Fifth Third Securities Investment Outlook Bill Kielczewksi, V.P. 5/3 Securities, Inc. Institutional Investment Group October, 2011

Fifth Third Securities

Investment Outlook

Bill Kielczewksi, V.P.5/3 Securities, Inc.

Institutional Investment Group

October, 2011

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Fifth Third Securities, Inc. -Background and Qualifications

What is the 5/3 Securities Institutional Investment Group

— Broker / Dealer created in 1998 when Fifth Third Bank purchased the Ohio Company – Established 1925

— Make primary and secondary markets in over $10 Billion monthly

— Series 7 / 63 registered investment representatives working for the 5/3 Capital Markets Division and housed in our various affiliates

— Specialize in fixed-income investments (MMKTs, Bonds, & Structured Notes)

— Build customized fixed-income portfolios for commercial clients; investing from overnight out to 30 years

— Distribute 5/3’s proprietary investment products (5/3 VRDNs, 5/3 underwritten MBS, 5/3 Corporate Bond participations)

Who are your local contacts

— Bill Kielczewski, V.P. Team Lead of MI, IN, Northern OH, PA, 13 years Institutional Investment experience, $1.50 billion in assets under management, The University of Toledo, Ohio

616-653-5008

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Fifth Third Securities5/3 Footprint Overview

* As of 6/30/2011

$111 billion assets*

1,316 banking centers

2,456 ATMs

15 affiliates in 12 states

Fifth Third Bank has been dedicated to serving the needs families and businesses for more than 150 years

7th strongest bank in the world, #1 in the US – according to capital ratios as defined by Bloomberg, June 2011

Naples

Raleigh

Cincinnati

FlorenceLouisville

Lexington

Nashville

Atlanta

Augusta

Orlando

Tampa

Naples

Raleigh

Charlotte

Huntington

PittsburghCleveland

Columbus

Toledo

Detroit

Grand Rapids

Traverse City

Chicago

Evansville

Jacksonville

Indianapolis

St. Louis

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1) Global View –

Focusing on growth & stabilizing the Euro Zone

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Global Economy Focus – US and Chinese GDP growth

$14,582

$5,878 $5,497

$3,309$2,560 $2,246 $2,087 $2,051 $1,729 $1,574 $1,479 $1,407 $1,039 $1,014

1.5% 9.5%

-1.1%

2.8% 1.7% 0.6% 3.1% 0.8% 7.7% 2.3% 3.5% 0.7% 3.3% 3.4%

-2000

0

2000

4000

6000

8000

10000

12000

14000

16000Of interest:

1. Direction of US economy – which is still the dominant economic force on the planet and 70% consumer driven.

2. China sustaining its GDP growth.

3. Emerging economies growing 3-9%; developed economies growing 0-2%.

Source = GDP data are 2010 numbers from Bloomberg (8/11); emerging market definitions from MSCI

Global GDP = $63.0 trillion

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Source = FactSet

1/10 4/10 7/10 10/10 1/11 4/11 7/11 10/1100

1010

2020

3030

4040

5050

6060

7070

8080

9090

100100

GermanySpainItalyIreland

Portugal

Greece

European Government Bond Yields

Germany Benchmark Bond - 2 Year - Yield Italy Benchmark Bond - 2 Year - Yield Spain Benchmark Bond - 2 Year - Yield

Greece Benchmark Bond - 2 Year - Yield Portugal Benchmark Bond - 2 Year - Yield Ireland Benchmark Bond - 2 Year - Yield

Global Economy Focus – EuroZone bond yields

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Q3

1. Washington inability to agree on a debt & deficit framework leads to US debt downgrade by S&P.

2. European Union inability to agree on financing Greece leads to concerns widening (…Italy is in focus).

3. Markets focus solely on Europe/Washington, ratcheting volatility up and economic confidence down.

Q4

4. European Union (17 nations) continue to struggle for a solution to finance peripheral countries.

5. Washington debt & deficit framework turned-over to a committee of 12. Plans to be delivered in November and voted on in December.

