Fifth Third Bancorp (FITB)

Other Information (Item 5)

Market Developments and Economic Conditions.

In recent periods, United States and global markets have experienced severe disruption and volatility, and general economic conditions have declined significantly. Adverse developments in credit quality, asset values and revenue opportunities throughout the financial services industry, as well as general uncertainty regarding the economic, industry and regulatory environment, have had a marked negative impact on the industry. These developments and conditions have also negatively impacted the financial position and results of operations of the Bancorp.

The United States and the governments of other countries have taken steps to try to stabilize the financial system, including investing in financial institutions, and have also been working to design and implement programs to improve general economic conditions. Notwithstanding the actions of the United States and other governments, there can be no assurances that these efforts will be successful in restoring industry, economic or market conditions and that they will not result in adverse unintended consequences. Factors that could continue to pressure financial services companies, including the Bancorp, are numerous and include (1) continued or worsening credit quality, (2) continued or worsening disruption and volatility in financial markets, (3) limitations resulting from or imposed in connection with governmental actions intended to stabilize or provide additional regulation of the financial system and (4) recessionary conditions that are deeper or last longer than currently anticipated, whether nationally or within all or a portion of the Bancorp’s geographic footprint.

Supervisory Capital Assessment Program

On February 10, 2009, the U.S. Department of the Treasury (Treasury) announced a new financial stability plan (the “Financial Stability Plan”), which builds upon existing programs and earmarks the second $350 billion of unused funds originally authorized under the Emergency Economic Stabilization Act of 2008 (EESA). Pursuant to the Financial Stability Plan’s new Capital Assistance Program (the “CAP”), the Bancorp, along with the other domestic bank holding companies with assets of more than $100 billion at December 31, 2008, was subject to a forward-looking stress test called the Supervisory Capital Assessment Program (the “SCAP”). The SCAP exam evaluated the projected level and quality of each institution’s capital during specified economic scenarios through the end of 2010, which included a baseline scenario, reflecting a consensus estimate of private-sector forecasters, and a more adverse scenario, reflecting an economic situation more severe than is generally anticipated. The process and methodologies used by the federal banking supervisory agencies under the SCAP are described in a white paper released by the Federal Reserve on April 24, 2009 and available on its website at www.federalreserve.gov.

The U.S. financial and regulatory authorities publicly announced the results of the SCAP examinations for the 19 domestic bank holding companies subject to the exam on May 7, 2009. Also on May 7, 2009, the Bancorp publicly announced specific information related to its SCAP results. The SCAP results indicated that under the more adverse scenario, the Bancorp would need to improve its Tier 1 common equity by an increase of $1.1 billion.

Institutions subject to the SCAP that require additional capital, or that need to improve the quality of their capital, must agree to augment their capital. The Bancorp has six months to raise the capital from private sources or take an investment from the Treasury under CAP in mandatorily convertible preferred stock (CAP shares). The Bancorp currently believes that there are a number of other options available to it that could generate substantial amounts of Tier 1 common equity, summarized below, which may reduce or even eliminate any capital required to be issued under the CAP program. If the Bancorp does not satisfy all of the SCAP capital requirements through private sources, it anticipates issuing CAP shares within six months, subject to potential shareholder approval if the amount of common stock issued upon exercise of the CAP shares or exercise of the warrants would equal or exceed 20 percent or more of the common stock outstanding.

The options the Bancorp anticipates evaluating include the potential sale of certain non-strategic assets, including available for sale securities held in a gain position. The Bancorp will also evaluate transactions involving the issuance of cash, common stock or other securities in exchange for outstanding securities of the Bancorp or its affiliates. The determination of whether to pursue such

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transactions will be made based upon market conditions, the price of the securities issued or redeemed, the amount of such securities that may be redeemed for a price acceptable to the Bancorp and to the holders of such securities, and other factors including the cost and dilution of such actions compared with the cost and dilution associated with the issuance of CAP shares and the terms associated with participation in the program.

