Regional bank Fifth Third's 4Q profit tops Street

DAN SEWELL Associated Press Published:

CINCINNATI (AP) -- Regional banker Fifth Third Bancorp reported Thursday that its fourth-quarter net income jumped 28 percent, helped by improving credit conditions.

The Cincinnati-based company earned $390 million, or 43 cents per share, for the period ended Dec. 31. That compares with $305 million, or 33 cents per share, a year ago, and topped analysts' estimates for of 41 cents per share.

Net charge-offs of bad loans dropped to $147 million from $239 million, which Fifth Third said Thursday was the lowest level since 2007's third quarter. Total delinquencies fell 4 percent from the third quarter, the lowest since 2004's second quarter.

CEO Kevin T. Kabat called the results "strong," and cited double-digit mortgage banking and corporate banking revenue growth among other highlights. He told analysts on a conference call that Fifth Third expects loan charge-offs to again be lower in the first quarter of 2013, and that the bank is setting aside less money to cover loan losses.

"That gives us confidence as we move into 2013," he said of the bank's fourth-quarter performance and favorable credit trends. Kabat said Fifth Third is well-positioned for more growth during a slow national economic recovery.

Shares rose 74 cents, or 4.8 percent, to close at $16.29 after climbing as high as $16.35. FactSet says that is their highest level since August 2008. Its shares traded as low as $12.04 in June.

Non-interest income, which includes revenue from fees and other sources, surged 60 percent to $880 million. This included a $157 million gain on the sale of shares of payment processor Vantiv Inc.

Net interest income declined 2 percent to $903 million from $920 million.

Net interest income combines interest on loans that the bank collects and interest on deposits and debt that the bank pays out. It is a measure of the bank's ability to profit from its lending.

For the full year, Fifth Third reported net income of $1.6 billion, up from $1.3 billion in 2011. After preferred dividends, net income available to common shareholders was $1.5 billion, or $1.66 per share, up from $1.1. billion, or $1.18 per share in 2011. Kabat said it was the second-highest yearly net income level in company history.

Fifth Third's business has rebounded in the aftermath of the nation's financial and housing crisis that hit particularly hard in key markets in Florida and Michigan. In September, Fifth Third raised its third-quarter dividend to 10 cents per share. Its dividend had been cut to 1 cent per share in late 2008.

Fifth Third has more than 1,300 banks in 12 states: Ohio, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania, North Carolina, Tennessee and West Virginia.

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AP Business Writer Michelle Chapman in New York contributed to this story,