May 7, 2009 – 11:50 am

2009-05-07-Stress Release:

Fifth Third Bancorp reportedly passed the FED’s stress test to see if it was adequately capitalized, but regulators said it needed another $1.1 billion to be adequately capitalized. You have to wonder what kind of test it was when all 19 insolvent banks passed it, some even needing more capital. But that’s the offical word from officaldoom. So, if you pay no attention to the $1.1B, Firth Third passes passes it’s stress test.


2008-10-28 -Bailed Out:

Fifth Third Bancorp is raising cash the newfangled way, from the taxpayer. From “the bailout package,” FTB will take a negligible $3.45B. That will not go unnoticed in our pain count when they report next quarter, if they’re around that is.  

2008-07-22 -Crushed:

Fifth Third Bancorp was crushed yesterday as investors deprived of shortselling abilities unloaded the stock until it hurt once the bailout legislation failed to pass in the House of Representatives.

2008-07-22 -Deadly Omen:

By increasing loan loss provisions, Fifth Third says loud and clear that it thinks things will get worse. The ocean was pretty rough in the second quarter as the bank lost $202M. Compare that with net income of $376M in the corresponding period a year earlier. The bank’s write-downs and charge-offs ballooned to $344M as adoption of FAS 159 added an initial amount of $25 million to that expense.

Effective January 1, 2008, the Bancorp adopted FAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“FAS 159”) for valuation and treatment of origination costs related to mortgages originated for sale. The revenue impact of this adoption in the first quarter of 2008 was an increase of approximately $25 million.

There was no capitial raised this quarter so we add 1.-4. below

  1. Tally for Write-Downs/Charge-Offs: $155M +$344M = $499M
  2. Tally for cash raised: = $0.0 + $2 B = $2 B
  3. Current level of Level III assets at $25 M
  4. Current level of loan loss reserves at $121 million + $598 M = $719 M

The Misery Index is $3.648 B

provision for loan losses:

2008-06-18 -Time is Running and Running Out On You :

With losses and write-downs mounting, Fifth Third Bancorp is taking actions that boldly state it’s just a matter of time before investors no longer answer your rights placements; just a matter of time until depositors seek higher yields; just a matter of time before large institutions sell the bank off and then sell short.

In short, it’s just a matter of time before the market stops tolerating the bank’s insolvency. And time is running out.

We begin our tally of capital raised with the anticipated $2B, but it’s just a band aid. You can bet it’s not meant to cover the $155M in write-downs through Q1.

2008-05-20 – Falling:

When it rains it pours and everything that was once right goes sourly wrong. With the get-it-any-way-you-can mentality of the credit bubble, Fifth Third Bancorp tried to profit by taking out life insurance on their employees. These polices, known as Bank-Owned Life Insurance (BOLI), now face losses because the policies held the same types of investments that have gotten killed in the credit crunch. And guess what? They’re still getting killed.

2008-05-02 – No Alt-A Today:

Or tomorrow. Or the next day either. You can bet that someone at Fifth Third Bancorp wants to be around a while. By dropping Alt-A like a bad habit, the implication is clear. No more raiding the company cookie box for the sugar high today while leaving the crumbs for the next guy to pick up tonight.


That the credit crisis caught up to Fifth Third Bancorp (FITB) in the fiscal fourth quarter of 2007 is not as newsworthy as how it happened. The bank announced a profit of $292M for the quarter vs $359M for the same period a year ago. So which hole did the $68M shortfall raise it’s ugly head from? Well it wasn’t a CDO or SIV or any of the usuall suspects, not directly anyway. It came from the bank’s bank-owned life insurance (BOLI). The insurance fund invested in the same acidic assets as the rest of the subprime losers and got torched like them as well.

The bank in fact mentions very little about subprime in its statement and describes it’s operating results as “relatively strong.” But then it goes on to include a charge for the year of $155M, attributed to BOLI.

Results included a non-cash charge of $155 million to write down insurance assets because of illiquidity in the asset-backed securities market, which has reduced the value of investments backing life insurance for its employees. Fifth Third disclosed the issue last month.

In preparation for more bad subprime mortgage-related write-downs to come, Fifth Third Bancorp also increased its loan loss reserve for the fourth quarter $284M — from $107M in the same period 2006 — and more than double the $139M in the previous quarter.

Since we are only counting the write-down numbers for now, we arrive at $155M for the present total.

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