piece that's out there once this other one is converted. So we just pencil in $30 million per year starting next year? Daniel T. Poston: Yes. But it will be $15 million every other quarter, not $7.5 million per quarter. Matthew D. O'Connor - Deutsche Bank AG, Research Division: Yes, got it. Okay. And then separately, if I may, just kind of a bigger picture question. You've talked about how you have one of the smaller securities books of there and that you've got a lot of capacity to add to it over time if rates rose, and you chose to -- I did notice the period end securities was about $1 billion higher than last quarter and the average. So just thoughts on where rates are right now, both your capacity and interest in adding more securities to your period-end levels?

We don't view the current rate environment as the end game environment. The reason why balances have increased this quarter is really more due to our decision to reinvest some of the expected cash flows that are coming back to us from the portfolio. Our anticipation is that rates will continue to inch up as we get closer to the end of QE as well as sort of the eventual, whether it's end of '14 or in '15, starting increasing short-term rates. So we have not fundamentally changed our investment strategy. This is probably somewhat of a temporary increase in investment balances. But clearly, we evaluate our opportunities and options and we will make the right decisions. But this particular quarter's increase in balances is not a permanent change in our investment approach. Daniel T. Poston: Said it another way, Matt, the $1 billion increase in the end of period balances that you see is an acceleration of assumed investments in the NIM and NII guidance that we gave reflects that as an acceleration of investment of cash flows and not as a permanent increase in the level of portfolio at this point.

Your next question comes from the line of Ken Zerbe of Morgan Stanley. Ken A. Zerbe - Morgan Stanley, Research Division: First question, just on capital. With, I guess, the positive changes that we've seen to Basel III capital ratios, when you look ahead to 2014 and your Basel III number is higher than where you previously thought it was going to be, do you think that gives you any more flexibility under the 2014 CCAR process to ask for more capital return than you may have otherwise, under different Basel III rules? Daniel T. Poston: Well, we're certainly hopeful that having some final rules creates some clarity that allows the CCAR process to be a little more transparent and for both us and the regulators to have a little more certainty with respect to what capital levels need to be going forward and how we should manage those. So I think net-net it's a positive in terms of removing an additional uncertainty, which might allow us to do things in our CCAR plan that otherwise we might have been a little hesitant to do because of that uncertainty. So I think on the margin, the impact that you're talking about may be there, yes. Ken A. Zerbe - Morgan Stanley, Research Division: And then just one final question. On Page 5, you had a chart showing C&I loan yields. I guess it's down another 32 basis points this quarter to 3.58%. When we think about where you're putting on new loans including any fees that might be in there as well, what's the right or what's the current level of C&I yields? Just to have a base of where that might bottom out.

Yes. I think as we stated, Ken, this quarter, we had the impact of expiring floor maturities on our C&I portfolio yields, so that was a large impact on yields. As we think about yields and spends going forward in that business segment, there are several factors that impact that line item. One is just the fact that incoming loans clearly are of different credit nature, better credit nature compared to outgoing loans. That is fairly clear from the activity that we see. The other one is the impact of the overall credit spreads, both in capital markets as well as bank loan markets. Credit spreads continue to tighten during the first half of the year. And that activity impacts our bank loan spreads and impacts the prepayment behavior in that portfolio. The other one that we have to keep in mind is that as a company, we have and we continue to approach that business from a relationship perspective. So the credit spreads are just a portion of the relative returns in that business and we are clearly seeing increased fee activity. And our internal return targets and profitability ratios take into account noncredit segments in that business. Now having said all of that, I think when you go through a change in the rate environment that we've experienced over the last sort of 6 to 8 weeks, that tends to sort of, hopefully, create some changes in spread trends, and we may see some of that going forward. In general, we expect the credit spreads to stabilize, but we are cautious because that necessarily is a little bit dependent upon what happens in capital markets, what happens with competition, how they price loans. So in our guidance with respect to NIM or NII, we tend to be cautious in how we think about commercial yields. But clearly, this quarter's particular drop in yields has been outsized and largely impacted by an expiration of floors. So I wouldn't extrapolate what happened this quarter into future quarters.

