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

Fifth Third: Bank Stock Winner

NEW YORK ( TheStreet) -- Fifth Third Bancorp (FITB - Get Report) was the winner on Tuesday among the largest U.S. banks, with shares rising over 1% to close at $17.03.

The broad indices all closed higher after yet another economic report showed a strengthening real estate recovery in the U.S. S&P Dow Jones Indices said Tuesday that the 10-city S&P/Case-Schiller Home Price index for February was up 8.6% from a year earlier, while the 20-city index was up 9.3% year over year. The 10- and 20-city indices showed respective increases in February from January of 0.4% and 0.3%.

"The 10- and 20-City Composites recorded their highest annual growth rates since May 2006," according to David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. Blitzer said in a press release that "Phoenix, San Francisco, Las Vegas and Atlanta were the four cities with the highest year-over-year price increases."

Considering that Arizona, California, Nevada and Georgia were all grossly affected by the bursting of the real estate bubble in 2008, the data underscores just how dramatically home prices are recovering.

In a note to clients following the release of the S&P Case-Schiller data, Rafferty Capital analyst Richard Bove tied the rising home prices to bank stock valuations.

"The banks have marked down their holdings of repossessed real estate to levels that reflected housing prices at the bottom," Bove wrote, adding that "the banks are not allowed to mark to market these holdings as they do certain of their securities holdings or their fair valued debt."

This means that book value per share is understated for many banks.

Because construction lending is very difficult in the current regulatory climate and "the regulators also frown upon lending to low income households," Bove wrote that "the demand for the residential real estate assets being held by banks is growing. The foreclosed property division (OREO) is now a profit center."

According to Bove, the big regional banks and money center banks with OREO representing the largest percentage of common equity include Fifth Third Bancorp, at 1.92%; Wells Fargo (WFC - Get Report), at 1.59%; PNC Financial Services Group (PNC - Get Report), at 1.40%; and SunTrust (STI - Get Report), at 1.13%.

1 of 2

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
Only $9.95
14-Days Free
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!
FITB $18.92 0.34%
PNC $92.50 -0.79%
STI $40.84 -0.61%
WFC $53.94 -0.85%
AAPL $124.25 -0.14%


DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs