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*See Total Return Analysis section in the Annual Report on Form 10-K for Fifth Third Bancorp’s 5-year and 10-year total return analysis. 

believe they will also exceed the fully phased-in Basel III proposed capital requirements. Now that we have this behind us and based on our strong financial results and capital position, we expect to have greater flexibility in managing our capital, including dividends. 

Despite the headwinds we have faced, we are generating solid levels of earnings and expect results to further improve. Change can be challenging, but how a company deals with change determines its success and ultimately its return to shareholders. We are confident that we are up to the challenge. 

## 2010 results 

For the full year 2010, we reported net income of $753 million, an increase from our 2009 results that included the benefit of a $1.1 billion after-tax gain on the sale of a 51 percent interest in Fifth Third Processing Solutions. 

Core operating results remained strong. We’ve maintained consistently strong pre-tax pre- provision net revenue (revenue minus expenses) – nearly $2.5 billion in 2010 – which is relatively high compared with our asset base and has enabled 

us to absorb losses better and generate stronger profits compared with many peer institutions. 

Net interest income and net interest margin continued to expand as we lowered our excess liquidity and benefited from deposit repricing. We have begun to see some stabilization in our loan balances and continue to see solid loan production, particularly in commercial and industrial (C&I) loans. Within C&I, origination volumes have been at historically high levels, but paydowns also remain high. Within consumer loans, auto loan originations have been very strong and our mortgage production picked up in the latter half of the year. Overall, we’ve been pleased with our lending volumes throughout the year and believe that we have some positive momentum heading into 2011. We also continued to grow high-value transaction deposit accounts in 2010, with average balances increasing 19 percent, or $10.4 billion, over last year. 

Our provision expense for loan and lease losses declined more than $2 billion from 2009, reflecting significantly lower net charge-offs and reductions in problem assets. We finished the year strong with fourth quarter net charge-offs dropping below 2 percent of average loans on an annualized basis, significantly better than most large peers. 

