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FITB – Stock in Focus for Thursday: FITB

Posted on April 23, 2009

FITB – Stock in Focus for Thursday: FITB

Fifth Third Bancorp

Fifth Third Bancorp (NASDAQ: FITB | Quote | Chart | News | PowerRating) down 6.82% on over 59.5 million shares traded.

To view the complete release, please visit: http://wallstreetnewsalert.com/fullstory.php?id=1079

April 23, 2009 – Fifth Third Bancorp today reported first quarter 2009 net income of $50 million, compared with a net loss of $2.1 billion in the fourth quarter of 2008 and net income of $286 million in the first quarter of 2008. Preferred dividends of $76 million increased from $42 million in the fourth quarter, primarily related to the issuance of $3.4 billion in preferred stock to the U.S. Treasury on December 31, 2008. Including preferred dividends, the net loss attributable to common shares was $26 million, or $0.04 per diluted share, compared with a net loss of $2.2 billion, or $3.78 per diluted share, in the fourth quarter of 2008 and net income of $286 million, or $0.54 per diluted share, in the first quarter of 2008.

First quarter net income benefited by $101 million after-tax, or $0.18 per share, due to the net impact of several significant items during the quarter outlined below. Two of these items reduced income tax expense, by $161 million, while these items and two others reduced pre-tax, pre-provision earnings in the first quarter by $92 million. During the quarter we decided to surrender one of our bank-owned life insurance (BOLI) policies. As a result, a $106 million tax benefit, or $0.19 per share, was recognized relating to losses in the policy recorded in prior periods that are now expected to be tax deductible. First quarter results also included non-cash charges of $54 million pre-tax, or $0.06 per share after-tax, related to this policy, reflecting reserves recorded in connection with the intent to surrender the policy as well as losses related to market value declines. Additionally, during the first quarter of 2009, we reached an agreement with the IRS to settle all of Fifth Third’s disputed leveraged leases for all open years. As a result of this settlement agreement, we recognized a $55 million reduction in income tax expense in the first quarter, or $0.10 per share, related to the reduction in tax reserves related to these exposures. This settlement also resulted in a reduction of net interest income of $6 million pre-tax, or $0.01 per share after-tax. Reported results for the first quarter also included $24 million pre-tax, or $0.03 per share after-tax, in securities losses and $8 million pre-tax or $0.01 per share after-tax in severance expense. Additional information on the tax benefits discussed above may be found later in this release.

About the company:

Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $120 billion in assets, operates 16 affiliates with 1,305 full-service Banking Centers, including 95 Bank Mart locations open seven days a week inside select grocery stores and 2,355 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Missouri, Georgia and North Carolina. Fifth Third operates five main businesses: Commercial Banking, Branch Banking, Consumer Lending, Investment Advisors and Fifth Third Processing Solutions. Fifth Third is among the largest money managers in the Midwest and, as of December 31, 2008, has $179 billion in assets under care, of which it managed $25 billion for individuals, corporations and not-for-profit organizations.

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From: http://www.thestreet.com/_yahoo/story/10490840/1/fifth-third-loss-lighter-than-expectations.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Fifth Third Loss Lighter Than Expectations

Fifth Third Bancorp’s (FITB Quote) shares soared on Thursday after first-quarter results beat expectations and management issued bullish statements for improving margin trends in upcoming quarters.

However, Fifth Third’s major exposure to regions of the country with severe economic conditions, combined with its book of deteriorating commercial loans and competition to gain deposits, may stand to give investors pause.

The Cincinnati-based bank posted a first-quarter loss of $26 million, or 4 cents per share, compared with a profit of $286 million, or 54 cents per share, a year earlier. The results beat expectations by a long shot, with the average analyst predicting a loss of 27 cents per share.

Fifth Third stock surged 12.5% in premarket trading after the report was released, but more recently eased to a 7.6% lift at $3.97.

Fifth Third attributed its loss mostly to preferred dividends it was required to pay on the government’s $3.4 billion preferred stake in the company. Excluding $76 million in preferred dividend payments, the bank would have posted a profit of $50 million.

But results were also hindered by exposure to commercial and residential loans in areas of the U.S. that have faced relentless economic headwinds.

Fifth Third posted $490 million in net charge-offs, down sequentially, but up78% over the past year. The bank also added $319 million to its allowance for future losses during the first quarter as nonperforming assets climbed to 3.19% of its loan book, from 1.81% a year ago and 2.38% at the end of 2008. The company’s losses and risk of future losses lie mostly in commercial and residential loans in Michigan and Florida, as well as other states in the Midwest.

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