Fifth Third Bancorp ( FITB) on Tuesday said it had made its first dividend payment to the government connected with the federal bailout funds it received at the end of last year.

The Cincinnati-based bank last year received $3.4 billion in capital from the U.S. Treasury in exchange for selling 136,320 preferred shares. It said Tuesday that it has paid the Treasury $42.6 million in dividend payments.

Fifth Third highlighted the fact that the additional capital was made available to healthy banks through the TARP's Capital Purchase Program. The TARP program, originally intended to boost the capital levels of healthy banks in order to kick start lending, has developed a stigma since distressed banks like Citigroup ( C) and Bank of America ( BAC) have had to go back for a second helping of funds to stabilize their capital levels.

Fifth Third Chairman and CEO Kevin Kabat said the company originated more than $5 billion of loans in January alone. In the fourth quarter, the company made nearly $20 billion in loans and renewal contracts across first mortgages, credit cards, home equity and commercial loans.

Fifth Third announced on Monday that it was selling a majority stake in its profitable payments processing business in order to additionally shore up capital levels. The regional bank will sell a 51% stake in the business to buyout firm Advent International for $561 million.

Shares of Fifth Third were up 13.3% to $2.81 on Tuesday.

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