Updated from 8:49 a.m. EDTFifth Third Bancorp's ( FITB) shares soared on Thursday after first-quarter results beat expectations and management issued bullish statements for improving margin trends in upcoming quarters. However, Fifth Third's major exposure to regions of the country with severe economic conditions, combined with its book of deteriorating commercial loans and competition to gain deposits, may stand to give investors pause. The Cincinnati-based bank posted a first-quarter loss of $26 million, or 4 cents per share, compared with a profit of $286 million, or 54 cents per share, a year earlier. The results beat expectations by a long shot, with the average analyst predicting a loss of 27 cents per share. Fifth Third stock surged 12.5% in premarket trading after the report was released, but more recently eased to a 7.6% lift at $3.97. Fifth Third attributed its loss mostly to preferred dividends it was required to pay on the government's $3.4 billion preferred stake in the company. Excluding $76 million in preferred dividend payments, the bank would have posted a profit of $50 million. But results were also hindered by exposure to commercial and residential loans in areas of the U.S. that have faced relentless economic headwinds. Fifth Third posted $490 million in net charge-offs, down sequentially, but up78% over the past year. The bank also added $319 million to its allowance for future losses during the first quarter as nonperforming assets climbed to 3.19% of its loan book, from 1.81% a year ago and 2.38% at the end of 2008. The company's losses and risk of future losses lie mostly in commercial and residential loans in Michigan and Florida, as well as other states in the Midwest.