Fifth Third Posts $511m Net Gain in 2009 Despite Quarterly Loss
Fifth Third Bancorp posted a net income for 2009 after a multi-billion dollar loss in 2008, as credit trends shows signs of improvement. Fifth Third posted a $98m net loss, or $0.20 per diluted share, for Q409, but its 2009 net income available to common shareholders increased to $511m, or $0.67 per diluted share, from a $2.2bn loss, or $3.91 per diluted share, in 2008. “Fourth quarter credit trends were better than expected and showed encouraging signs of improvement," said Kevin Kabat, CEO of Fifth Third Bancorp. Fifth Third held $8.1bn in residential mortgage loans at the end of the quarter down 3% from $8.3bn in the previous quarter and 13% from $9.3bn at the end of 2008. Non-performing residential loans reached $275m, up from $267m in the previous quarter and $259m at the end of 2008. "We currently expect credit and operating results to improve further in the first quarter, and that our aggressive actions to address the issues presented by this cycle will continue to serve us well as the economic environment stabilizes and improves," Kabat said. Fifth Third holds $11.9bn in commercial mortgage loans. For its commercial mortgage portfolio, the rate of delinquency decreased to $898m in Q409 from $912m in 2009, even though it’s an increase from $482m in 2008. Fifth Third's results reflect the continued stress in the commercial mortgage market, which is expected by credit-rating agencies to gain in delinquencies in coming months. To what extent delinquencies will rise depends on the credit-rating agency commenting at the time. Fitch Ratings and Realpoint see continued troubles ahead in both the near- and long-term. On the other hand, Moody’s Investors Service and Credit Suisse hold brighter outlooks for investor demand for securities backed by commercial mortgages. Write to Jon Prior.