By Joe Rauch
CHARLOTTE, N.C., Feb 2 (Reuters) - Fifth Third Bancorp said on Wednesday it repaid $3.4 billion in U.S. government bailout aid, becoming the latest U.S. regional bank to exit the Troubled Asset Relief Program.
Fifth Third repurchased 136,320 preferred shares from the U.S. Treasury Department, removing the U.S. government as an investor in the Cincinnati-based bank.
'Redemption of TARP represents another important milestone for Fifth Third,' said Chief Executive Kevin Kabat.
The bank had paid more than $350 million in dividends to the government since receiving the investment in December 2008.
Regional banks have been slower to repay TARP aid than their larger rivals, because many are still coping with large real estate-related loan losses.
But on Jan. 20, Fifth Third completed a $1.7 billion share offering as part of its TARP repayment preparation. The bank sold 121 million shares at $14 each.
Fifth Third's repayment means Southeastern regional banks SunTrust Banks Inc and Regions Financial Corp are the two largest that have not yet repaid their TARP investments.
The U.S. Treasury still holds warrants to purchase 43.6 million common shares at an exercise price of $11.72 per share.
Fifth Third said it is evaluating whether it will purchase those warrants as well.
(Reporting by Joe Rauch, editing by Gerald E. McCormick)
((joe.rauch@thomsonreuters.com; +1 704 692 5885; Reuters Messaging: joe.rauch.reuters.com@reuters.net))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: FIFTHTHIRD/TARP
* Bank paid $350 mln in dividends to government
* Completed $1.7 bln share offering in advance
* Reviewing whether to buy back warrants for 46 mln shares
* Shares down 0.4 percent in Wednesday trading
(Adds fourth quarter results, details on dividends, Updates share price)
By Joe Rauch
CHARLOTTE, N.C., Feb 2 (Reuters) - Fifth Third Bancorp said on Wednesday it repaid $3.4 billion in U.S. government bailout aid, making it the latest bank to repay the U.S. as the banking sector recovers.
The repayment reflects the fact that some regional banks are posting consistent profits again as commercial real estate-related loan losses are easing.
The bank was one of hundreds across the country to receive Troubled Asset Relief Program, or TARP, aid at the height of the financial crisis in the Fall of 2008, and was one of the 19 largest U.S. banks to be stress tested by regulators in May 2009.
Fifth Third financed the repayment, in part, through a $1.7 billion share offering in January, where it sold shares at a 1.5 percent discount to their closing price that day.
The bank also sold $1 billion in bonds through a senior debt offering to help fund the repayment.
The biggest U.S. banks repaid the government in 2009 and 2010, but regional banks have been slower to repay the government's bailout aid as they've struggled with high levels of loan losses in commercial real estate and sluggish loan demand.
Fifth Third repurchased 136,320 preferred shares from the U.S. Treasury Department, removing the U.S. government as an investor in the Cincinnati-based bank.
Southeastern regional banks SunTrust Banks Inc and Regions Financial Corp are now the two largest lenders that have not yet repaid their TARP investments. SunTrust has $5 billion in government aid, and Regions has $3.5 billion.
In January Fifth Third reported improved profits for 2010, and showed signs it worst credit losses may be in the past. The bank reported net income of $753 million 2010, up 2 percent from 2009.
The bank's loan write-offs shrank to their lowest level in nearly two years in the fourth quarter 2010.
Net charge-offs declined to less than 2 percent of total loans for the first time since the second quarter of 2008.
Total nonperforming assets -- or loans that are no longer current -- declined by 43 percent to $1.7 billion from $3 billion a year ago.
VALUABLE WARRANTS
The U.S. Treasury still holds warrants to purchase 43.6 million common shares at an exercise price of $11.72 per share.
Fifth Third shares closed at $15.45 on Wednesday.
The bank's warrants could be some of the most valuable warrants currently owned by taxpayers through the TARP program, said Linus Wilson, an assistant professor of finance at University of Louisiana at Lafayette who tracks TARP investments.
Wilson estimated the warrants could be worth $368 million, and U.S. taxpayers could double their profits on selling the warrants.
Fifth Third said it is evaluating whether it will purchase the warrants.
The bank said it paid more than $350 million in dividends to the government since receiving the TARP investment in December 2008.
The TARP repayment also means a dividend increase may be next for the bank.
During the company's fourth quarter earnings call with analysts, Fifth Third chief financial officer Dan Poston said the company's current capital position and earnings 'would support a return to a more normalized dividend policy.'
Fifth Third slashed its quarterly dividend to 1 cent per share in December 2008, after the shareholder payout peaked at 44 cents per share early that year.
(Reporting by Joe Rauch, editing by Gerald E. McCormick and Carol Bishopric) Keywords: FIFTHTHIRD/TARP (joe.rauch@thomsonreuters.com; +1 704 692 5885; Reuters Messaging: joe.rauch.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
CHARLOTTE, N.C., Feb 2 (Reuters) - Fifth Third Bancorp said on Wednesday it repaid $3.4 billion in U.S. government bailout aid, becoming the latest U.S. regional bank to exit the Troubled Asset Relief Program.