Your next question comes from the line of Paul Miller of FBR. Paul J. Miller - FBR Capital Markets & Co., Research Division: On -- coming back to the mortgage side, correct me if I'm wrong, but you're mostly a refi shop. What type of things are you doing to try to increase your purchase market or are you just comfortable with the mix shift you got right now? Daniel T. Poston: Yes. I think in the quarter, in the second quarter, about 1/4 of our volume was related to purchase mortgages. So I think we do have a fairly sizable portion of our business that's purchased business. That increased significantly during the quarter. Purchase volume was $1.8 billion of the $7-plus billion in originations. In the quarter, that was up 80% from $1 billion in the first quarter. So I think we're seeing increased purchase volume. That's the result of a number of things. One is we've given more attention and focus, obviously, to purchase volume as the environment has started to shift. You get the seasonal benefit of the selling season that starts in the second quarter and continues into the third. And continued stabilization and improvement in real estate valuations, and the real estate market is helping there as well. So we have a sizable portion of our business, in the second quarter, it was from purchase volume that will be a greater percentage, obviously, as we go forward and the refi portion of the business wanes. But were confident in our ability to capture our share of purchase volume and think we're doing the right things to increase purchase volumes as we go forward. Paul J. Miller - FBR Capital Markets & Co., Research Division: Can I be -- correct me if I'm wrong, I don't believe that you guys have a lot of eligible loans in your portfolio because you weren't -- your portfolio's relatively clean. Am I correct or are you doing HARP?

Depends on who you compare us to. But in general, we would say that our portfolio is much cleaner relative to a large number of our peers. Paul J. Miller - FBR Capital Markets & Co., Research Division: But are you doing HARP? Is there HARP originations in that $7 billion number? Kevin T. Kabat: Yes, absolutely. Daniel T. Poston: Yes. We had about $1.4 billion. It was about 22% of our second quarter volume. Paul J. Miller - FBR Capital Markets & Co., Research Division: And with that, is the HARP -- with higher rates, is the HARP gain on sale margins relative to the overall gain on sale margins? Are they coming in or are they still holding pretty strong? Daniel T. Poston: They've come in significantly. In the second quarter, they were still probably 100 basis points or so wider than non-HARP. We're expecting that, that differential will continue to shrink as we go forward.

The next question comes from the line of Ken Usdin of Jefferies. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: First question, I just wanted to ask you to update us on your strategy around hedging the MSR. You guys have had really nice MSR gains over the last couple of quarters, and I know you did say that they would be down from here. But can you just talk as how, to the extent that you are hedging the MSR, or are you more just apt to kind of let it ride with rates at this point?

We absolutely hedge our MSR. Our risk management approach and sort of the underlying policy and limits require us to manage MSR volatility within fairly prudent guidelines. Now having said that, the same risk management approach, in general, applies to the overall mortgage banking revenues. And as you know, up until the end of the second quarter, we've operated under very unprecedented rate and margin environment. And during the second half of 2012 and most of the first half of 2013, primary 30-year mortgage rates have fluctuated between 3.5 and 3 7/8, and gain on sale margins at that time approached 4 or 5 points. Now operating in that environment for 3 full quarters in a row creates significant risk exposures in the underlying revenue streams, and we're cognizant of that. Now at that point, a 25 basis point move up or down in rates has created significant changes. We spend a lot of time studying our MSR asset and its convexity, and we use a lot of third-party opinions along those lines. We're also very cognizant on how MSR assets are valued. As you know, largely valuations depend on what happens at the end of the quarter. So it's very difficult for us not to hedge the position. And it's not -- the hedge position is not a position that you put on at the beginning of the quarter and go away because it's a very dynamic position. Having said all of that, I mean, having said all of that, we are now in a different rate environment. We moved away from that 3.5% to 3.75% zone into more of a 4.5% mortgage rate zone. And in this environment, clearly, our approach to hedging MSR values is going to be different than the strategies that we have used over the past sort of 3 or 4 quarters. So we've never given any guidance in terms of our MSR because, truly, as a hedge management philosophy, we don't anticipate gains and losses, and our goal is to neutralize the volatility in that asset. But having moved from that cusp-y nature of mortgage rates, we're clearly much more focused on making sure that we preserve the stability and the value of our MSR. So basically, cut it short, yes, we do hedge our MSR value. We will continue to hedge the MSR value. Our tactics may change from one quarter to another but, in general, we do not take market risk when it comes to the mortgage revenue streams in our business. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay, got it. And then my second question is regarding just preferred issuance, when you did the press release back in the spring about the conversion. Now that conversion has happened. That press release also mentioned the possibility of issuing another $500 million of preferred. So I wanted to ask you, a, are you planning on doing that? And then b, you're still very low as a percentage of Basel III in terms of that total preferred bucket, so I just wanted to ask you to your thoughts on just, do you intend to continue to fill up that bucket? And where would you expect to take that to over time?

