Fifth Third (NASDAQ:FITB), the super-regional bank with the funny-sounding name, might still be driving its long-suffering investors to drink. Sure, the yield curve is a problem for all banks, but this company seems to still have troubles that go beyond that one-size-fits-all explanation.
Because of some large charges in the year-ago period, it's a little bit unwieldy to compare fourth-quarter results with last year's. So I'll take the unusual step of comparing results on a sequential basis -- comparing this quarter with the third quarter.
Total revenue (basically, the combination of net interest income and non-interest income) was essentially flat, while net income fell 16%. Sequential expense growth was fairly modest (about 4%), but Fifth Third's results suffered from higher provisioning due to bad debts from airline bankruptcies and a spike in personal bankruptcies.
Net interest income was down about 1% sequentially, and Fifth Third's net interest margin dropped five basis points to 3.11% (and 24 basis points from last year). Return on assets and return on equity both dropped, and the efficiency ratio worsened again.
All in all, not a great quarter.
At least there was decent asset growth. Loan balances climbed 11% on an annualized sequential basis, and deposits increased at a slightly higher clip. There was also good performance in the non-interest businesses. Although the company's non-interest income was about 9% higher sequentially as reported (annualized), the exclusion of lease revenue and securities gains/losses bumps that up to 16% on an annualized basis.
Fifth Third is a strange story -- a troubled super-regional with a solid history of growth. Is it as a well-run as US Bancorp (NYSE:USB), Wachovia (NYSE:WB), or maybe even the smaller TCF Financial (NYSE:TCB) or BB&T (NYSE:BBT)? Not right now. In fact, things are tough enough now that people are talking about Fifth Third being an acquisition target if it doesn't straighten up quickly.
I'm no great fan of rumors, but I am a definite value hound. And such is the perversion of a value orientation that Fifth Third's ongoing struggles don't bump it off my watch list. In fact, as long as the company isn't doing permanent damage to its customer base, there could still be a second act here.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