Most forms of Tier 1 common-qualifying capital that the Bancorp may generate, including through the issuance of the CAP shares, would generate additional Tier 1 capital as well. As the Bancorp expects that its Tier 1 ratio would be substantially in excess of the “well-capitalized” minimum of 6 percent, as well as in excess of its target range of 8 to 9 percent, even without the inclusion of any new Tier 1 common-qualifying capital (including CAP shares), and even under the more adverse scenario, it would expect to use the proceeds to repay a portion of the preferred stock issued to Treasury on December 31, 2008 under the Capital Purchase Program. This repurchase would be subject to approval by the Bancorp’s primary Federal banking agency.

A CAP participant will be permitted to issue CAP shares to Treasury in any amount between one percent and two percent of its risk-weighted assets, plus any additional amount used to redeem Capital Purchase Program shares. Approval from the institution’s primary federal regulator is required for amounts in excess of this limit and any participant receiving additional amounts will be deemed as needing “exceptional assistance” and may be subject to additional terms and conditions. The CAP shares may be converted by the issuer to common shares with the approval of the participant’s primary federal banking agency. If the participant does not convert the CAP shares, the CAP terms require conversion automatically take place seven years after issuance. The CAP shares will be convertible into shares of common stock at a conversion price equal to 90% of the average closing price for the common stock for the 20 trading day period ending February 9, 2009, subject to customary anti-dilution adjustments and will bear cumulative dividends of 9%, payable quarterly, until converted or redeemed. If, however, certain shareholder approvals, discussed below, are required but not received within six months from issuance, the CAP shares will have a dividend rate of 20% until such shareholder approval is received. If the Bancorp issues CAP shares, the conversion price will be $3.22 per share.

So long as Treasury owns either CAP shares or common stock issued under the CAP, the issuing institution may not declare or pay dividends greater than $0.01 per share per quarter without Treasury’s consent. In addition, the participant must submit a plan for how they intend to use the capital to support lending. These plans will be made public upon completion of the capital investment. The participants must also submit ongoing monthly reports to the Treasury that break out lending by category and show how many new loans they provided and how many ABS and mortgage-backed securities they purchased, with a description of the lending environment in the markets they serve. The reports, which will be made public, must include a comparison to an estimate of what lending activity would have been without government capital assistance. Participating institutions will be subject to rules, regulations and Treasury guidance with respect to executive compensation, transparency, accountability and monitoring, as published and in effect at the time of the investment closing.

Like the preferred shares issued to Treasury under the Capital Purchase Program, the CAP shares will not have voting rights other than class voting rights on (i) any authorization or issuance of shares ranking senior to the senior preferred shares, (ii) any amendment to the rights of senior preferred shares, or (iii) any merger, exchange or similar transaction which would adversely affect the rights of the senior preferred shares. In addition, if dividends are not paid in full for six dividend periods, Treasury will have the right to elect two directors (which right will terminate when dividends have been paid for four consecutive dividend periods). Upon conversion of the CAP shares, Treasury will have the voting rights associated with the common stock.

As part of its purchase of CAP shares, Treasury will receive a warrant to purchase the participating institution’s common stock, with an aggregate market value, based on the CAP conversion price, equal to 20 percent of the amount of the Treasury’s investment in the CAP shares. The initial exercise price on the warrants will be the CAP share conversion price, subject to adjustment if shareholder approvals described below are required and are not received. Treasury has indicated that it would not exercise voting rights with respect to any common stock received upon exercise of warrants.

If the institution does not have sufficient authorized common stock to reserve for conversion and/or must receive shareholder approval to issue common stock upon conversion of the CAP shares or exercise of the warrants, it must call a shareholder meeting and receive the permission necessary to convert the CAP shares or exercise the warrants. If the institution does not receive such shareholder approval, the conversion price and the warrant exercise price will each be decreased by 15% of the original conversion price and warrant exercise price, respectively, on each six month anniversary of the issue date of the CAP shares, subject to a maximum reduction of 45% of the original conversion price and warrant exercise price.

The Bancorp would potentially require shareholder approval to issue common stock upon conversion of the CAP shares or exercise of the warrants if the amount of common stock issuable under the CAP shares and exercise of the warrant would equal or exceed 20 percent or more of the common stock outstanding.

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