Diversified financial services holding company Fifth Third Bancorp (FITB) reported Thursday that loss for the fourth quarter narrowed sharply from last year, helped by improving credit trends and sharply lower loan loss provisions.
The company also said that it expects net charge-offs to decline in the first quarter and the full-year 2010. Nonperforming assets are projected to increase moderately in the first quarter.
In a statement, chairman, chief executive officer and president, Kevin Kabat said, "Fourth quarter credit trends were better than expected and showed encouraging signs of improvement. Net charge-offs were $708 million, down $48 million from the third quarter, with improvement in both commercial and consumer loan losses."
The Cincinnati, Ohio-based reported net loss available to common shareholders, after preferred dividends, of $160 million or $0.20 per share for the fourth quarter, sharply narrower than $2.18 billion or $3.78 per share in the prior year quarter. On average, 25 analysts polled by Thomson Reuters expected the company to report loss of $0.31 per share for the fourth quarter. Analysts' estimates typically exclude special items.
The company reported a net loss of $98 million, compared to net loss of $2.1 billion in the fourth quarter of 2008.
The results for the latest quarter included the benefit of a $20 million pre-tax mark-to-market adjustment on warrants, offset by a $22 million pre-tax litigation reserve accrual. The year-ago quarter included net charges of $1.0 billion pre-tax or $1.76 per share, a $965 million goodwill impairment charge, a $40 million other-than-temporary-impairment charge on securities, a $34 million charge to lower the cash surrender value of a BOLI policy, and an $8 million charge due to changes in loss estimates related to the Bancorp's indemnification obligation with Visa.
Fifth Third's quarterly net interest income, on a taxable equivalent basis, declined 2% to $882 million from $897 million in the prior-year quarter, while total non-interest income edged up 1% to $651 million from $642 million in the same quarter last year. Thirteen Wall Street analysts had a consensus revenues estimate of $1.45 billion.
Provision for loan losses for the quarter plunged to $776 million from $2.36 billion in the prior-year quarter. Net charge-offs also dropped to 3.62% from last year's 7.5%.
Losses on loans in Florida and Michigan accounted for most of Fifth Third's fourth quarter charge-offs.
Fifth Third's service charges on deposits of $159 million decreased 2% from the same quarter last year. Retail service charges declined 3% from the year-ago quarter, driven by a reduction of NSF fees due to changes in overdraft policies. Commercial service charges increased 1% from last year.
Corporate banking revenue increased 15% to $98 million from the same period the previous year, as lower foreign exchange and interest rate derivative sales revenue more than offset growth in institutional sales and business lending fees. Mortgage banking net revenue increased by $161 million to $132 million from the year-ago quarter.
Investment advisory revenue decreased 2% to $77 million from the same quarter last year. Institutional trust revenue was up 13% from the previous year, while private client revenue increased 5% year-over year. Mutual fund fees were down 27% from the prior-year quarter, generally due to lower mutual fund balances. Brokerage fees were down 7% from the same period a year ago. Card and processing revenue was $76 million in the quarter.
The Tier 1 common equity ratio for the quarter increased to 7.00% from last year's 4.37%, the Tier 1 capital ratio grew to 13.31% from 10.59% a year ago, and the total capital ratio increased to 17.48% from last year's 14.78%. The tangible common equity to tangible assets ratio in to 6.45% from a year ago's 4.23%. Net interest margin increased 9 bps to 3.55% from last year.
Among the peers, Minneapolis, Minnesota-based U.S. Bancorp (USB) reported Wednesday a profit for the fourth quarter that more than doubled, as revenues grew 20.8% from last year due to higher net interest income and fee revenue. The company's provision for credit losses increased 9.6% from a year ago, reflecting the adverse impact of current economic conditions, but decreased 4.7% on a linked quarter basis. Net income rose to $580 million or $0.30 per share from $259 million or $0.15 per share in the year-ago quarter. Total net revenue on a taxable-equivalent basis increased 20.8% to $4.38 billion from $3.62 billion last year.
Full-Year Highlights
For fiscal 2009, the company reported net income of $511 million or $0.67 per share, compared to a net loss of $2.2 billion or $3.91 per share in the previous year. Analysts expected the company to report earnings of $0.60 per share for the full year 2009.
Outlook
Looking ahead, Kabat added, "We expect net charge-offs to decline again in the first quarter, reflecting relatively stable consumer trends and lower C&I and commercial real estate losses, and our current expectation is for full-year 2010 net charge-offs to decline from those realized in 2009 as we experience lower loss content in problem assets at this stage of the cycle."
The company also noted that it currently expects nonperforming assets to increase moderately in the first quarter and for growth to continue to slow moving forward.
Stock Quote
FITB closed Wednesday's regular trading session at $11.31, up $0.10 on a volume of 25.43 million shares, higher than the three-month average volume of 17.34 million shares. In the past 52-week period, the stock has been trading in a broad range of $1.01 to $11.95.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.