Fifth Third repurchased 136,320 preferred shares from the U.S. Treasury Department, removing the U.S. government as an investor in the Cincinnati-based bank.
'Redemption of TARP represents another important milestone for Fifth Third,' said Chief Executive Kevin Kabat.
The bank had paid more than $350 million in dividends to the government since receiving the investment in December 2008.
Regional banks have been slower to repay TARP aid than their larger rivals, because many are still coping with large real estate-related loan losses.
But on Jan. 20, Fifth Third completed a $1.7 billion share offering as part of its TARP repayment preparation. The bank sold 121 million shares at $14 each.
Fifth Third's repayment means Southeastern regional banks SunTrust Banks Inc and Regions Financial Corp are the two largest that have not yet repaid their TARP investments.
The U.S. Treasury still holds warrants to purchase 43.6 million common shares at an exercise price of $11.72 per share.
Fifth Third said it is evaluating whether it will purchase those warrants as well.
(Reporting by Joe Rauch, editing by Gerald E. McCormick)
((joe.rauch@thomsonreuters.com; +1 704 692 5885; Reuters Messaging: joe.rauch.reuters.com@reuters.net))
((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com
* BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: FIFTHTHIRD/TARP
* Bank paid $350 mln in dividends to government
* Completed $1.7 bln share offering in advance
* Reviewing whether to buy back warrants for 46 mln shares
* Shares down 0.4 percent in Wednesday trading
(Adds fourth quarter results, details on dividends, Updates share price)
By Joe Rauch
CHARLOTTE, N.C., Feb 2 (Reuters) - Fifth Third Bancorp said on Wednesday it repaid $3.4 billion in U.S. government bailout aid, making it the latest bank to repay the U.S. as the banking sector recovers.
The repayment reflects the fact that some regional banks are posting consistent profits again as commercial real estate-related loan losses are easing.
The bank was one of hundreds across the country to receive Troubled Asset Relief Program, or TARP, aid at the height of the financial crisis in the Fall of 2008, and was one of the 19 largest U.S. banks to be stress tested by regulators in May 2009.
Fifth Third financed the repayment, in part, through a $1.7 billion share offering in January, where it sold shares at a 1.5 percent discount to their closing price that day.
The bank also sold $1 billion in bonds through a senior debt offering to help fund the repayment.
The biggest U.S. banks repaid the government in 2009 and 2010, but regional banks have been slower to repay the government's bailout aid as they've struggled with high levels of loan losses in commercial real estate and sluggish loan demand.
Fifth Third repurchased 136,320 preferred shares from the U.S. Treasury Department, removing the U.S. government as an investor in the Cincinnati-based bank.
Southeastern regional banks SunTrust Banks Inc and Regions Financial Corp are now the two largest lenders that have not yet repaid their TARP investments. SunTrust has $5 billion in government aid, and Regions has $3.5 billion.
In January Fifth Third reported improved profits for 2010, and showed signs it worst credit losses may be in the past. The bank reported net income of $753 million 2010, up 2 percent from 2009.
The bank's loan write-offs shrank to their lowest level in nearly two years in the fourth quarter 2010.
Net charge-offs declined to less than 2 percent of total loans for the first time since the second quarter of 2008.
Total nonperforming assets -- or loans that are no longer current -- declined by 43 percent to $1.7 billion from $3 billion a year ago.
VALUABLE WARRANTS
The U.S. Treasury still holds warrants to purchase 43.6 million common shares at an exercise price of $11.72 per share.
Fifth Third shares closed at $15.45 on Wednesday.
The bank's warrants could be some of the most valuable warrants currently owned by taxpayers through the TARP program, said Linus Wilson, an assistant professor of finance at University of Louisiana at Lafayette who tracks TARP investments.
Wilson estimated the warrants could be worth $368 million, and U.S. taxpayers could double their profits on selling the warrants.
Fifth Third said it is evaluating whether it will purchase the warrants.
The bank said it paid more than $350 million in dividends to the government since receiving the TARP investment in December 2008.
The TARP repayment also means a dividend increase may be next for the bank.
During the company's fourth quarter earnings call with analysts, Fifth Third chief financial officer Dan Poston said the company's current capital position and earnings 'would support a return to a more normalized dividend policy.'
Fifth Third slashed its quarterly dividend to 1 cent per share in December 2008, after the shareholder payout peaked at 44 cents per share early that year.
(Reporting by Joe Rauch, editing by Gerald E. McCormick and Carol Bishopric) Keywords: FIFTHTHIRD/TARP (joe.rauch@thomsonreuters.com; +1 704 692 5885; Reuters Messaging: joe.rauch.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.