MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Fifth Third Bancorp 61  Bancorp since the end of the fourth quarter of 2008, was $2.6  billion. After considering such activities, primarily the Processing  Business Sale, the indicated additional net Tier I common equity  required was $1.1 billion. To address the SCAP results the  Bancorp undertook a number of capital actions during the second  quarter of 2009. The Bancorp completed a $1 billion common  stock offering and issued approximately 158 million shares at an  average price of $6.33. In addition, the Bancorp completed an  exchange of a portion of its Series G preferred stock for  2,158.8272 shares of its common stock, no par value, and $8,250  in cash, for each set of 250 validly tendered and accepted  depositary shares. The Bancorp issued approximately 60 million  shares of common stock and paid $230 million in cash in  exchange for 7 million depositary shares. After settlement of the  exchange offer, 4,112,750 depositary shares representing 16,451  shares of Series G preferred stock remained outstanding. As a  result of this exchange, the Bancorp increased its common equity  by $441 million. The Bancorp also sold its Visa, Inc. Class B  common shares resulting in an additional $187 million benefit to  equity.  credit quality, strong capital ratios and diverse funding sources, in  addition to disciplined liquidity monitoring procedures.  The Bancorp’s senior debt credit ratings are summarized in  Table 46. The ratings reflect the ratings agencies view on the  Bancorp’s capacity to meet financial commitments.* Additional  information on senior debt credit ratings is as follows:  Additionally, the Bancorp’s subsidiary bank (Fifth Third Bank)  also receives independent credit ratings. On November 1, 2010,  Moody’s downgraded ten large regional banks, including Fifth  Third Bank, due to the passage of the Dodd-Frank Act. The Act  signaled the government’s intent to limit support for individual  banks, thus reducing Moody’s support assumptions for these  banks. Fifth Third Bank’s credit ratings for Short-Term, Long- Term Deposit, Senior Debt and Subordinated Debt were  downgraded to P-2, A3, A3 and Baa1, respectively, from P-1, A2,  A2 and A3, respectively. Additionally, Moody’s changed Fifth  Third Bancorp and Fifth Third Bank’s outlook from negative to  stable. During 2010, DBRS Investors Service downgraded the  long-term debt rating and deposit ratings for the Bancorp’s  subsidiary to “A” from “AH”.  *  As an investor, you should be aware that a security rating is not  a recommendation to buy, sell or hold securities, that it may be  subject to revision or withdrawal at any time by the assigning  rating organization and that each rating should be evaluated  independently of any other rating.  On January 25, 2011, the Bancorp raised $1.7 billion in new  common equity through the issuance of 121,428,572 shares of  common stock in an underwriting offering at an initial price of  $14.00 per share. On January 24, 2011, the underwriters exercised  their option to purchase an additional 12,142,857 shares at the  offering price of $14.00 per share. In connection with this  exercise, the Bancorp elected that all such additional shares be  sold and the Bancorp entered into a forward sale agreement which  resulted in a final net payment of 959,821 shares on February 4,  2011.  On February 2, 2011, the Bancorp redeemed all 136,320  shares of its Series F Preferred Stock held by the U.S. Treasury  totaling $3.4 billion. The Bancorp used the net proceeds from the  common stock and senior notes offerings previously described  and other funds to redeem the Series F Preferred Stock.  In connection with the redemption of the Series F Preferred  Stock, the Bancorp accelerated the accretion of the remaining  issuance discount on the Series F Preferred Stock and recorded a  corresponding reduction in retained earnings of $153 million. Dividends of $15 million were paid on February 2, 2011  when the Series F Preferred Stock was redeemed. The Bancorp  notified the U.S. Treasury on February 17, 2011, of its intention to  negotiate for the purchase of the warrants issued to the U.S.  Treasury in connection with the CPP preferred stock investment.  These transactions will be reflected in the Bancorp’s  consolidated financial statements for the quarter ended March 31,  2011. Note 32 of the Notes to Consolidated Financial Statements  provides additional information regarding the redemption of the  Series F Preferred Stock and the January 2011 common stock  offering.  On May 7, 2009, the Bancorp announced its SCAP results which  indicated that the Bancorp’s Tier 1 common equity would be  required to be augmented to maintain a capital buffer above the  newly required four percent threshold of the Tier 1 common  equity ratio under the more adverse scenario of the assessment.  The total amount required, prior to considering activities by the  Management, including the Bancorp’s Board of Directors,  regularly reviews the Bancorp’s capital position to help ensure it is  appropriately positioned under various operating environments. • Moody’s “Baa1” rating is considered medium-grade  obligations and is the fourth highest ranking within its  overall classification system;  • Standard & Poor’s “BBB” rating indicates the obligor’s  capacity to meet its financial commitment is adequate  and is the fourth highest ranking within its overall  classification system;  • Fitch Ratings’ “A-” rating is considered high credit  quality and is the third highest ranking within its overall  classification system; and  • DBRS Ltd.’s “A (low)” rating is considered satisfactory  credit quality and is the third highest ranking within its  overall classification system.  2011 Capital Actions  CAPITAL MANAGEMENT 2009 Capital Actions  As of December 31 ($ in millions)  2010 2009 2008 2007 2006 Average equity as a percent of average assets  12.22 % 11.36 8.78 9.35 9.32 Tangible equity as a percent of tangible assets  10.42 9.71 7.86 6.14 7.95 Tangible common equity as a percent of tangible assets  7.04 6.45 4.23 Tier I capital  $13,965 13,428 11,924 8,924 8,625 Total risk-based capital  18,173 17,648 16,646 11,733 11,385 Risk-weighted assets  100,193 100,933 112,622 115,529 102,823 Regulatory capital ratios: Tier I capital  13.94 %  13.30 10.59 7.72 8.39 Total risk-based capital  18.14 17.48 14.78 10.16 11.07 Tier I leverage  12.79 12.34 10.27 8.50 8.44 Tier I common equity  7.50 6.99 4.37 5.72 8.22 TABLE 47: CAPITAL RATIOS 