July 20, 2009

Why is Fifth Third Bancorp in the ERRI?

Posted in economic indicator, economic recovery, ERRI, foreclosure crisis, U.S. Economy tagged , , , , , at 6:00 pm by realitytax

Fifth Third Bancorp (FITB) is a diversified financial services company in two U.S. regions affected differently by the economic crisis reverberating through the country on the heels of the credit/mortgage crisis of 2008. As of the end of 2008, 5/3 Bancorp operated 1,307 full-service banking centers, including 92 Bank Mart locations through 18 affiliates in the midwest and southeastern regions of the United States. The Bancorp operates through five business segments: Commercial Banking, Branch Banking, Consumer Lending, Fifth Third Processing Solutions (FTPS) and Investment Advisors. (On June 6, 2008, Fifth Third Bancorp completed the acquisition of First Charter Corporation.)

In indexing banking sector recovery on the heels of major intervention in the largest U.S. banks by the government it is difficult to ignore that Large-Cap institutions are influenced by TARP processes – it’s impossible to measure what’s happening without considering these large institutions. Considered against its peers, such as Regions Financial, Huntington, or Marshal & Ilsley, FITB seems solidly positioned.

FITB, which has traded as high as $21 within the last year, was in disfavor with traders before much of the market in early March, bottoming out near $1/share a couple weeks sooner. Stock price trends reflect “collective opinion” within the investment community. The 50 day Moving Average is rising; the 200 day Moving Average is falling which is Bearish. Other indicators are mixed – as is true for much of the sector.

With $4.1 billion in market capitalization, FITB, a Mid-Cap stock, is initially weighted as 3.37% of the whole (the financial sector comprises just slightly over 10% of the ERRI fund, arguably the key component in the index itself) the rest of the sector is represented in the equity compenent of the ERRI by Allied Irish Banks (AIB) and Comerica (CMA).

Disclaimer: Readers are advised that the ideas, materials, and opinions contained herein should be used solely for informational purposes. The author does not purport to tell or suggest investment securities that should be bought or sold. Investors should always conduct their own research and due diligence and obtain professional advice before making any investment decision.Neither the author nor realitytax shall be be liable for any loss or damage caused by a reader’s reliance on information obtained in any posts, newsletters, special reports, email correspondence, or comments on the web site. The author is not a registered investment advisor or broker/dealer.

The information contained herein does not constitute a representation by the publisher or a solicitation for the purchase (or sale) of securities. Opinions and analyses are based on sources believed to be reliable and are written in good faith, but no representation or warranty is made as to their accuracy or completeness, and we are not liable for errors or omissions. All such information should be independently verified with the companies mentioned.

The author(s) receives no compensation of any kind from any companies that may be mentioned on this web site. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed; the intent is neither to suggest investment choices/strategies nor to influence market conditions, but rather to divulge methodology for inclusion of equities and sectors in the Economic Recovery Reality Index [ERRI]


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