Fifth Third sets aside $69 million to pay lawyers
Bank manages fourth-quarter profit in litigious circumstances
Nonetheless, the bank did manage to pull off a profit despite a huge settlement with Freddie Mac and even added capital to its litigation reserve fund.
In the fourth quarter, the bank reported net income of $383 million, or $0.43 per diluted common share.
Results included the mortgage repurchase provision of $28 million primarily related to Fifth Third’s settlement with Freddie Mac and expectations for future repurchase requests. The bank also recored $69 million in charges to increase its litigation reserves.
Fifth Third entered into a settlement for $25 million with Freddie Mac to resolve certain repurchase claims associated with mortgage loans originated and sold prior to 2009.
This was charged against the representation and warranty reserve.
A big driver of profit is the bank's stake in Vantiv, one of the nation's top payment processors and a strategic business partner of Fifth Third.
Additionally, overall credit improved at the bank.
Allowance for loan and lease losses decreased $95 million. Nonperforming assets declined $39 million and the bank changed its policy on home equity nonaccruals, which added another $46 million.