Fifth Third Bancorp's (NASDAQ:FITB) relatively neutral quarter seems like a moral victory for new CEO Kevin Kabat, in that it contained no major bad news. Five years ago, Fifth Third's stock was around $70 per share, but issues like balance sheet problems and accounting missteps deflated shares to their current $40 price. Will the company finally be able to get back on track?

For the quarter, net income fell 1% to $359 million. On the positive side, balance-sheet restructuring improved net interest margin for the quarter to 3.44%, versus 3.16% in December. This improvement combined better yield on earning assets with a lower cost of funds.

During the conference call, Kabat talked about basic blocking-and-tackling issues such as getting better at keeping customers, attracting more new customers, and deepening relationships. At the end of the day, basic issues like these make or break a bank. Kabat pointed out a University of Michigan study that ranked Fifth Third Bancorp second in customer service amongst large banks. That's impressive to me, considering that bad customer service at big banks like Bank of America (NYSE:BAC) and Wachovia (NYSE:WB) is a thing of the past.

Core expense growth increased 8% year over year, a rate that Kabat noted was unsustainable, given the current banking environment. He also said the company had already undertaken initiatives to manage expenses, and that it hopes to achieve about $40 million to $50 million in annualized savings. Credit quality was also very stable, with most credit loss ratios either flat or down compared to last year.

The company's outlook for 2007 called for mid-to-high-single-digit growth in net interest income, a stable net interest margin in the 3.35%-3.45% range, a stable charge-off ratio, and some operating leverage from growing non-interest income faster than non-interest expenses. Stay tuned to see whether this former champion can regain its past glory.

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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.