Fifth Third Bancorp (NASDAQ:FITB) Raising $1.7 Billion in Secondary Offering to Pay TARP

Fifth Third Bancorp (NASDAQ:FITB) reported a solid quarter, beating earnings estimates, although it was overshadowed by their announcement they were going to raise $1.7 billion in a secondary offering to pay back TARP.

FBR says, "Fifth Third Bancorp reported EPS of $0.33, beating both FBR and Street estimates of $0.11 and $0.24, respectively. Management also announced that it is raising $1.7 billion in a secondary offering and conducting an undisclosed senior debt offering in order to buy back $3.4 billion of TARP preferreds. We believe that this is a positive development for the company, as it removes an overhang from shares. However, while the capital raise is unlikely to be dilutive to earnings, we do not expect it to be accretive, and the company still has significant credit issues to work through...Given our expectations for higher provisions, we are decreasing our FY11 operating EPS estimates to $1.05 from $1.10 and introducing our FY12 operating EPS estimate of $1.40."

FBR Capital maintains a "Market Perform" rating on Fifth Third Bancorp (FITB), which was trading at $14.37, down $0.24, or 1.64 percent, as of 12:53 PM EST. FBR has a price target of $14 on Fifth Third Bancorp.