6. US economy continuing slowly forward; China exports slowing.

2012

7. US economy will hinge on two issues: i) the extent fiscal restraint from Washington may restrict consumer spending, ii) the potential spillover from Europe via lower exports and tighter financial conditions.

8. US markets will hinge on:

• #1 above

• Tone of US elections

• Foreigners continuing to finance 40-50% of our Treasury debt issuance.

Macro, Policy-Driven Markets

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1) Global economy is moving forward, but at an uneven pace and behind inflation rates.

• 5-9% in emerging markets, but with inflation concerns around commodity prices

• 1-2% in developed markets, but very nervous about potential fiscal policy/debt management.

• Event risks remain high - price of crude oil and social tensions around government fiscal policy.

2) US economic growth is frustratingly slow, but self-sustaining on its own. However…

• Washington and the Private Sector are at sharp odds over future economic leadership.

• Cash will not commit to be recycled back into the economy as capital.

3) Continuation of slow economic rebuild = continuation of incremental investment rebuilding.

• Watching US consumer spending trends; prices of copper, gold and crude oil.

• Risk of recession in next 12-month now likely approaching 50/50. Consumer dependent, and would likely be shallow – unless Europe spins out of control.

Macro Summary

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USA Inc. –

Challenges where progress needs to be made in 2012…

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'02 '03 '04 '05 '06 '07 '08 '09 '10 '1120

30

40

50

60

70

80

90

100

110

120

-6

-4

-2

0

2

4

6

8

10

Consumer ConfidenceIndex (left)

Savings Rate

Consumer Spending YoY % (right)

Composite Series: Index Numbers, 1985=100, Consumer Confidence Index - United States (Left)(% 1YR) Personal Consumption Expenditures, Bil. $, Saar - United States (Right)Personal Income, Personal Saving As A Percentage Of Disposable Personal Income, Bil. $, Saar - United States (Right)Recession Periods - United States

Source = FactSet

The U.S. Consumer - Spending OK; Sentiment Low

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'47 '50 '53 '56 '59 '62 '65 '68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '1000

55

1010

1515

2020

2525

13.00

The Misery IndexCPI Y/Y plus the Unemployment Index

Lowering the Misery Index

Source = FactSet

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Normalizing the housing market

Source = FactSet

'46 '49 '52 '55 '58 '61 '64 '67 '70 '73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '0900

2,0002,000

4,0004,000

6,0006,000

8,0008,000

10,00010,000

12,00012,000

14,00014,000

16,00016,000

Owners Equity

Mortgage Debt

Housing Market Net Worth

Household & Nonprofit Organizations - Owners' Equity In Household Real Estate, B.100 - United States Debt Outstanding - Total Households - Home Mortgage, D.3 - United States Recession Periods - United States

13


'87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Receipts (R)

Expenditures(R)

Total Debt Outstanding(L)

Federal Government Finance Summary

Federal Debt, Total Amount Outstanding - United States / 1000 (Right)Federal Govt Current Receipts & Expenditures, Total Expenditures, Bil. $, Saar - United States (Left)Federal Govt Current Receipts & Expenditures, Total Receipts, Bil. $, Saar - United States (Left)Recession Periods - United States

Framework for federal government finances

Source = FactSet

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Getting the piles of cash off the sidelines

Source = FactSet

'07 '08 '09 '10 '110

500

1,000

1,500

2,000

2,500

5,500

6,000

6,500

7,000

7,500

8,000

8,500

9,000

Bank Deposits with Fed (R)

Corporate Cash (R)

Bank Deposits (L)

Cash piles continue to build on the sidelines...

