Examining the Bank That Returned 7.4% to Its Shareholders Last Year

Some investors love U.S. Bancorp and Huntington Bancshares, but it turns out that Fifth Third Bancorp was the best at returning the money it made back into the pockets of its shareholders in 2013.

Jul 17, 2014 at 11:08AM

Fifth Third Bank (NASDAQ:FITB) is a regional bank that often goes undiscussed. But a dive into one trend reveals that big things for its shareholders could be here soon.

The one thing worth watching
At its annual shareholder meeting, one of the fascinating things Fifth Third revealed was how well it did in returning the money it made to its shareholders relative to peers through dividends and share buybacks. As you can see below, it eclipsed not only regional peers like Huntington Bancshares (NASDAQ:HBAN), but also highly regarded Warren Buffett favorite, US Bancorp (NYSE:USB):

Source: Company Annual Shareholder Meeting.

One of the biggest drivers behind this isn't just a strong dividend -- Fifth Third increased its dividend by 31% last year and returned more than $400 million to shareholders through it -- but that it repurchased $925 million worth of its common stock in 2013.

Relative to Huntington Bancshares and US Bancorp, the trend in its shares outstanding during the last year is strikingly different:

Source: Company SEC Filings.

Yet, one of the most interesting things about Fifth Third Bank is that it doesn't appear as though this trend of buying back stock will stop anytime soon.

The trend continues
When the results from the Federal Reserve's annual CCAR process were announced, Fifth Third revealed it had received approval to repurchase up to $669 million in common stock between the beginning of April 2014 to the end of March 2015. In addition, when its latest announcement of its reduction of its stake in Vantiv was made in May, Fifth Third also added another $81 million to its repurchase budget, bringing the total to $750 million.

Fitb By Tyler Merbler

Source: Flickr / Tyler Merbler.

This coincides with the news from earlier in the year that Fifth Third had received explicit approval from its board of directors to repurchase up to 100 million shares. And in its latest SEC filing, we learned it didn't just do that in the first quarter of the year; at the end of April, it "entered into an accelerated share repurchase transaction," and was seeking to buy back 6.2 million shares for $150 million.

The key takeaway
With earnings season just around the corner, it will be very interesting to learn the direction of the repurchases in the second quarter, as the stock price of Fifth Third fell by nearly 15% from the beginning of April to the middle of May. If it truly believed the stock was a worthwhile purchase, one has to think it would've aggressively bought back more stock as the price plummeted.

More work needs to be done to determine if the management team is making a correct move by buying more shares, as its price to tangible book value of 1.8 undeniably wouldn't be considered "cheap." But there is the possibility it may be a good value.

And one way to determine this is to learn what the management team itself thinks.

Bank of America + Apple? This device makes it possible.
The banking industry is poised for massive change. You see, Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its destined to change everything from banking to health care. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here

Patrick Morris owns shares of US Bancorp. The Motley Fool owns shares of Fifth Third Bancorp and Huntington Bancshares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information