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3 Regional Bank Stock Best Bets From KBW

Fifth Third Bancorp
Shares of Fifth Third Bancorp (FITB - Get Report) of Cincinnati closed at $14.58 Tuesday, returning 15% year-to-date, following an 11% decline during 2011.

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The shares trade for 1.4 times tangible book value, and for 10 times the consensus 2013 EPS estimate of $1.52.

The company last Wednesday announced that the initial public offering of its Vantiv (VNTV) payment processing subsidiary resulted in Fifth Third retaining "39 percent of Vantiv's future earnings."

After tax, Fifth Third's first-quarter gains from the Vantiv sale will total $roughly $71 million.

Fifth Third on March 14 announced that the Federal Reserve had rejected its plan to increase its quarterly dividend from the current payout of eight cents, and also objected to common share buybacks, except for "the repurchase of common shares in an amount equal to any after-tax gains realized by Fifth Third from the sale of Vantiv, Inc. common shares by either Fifth Third or Vantiv."

Based on the eight-cent quarterly payout, the shares have a dividend yield of 2.19%.

KBW on Wednesday raised its price target for Fifth Third to $16 from $15, while raising its first-quarter earnings estimate by four cents, to 35 cents a share. KBW also raised its 2012 EPS estimate by seven cents to $1.42, and its 2013 estimate by a nickel to $1.55.

KBW raised the estimates "primarily to reflect stronger mortgage banking revenues and lower credit costs," while adding that "the largest risk to our price target is the flattening of the yield curve and the pressure on net interest margins."

Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.

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