H.8, Liabilities Of Commercial Banks, Deposits, Bil. Usd, Sa - United States (Right)H.4.1- Liabilities of All Federal Reserve Banks, Deposits, Depository Institutions (Mil $) - United States / 1000 (Left)Nonfarm Nonfinancial Corporate Business - Total Liquid Assets, L.102 - Levels - United States (Left)Recession Periods - United States

Amounts in billions ($)

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1. Getting monthly job additions that start with a 3, followed by 5 zeroes. Currently 150k….

2. Getting weekly unemployment claims to start with a 3, followed by 5 zeroes. Currently 400k….

3. Getting real GDP growth to start with a 3. Currently 2.5%....

4. Keeping YoY consumer inflation at or below 3%. Currently 2.9%....

5. Keeping gasoline signs to start with a 3. Currently $3.20….

6. Getting a 10-year Treasury yield to start with a 3. Currently 1.99%....

7. Reaching a credible, bi-partisan framework that would bring the federal budget deficit down to 3% of GDP. Currently 8.5%....

8. Over next 12-18 months, getting the Fed Funds Rate back toward 3%. Currently 0 – 0.25%....

USA Inc. Trend Watch in Q4 – The importance of the number 3…

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3) Bond Market Trends –

Investment Ideas & Analysis

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US Bond Market – How did we get here?

Source = FactSet

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US Bond Market – Where are we going?

Source = FactSet

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US Bond Market – already assuming the worst?

'07 '08 '09 '10 '11

-1-1

00

11

22

33

44

55

66

3-month T-Bill

10yr Treasury

10-year and 3-month Treasury Yields

Government Benchmarks 10 year, Yield, Percent, Close - United States US Benchmark Bond - 3 Month - Yield

Recession Periods - United States

Source = FactSet

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4) Focusing on the Financial Basics –

What can we do to increase yield?

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Trade the “Spread” – 2 Yr. Treasury vs. 2 Yr. Agency Bond

Source = FactSet

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Trade the “Spread” – 5 Yr. Treasury vs. Fannie Mae MBS

Source = FactSet

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Trade the “Spread” – 10 Yr. Treasury vs. 10 Yr. Muni Bonds

Source = FactSet

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1. When it comes to investing, be unemotional and pragmatic. If this isn't you, hire someone who is.

2. If you don’t understand an investment holding, sell it and buy something you do understand.

3. Investing is about allocating capital today to work through business cycles to produce average returns that exceed the inflation rate and build future purchasing power. Sitting in cash is currently producing a negative real yield.

4. When it comes to investing, everything works some of the time. Be diversified…money market, Government Bonds, Government MBS, Michigan Municipal Bonds.

5. Constantly look to rebalance your portfolio. Be dynamic…Sell asset classes when their prices are high, buy others when prices are low.

6. When the asset side of your balance sheet is stuck, work on reducing the liability side. In the end, the two are connected. Look to refinance existing bond deals at all time low rates.

7. According to the Fed, saving and money market rates are staying below 1% until at least 2013 – so be frustrated or do something about it.

Financial Insights to Remember

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Appendix I – Allowable investments

www.michigan.gov (To Print: use your browser's print function)

Release Date: January 08, 2002 Last Update: December 20, 2006

Investments of Surplus Funds of Political Subdivisions Public Act 20 of 1943 as amended by Public Act 196 of 1997 Public Act 20 of 1943 as amended through June 30, 1997

Public Act 20 of 1943 as amended through December 31, 1997

129.91 Sec. 1. (1) The legislative or governing body of a county, city, village, township, or special assessment district, or an agency, board, or commission of a county, city, village or township, by resolution may authorize its treasurer or other chief fiscal officer to invest surplus funds belonging to and under the control of the political subdivision, special assessment district, or agency, board, or commission of a county as follows:

Sec. 1. (1) Except as provided in section 5, the governing body by resolution may authorize its investment officer to invest the funds of the public corporation in 1 or more of the following:

(a) In bonds, securities, and other obligations of the United States, or an agency or instrumentality of the United States in which the principal and interest is fully guaranteed by the United States. This subdivision shall include securities issued or guaranteed by the government national mortgage association.

