By Lisa Beilfuss And Rachel Louise Ensign
Fifth Third Bancorp said profit dropped in its latest quarter as
the bank took a hit from forthcoming branch closures.
The Cincinnati-based bank reported earnings of $315 million,
down from $439 million a year earlier. Per-share profit fell to 36
cents from 49 cents. Revenue slid 12% to $1.45 billion.
Analysts anticipated 38 cents in per-share profit on $1.5
billion in revenue, according to Thomson Reuters.
The bank said the branch closures and other one-time charges
drove the earnings about 7 cents lower, which led some analysts to
say the bank met or surpassed expectations. For instance, John
Pancari, analyst at Evercore ISI, estimated "core" earnings per
share at about 42 cents, which beat his estimate of 39 cents.
Shares rose about 1% in recent trading.
Fifth Third last month announced plans to consolidate or sell
about 100 branches in an effort save about $60 million a year. On
Tuesday, the bank said it plans to close five additional
branches.
The bank also said it plans to spend more on technology through
the rest of the year. President and Chief Operating Officer Greg
Carmichael, who is set to take over as chief executive on Nov. 1
from retiring CEO Kevin Kabat, said the move would help the bank
become more efficient and satisfy customers who increasingly want
to "bank anywhere, anytime."
Fifth Third managed to lift its net interest margin, a key gauge
of lending profitability that has been falling at regional banks
squeezed by low interest rates, to 2.90% from 2.86% in the first
quarter on growth in the company's commercial business. The metric
measures how much a bank earns from the difference between what it
pays on deposits and what it receives on loans and investments.
Some other banks have signaled that the gauge may have bottomed
out.
Fifth Third said noninterest income fell 24% on the branch
closure charge, while net interest income fell 1% from the year
prior. The highlight was mortgage banking, which rose 50% to $117
million.
Average total loans grew 2% from a year earlier, led by strong
growth in commercial construction loans.
Noninterest expense dipped 1% to $947 million. But the lender's
efficiency ratio, a measure of expenses compared to revenue, rose
to 65.4% from 58.2% last year. Mr. Carmichael said Tuesday that he
sees "further opportunities to improve operational
efficiencies."
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Rachel
Louise Ensign at rachel.ensign@wsj.com
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