Fifth Third Gets Ahead On Credit

Fifth Third Bancorp (NASDAQ: FITB) reported EPS that came in between Citigroup and Consensus for the company's 3Q as it continues to get past bad credit transgressions and loans.

In the report, Citigroup writes "FITB reported 3Q EPS of $0.22 vs our $0.25 estimate and consensus of $0.17. Underlying quarter looked decent with small core beat driven by strength in mortgage and NII expansion. Signs of loan growth were also a welcome change. On the credit side, FITB moved aggressively to put past credit transgressions behind it marking for sale or selling down $1.2 billion of problem loans which resulted in an incremental ~15% hit vs prior marks. On the downside, 3Q showed “non-core” credit costs in fees & expenses back on the rise with mortgage repurchase costs kicking in extending the drag on EPS. With NII coming under pressure next year and personnel costs appearing to reset to a higher base, we see 2011 as unlikely to show PTPP expansion."

Citigroup maintains its Hold rating and $15 price target.

Fifth Third Bancorp closed Friday at $12.86.