This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Fifth Third Earnings Drop on Mortgage Putbacks

Fifth Third's noninterest income totaled $671 million in the third quarter, declining from $678 million the previous quarter, but increasing from $665 million, a year earlier. The third quarter number included the Vantiv warrant write-down and also "$13 million in gains recognized from sale of certain Fifth Third funds."

Mortgage banking revenue grew to $200 million during the third quarter, from $183 million in the second quarter, and $178 million in the third quarter of last year.

The third-quarter bottom line was boosted by a $19 million release of loan loss reserves, "reflecting continued improvement in credit trends." The company's loan loss reserves covered 2.32% of total loans as of Sept. 30, which was a strong level of coverage, when compared to an annualized net charge-off rate of 0.75%.

Fifth Third CEO Kevin Kabat said that the company's "third quarter earnings were highlighted by solid net interest income results and continued strong mortgage banking revenue, contributing to an ROA of 1.23 percent and a return on average common equity of 10.4 percent," and that the bank "had success across our commercial bank and consumer lending businesses, with double-digit growth in corporate banking revenue, up 16 percent year-over-year, and mortgage banking revenue, up 13 percent year-over-year."

Kabat went on to say that the company "entered into a share repurchase agreement for $350 million of common stock," and that "our current capital levels and ability to generate capital are strong, and we expect to continue to return capital to shareholders in a prudent manner, absent any significant changes in the operating environment."

Fifth Third said that the share repurchase agreement "reduced Fifth Third's share count by 21.5 million shares" during the third quarter, "which had an 8 million impact on average share count." The company "expects the settlement of this transaction to occur on or before November 26, 2012."

The company's estimated Basel III Tier 1 common equity ratio was 9.0% as of Sept. 30.

Jefferies analyst Ken Usdin rates Fifth Third a "Buy," with a $16 price target, and said on Thursday after the earnings release that "forward pre-provision for loan losses guidance looks good, but sustainability could be in question since positive deltas are in fees (presumably mortgage) and net interest income guidance was disappointing."

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
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.
Submit an article to us!
SYM TRADE IT LAST %CHG
FITB $19.46 0.08%
AAPL $130.12 -0.23%
FB $79.55 -1.10%
GOOG $561.67 1.10%
TSLA $204.04 -1.50%

Markets

DOW 18,190.72 -23.70 -0.13%
S&P 500 2,109.74 -1.00 -0.05%
NASDAQ 4,982.1270 -5.7630 -0.12%

Partners Compare Online Brokers

Free Reports

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