Monday, May 6, 2013

Fifth Third Bancorp Q1 2013 Earnings

Fifth Third Bancorp (FITB) has released Q1 2013 earnings.  The company reported a profit of $413 million, or EPS of $0.46 per share.  This represents a 2% increase in EPS, but a 2% drop in net income as compared to Q1 2012, which produced $0.45 EPS on $421 million of revenue.  FITB net income increased just over 6% sequentially.  This year-over-year decline of $8 million in revenue was led by falling earnings from deposits and loans, also known as “Net Interest Income”, as well as “Income from Fees and Other Sources”.  A major positive point for the bank’s operations was a decreasing amount of “Net Charge-Offs”, or the amount of money lost on bad loans.  This number was reported at $133 million, which is the lowest level seen since 2007.  This number follows the recent trends downwards, and can be seen as a positive sign looking into the future.  Fifth Third Bancorp operates in Florida and Michigan, two of the areas that took the largest losses during and immediately after the financial crisis shook this country.  As these areas have been bouncing back, and are expected to continue, operations spanning these areas of the country should continue to thrive.  Recently, there has been news that the Fed will not stop quantitative easing.  This will continue to take the country on its current path of easy money, possibly increasing the volume of loans originated, especially in Florida (housing) and in the Midwest, as automobile companies continue to generate strong revenues. 

Leading the rise in EPS, although there was a slight decrease in net income, is the company’s share repurchase program:  the company bought back about 8 million shares in the first quarter.  FITB also increased its quarterly dividend to $0.11 per quarter from $0.10, as it reported one of its highest levels of net income ever.  

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