Fifth Third Realizes Gain from Processing Unit in 2Q

Fifth Third Bancorp (FITB) boosted quarterly profits thanks to slightly stronger revenue and a special gain associated with a former processing unit.

The $118 billion-asset company's net income available to shareholders rose 15% in the second quarter from a year earlier, to $376 million. The results included dividends paid on preferred stock.

Fifth Third benefited from a $36 million after-tax gain tied to the valuation of a warrant the Cincinnati company holds in Vantiv, which was once known as Fifth Third Processing Solutions. Fifth Third sold a 51% stake in that business to Advent International in 2009.

"Earnings trends remained positive in the second quarter of 2012," Kevin Kabat, the company's president and chief executive, said in a press release Thursday. "Results came in better than we had anticipated and followed a very strong first quarter."

Earnings fell 11% from the first quarter.

Net interest income edged up 3% from a year earlier to $899 million; it was relatively flat from the first quarter. The net interest margin shrank 6 basis points from a year earlier and 5 basis points from the first quarter, to 3.56%.

Average loans rose 7% from a year earlier and 1% from the first quarter, to $84.5 billion. Residential mortgages and commercial and industrial loans increased from a quarter earlier, while all other major loan categories shrank.

The loan-loss provision fell 37% from a year earlier and 22% from the first quarter, to $71 million. Net chargeoffs fell 40% from a year earlier and 18% from the first quarter, to $181 million. Nonperforming assets fell 22% from a year earlier and 3% from the first quarter, to $1.6 billion.

Noninterest income rose 3% from a year earlier, to $678 million; that figure fell 12% from the first quarter. Noninterest expense increased 4% from a year earlier and fell 4% from the first quarter; it was $937 million.