Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Cincinnati-based Fifth Third Bancorp
So what: Fifth Third surprised Wall Street in its third-quarter announcement by reporting $0.40 in quarterly earnings per share against the average expectation of $0.33. Earnings per share were up 14% from last quarter and a whopping 82% from the same quarter last year. The bank was helped primarily by lower loan-loss provisions. Provisions of $87 million were down 23% from the second quarter and 81% from a year ago.
Now what: Fifth Third was among the regional banks that struggled more than the average in the wake of the financial crisis. However, the numbers from the third quarter show the bank continuing to claw its way back. Most notably, credit quality at the bank continues to improve. At the end of the quarter, nonperforming loans as a percentage of total loans, leases, and other assets fell to 1.93% from 2.15% at the end of last year. Charge offs were at the lowest level since the fourth quarter of 2007, falling to $262 million from $304 million last quarter. If these trends continue, the current book value multiple of 0.8 on Fifth Third's stock could prove to be a pretty good deal.
Want to keep up to date on Fifth Third Bancorp? Add it to your watchlist.
The Motley Fool owns shares of Fifth Third Bancorp. 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.
Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool’s disclosure policy prefers dividends over a sharp stick in the eye.