Wednesday, January 16, 2002

5/3's profits defy recession


4Q up 21% as others slide; U.S. Bancorp down 9.5%

By Jeff McKinney
The Cincinnati Enquirer

        Brisk revenue growth helped Fifth Third Bancorp post a 21 percent rise in fourth-quarter profits.

        The gain for the Cincinnati-based banking company came when other major U.S. banking companies are expected to post smaller profits this month as the weak economy crimps business.

Schaefer
Schaefer
        The parent of Fifth Third Bank earned $385.5 million, or 65 cents a share, up from $319.1 million, or 55 cents a share, in last year's fourth quarter. Those profits included operations from Fifth Third's acquisition of Old Kent Financial Corp., completed in April.

        The increase came as Fifth Third had double-digit revenue growth.

        Total revenues for the fourth quarter rose 17 percent to $1.1 billion and jumped 13 percent to $4.3 billion percent for the year. For 2001, the bank's net income was $1 billion, or $1.86 a share, down from $1.1 billion, or $1.98 a share. The bank's profits for 2001 and 2000 were cut by $293.6 million and $66.6 million respectively because of merger-related charges tied to Old Kent.

        Fifth Third's fourth-quarter revenue included a 25 percent gain in fee income, fueled by gains of 32 percent from the bank's data-processing unit, 27 percent in retail deposit revenue and 49 percent in commercial deposit revenue.

        But the bank was not isolated from the credit quality problems that dented many banks' profits last year. The number of loans likely to be unpaid rose 17 percent to $236.1 million and loan charge-offs were $54.6 million, up 56 percent from a year earlier.

        Chief executive George Schaefer Jr. said he was pleased with the bank's performance, saying Fifth Third has not experienced the level of credit problems other U.S. banks have, particularly similar-sized regional banks.

        He said the bank will not rule out more acquisitions, but said it does not necessarily need deals to sustain its growth.

        In another report:

        • U.S. Bancorp: Higher expenses and problem loans caused the parent of Firstar to post a 9.5 percent drop in fourth-quarter profits.

        Net income for the nation's eighth-largest banking company was $695.4 million, or 36 cents a share, down from $768.7 million, or 40 cents a share, in last year's fourth quarter.

        The company wrote off $265.8 million of bad loans, up 16 percent from the year earlier.

        For the year, the bank had net income of $1.7 billion, or 88 cents a share, vs. $2.9 billion, or $1.62 a share, in 2000.

       



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