UPDATE 1-Fifth Third eyes TARP repayment this year

Wed Feb 10, 2010 11:20am EST

* Repayment "most likely" in second half of 2010

* Will discuss need for capital raise with regulators

NEW YORK Feb 10 (Reuters) - Fifth Third Bancorp (FITB.O) will likely return funds it received as part of the bank bailout package this year, the company's chief financial officer said on Wednesday.

The Cincinnati-based bank, which received $3.4 billion from the U.S. government's Troubled Asset Relief Program, will "most likely" repay that money in the second half of the year, Chief Financial Officer Daniel Poston said at a Credit Suisse financial services conference.

Fifth Third, which had $113 billion in assets at the end of 2009, would follow larger rivals such as PNC Financial Services Group (PNC.N) in returning the funds. PNC earlier this month raised $3 billion in stock and sold an investment servicing unit to help pay back its $7.6 billion in TARP funds.

Fifth Third expects to discuss any capital raises with regulators before it gets the green light to repay TARP, Poston said in response to analysts' questions about whether the bank will need to raise money.

The bank reported a smaller fourth-quarter loss last month as loan losses eased but it remains exposed to some of the areas that have been hardest hit by the financial crisis.

Losses on loans in Florida and Michigan accounted for 53 percent of Fifth Third's total charge-offs in the fourth quarter, according to its earnings statement. (Reporting by Elinor Comlay; Editing by Bernard Orr)