Fifth Third snaps streak of 3 straight quarterly losses as loan-loss provisions drop

Fifth Third posts $130M profit, tops forecasts

CINCINNATI — Fifth Third Bancorp said Thursday its net income tumbled 85 percent in the second quarter from results inflated by an asset sale a year ago, but the latest results broke a streak of three straight quarterly losses.

The regional banker’s stock surged on the return to profits, which the company based in Cincinnati expects to continue in the current quarter.

The latest results were helped by a steep drop in provisions to cover bad loans. Fifth Third’s loan-loss provisions fell to $325 million in the second quarter, down 69 percent from the year-ago period and 45 percent from the first quarter.

The company said delinquent loans fell 17 percent, to the lowest level since 2007, and charge-offs of bad loans were down 25 percent for the quarter.

“Our return to profitability is a major step in the progress of the company after the events of the past couple of years,” Kevin Kabat, president and CEO, told investors in a conference call.

Kabat said the company expects continued capital growth and a favorable bottom line in the third quarter. He said Fifth Third has been hiring, and plans to open an unannounced number of new branches in the second half of this year.

Its shares jumped $1.17, or 10.4 percent, to close at $12.45. They have traded from $6.59 to $15.25 in the past year.

Fifth Third, which was hit hard by the housing slump in key states such as Florida and Michigan, said net income available to common shareholders was $130 million, or 16 cents per share. Analysts had forecast a profit of just 2 cents per share.

That’s down from $856 million, or $1.15 per share, a year ago when its results included a gain on the sale of its processing business. Fifth Third said last year it would have had a loss of about $200 million, or 27 cents, in the second quarter without that gain.

Fifth Third has 16 affiliates with offices in 12 states.

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