(a) Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States.

(b) In certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, but only if the financial institution complies with subsection (2).

(b) Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, buy only if the financial institution complies with subsection (2).

(c) In commercial paper rated at the time of purchase within the 3 highest classifications established by not less than 2 standard rating services and which matures not more than 270 days after the date of purchase. Not more than 50% of any fund may be invested in commercial paper at any time.

(c) Commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase.

(d) In United States government or federal agency obligation repurchase agreements.

(d) Repurchase agreements consisting of instruments listed in subdivision (a).

(e) In bankers' acceptances of United States banks. (e) Bankers' acceptances of United States banks. (f) Obligations of this state or any of its political subdivisions that at

the time of purchase are rated as investment grade by not less than 1 standard rating service.

(f) In mutual funds composed of investment vehicles which are legal for direct investment by local units of government in this state.

http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=mcl-Act-20-of-1943&queryid=178200&highlight=

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(g) Mutual funds registered under the investment company act of 1940, title I of chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to 80a-64, with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of either of the following: (i) The purchase of securities on a when-issued or delayed delivery basis. (ii) The ability to lend portfolio securities as long as the mutual fund receives collateral all times equal to at least 100% of the securities loaned. (iii) The limited ability to borrow and pledge a like portion of the portfolio's assets for temporary or emergency purposes.

(h) Obligations described in subdivisions (a) through (g) if purchased through an interlocal agreement under the Urban Cooperations Act, PA 7 of 1967 (Ex Sess), MCL 124.501 to 124.512.

(i) Investment pools organized under the surplus funds investment pool act, PA 367 of 1982, 129.111 to 129.118.

(j) The investment pools organized under the local government investment pool act, PA 121 of 1985, MCL 129.141 to 129.150.

(2) A county, city, village, township, or special assessment district investing funds under subsection (1) shall not deposit or invest the funds in a financial institution which is not eligible to be a depository of surplus funds belonging to the state under section 6 of PA 105 of 1855, MCL 21.146.

(2) A public corporation that invests its funds under subsection (1) shall not deposit or invest the funds in a financial institution that is not eligible to be a depository of funds belonging to the state under a law or rule of this state or the United States.

(3) Assets acceptable for pledging to secure deposits of public funds are limited to any of the following: (a) (b) (i) (ii) (iii) (c)

(3) Assets acceptable for pledging to secure deposits of public funds are limited to assets authorized for direct investment under section (1).

(4) As used in this section, "financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal office or branch office in this state under the laws of this state or the United States.

(4) As used in this section, "financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits

are insured by an agency of the United States government and which maintains a principal office or branch office in this state

under the laws of this state or the United States.

Appendix I – Allowable investments, cont’d.

http://www.michiganlegislature.org/mileg.asp?page=getObject&objName=mcl-Act-7-of-1967-ex-sess.&queryid=178208&highlight=




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Appendix II – U.S. Treasury conservatorship ofFannie Mae and Freddie Mac

September 11, 2008HP-1131

Frequently Asked Questions:Treasury Senior Preferred Stock Purchase Agreement

Can the U.S. Congress or the Executive Branch change the terms of the preferred stock purchase agreement? This preferred stock purchase agreement is a binding legal obligation between two parties. The agreement is designed to prohibit any amendment that would decrease the amount of Treasury's funding commitment or add funding conditions that would adversely affect debt or mortgage-backed securities holders. Some may speculate that a future Congress could pass a law that would abrogate the agreement. But any such law would be inconsistent with the U.S. government's longstanding history of honoring its obligations. Such action would also give rise to government liability to parties suing to enforce their rights under the agreement. The U.S. Government stands behind the preferred stock purchase agreements and will honor its commitments. Contracts are respected in this country as a fundamental part of rule of law.

Can the U.S. Congress or the Executive Branch change the covenants in the agreement, such as the covenant requiring the reduction of the companies' portfolios?As with any contract, the parties to the agreement may modify the covenants by mutual agreement only.

