By Jeff McKinney
Enquirer staff writer

Fifth Third Bancorp's stock price dropped 6.5 percent Thursday over Wall Street questions and concerns about the Cincinnati banking giant's 8 percent gain in second-quarter profits.

The stock of the parent of Fifth Third Bank closed at $50.50, down $3.48, a 52-week low. The decline came on heavy trading volume of more than 8.2 million shares, about four times the daily average over the last three months.

Loan growth, higher fee income and expense control helped Fifth Third earn $447.5 million, or 79 cents a share. That was up from $415.5 million, or 71 cents, in the same quarter a year ago.

"While we can't control market reactions, we work hard to control what we can: delivering earnings growth by focusing on growing accounts, generating significant loan growth and service revenue," said Fifth Third spokeswoman Robbie Jennings.

The stock fell after some banking analysts contended that Fifth Third would not have met Wall Street's second-quarter earnings per share estimates of 79 cents without some special items.

At least four analysts said Fifth Third profits were helped by a gain of 15 cents per share from the sale of merchant processing contracts.

Otherwise, the analysts said, Fifth Third would have missed the estimate.

"They needed some one-time gains to make the consensus number, and that is the main factor in the stock price decline today," said Denis Laplante of Keefe, Bruyette & Woods Inc. in New York.

He estimated that Fifth Third would have had earnings per share of 76 cents to 78 cents without the gain.

Other analysts said the number could have ranged from 75 cents to 81 cents.

Laplante is maintaining his "outperform" rating on the stock.

Fred Cummings of KeyBanc Capital Markets in Cleveland said the fall came amid disagreement among analysts and investors of what the core earnings in the second quarter should have been.

Cummings and other analysts said Fifth Third basically had a good quarter, with strong loan growth, solid gains in fee-based operations such as investment advisory services and trust operations and a drop in charge-offs for problems in the second quarter of 2003.

Loans and leases hit $56.7 billion, up 15 percent from $49.3 billion a year ago. Consumer lending rose by 21 percent and commercial loans by 11 percent. Revenue from investment advisory rose 17 percent to $96.6 million while revenue from its data processing unit rose 4.9 percent to $148.4 million.

Service charges rose 8.5 percent to $131.1 million, but mortgage-banking revenue dropped 35 percent to $60.7 million, largely because of higher interest rates.

E-mail jmckinney@enquirer.com