Oct. 21 (Bloomberg) -- Fifth Third Bancorp posted a second consecutive quarterly loss as homebuilders and developers fell behind on loans and the value of the Ohio bank's stakes in Fannie Mae and Freddie Mac deteriorated.

The third-quarter net loss of $56 million, or 14 cents a share, compared with a profit of $325 million, or 61 cents, a year earlier, the Cincinnati-based company said today in a statement. Fifth Third said it may ask to be included in the U.S. Treasury's plan to buy preferred stock in banks.

The bank, Ohio's second-largest behind National City Corp., lost half its market value this year as the state's economy faltered and foreclosures in local markets soared to among the highest in the U.S. National City posted a wider loss for the quarter today and set plans to cut 4,000 employees, or 14 percent of its workforce.

``We are not immune to disruptions in the capital markets and weakening economic conditions,'' Fifth Third Chief Executive Officer Kevin Kabat said in the statement. ``Higher credit costs once again drove bottom-line results that no one here is satisfied with.''

The quarter included pretax charges of $51 million on Fifth Third's Fannie and Freddie stakes, $45 million tied to Visa Inc.'s settlement with Discover Financial Services and $27 million for costs of bank-owned life insurance policies. Fifth Third missed the average estimate of a 15-cent-a-share profit from eight analysts surveyed by Bloomberg.

Fifth Third rose 2 cents to $12.25 at 4 p.m. in Nasdaq Stock Market trading. The stock has fallen 59 percent in the past 12 months.

Treasury Plan

Fifth Third, which said in June it aimed to raise $2 billion by selling shares and businesses, may reconsider those plans after learning details of the $700 billion U.S. Treasury plan to aid the financial industry. Treasury Secretary Henry Paulson offered to inject $250 billion to lenders -- half to nine of the nation's biggest banks -- by buying preferred shares.

``This appears to be an attractive form of capital,'' Kabat said on a conference call. ``We'll be giving this program strong consideration.''

Average loans, excluding those held for sale, rose 11 percent to $84.7 billion and total deposits rose 9 percent to $75.2 billion, the lender said.

Funds set aside for bad loans increased to $941 million from $139 million a year earlier. The net interest margin, the difference between what a bank pays for deposits and what it earns on loans, widened to 4.24 percent from 3.41 percent in the first quarter.

``Credit quality weakened, a trend we expect to continue over the next few quarters as management deals with credit challenges mainly stemming from its Michigan and Florida markets,'' Morgan Keegan & Co. analyst Robert Patten said in a note.

To contact the reporter on this story: Doug Alexander in New York at dalexander3@bloomberg.net

Last Updated: October 21, 2008 16:16 EDT