Fifth Third Bancorp FITB shares fell 4.4% yesterday following 10-K disclosure of a formal SEC investigation into Fifth Third's accounting and reporting treatment of certain commercial loans. According to CFO Poston at an investor conference, "The SEC at this point has made no allegation of improper accounting or reporting and hasn't made explicit to us the specific purpose of their inquiries." We are not sure what the review is related to, but did note new language in the 10-K regarding changes to critical accounting policies for allowance calculations for commercial loans.
Given the uncertainty regarding the SEC investigation, Citi reduces the price target to $15, and would not view the decline as a buying opportunity, as it does not have enough information to evaluate the severity or potential impact from this investigation.
Citi has a Hold rating on FITB
FITB closed Tuesday at $13.95
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