Fifth Third CEO sees bank in stronger position going forward as economy slowly recovers

Fifth Third CEO says bank stronger going forward

CINCINNATI — Fifth Third Bancorp’s chief executive said Tuesday the regional bank is in a stronger position as it moves forward amid what he expects will be a slow but steady economic recovery.

CEO and Chairman Kevin Kabat told shareholders attending the company’s annual meeting that the regional bank’s core results are expected to improve as the economy improves.

“We’re positioned to emerge as one of the best-performing regional banks,” he said.

Kabat said the company remains focused on returning to sustained profitability in the wake of the economic recession and the financial crisis that shook up the industry.

Banks have had to deal with billions of dollars in bad loans to borrowers who could not make payments, but Kabat said he expects continued improvement in the Cincinnati-based bank’s loan losses and expects them to stabilize.

Fifth Third is still working to overcome a hard-hit housing market, especially in the key states of Florida and Michigan.

“Michigan is, we think, getting close to the bottom, so that feels a little bit better to us,” he said, while adding that Florida “remains a challenge.”

Kabat could not comment on first-quarter earnings set to be reported Thursday and would not give specific answers to questions about when the bank would restore its dividend and repay the $3.4 billion received in 2008 from the government’s bank investment program. He saidthe bank expects to make the repayment later this year, but he wouldn’t provide a specific time.

Sam Haddan was one of the shareholders concerned about the quarterly dividend that has been at 1 cent for over a year.

“They keep saying they plan to increase it, but they won’t say when,” said Haddan, 84, of Evansville, Ind.

Kabat told shareholders Tuesday that he would like the company to improve its profit potential before increasing the dividend.

Shareholder Darrell Clark, 52, of Fairfield, said he was pleasantly surprised that Fifth Third’s stock price has increased as much as it has since he became an investor 13 months ago, but he said he had expected some increase.

“I wouldn’t have invested if I had thought Fifth Third would fail,” Clark said.

Fifth Third’s shares closed at $14.80 Tuesday, up 56 cents in trading. Fifth Third shares have ranged from $2.91 to $15.08 over the past 52 weeks.

Kabat again stressed, when talking to reporters, that he expects the economy to recover but in a “slow, steady and restrained” manner.

“I think you’ll see the industry as a whole, especially Fifth Third, continue to get healthier and healthier,” Kabat said.

Kabat said acquisitions are possible later, but the company probably would be looking at banks that have been taken over by the Federal Deposit Insurance Corp.