Fifth Third seeks national bank charter to accelerate expansion

Register now

Fifth Third Bank in Cincinnati has filed an application with the Office of the Comptroller of the Currency to convert from an Ohio state charter to a national charter.

The move by the $168 billion-asset bank is a rare one. Just 1% of commercial banks switch charters in a given year, according to research from the Federal Reserve Bank of Dallas. And in more recent years, the conversions tended to be among national banks switching to state charters.

Fifth Third is jumping under the umbrella shared by its larger peers as it undertakes several expansion initiatives, including spreading beyond its traditional 10-state retail territory. It bought MB Financial in Chicago in March, is planning to add as many as 125 branches in four Southeastern states by 2021, and says it will be hiring 200 workers to beef up its digital banking operations. The bank also has opened offices recently in Texas and Colorado to go after more midsize business clients there.

Fifth Third made the filing with those and future expansion efforts in mind, a spokesman said Friday.

The national bank charter has been considered an advantage to banks doing business in multiple states as the OCC wields the power to preempt state laws.

“We believe a national charter will be more efficient, given national banks are regulated and examined by the OCC and subject to a uniform set of laws and regulations,” the spokesman said.

The last big bank to switch from a state charter to a national one was American Express National Bank in Salt Lake City, which now has about $122 billion in assets. Its conversion took effect in April 2018, according to OCC data. One of the most notable switches came in 2004 when JPMorgan Chase, as part of its merger with Bank One in Chicago, converted from a New York state charter to a national charter.

Most banks that have switched charters in recent years have swung toward state regulators following the passage of the 2010 Dodd-Frank Act reforms.

When San Antonio’s Frost Bank, now with nearly $31.7 billion in assets, converted to a state charter in Texas seven years ago, then Chief Executive Richard Evans cited tougher regulatory demands under the new law that pushed it toward a supervisor more familiar with its home market.

The number of banks under the OCC’s supervision has fallen in recent years to just over 1,100 firms from more than 1,900 in 2012, due in part to a rash of mergers and acquisitions in the industry, according to Federal Deposit Insurance Corp. data. But the agency still oversees most of the industry’s assets.

For reprint and licensing requests for this article, click here.