Fifth Third Bancorp is dusting off an old plan.

During a conference call Thursday to discuss second-quarter earnings, Fifth Third announced plans to open 100 to 125 branches in fast-growing markets across the Southeast, such as Nashville, Tenn., Charlotte, N.C., the Raleigh-Durham area of North Carolina, and Atlanta. The new branches are expected to open over the next three years, and will help the company add deposits and boost its market share across the region.

The branch expansion, more broadly, shows Fifth Third moving forward with a nearly 20-year-old plan to bolster its presence in the region. In the early 2000s, the Cincinnati company completed a series of bank acquisitions in states such as North Carolina and Florida, with a long-term goal of adding additional branches down the road. Those plans were put on hold, however, by the financial crisis and the difficult years that followed.

Bank M&A at Fifth Third from 200-2008

“Our intent all along was to get a foothold in those markets and expand our franchise through the de novo [branching] process,” Carmichael said during a follow-up interview after the call. “The crisis came, we were put on hold, and weren’t able to invest in additional branches for a seven- to eight-year period there.”

In the cities targeted for expansion, Fifth Third has a goal of being in the top four in deposit market share, Carmichael said. It is currently the fifth-largest bank in Charlotte, and the ninth-largest bank in Nashville, according to the Federal Deposit Insurance Corp.

“We’re just getting back to our original plan,” Carmichael said.

The new branches come at an already busy time for Fifth Third. The company in May announced plans to buy the $20 billion-asset MB Financial in Chicago.

As part of that deal, Fifth Third plans to close roughly 40 branches in the Windy City, given the overlap that will occur between the two companies after the deal closes, likely in early 2019.

The Southeastern expansion also comes as deposit growth has been hard to achieve for Fifth Third. During the second quarter, total average deposits rose 1% from a year earlier to $104 billion and were flat from the prior quarter.

As Fifth Third adds more than 100 branches across the Southeast, it will also shed roughly the same number across the Midwest. While the company did not provide details about the locations of the planned closures, Carmichael said they will likely take place in cities where the company is “No. 1 or 2” in market share.

“Mostly it will come from our slower-growth, legacy markets" in states such as Ohio, Michigan and Indiana, Carmichael said.

Adding new customers won’t be easy, given that the Southeast is dominated by big players such as Bank of America in Charlotte, and SunTrust Banks in Atlanta.

During the call, executives faced questions about what, exactly, will give them a competitive edge. Executives noted that they have used proprietary technology to identify the most lucrative geographic locations for the new branches, taking into account factors such as the location of other banks, traffic patterns and surrounding retail activity.

Additionally, Fifth Third’s ongoing investments in data analytics have allowed it to offer more targeted promotions to prospective households and businesses. The new branches will also be smaller and more efficient than older locations.

“We have to go back to the markets where we have a foothold in, where we’re doing well but could do a lot better,” Carmichael said.

Carmichael added that Fifth Third also has the capacity for a virtual expansion outside its 10-state retail footprint, thanks to its recent investments in digital banking technology.

Still, while other big banks — such as JPMorgan Chase, Citizens Financial Group and PNC Financial Services Group — have announced plans to open national digital banks, Fifth Third plans to hold off for a while, focusing instead on customers in its core markets.

“We’re not there yet in our decision of how best to go on a national level, but what I will tell you is we don’t build anything that’s not capable of supporting a national digital bank,” he said.

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