It has been about a month since the last earnings report for Fifth Third Bancorp (FITB Quick QuoteFITB - Free Report) . Shares have added about 11.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Fifth Third Bancorp due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Fifth Third Q1 Earnings Beat on Recapture of Provisions

Fifth Third’s first-quarter 2021 earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 69 cents. Results also compare favorably with the prior-year quarter’s earnings of 13 cents.

The company’s performance displays a solid capital position, along with rising revenues, aided by fee income growth. Also, benefit from credit losses was a tailwind. However, marginally higher expenses, and flat loan and deposit growth played spoilsport.

The company reported net income available to common shareholders of $674 million, up significantly from $29 million recordedin the prior-year quarter.

Non-Interest Income Support Revenues, Costs Flare Up, Loan & Deposits Flat

On a fully-taxable equivalent basis, total revenues came in at $1.93 billion, up 1.3% year over year, driven by higher fee income. Further, the figure surpassed the Zacks Consensus Estimate of $1.90 billion.

Fifth Third’s net interest income came in at $1.18 billion, down 4% year on year. It primarily reflects lower market rates and weak commercial loan balances, partially offset by soft deposit costs, favorable impact of previously-executed cash flow hedges, and interest income from Paycheck Protection Program (PPP) loans.

Net interest margin shrunk 66 basis points (bps), year over year, to 2.62%, representing the impact of excess liquidity, lower market rates, and lower commercial loan balances, partially offset by lower deposit costs.

Non-interest income climbed 3.7% to $759 million (excluding certain non-recurring items). Including significant items, non-interest income rose 11.7% year over year to $749 million. Rise in wealth and asset management revenues, card and processing revenues, leasing business revenues and other non-interest revenues were partly muted by lower commercial banking revenues, service charges on deposits and mortgage banking revenues.

Excluding merger-related expenses, non-interest expenses flared up 1.9% from the prior-year quarter to $1.22 billion. This upsurge chiefly resulted from rise in compensation and benefits expense and non-qualified deferred expenses compared to the year-ago quarter and servicing expense, partially offset by lower other non-interest expense and marketing expense. Including merger expenses, costs rose 1% year over year.

As of Mar 31, 2021, average loan and lease balances, and average total deposits were flat at $108.9 billion and $158.8 billion, respectively. An increase in indirect secured consumer loans was offset by a decrease in commercial and industrial loan balances. As for deposits, increases in demand and savings deposits were offset by decreases in interest checking, money market, and other time deposits.

Credit Quality Improve

The company reported benefit from credit losses of $173 million against provision expense of $640 million in the year-ago quarter. Net charge-offs came in at $71 million or 27 bps of average loans and leases on an annualized basis compared with the $122 million or 44 bps witnessed in the prior-year quarter. Further, total allowance for credit losses decreased 5.4% from the prior-year quarter to $2.39 billion.

However, total non-performing assets, including loans held for sale, came in at $783 million, up 10.5% from the year-ago quarter.

Strong Capital Position

As of Mar 31, 2021, Tier 1 risk-based capital ratio was 11.94%, up from10.56% at the end of the prior-year quarter. The CET1 capital ratio (fully phased-in) was 10.46% compared with 9.37% recorded at the end of the year-ago quarter. The Tier 1 leverage ratio was 8.62% as compared with the year-earlier quarter’s 9.37%.

Share Repurchase Update

During the first quarter, the company repurchased shares worth $180 million.

Outlook

Second-Quarter 2021

These expectations are on sequential basis and includes impact of PPP forecast provided.

The company expects NII to be stable to up1% and non-interest income to be down 3-5%.

Non-interest expenses are expected to be down in the range of 5-7%.

Average loans and leases are projected to be rise 1-2%.

Net charge offs are likely to be in the range of 25-35 bps.

Full-Year 2021

Management projects average total loans and leases to be stable to up slightly year over year.

NII is expected to be down 1%, while non-interest income is likely to increase 4-5%. Excluding TRA impact, fee income is anticipated togrow 5% to 6%.

Non-interest expenses are expected to rise about 1% (including $50-$55 million expected in 2021 servicing expense from recent consumer loan purchases).

Net charge offs are likely to be in the range of 30-40 bps.

Effective tax rate is expected to be between 22% and 23%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review. The consensus estimate has shifted 5.58% due to these changes.

VGM Scores

At this time, Fifth Third Bancorp has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Fifth Third Bancorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.