Fifth Third Bank Stock Gains After $178 Million Loan Loss. Earnings Were Strong.

The regional bank posts earnings of 91 cents a share, surpassing analysts’ estimate of 86 cents. (Ty Wright/Bloomberg)

Key Points

• Fifth Third Bancorp reported earnings of 91 cents per share, exceeding estimates of 86 cents, with revenue up 8% to $2.31 billion.
• The bank disclosed a $178 million charge-off for an impaired asset-backed loan, following earlier reports of $170 million to $200 million in expected losses.
• Fifth Third’s shares rose 1.9% to $41.10, and Comerica’s shares increased 1.7% after both banks reported better-than-expected earnings.

Shares of Fifth Third Bancorp rose Friday after the regional bank shook off a $178 million loan loss to report better-than-expected quarterly earnings.

The bank posted earnings of 91 cents a share, surpassing analysts’ consensus estimate of 86 cents. Revenue totaled $2.31 billion, up 8% from the prior year and a tick above Wall Street’s call for $2.29 billion.

Fifth Third stock rose 2.9% to $41.51 on Friday.

Bank stocks plunged Thursday after Zions Bancorp and Western Alliance Bancorp disclosed exposure to bad loans, ratcheting up fears of widespread credit risks. While Fifth Third, which recently revealed its own issues with loan losses, sank 6%, the solid earnings may allay some concerns.

The Cincinnati-based bank said in a regulatory filing last month that it expected to lose $170 million to $200 million due to alleged fraudulent activity by a borrower. That borrower was now-bankrupt car dealer Tricolor Holdings, Barron’s reported.

Fifth Third didn’t mention Tricolor by name in its earnings report, but did disclose a $178 million charge-off due to the impairment of an asset-backed loan.

Shares of fellow regional bank Comerica also were up 1.7% on Friday. The bank posted earnings of $1.35 a share, ahead of the $1.31 analysts had expected. Fifth Third announced earlier this month that it was acquiring Comerica in an all-stock deal valued at $10.9 billion that will create the ninth-largest U.S. bank.

Write to Nate Wolf at nate.wolf@barrons.com