DOW JONES NEWSWIRES
Fifth Third Bancorp. (FITB) swung to a second-quarter profit on
a joint venture-related gain as credit woes continued to grow.
The Cincinnati bank is a Midwest stalwart that, like many
rivals, expanded into hot markets such as Florida during the
housing boom and is paying for it now. It has exited some
problematic sectors and tightened lending standards, but still
faces credit woes.
It has also taken steps to boost common equity, including a $1
billion common-stock offering and exchanges of depositary shares
for common ones.
Fifth Third posted income of $882 million, or $1.15 a share,
compared with a year-earlier loss of $202 million, or 37 cents a
share, a year earlier. The latest results included a $1.06 billion
gain from the sale of a 51% in its processing business. The prior
year's results included 44 cents in charges.
Revenue more than doubled to $3.42 billion amid the gain.
The provision for loan losses was $1.04 billion, up 45% from a
year earlier and 35% from the prior quarter. Net charge-offs rose
to 3.1% from 1.7% and 2.4%, respectively. Nonperforming assets rose
to 3.5% from 2.3% and 3.2%.
Average core deposits grew 9% from a year earlier.
Late last month, Advent International Corp. completed its
purchase of a 51% stake in Fifth Third's processing business in a
$2.35 billion deal. The company said the deal would contribute
about $1.2 billion to common equity.
Last month, Fitch cut its ratings on Fifth Third one notch as
part of a review of U.S. banks, saying it has been battling
"significant ongoing asset quality issues since late 2007" because
of extremely challenging housing markets in its areas, especially
in Florida and Michigan.
Fifth Third's shares closed Wednesday at $7.01 and haven't
traded premarket.
-By Kerry Grace Benn, Dow Jones Newswires; 212-416-2353;
kerry.benn@dowjones.com