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TheStreet Open House

Bank Stocks Lead on 'Government Restart Day'

Stock quotes in this article: FITB, GS, HBAN, USB, KEY, I:BKX

NEW YORK ( TheStreet) -- Fifth Third Bancorp (FITB) of Cincinnati was the winner among the largest U.S. banks on Thursday, with shares rising over 3% to close at $18.96.

The company early Thursday reported third-quarter earnings available to common shareholders of $421 million, or 47 cents a share, compared to $582 million, or 65 cents a share, in the second quarter, and $354 million, or 38 cents a share, in the third quarter of 2012.

As usual, Fifth Third's numbers included extraordinary items, with the third-quarter results boosted by an $85 million benefit on the sales of shares of Vantiv (VNTV), which came to $55 million after tax, or 6 cents a share.

As expected, Fifth Third reported a sharp drop in mortgage banking net revenue to $121 million in the third quarter, from $233 million the previous quarter and $200 million a year earlier.

A partial offset to the revenue drop was a decline in credit expenses. The bank's third-quarter provision for loan and lease losses was $51 million, declining from $64 million the previous quarter and $65 million a year earlier.

Jefferies analyst Ken Usdin in a note to clients said Fifth-Third's operating earnings for the third quarter appeared "closer to $0.43, excluding one-timers," which he called a "solid beat" of the consensus EPS estimate of 42 cents, among analysts polled by Thomson Reuters.

Usdin wrote that Fifth Third's "expenses look good," since core expenses were down $55 million sequentially, excluding a $30 million litigation charge. The analyst rates Fifth Third a "buy," with a price target of $21.00.

Please see TheStreet's earnings coverage for more on Fifth Third's results.

Broad Market Strong Following Washington Drama

The broad indices ended mixed, with the Dow Jones Industrial Average dragged slightly in the red after shares of IBM fell over 6% to close at $174.34, after the company was downgraded by Goldman Sachs analyst Bill Shope to a "neutral" from a "buy" rating. Shope wrote in a note that "the company appears to be going through a challenging period that may limit operational earnings upside and produce more quarterly volatility than investors have been accustomed to."

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