(Adds information from earnings call, updated stock prices.)

Fifth Third ( FITB) shares were soaring Thursday after the firm topped expectations for second-quarter results and indicated it is adequately prepared for escalating credit costs.

Shares of the Cincinnati-based lender sailed 14.8% higher to $8.05 in recent trading.

Fifth Third earned $856 million, or $1.15 per share, compared with a loss of $202 million, or 37 cents per share, a year earlier, largely due to a one-time gain. Excluding special items, the bank would have lost 27 cents per share, still 7 cents better than the average analyst's expectation, according to Thomson Reuters.

Fifth Third's results included an after-tax gain of $1.1 billion on the sale of a majority stake in its processing business. The firm also said it has sold shares of Visa ( V) in the third quarter, for a post-tax gain of about $206 million.

The bank's net charge-offs of bad loans climbed to $626 million, nearly double the $344 million it charged off a year ago and up 28% from the first quarter's $490 million. Its provision for loan and lease losses totaled $1 billion, or 4.28% of total loans at the end of the quarter.

"Credit trends remain difficult and signals regarding future trends are somewhat mixed at this point," Chairman and CEO Kevin T. Kabat said in a statement.

Though Fifth Third has exceeded the Federal Reserve's requirement that it boost Tier 1 capital levels by $1.1 billion, Kabat said on a conference call that the firm is not ready to repay bailout funds until there are tangible signs that economic conditions are improving.

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