Does the senior preferred stock purchase agreement protect debt and mortgage backed securities issued or maturing after 2009?Yes. The holders of senior debt, subordinated debt, and mortgage backed securities issued or guaranteed by these GSEs are protected by the agreement without regard to when those securities were issued or guaranteed. Debt and mortgage backed securities issued or guaranteed both before and after December 31, 2009 are protected by the agreement.

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Fifth Third Securities Appendix II – U.S. Treasury conservatorship ofFannie Mae and Freddie Mac, cont’d.

If the preferred stock purchase agreement protects senior and subordinated debt securities issued at any time in the future, how can the agreement ever be terminated?Treasury's funding commitment in the agreement would terminate under three events: The funding commitment terminates if the commitment is fully funded by Treasury. If a GSE liquidates its assets, its net worth deficiency is computed at that time and the GSE can call upon the Treasury to fund under its preferred stock purchase agreement. After that final funding, the funding commitment in the agreement would terminate. When a GSE satisfies all of its liabilities, whether at maturity or by making some other provision for payment in full of its obligations, the funding commitment will also terminate.

Why is the preferred stock purchase agreement limited to $100 billion? Is that enough to protect against even the worst downside scenario? What happens if losses exceed $100 billion?Treasury deliberately chose a large number to give confidence to the markets.

If Treasury has already received $1 billion in senior preferred stock, how can you say that no investment has been made yet?The companies each issued $1 billion in senior preferred stock to Treasury in connection with Treasury's commitment to maintain a positive net worth in the GSE. No taxpayer money was spent to receive this stock.

How is it legal for this preferred stock purchase agreement to be valid beyond the December 31, 2009 expiration of Treasury's authority?Treasury received the preferred stock and received warrants for common stock as of Sunday September 7, 2008 and will not need to purchase any additional shares relative to this agreement. No payments by the Treasury will be made under this agreement until and unless necessary to prevent a negative net worth position for either GSE.If the Treasury makes payments under its funding commitment, the liquidation preference of the Treasury shares will increase accordingly

.

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Fifth Third Securities Appendix II – U.S. Treasury conservatorship ofFannie Mae and Freddie Mac, cont’d.

What happens to the declared dividends for investors of existing GSE preferred stock?Dividends actually declared by a GSE before the date of the senior preferred stock purchase agreement will be paid on schedule.

Can the government exercise its warrants whenever it wants, even if it is disadvantageous to the companies?Yes. Treasury can exercise its warrant for up to 79.9% of the common stock of each GSE on a fully diluted basis at any time during the 20-year life of the warrant.

What do the rating agencies think of this agreement?All of the rating agencies have reaffirmed the United States' current rating status.

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The opinions expressed herein are those of Fifth Third Bank, Investment Advisors Division, Fifth Third Securities, Inc., and may not actually come to pass. This information is current as of the date of the presentation and is subject to change at any time, based on market and other conditions. Prior to making any financial or investment decision, you should assess, or seek advice from a professional regarding, whether any particular transaction is relevant or appropriate to your individual circumstances.Index performance is used throughout this presentation to illustrate historical market trends and performance. Indexes are unmanaged and do not incur investment management fees. An investor is unable to invest in an index. Past performance is no guarantee of future results.

Fifth Third Asset Management, Inc (FTAM) is an indirect, wholly owned subsidiary of Fifth Third Bancorp and an affiliated company with Fifth Third Bank Investment Advisors division.

Fifth Third Bancorp provides access to investments and investment services through various subsidiaries. Investments and Investment Services are:

Not FDIC Insured Offer No Bank Guarantee May Lose Value

Not Insured By Any Federal Government Agency Not A Deposit

Disclosures and Disclaimers

Documents

Fifth Third Securities Investment Outlook Bill Kielczewksi, V.P. 5/3 Securities, Inc. Institutional Investment Group October, 2011