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The Zacks Analyst Blog Highlights: Fifth Third Bancorp, U.S. Bancorp, Zions Bancorp, KeyCorp and First Potomac Realty Trust

Zacks Equity Research

For Immediate Release

Chicago, IL – June 21, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Fifth Third Bancorp (FITB-Free Report), U.S. Bancorp (USB-Free Report), Zions Bancorp. (ZION-Free Report), KeyCorp. (KEY-Free Report) and First Potomac Realty Trust (FPO-Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Thursday’s Analyst Blog:

Fifth Third Enhances Shareholder Value

Fifth Third Bancorp (FITB-Free Report) announced a 9% hike in its quarterly dividend. This is in line with the company’s 2013 capital plan which was approved by the Federal Reserve.

With this hike, Fifth Third’s quarterly dividend figure reached to 12 cents. The dividend will be paid on Jul 18, 2013 to shareholders of record as on Jun 28, 2013. The company had also increased its dividend by 10% to 11 cents in the last quarter as well.

The dividend hikes evince the company’s healthy capital position. At the end of the first quarter, Fifth Third’s Tier I common equity ratio improved 19 basis points (bps) sequentially to 9.70%. Tier I capital ratio increased 18 bps sequentially to 10.83%.

Fifth Third’s earnings power has been helping it strengthen its capital position. The company has delivered positive earnings surprises in the last 4 quarters. With an expected earnings growth rate of 9.2%, the company is expected to continue returning capital to its shareholders.

Fifth Third’s 2013 capital plan also includes redemption of trust preferred securities (TruPS) worth $750.0 million and share repurchases worth $984 million. The repurchase will include shares worth $550.0 million issued as a result of Series G preferred stock conversion. Further the company also intends additional share repurchases with the after-tax proceeds from sale of its stake in Vantiv, Inc.

Dividend Hikes by Other Banks

Similar to Fifth Third, other banks that increased their dividends following the Fed’s approval include U.S. Bancorp (USB
-Free Report) – 18% to 23 cents, Zions Bancorp. (ZION-Free Report) –300% to 4 cents and KeyCorp. (KEY-Free Report) – 10% to 5.5 cents.


Diversified footprints of Fifth Third enable it to utilize the benefits from the recovering economy. Additionally, the company’s improving credit quality, rising loans and deposits, as well as stable balance sheet reflects its growth prospects.

Fifth Third’s efforts to enhance shareholder value thorough dividend and share repurchase activities make it an attractive pick for yield-seeking investors.

Currently, Fifth Third carries a Zacks Rank #3 (Hold).

First Potomac Sells Industrial Assets

First Potomac Realty Trust (FPO-Free Report) recently accomplished the sale of a significant part of its industrial portfolio to an affiliate of Blackstone Real Estate Partners VII and Corporate Office Properties Trust. The sell-offs have helped the company reap $259 million in total.

First Potomac can now enjoy greater financial flexibility, a streamlined portfolio and have sufficient funds to acquire high-quality office properties in the Washington, D.C. region.

In particular, the divested portfolio to the Blackstone affiliate for $241.5 million included 23 institutional-quality properties spanning over 4.0 million square feet. Of them, 16 are positioned in Southern Virginia while the rest are located in the Baltimore, MD and Washington, D.C. submarkets.

In addition, First Potomac vended a property -- I-66 Commerce Center in Haymarket, VA to Corporate Office Properties Trust in early May for $17.5 million.

The sell-offs have resulted in First Potomac retaining in its portfolio, mainly office and business park properties in the greater Washington, D.C. market. Also, two industrial properties in the Northern Virginia market are present in its current portfolio.

Moreover, recently, the company generated net proceeds of approximately $104.9 million from an equity offering of nearly 7.5 million shares. The move came as part of its efforts to infuse capital and repay debt.

Presently, we await the company’s second-quarter 2013 earnings that are scheduled to release in late July for an update on the full-year 2013 core FFO guidance, following the sale of these assets and the recently completed public offering.

Finally, we believe that the increase in financial flexibility through asset sale and the stock offering would poise the company well for investment and acquisition prospects in the greater Washington D.C. office sector and hence we remain encouraged. This is expected to go a long way in strengthening the company’s top line.


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