CINCINNATI Fifth Third Bancorp shares plummeted 27 percent yesterday after the regional bank, facing rising loan losses, said it is slashing its dividend and is trying to raise $2 billion with a stock offering and sale of noncore businesses.
Fifth Third also predicted second-quarter earnings would fall far below Wall Street expectations. It cited the housing and credit crisis that has battered the financial sector, hitting particularly hard in key Fifth Third states like Ohio, Michigan, and Florida.
Fifth Third shares fell $3.47 to $9.26 in very heavy trading. The stock, which traded as high as $43.20 within the last year, has lost more than half its value in just three weeks, after closing at $18.85 on May 28.
The quarterly dividend will be cut by nearly two-thirds to 15 cents from 44 cents. It will be paid July 22, when the company will report second-quarter earnings, to shareholders of record June 30.
In a regulatory filing, Fifth Third said second-quarter earnings are expected to be 1 to 5 cents a share. Analysts surveyed by Thomson Financial were expecting 40 cents.
Credit ratings agency Moody s Investors Service said yesterday it placed Fifth Third s long-term deposit and debt ratings on review for a potential downgrade.