We plan to follow our CCAR plan and issuing another $450 million in preferred securities is in that plan, so we plan to execute that strategy. Going forward, I think, we believe that we achieve better capital efficiency by utilizing preferred securities in our capital accounts. And over time, we would like to utilize the room that we have in that line item. Kenneth M. Usdin - Jefferies & Company, Inc., Research Division: Okay. And then just last quick thing. So that $450 million is going to -- well, we don't know exact timing, but that's something that we need to contemplate as far as the preferred expense run rate, the preferred dividend run rate as well.

Correct.

Your next question comes from the line of Steve Scinicariello of UBS. Stephen Scinicariello - UBS Investment Bank, Research Division: Just want to talk about life after mortgage for a second here. Just given some of the strong underlying trends and some of the -- your other fee income areas like deposit charges, card, corporate, investment, management, what not. Just kind of wondering if you could talk a little bit about some of the opportunities you have to kind of ramp those up as kind of the economy continues to get better and the ability of that to maybe offset some of the kind of net effect from kind of the mortgage tailing off. Kevin T. Kabat: Yes. Steve, a couple of things I'd say. One is, if you look at it, I think we're a little bit ahead of the game because you can see the progress being made even today in today's results in our other fee areas. So whether you're talking about commercial fees, whether you're talking about deposit fees, whether you're talking about card fees, whether you're talking about record brokerage fees contributing to the IA -- our IA business, we feel really good about the momentum that we've built and investments we've made in those businesses that will continue. And I think that is true in terms of the guidance that we've given you and in the progress that we've made from that standpoint. And even in terms of life after mortgage, as you say, there will be a mortgage business that will continue to refer consumer product through. Our deposit products with cross-sells will continue to be a strength of ours. Our sales culture continues to be a strength. So those are opportunities. And we're also, really, just now beginning to see, I think, some better health in our business banking space. And so that end of the spectrum, I think, is beginning. And that has, I think, a better outlook over the next few quarters and into next year as well. So again, we feel like we're really well positioned, and our businesses are operating and working well. We think we're ahead of the game in terms of some of the product offerings that we've put out. We've talked about our deposit simplification, that's complete now. And we have a platform that we can build on. And as I mentioned earlier in one of the questions, we're also beginning to see a lessening of drag on our assets and balances in our -- in the CRE space. So again, we think that we'll show you and we'll be able to demonstrate the transition to the core bank strength that Fifth Third, I think, shows in the numbers today that you'll look for us in the future. I don't know, Dan, if there's anything you'd add. Daniel T. Poston: No. That says it pretty well.

Your final question comes from the line of Jack Micenko of SIG. Jack Micenko - Susquehanna Financial Group, LLLP, Research Division: On the mortgage side, you've grown your mortgage portfolio nicely over the past several years. At the same time, historically, when rates have gone up, we've seen a migration on the purchase side from 30-year fixed into maybe some 7/1s, 10/1s. I think that's generally the kind of product you've been looking to put on balance sheet. So I guess the question is, in the mortgage business on the purchase side, have you seen that transition yet in terms of a migration to lower -- shorter duration purchase mortgage? And would that potentially be a driver of additional mortgage growth in the future on balance sheet as the structure is more sort of consistent with the duration you're looking for in the mortgage book?

I don't have the statistics as to what percentage of our ARM originations are purchase versus refi. But in general, our preference, as you stated, is for shorter duration mortgage assets. We do not currently, and for a number of quarters now, have not been retaining longer-term mortgages whether it's conforming jumbos or our retail mortgage product. If we do see an uptick in shorter duration mortgage originations, yes, that would benefit our overall mortgage portfolio growth because I suspect that we will not make any changes in terms of duration preferences in our retained mortgage portfolios. Yes, if we do see that uptick, we may be able to retain a little bit more of those shorter duration mortgages. Jack Micenko - Susquehanna Financial Group, LLLP, Research Division: Okay, great. And then on the commercial real estate side, the run off has been, I don't know, net, maybe call it $300 million a quarter. Can you give us some granularity around what some of the growth looks like and try to do the math and net out what -- when we see the trough, I think you'd said, maybe by the end of the year? And then what kind of sort of net new growth we could potentially forecast going forward? Kevin T. Kabat: Yes. I think the color that we've given you is really kind of pertaining to this year. And our expectation is that we could begin to see some growth in the CRE assets, so that gives you the number there. We really haven't given guidance in terms of -- next year we will when we get closer to the end of the year. But obviously, when we hit that inflection point, that could become -- as you can see, as a percentage of our total assets and book, we're probably one of the lowest, if not the lowest, in all of the regionals with that asset classification. So there's a good opportunity out there. We've got good focus and strong infrastructure against that to take a look at it. But we'll give you more clarity as we get further out in the year on that. So...

There are no further questions at this time. This concludes today's conference call. You may now disconnect.