In Greenville, Fifth Third Bank is an island in a Southeastern sea of banks.
The Ohio-based bank, which operates branches in 10 states in the Midwest and Southeast, never entered South Carolina when it engaged in multiple acquisitions in the early- to mid-2000s and built no branches here.
Then the recession hit and all bets were off. But now, Fifth Third Bank (taken from the name of its two predecessor companies) is back in the game, slashing retail branches in older markets up north and redeploying resources to the sunny South.
West of the Mississippi, it is also creating stand-alone commercial banking offices in potentially lucrative markets like Denver, Dallas, and Houston.
In that context, the little-noticed middle-market banking office that Fifth Third opened in 2012 at 31 S. Main St. is a pioneer.
On a January conference call to discuss the $146 billion bank’s fourth-quarter earnings, chairman, president, and CEO Greg Carmichael gave a shout-out to the Greenville office for its exceptional performance as a stand-alone commercial banking unit.
Prior to creating new middle-market offices out West, “we also expanded into Greenville, South Carolina, which is out-of-footprint,” Carmichael told analysts. “In addition to that, we have a St. Louis middle-market operation. Both of those have done extremely well. … The cornerstone of that is finding the right talent that knows the market,” the CEO said.
On Feb. 12, Carmichael came to Greenville to personally thank his commercial team for their performance while finalizing plans for a new wealth management group that will operate under the same roof.
In an interview during his visit, Carmichael called wealth management “the next logical piece” in commercial banking relationships, with services such as lending, equipment financing, treasury management, and capital markets opening the door to discussion of services like diversified investments, tax strategies, and retirement and estate planning for business owners and other high-net-worth clients.
Effective immediately, wealth management team members James Jones, Todd Ripley, Gency Kirk, and Richard Crumpler will work alongside the existing six-person commercial team serving the Upstate, said Lee Fite, regional president for Fifth Third Bank-Carolinas.
“It’s about being a holistic relationship and being their bank,” added Charles Arndt, the regional market executive leading the middle-market group.
Retail in limbo
While Fifth Third currently operates 51 branches in North Carolina and 33 in Georgia, including in Charlotte and Atlanta, it’s had no retail footprint in the Palmetto State.
That could change as early as 2020.
“We made a thrust in the Southeast starting in 2000 … and we hadn’t been able to expand our distribution coming out of the financial crisis until just recently,” Carmichael said of plans to expand the bank’s retail presence down south.
Carmichael, who holds a degree in computer science and served in several information technology positions at GE before joining Fifth Third as chief information officer, noted that he has CIOs assigned to each of the bank’s business lines: commercial banking, branch banking, consumer banking, and wealth and asset management.
“I have to take advantage of opportunities to bring technology to bear, to create more efficiencies, a better service model, a better delivery model,” he said.
Lower-hanging commercial fruit?
Andrew Boord, a portfolio manager and analyst at Fenimore Asset Management in Memphis, Tennessee, sees the recently announced megamerger between BB&T and SunTrust Bank as an opportunity for competitors to pick off both business and talent.
“The big mergers are wonderful for smaller competitors because so many crumbs fall off the table,” he said.
“Sometimes larger banks just don’t want to work with smaller clients. They instead focus on more midsized and larger businesses,” Boord said. If the merged bank raises its minimum loan size or if service issues arise, some business clients may want to switch banks, he noted.
Fifth Third has “a really good shot” at cherry-picking such customers, Boord said. “Clients tend to be much more loyal to the banker than to the name of the bank. … If you’re a good banker, your phone is ringing.”
As for retail, BB&T and SunTrust will need to pare numerous branches in markets with overlap, but that may not prompt Fifth Third to open a significant number of branches in the Upstate.
Kevin Baker, a senior research analyst at Piper Jaffray, believes less is more when it comes to branches.
“The future of banking is not a big branch network,” he said.
During his February interview, Carmichael suggested that he may rule out another merger in the Southeast in favor of concentrating on select existing markets where retail, commercial banking, and wealth management services can help grow Fifth Third’s earnings in tandem.
“You look at this market here and you look back over time; it’s really held up well during difficult recession-era times, and because of diversity in this market and the attractive nature of this market, and we just need population and commercial growth in this market,” he said.