On the Call: Fifth Third on commercial loan demand

AP News
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Posted: Oct 21, 2010 11:34 AM
On the Call: Fifth Third on commercial loan demand

Regional banking company Fifth Third Bancorp reported a second straight quarterly profit, coming off a string of losses, as the bottom line benefited from the settlement of litigation related to a bank-owned life insurance policy.

The results were dragged down by the sale of poor-performing mortgage loans and other measures to reduce risk, but executives also said the bank enjoyed broad-based loan growth during the quarter. On a call with analysts, President and CEO Kevin Kabat said the new lending was driven in particular by growth in loans for health care and manufacturing, two industries he said are recovering well.

Wells Fargo Securities analyst Matthew Burnell said other banks also have reported fresh demand for commercial loans. He wanted to know if competition among banks for those loans may be heating up.

QUESTION: Are you seeing any signs of greater price or other levels of competition for commercial loans in any of your markets that might cause you to think these loans are getting a little bit aggressive in either the pricing or the other terms?

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ANSWER: We are seeing a pickup and feeling comfortable in terms of the loan demand that we're seeing in the marketplace. I wouldn't call it robust, but there is demand there. ... We've begun to see some pricing tension, but for the most part we've held the line from that standpoint and still have been able to grow the balance sheet. So, we feel good about how well-positioned we are and we feel good about the competitive landscape.