Fifth Third Bancorp. projected second-quarter earnings well below analyst estimates and higher-than-expected charge-offs amid mounting credit problems that have spurred doubts about regional banks.
The Cincinnati bank said it has been hurt as credit trends continue to deteriorate, and it doesn't expect conditions to improve in the near term.
The company said it expects per-share earnings of 1 cent to 5 cents, excluding an accounting charge, compared with the mean estimate of 13 cents from analysts polled by Thomson Reuters.
The news didn't appear to shock investors, and may have heartened them, as Fifth Third shares recently traded up 2% at $9.95 in after-hours action.
The news comes just a day after Fifth Third announced it plans to sell $1 billion in convertible preferred stock, sell noncore operations and slash its dividend by 66% - news which sent its peer group's shares plunging.
In addition, the company expects to record net charge-offs of $340 million to $350 million, or 1.65% to 1.7%, from 0.55% a year earlier, led by losses on consumer loans in Florida and Michigan. The company also cited weakness in residential construction as spurring losses.
Fifth Third's loan loss provision will rise to $700 million to $725 million, compared with $121 million in the year-earlier period.