Fifth Third posts 2Q loss on charge, provision

For the three months ended June 30, the bank reported a loss of $202 million, or 37 cents per share, compared with net income of $376 million, or 69 cents per share, in the corresponding period a year earlier.

The bank recorded charges of $270 million, or 42 cents per share related to the tax treatment for its leverage lease holdings based on recent court rulings, and a charge of $13 million, or 2 cents per share, related to a recent acquisition.

Analysts polled by Thomson Financial, on average, expected the bank to break even for the period. Analysts typically exclude one-time gains and charges in their estimates.

Net interest income, the difference between how much it costs a bank to borrow money and how much it receives from lending money to customers, was $744 million, relatively even with the $745 million posted in the year-ago period.

Non-interest income, or income derived from fees and other charges, rose 8 percent to $722 million from $669 million.

The bank increased its provision for loan losses, or money set aside to cover bad loans, to $719 million, nearly six times the $121 million set aside in the same period last year.

Net charge-offs, or loans written off as not being repaid, more than tripled to $344 million from $102 million in the 2007 quarter. Non-performing assets also tripled, to $407 million from $136 million.

"Deteriorating credit trends remain disproportionately attributable to commercial and residential real estate loans, particularly in Florida and Michigan, and we continue to be very active in taking steps to address these issues that we and the industry are facing," said Chairman and Chief Executive Kevin T. Kabat in a statement.

Absent unexpected events, Fifth Third expects to post a profit in the third quarter, he said.

Shares of Fifth Third rose $1.56, or 11.7 percent, to end at $14.95 Tuesday.