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Bank Stocks Lead on 'Government Restart Day'

NEW YORK ( TheStreet) -- Fifth Third Bancorp (FITB - Get Report) of Cincinnati was the winner among the largest U.S. banks on Thursday, with shares rising over 3% to close at $18.96.

The company early Thursday reported third-quarter earnings available to common shareholders of $421 million, or 47 cents a share, compared to $582 million, or 65 cents a share, in the second quarter, and $354 million, or 38 cents a share, in the third quarter of 2012.

As usual, Fifth Third's numbers included extraordinary items, with the third-quarter results boosted by an $85 million benefit on the sales of shares of Vantiv (VNTV), which came to $55 million after tax, or 6 cents a share.

As expected, Fifth Third reported a sharp drop in mortgage banking net revenue to $121 million in the third quarter, from $233 million the previous quarter and $200 million a year earlier.

A partial offset to the revenue drop was a decline in credit expenses. The bank's third-quarter provision for loan and lease losses was $51 million, declining from $64 million the previous quarter and $65 million a year earlier.

Jefferies analyst Ken Usdin in a note to clients said Fifth-Third's operating earnings for the third quarter appeared "closer to $0.43, excluding one-timers," which he called a "solid beat" of the consensus EPS estimate of 42 cents, among analysts polled by Thomson Reuters.

Usdin wrote that Fifth Third's "expenses look good," since core expenses were down $55 million sequentially, excluding a $30 million litigation charge. The analyst rates Fifth Third a "buy," with a price target of $21.00.

Please see TheStreet's earnings coverage for more on Fifth Third's results.

Broad Market Strong Following Washington Drama

The broad indices ended mixed, with the Dow Jones Industrial Average (^DJI) dragged slightly in the red after shares of IBM fell over 6% to close at $174.34, after the company was downgraded by Goldman Sachs analyst Bill Shope to a "neutral" from a "buy" rating. Shope wrote in a note that "the company appears to be going through a challenging period that may limit operational earnings upside and produce more quarterly volatility than investors have been accustomed to."
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