R-G Crown acquisition adds to bad loans at Fifth Third

Fifth Third Bancorp joined the line of banks warning Wall Street about the damage the mortgage crisis will wreak on their bottom line.

The bank said in a Tuesday filing with the Securities and Exchange Commission that it would take a $275 million provision for loan and lease losses, nearly double the $140 million provision it took last quarter to cover bad loans.

That will knock fourth-quarter earnings per share down to the range of 24 cents to 27 cents, the bank said, with full-year earnings per share in the $2.19 to $2.22 range.

Analysts, on average, had expected fourth-quarter earnings per share of 65 cents and $2.71 for full-year 2007.

Losses in home equity loans are the primary causes for the higher provision, Fifth Third said in the filing. Commercial construction and commercial mortgage loans also contributed.

R-G Crown Bank, a Casselberry-based bank that Fifth Third acquired last month, also contributed to the bad loans. Fifth Third said R-G Crown's bad loans would account for $37 million of Fifth Third's nonperforming assets in the fourth quarter, or 5 percent of the expected 49 percent increase in nonperforming assets. Those are mostly in commercial loans.

Cincinnati-based Fifth Third (NASDAQ: FITB) is among the largest banks in the Tampa Bay area. On June 30, prior to the R-G Crown acquisitions, Fifth Third had 40 offices, $1.6 billion in deposits and a 2.17 percent market share in the Bay area, according to the most recent information available from the Federal Deposit Insurance Corp. Fifth Third picked up an additional 10 offices with the R-G Crown deal.

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source: bizjournals.com