Preheat oven to 350 degrees F.
In small bowl, combine the cream cheese and sugar.
Take 5 slices of the Italian bread and smear with cream cheese, like you would do with peanut butter.
Top each slice with another slice of bread to form a sandwich.
In medium bowl, whisk together the eggs, milk, and vanilla extract. Dip and soak each sandwich in egg mixture.
In large skillet, heat 1 tablespoon of butter over medium-high heat.
Cook two sandwiches (or however many will fit in your skillet) at a time in skillet, 4-5 minutes on each side, or until golden brown. Set each sandwich aside on greased baking sheet and brown remaining sandwiches.
With all 5 sandwiches on baking sheet, bake in the preheated oven for 12-15 minutes.
Cut each sandwich in half and sprinkle with powdered sugar. Enjoy!