Fifth Third Bancorp said Thursday it lost almost $2.2 billion in the fourth quarter, mainly due to rising defaults on loans, charges on goodwill and credit costs.
Shares of the Cincinnati-based financial services company closed down 29 percent.
Fifth Third said its loss available to common shareholders amounted to $2.18 billion, or $3.82 a share, for the three months ended Dec. 31 versus a profit of $16 million, or 3 cents a share, in the same period.
The company said its losses mainly were related to commercial residential builder and developer loans and consumer residential real estate loans, primarily in Florida and Michigan.
Chairman and CEO Kevin Kabat told analysts in a conference call Thursday that Fifth Third recorded $800 million in losses on those loans sold or transferred to held-for-sale during the fourth quarter.
"We also continued to be very aggressive in restructuring consumer loans," Kabat said.
Fifth Third modified $218 million in loans during the quarter and had $574 million in restructured customers loans on its books as of the end of the year, the company said.
Kabat said while those actions had a significant impact on the company's bottom line, he believes they will benefit shareholders and customers in 2009.
The fourth quarter results also included a non-cash pretax charge of $965 million — or $1.64 a share after taxes — reflecting the company's reduced market value. The write-down resulted from goodwill impairment testing at the end of the fourth quarter on the difference between the reduced value of its stock and the book value of the company.
Analysts polled by Thomson Reuters, on average, expected earnings of 1 cent a share. Those estimates typically exclude one-time gains and charges.
Shares of Fifth Third dropped $1.14, or 29 percent, to end at $2.85 after sinking to a new 52-week low of $2.70 earlier in the session.
Kabat said he expects deteriorating economic conditions to continue to put stress on both consumer and commercial portfolios and create challenges for the credit environment in the near future.
"Trends in the economy are uncertain, which reduces visibility beyond the immediate future," he told analysts.
Fifth Third said it raised a combined $4.5 billion in preferred equity, including $3.4 billion from the U.S. Treasury's bailout program. The additional capital increases Fifth Third's capacity to provide credit to businesses and consumers, the company said.
For the year, Fifth Third reported a loss of $2.2 billion, or $3.94 cents per share compared with earnings of $1.1 billion, or $1.99 per share in 2007.
Fifth Third has 18 affiliates with offices in 12 states.
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