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## MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 

Corporate banking revenue decreased $8 million, or two percent, in 2010, largely due to decreases in international income and lease remarketing fees, partially offset by growth in syndication and business lending fees. Foreign exchange derivative income of $63 million decreased 17% driven by volume declines. Loan syndication fees were $28 million in 2010, compared to $8 million in 2009. 

Investment advisory revenue increased $35 million, or 11%, from 2009 as the result of improved market performance and sales production that drove an increase in brokerage activity and assets under care. Brokerage fee income, which includes Fifth Third Securities income, increased $23 million in 2010 as investors migrated balances to stock and bond funds due to improved market performance, which increased commission-based transactions. As of December 31, 2010, the Bancorp had $266 billion in assets under care and managed $25 billion in assets for individuals, corporations and not-for-profit organizations. 

On June 30, 2009, the Bancorp completed the sale of a majority interest in its merchant acquiring and financial institutions processing businesses. The Processing Business Sale generated a pre-tax gain of $1.8 billion ($1.1 billion after-tax). As part of the transaction, the Bancorp retained certain debit and credit card interchange revenue and sold the financial institutions and merchant processing portions of the business, which historically comprised approximately 70% of total card and processing revenue. As a result of the sale, card and processing revenue decreased $299 million, or 49%, compared to 2009. Card issuer interchange, which was retained by the Bancorp, increased eight percent, to $284 million, compared to 2009 due to strong growth in debit and credit card transaction volumes. 

Other noninterest income decreased $73 million in 2010 compared to 2009. The components of other noninterest income are shown in Table 9. The decrease was primarily due a $244 million gain relating to the sale of the Bancorp’s Visa, Inc. Class B shares in 2009 and a $27 million decrease in revenue in 2010 related to the TSA entered into as part of the Processing Business Sale, partially offset by an increase of $196 million in BOLI income. The year ended December 31, 2010 includes a $152 million litigation settlement related to one of the Bancorp’s BOLI policies while 2009 includes $53 million in charges to record a reserve in connection with the intent to surrender one of the Bancorp’s BOLI policies as well as losses related to market value declines. 

Net securities gains totaled $47 million in 2010 compared to $10 million of net securities losses during 2009. 

## Noninterest Expense 

Total noninterest expense remained relatively flat in 2010 compared to 2009 as increases in salaries, wages and incentives and the expense for representation and warranties were largely offset by a decrease in the provision for unfunded commitments and letters of credit, lower FDIC insurance and other taxes and a decrease in card and processing expense. The components of noninterest expense are shown in Table 10. Noninterest expense in 2010 included $49 million of expenses related to the TSA and $25 million in legal fees associated with the settlement of claims 

## TABLE 10: NONINTEREST EXPENSE 

## TABLE 9: COMPONENTS OF OTHER NONINTEREST INCOME 

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with the insurance carrier on one of the Bancorp’s BOLI policies Noninterest expense in 2009 included $76 million of expense related to the TSA and a $55 million FDIC special assessment charge, partially offset by a $73 million reduction in the Visa litigation reserve. 

Total personnel costs (salaries, wages and incentives plus employee benefits) increased $94 million, or six percent in 2010 compared to 2009 due primarily to increased base, variable and incentive compensation, partially offset by lower deferred compensation. Base and incentive compensation increased due primarily to investments in the sales force and expanded banking center hours during 2010. As of December 31, 2010, the Bancorp employed 21,613 employees, of which 6,742 were officers and 2,519 were part-time employees. Full-time equivalent employees totaled 20,838 as of December 31, 2010 compared to 20,998 as of December 31, 2009. The decrease in full-time equivalent employees is primarily due to the transfer of employees on January 1, 2010 from the Processing Business Sale, partially offset by an increase in the sales force in 2010. 

Card and processing expense includes third-party processing expenses, card management fees and other bankcard processing expenses. Card and processing expense decreased $85 million, or 44%, in 2010 compared to 2009 due to the Processing Business Sale in June of 2009. 

Total other noninterest expense increased $23 million in 2010 compared to 2009. The components of other noninterest expense are shown in Table 11. The increase from 2009 was primarily due to increased charges to representation and warranty reserves related to residential mortgage loans sold to third-parties, as well as higher impairment on affordable housing investments, higher marketing expense due to increased consumer marketing campaigns and an increase in professional services fees primarily due to legal expenses related to the settlement of one of the Bancorp’s BOLI policies. The increase in affordable housing investment impairment was due to an increase in the volume of investments. These impacts were partially offset by a decrease in the provision for unfunded commitments and letters of credit, lower FDIC insurance and other taxes and a decrease in intangible asset amortization due to certain customer deposit intangibles 

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