Fifth Third to pursue non-banking acquisitions says CEO

Fifth Third is looking to pursue non-banking acquisitions so as to boost its fee income, according to CEO Greg Carmichael, ahead of its AGM of shareholders. The bank's core lending business has been under pressure from low interest rates that makes it less profitable, as well as a sluggish economy. 

Alexander Coolidge

acoolidge@enquirer.com

Fifth Third CEO Greg Carmichael told shareholders Tuesday he would pursue nonbanking acquisitions to bolster the regional bank's fee income.

Such deals will bolster the Downtown Cincinnati-based regional bank's service capabilities to commercial clients, helping build those relationships beyond business lending, Carmichael said. Tapped as the leader of Fifth Third in November, Carmichael added the bank also remains interested in buying smaller banks.

"Our business customers are looking for partners in addition to just providing credit," Carmichael said.

Carmichael's comments came at Fifth Third's annual meeting of shareholders and a subsequent news conference at the Hyatt Regency Hotel Downtown. He told shareholders the bank logged "solid" results in 2015 despite a tough lending and economic environment.

The meeting was attended by more than 60 shareholders and Carmichael faced a handful of questions about the dividend and acquisitions. Carmichael told shareholders the bank's capital plan includes an unspecified dividend increase, subject to regulatory and board approval. He said the bank continues to eye acquisition opportunities.

Last year, Fifth Third earned a $1.6 billion profit on $6.6 billion in revenues. The bank's first quarter results are slated to be released Thursday.

Fifth Third's core lending business has been under pressure from historically low-interest rates that make it less profitable. A sluggish economic since the Great Recession has also sapped demand.

Bank executives hailed the Federal Reserve’s December decision to begin increasing interest rates, but Fifth Third doesn't expect the move to lead to a spike in new lending. Bank executives expect further incremental increases over time.

Fifth Third's costs for compliance and IT spending have risen, prompting some cutting elsewhere. Early this year, Fifth Third extended a buyout offer to 775 employees.

As Fifth Third continues to automate and do more mobile transactions, the bank is also in the midst of hiring 200 information technology employees this year. The bank will have more than 1,000 IT workers by the end of the year.

The bank is also wrapping up its branch restructuring, announced last summer, that is cutting 105 or 8 percent of retail offices. The cuts will shrink the company's footprint to 10 states from Michigan to Florida as it exits Pennsylvania and Missouri retail operations. The bank closed 41 branches in 2015, had planned to close 34 in the March quarter and close the last 32 by June.

At the end of the meeting, former CEO Kevin Kabat formally retired from the board of directors. He said he plans to remain active on various corporate boards, but is debating whether to leave Cincinnati. He was awaiting a phone call to learn the sex of his fourth grandchild.

"I'm trying to get closer to my children – one's in Cincinnati, one's in Lansing, Michigan and one's in Chicago," Kabat said. "It's all about family now."