Record Origination Drives Fifth Third Profts

Cincinnati-based Fifth Third Bancorp (FITB) reported Q209 earnings of $882m, up from a $50m profit in Q109 and a loss of $202m in Q208. The firm’s mortgage banking business drove a net revenue of $147m, up $13m from Q109 and $61m in Q208. Fifth third originated $6.9bn in new mortgage loans, a record for the firm, and up from $4.9bn in Q109. Fifth Third held $475m worth of non-performing residential mortgage assets in the quarter, consistent with Q109, but home equity non-performing assets decreased $10m to $73m. The bank said residential mortgages in Michigan and Florida represented 62% of its total residential real estate non-performing assets and 35% of all residential real estate loans. “Results for the second quarter were in line with our expectations and continue to reflect strong core results coupled with high credit costs,” said chairman, CEO and president Kevin Kabat in the report. “Credit trends remain difficult and signals regarding future trends are somewhat mixed at this point. We continue to work aggressively to manage the risk in our loan portfolio.” Kabat said he expects loan losses to increase slightly, but added current loan loss reserves should be sufficient to handle any increase. After coming up short on the government’s “stress test” in May, Fifth Third faced a requirement to raise $1.1bn of Tier 1 common equity. The bank said it exceeded that requirement by $650m through a common stock offering, preferred stock exchange and sale of common stock it held in credit card company Visa (V). Fifth Third also made a Federal Deposit Insurance Corporation special assessment payment of $55m. Write to Austin Kilgore. Disclosure: The author held no relevant investment positions when this story was published.

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