Fifth Third Bancorp. said Wednesday that it has agreed to buy Capital Holdings Inc., a surburban Toledo, Ohio, banking company founded 12 years ago by two former executives of Toledo Trust Co., for $234 million in stock.
The acquisition is slated to close in the first quarter and would bring Cincinnati-based Fifth Third an additional $1.1 billion of assets and 10,000 clients, most of them professionals and entrepreneurs in metropolitan Toledo.
It would also increase Fifth Third's share of deposits in that market by 10%, to $1.848 billion, or 26%, and its share of the Ohio market by 0.44%, to just under 10%, according to Sheshunoff Information Services.
Robert Niehaus, executive vice president and head of retail banking at Fifth Third, said his company was drawn to Capital Holdings' management team and loyal, mostly high-end customer base. "What we bring to table is a significant number of new services and the ability to cross-sell," he said.
George A. Schaefer Jr., chief executive officer of Fifth Third, said in a news release, "This partnership gives us an opportunity to build on that strong foundation by offering their customers even greater financing flexibility, as well as a more extensive consumer, investment, and data processing product portfolio and electronic delivery capabilities."
Capital Holdings, the parent of Capital Bank, has 16,580 accounts, and the average balance is $35,000.
Fifth Third has been gradually increasing its network of branches throughout the Midwest, saying it prefers small mergers to the expense and dislocation of big ones. In late August it agreed to buy Ottawa Financial Corp. in Holland, Mich., in a deal that would add $1.1 billion of assets and 27 offices in that state.
Mr. Niehaus hinted that more acquisitions in Ohio could be in store. This month the $44 billion-asset banking company announced an agreement to buy the Cleveland money management firm Maxus Investment Group. Meanwhile, rival KeyCorp, also of Cleveland, has kept a grip on market-share leadership in the state, with 11.46%, according to Sheshunoff.
"Our core market continues to be Ohio, Kentucky, and Indiana," Mr. Niehaus said.
John S. Szuch, Capital Holdings' chairman and chief executive officer, and Robert A. Sullivan, president and chief operating officer, have agreed to take senior roles at Fifth Third Bank in northwestern Ohio.
Mr. Szuch and Mr. Sullivan would push aside the current senior management team at $3 billion-asset Fifth Third Bank, northwest Ohio, which has 43 branches.
Thomas B. Donnell, who joined Fifth Third Bank when Fifth Third bought National Bank of Findlay in 1984, is to remain on its board as a director. President and chief operating officer Donald H. Kincade would help with the integration of Fifth Third and Capital Holdings and then take a position at Fifth Third Bancorp.
Mr. Szuch and Mr. Sullivan are credited with making Capital Holdings the fourth-largest bank in their home county, Lucas, on the strength of personal contacts and personalized service for retail and commercial clients.
The two men started Capital Holdings in the Toledo suburb of Sylvania after leaving Toledo Trust in 1988. Toledo Trust was later taken over by larger Ohio banks.
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