Regional bank and financial services company Fifth Third Bancorp (NASDAQ:FITB) stock has been plunging with the benchmark indices. The bank was selected as one of Ethisphere’s “World’s Most Ethical Companies” for the third year. The Company has achieved the lowest CRE and highest TM fees among its peers. Market share was grown in the Southeast and the West Coast and Chicago through its acquisition of MB Financial. Its fiscal Q1 2022 earnings indicated softness in net margin interest but robust loan growth.
The Federal Reserve has signaled seven rate hikes in 2022, which should help boost net interest margins for banks as they aggressively attempt to rein in inflation. The acquisition of fintech platforms like Provide and Dividend Finance should help create a national presence of its brand. The Company was an early financier of renewable energy well before ESG was actually coined as a strategy. Prudent investors seeking exposure to a stable regional bank brand can watch for opportunistic pullbacks in Fifth Third Bancorp shares.
Q1 Fiscal 2022 Earnings Release
On April 19, 2022, Fifth Third released its fiscal first-quarter 2022 results for the quarter ending March 2022. The Company reported earnings per share (EPS) profits of $0.68 versus $0.69 consensus analyst estimates, a (-$0.01) miss. The net margin was 2.59% versus 2.55% in Q4 2021. Net interest income was stable compared to Q4 2021, up 1% excluding the impact of PPP. Average securities balances increased $5 billion and core deposits increased by 1% compared to Q4 2021.
Revenues came in at $1.88 billion, missing estimates by (-$0.60). Fifth Third CEO Greg Carmichael noted in his comments, “Last week, I announced my plans to retire as CEO and transition to Executive Chairman, effective July 5, 2022. As part of our thorough succession planning process, I am excited and proud to announce the Board of Directors has appointed Tim Spence to succeed me as our next CEO. I believe this is the right time for a transition, given Fifth Third’s tremendous financial health and performance. Being the CEO of Fifth Third has been an honor of a lifetime.”
Conference Call Takeaways
CEO Carmichael noted the negative impact of $0.02 from the Visa (NYSE:V) return swap and market-to-market impact over to AvidXchange Holdings. The Company generated an average S&I growth of 8%, excluding PPP. Core deposits grew 4% and household growth grew 3% YoY. The Company grew its securities portfolio at attractive market entry points by nearly $5 billion. Net interest income grew 1% sequentially. He is cautious with respect to its CRE portfolio, which is at the lowest CRE as a percentage of capital among its peers.
The Company focused its investment heavily on treasury management systems to build managed service platforms. This has enabled Fifth Third to have the highest TM fees as a percentage of revenues among its peers. CEO Carmichael reflected on the various strategic actions the bank has taken,
“We also invested in strategic nonbank acquisitions like Provide, Dividend, Coker Capital, H2C, Franklin Street, and more, to accelerate growth and broaden our capabilities. We structure our security portfolio to generate stable, predictable cash flows that have allowed us to extend in our earnings advantage versus peers.”
He noted that this had been his 29 and last quarterly earnings call. The new CEO Tim Spence has been with Fifth Third since 2015 developing strategies and vision.
FITB Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precise view of the price action playing field for FITB stock. The weekly rifle chart downtrend was triggered after the rejection near the $48.24 Fibonacci (fib) level and collapsed hard through the weekly 50-period moving average (MA) at $42.11. The weekly 5-period MA is falling at $38.50 followed by the 15-period MA at $43.53. The weekly lower Bollinger Bands (BBs) sit at $33.86. The weekly market structure low (MSL) buy trigger level is tested at $37.13.
The weekly stochastic fell through the 20-band towards the 5-band oversold level. The daily rifle chart is in a make or break with a 5-period MA sloping down at $38.10 followed by the 15-period MA at $38.69. The daily lower BBs sit at $36.12 as the daily stochastic stalls above the 20-band to either mini pup or cross back down. The daily 50-period MA resistance is at $42.48 and the daily 200-period MA resistance sits at $42.87. Prudent investors can watch for opportunistic pullbacks at the $35.13, $34.62 fib, $32.47 fib, $31.20 fib, $29.74 fib, $27.46 fib, and the $25.59 fib level. Upside trajectories range from the $41.06 fib up to the $47.81 fib level.