This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Fifth Third Earnings Drop on Mortgage Putbacks

  • Third-quarter EPS of 38 cents, meeting the consensus estimate.
  • $24 million in mortgage putback charges.
  • $26 in charges related to trust preferred redemptions.
  • $16 million negative valuation adjustment on Vantiv warrant, which was written-up the previous quarter by $56 million.
  • Net interest margin holds at 3.56%.

NEW YORK (TheStreet) -- Fifth Third Bancorp (FITB) reported a decline in third-quarter earnings, as the bottom line was affected by several one-time items, including a $24 million in charges related to mortgage putback demands.

The Cincinnati lender reported third-quarter earnings of available to common shareholders of $354 million, or 38 cents a share, meeting the consensus estimate of analysts polled by Thomson Reuters.

Earnings declined from $376 million, or 40 cents a share, during the second quarter, and $381 million, or 40 cents a share, during the third quarter of 2011.

In addition to the mortgage putback charge, the sequential earnings decline reflected $26 million in charges related to the redemption of trust preferred shares, which was an industry trend for regional banks because the Federal Reserves proposed rules to implement the Basel III capital requirements will exclude most trust preferred shares from regulatory Tier 1 capital. This "capital treatment event" enabled banks to redeem trust preferred shares at favorable terms for a limited period.

The earnings decline from the second quarter also reflected a $16 million negative valuation adjustment on a warrant that Fifth Third holds in Vantiv (VNTV). During the second quarter, Fifth Third had seen a $56 million pre-tax gain from a positive adjustment in valuation for the warrant.

Fifth Third reported third-quarter net interest income of $907 million, increasing from $899 million the previous quarter, and $902 million, a year earlier. The company's net interest margin net interest margin (NIM) -- the difference between the average yield on loans and investments and the average cost for deposits and borrowings -- was 3.56%, which was the same level as in the second quarter, while narrowing from 3.65% a year earlier.

Most banks are facing pressure on their net interest margins, with the Federal Reserve keeping its target federal funds rate in a range of zero to 0.25% since the end of 2008, while the central bank in September significantly increased its purchases of long-term mortgage-backed securities, in an effort to keep long-term rates at historically low levels.

Third-quarter average loans were $82.9 billion, increasing slightly from the second quarter, but 5% year-over-year. Average commercial and industrial loans grew by 1% sequentially and 15% year-over-year, to $33.1 billion. Average residential mortgage loans were up 3% quarter-over-quarter, and 16% year-over-year, to $11.6 billion.

Stock quotes in this article: FITB 

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs