This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fifth Third Continues Mortgage Streak (Update 1)

Stocks in this article: BAC C FITB

  • Fourth-quarter EPS of 43 cents beats the consensus estimate of a 41-cent profit.
  • Mortgage revenue rises 38% sequentially.
  • Period-end total commercial loans increase by 5% sequentially; C&I loans by 8%.
  • Net interest income declines; net interest margin narrows.
  • Fourth quarter ROA of 1.33%, ROTCE of 14.1%, both increasing sequentially and year-over-year.

Updated with midday market action and comments from Jefferies analyst Ken Usdin.

NEW YORK ( TheStreet) -- Fifth Third Bancorp (FITB) of Cincinnati on Thursday announced another quarter of very strong mortgage revenue growth and solid increases in commercial and industrial loan balances.

The company reported fourth-quarter net earnings available to common shareholders of $390 million, or 43 cents a share, increasing from $354 million, or 38 cents a share in the third quarter, and $305 million, or 33 cents a share, in the fourth quarter of 2011.

For all of 2012, Fifth Third reported earnings available to common shares of $1.541 billion, or $1.66 a share, increasing from $1.094 billion, or $1.18 a share, in 2011.

The fourth-quarter results beat the consensus estimate of a 41-cent profit, among analyst polled by Thomson Reuters. The fourth-quarter results reflected a number of one-time items, including a $157 million gain on the sale of Vantiv (VNTV) shares, which amounted to $102 million after taxes, adding 11 cents a share to earnings. Fifth Third's former payment processing subsidiary completed its initial public offering in March. Fifth Third held a 33% stake in Vantiv as of Dec. 31.

Negative after-tax one-time items for the fourth-quarter included:

  • $87 million, or nine cents a share, for debt extinguishment.
  • $12 million, or a penny a share, on a reduced valuation for a warrant to purchase Vantiv shares.
  • $10 million, or a penny a share, "related to the valuation of a Visa total return swap."
  • $19 million, or two cents a share, to increase mortgage putback reserves, "due to new Freddie Mac (FMCC) guidance for potential 2004-06 repurchase claims."

The net effect of the one-time items was a two-cent reduction in earnings, underlining a solid quarter for Fifth Third.

Fifth Third's shares were up 5% in midday trading, to $16.26, while the KBW Bank Index (I:BKX) was up slightly to 53.60, with all 24 index components showing gains, except for five, including Bank of America (BAC), which was down 4% to $11.33, and Citigroup (C), which was down 3% to $41.25.

Bank of America reported a fourth-quarter profit of $700 million or $.03 a share, beating the consensus EPS estimate by a penny, after the company pre-announced a large mortgage putback settlement with Fannie Mae (FNMA) and a major contribution to the $8.5 billion foreclosure settlement between federal regulators and the nation's largest loan servicers.

Citigroup reported fourth-quarter earnings of $1.2 billion, or 38 cents a share. Excluding credit valuation and debit valuation adjustments, Citi earned $2.2 billion or 69 cents a share, missing the consensus estimate of 96 cents. Citigroup's earnings were lowered by charges related to its restructuring announced in the fourth quarter, as well as a declining release of loan loss reserves.

Fifth Third's net interest income declined to $903 million during the fourth quarter, from $907 million in the third quarter and $920 million in the fourth quarter of 2011, as the net interest margin -- the spread between the average yield on loans and investments and the average cost for deposits and borrowings -- narrowed to 3.49% from 3.56% the previous quarter and 3.67% a year earlier.

Fifth Third said that "The decline in net interest income was driven by the effect of approximately $10 million in non-recurring benefits recorded in the third quarter. Otherwise, net interest income benefited from a decline in interest expense driven by higher demand deposit balances and continued runoff in consumer CD balances." Fourth-quarter net interest income also benefitted from reduced expenses on borrowings.

Fifth Third CEO Kevin Kabat said that "every caption in fee income was up for the quarter, including mortgage banking revenue up 29 percent and corporate banking revenue up 13 percent sequentially. Net interest income was consistent with third quarter results and stronger than expected."

1 of 2

Select the service that is right for you!

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.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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