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5 Regional Banks to Watch Heading Into Earnings (Update 2)

Fifth Third Bancorp


Shares of Fifth Third Bancorp (FITB) of Cincinnati closed at $16.31 Thursday, returning 8% during the first quarter, following a 23% return during 2012. The shares trade for 1.4 times tangible book value and for 9.7 times the consensus 2014 EPS estimate of $1.69. The consensus 2013 EPS estimate is $1.65.

Fifth Third on March 14 announced a "potential increase" in its quarterly dividend from 10 cents a share, with approval for the potential repurchase of up to $750 million in trust preferred securities. The company also received approval for the potential conversion of $398 million in convertible preferred shares to common shares. If the conversions are completed, the company has Federal Reserve approval for common share buybacks totaling up to $984 million.

Based on the current quarterly payout, the shares have a dividend yield of 2.45%.

Jefferies analyst Ken Usdin said in a report on March 15 that "we see FITB's announced capital plan as a modest positive. Potential upside to EPS is 3% at best and neutral at worst."

The company will report its first-quarter results on April 18, with the consensus estimate being a 39-cent profit, declining from 43 cents in the fourth quarter, and 45 cents in the first quarter of 2012.

O'Connor rates Fifth Third a "buy," and estimates the company will report a first-quarter profit of 40 cents, factoring in two cents from valuation adjustments in warrants the company holds to purchase shares of Vantiv (VNTV), as well as gains from a securitization of auto loans.

O'Connor expects Fifth Third's net interest margin "to decline modestly (possibly 4-5bps per quarter) through 2013."

For the first quarter, the analyst expects mortgage repurchase costs to decline by $29 million from an "elevated" fourth quarter.

FITB ChartFITB data by YCharts

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

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

Stock quotes in this article: BAC, COF, USB, FITB, STI, JPM, C, WFC, BBT, PNC 
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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