Fifth Third Bancorp's shares have now returned 12% year-to-date, after declining 11% last year.

The shares trade for 1.2 times their reported June 30 tangible book value of $11.89, and for nine times the consensus 2013 earnings estimate of $1.52 a share, among analysts polled by Thomson Reuters. The consensus 2012 EPS estimate is $1.58.

Based on a quarterly payout of eight cents, the shares have a dividend yield of 2.26%.

Fifth Third last Thursday reported second-quarter earnings available to common shareholders of $376 million, or 40 cents a share, declining from $421 million, or 46 cents a share, during the first quarter, when the company realized after-tax benefits of roughly $82 million, or nine cents a share, from the spinoff of its Vantiv ( VNTV) payment processing subsidiary. Second-quarter earnings increased slightly from a year earlier.

During the second quarter, Fifth Third realized after-tax gains of $36 million, or four cents a share, on the sale of Vantiv shares.

Fifth Third's second-quarter return on average assets (ROA) was 1.32%, declining from 1.49% in the first quarter, but increasing from 1.22% in the second quarter of 2011. The second-quarter return on average common equity (ROE) was 11.4%, declining from 13.1% the previous quarter, and increasing from 11.0% a year earlier.

The Federal Reserve in March rejected Fifth Third's plan to increase its dividend, while allowing the company to repurchase $1.4 billion in trust preferred securities and repurchase common shares in amounts equal to after-tax gains from the Vantiv sale. Fifth Third submitted a revised capital plan to the Federal Reserve in June, saying its plans to return capital to investors were "substantially similar" to the earlier plan.

Deutsche Bank analyst Matt O'Connor calls Fifth Third his "top pick" among super regional banks, and attributes the stock's underperformance this year to "disappointment/uncertainty" over the company's plans to return capital to investors, although "there should be a resolution/more clarity coming soon."

O'Connor's price target for Fifth Third is $17, and he estimates that Fifth Third will earn $1.56 a share for all of 2012, followed by EPS of $1.65 in 2013.

The analyst said that Fifth Third is attractive now on valuation, with the shares trading "at just 8.7x and 8.3x our 2012E and 2013E, respectively vs. 10.2x and 9.3x for peers," implying that concerns over capital return "should be in the stock." O'Connor added that "Near term, FITB should continue be one of the biggest beneficiaries of stronger mortgage," and once the company hears back from the Fed on its revised capital plan, "there could be a positive capital deployment story later this year."

FITB Chart FITB data by YCharts

Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.


-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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