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No. of Recommendations: 5
The market is anticipating a recession which could hit Fifth Third’s Midwest region pretty hard, particularly already depressed Michigan and Ohio. The market is also anticipating a major hit in home prices. However the home prices in the Midwest never had the large percentage price increases that the east and west coast cities experienced.


Before I start, my first gripe about FITB - what the heck kind of name is Fifth Third? I call them one and two thirds bank - 1+2/3. But that has absolutely nothing to do with investing, so back to the topic.

Michigan and Ohio home prices are already depressed - significantly. In my area (north suburban Detroit) we have seen home values already drop by about 35% in the last year. Foreclosures are up already as well - we have 8 foreclosures in my subdivision of about 225 homes. The market is significantly depressed in this area, as it has been for most of the 2000's. Much of this is due to the significant number of cutbacks and layoffs at the Big 3 since 2000. I honestly don't think unemployment in Michigan has dropped below 7% since then.

How this relates to FITB is simple - They have been operating in this depressed market for quite a while. The likelihood of their encountering even greater losses is there, but not as likely as it might be presented, simply because the area hasn't been booming. In a strange way, this makes FITB - as well as a few other larger regional banks in the area like National City, Comerica and Flagstar - a bit more recession proof since they have been effectively operating in a recession for the last 7 years.

Just giving a bit of perspective from the area...

Sparty
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