Catherine Murray, an analyst with J.P. Morgan Chase & Co. in New York, likes what the future holds for Fifth Third Bancorp, which is nearing completion on integrating Old Kent Bank branches it purchased earlier this year.
On Wednesday, Ms. Murray raised her target price for Fifth Third stock by $2, to $74, for the next 12 months, mainly because she believes the company will get a boost in earnings when the integration is done. 
The company has converted Old Kent branches in the Fort Wayne, Ind., Chicago, and Detroit markets. Fifth Third expects to complete its final conversion, in the Grand Rapids, Mich., market, by the end of October. The bank closed its $4.6 billion purchase of Old Kent in April.
Ms. Murray expects most of the 16% increase in target price to come within the next six months as Fifth Third sees cost savings and revenue synergies in relation to the acquisition, she wrote in a research note.
The high forecast growth reflects the expected continued strong organic growth and synergies from the Old Kent acquisition, she said. Meanwhile, she said, she expects the banking companys earnings per share to climb 27% in 2001 and 17% in 2002, as the Cincinnati company builds on a strong sales culture, low cost structure, and a high employee stock ownership plan.
Ms. Murray estimated that revenues would grow by 11% in 2001 and 7% in 2002. Solid net interest income and a 30% increase in data processing fees are the reason, she said.
Ms. Murrays outlook is echoed by Fred Cummings, an analyst at McDonald Investments, a division of KeyCorp in Cleveland. He rated the stock a strong buy. His target price is $75 for the next 12 months. The companys successful merger and good credit quality have made the stock a good choice, he said.
They dont have the same credit quality issues that many in the industry do, he said. In the second quarter, the company reported operating earnings of $338.2 million, a 14% increase from the same period a year ago. Fifth Third cited increased fee income and improved credit quality.
Buying Old Kent added northern Indiana, Chicago, and Michigan to Fifth Thirds principal markets in Ohio, Indiana, and Kentucky. Old Kent is located in Farmington Hills, Mich.
Fifth Third now ranks third in deposits in Michigan, where it holds a 10% deposit share. The company has a commanding 44% deposit share in Grand Rapids and a presence in Detroit and Ann Arbor.
In Chicago, Fifth Third now has 3% of the market share after the Old Kent acquisition, after netting 110 branches through the deal. Illinois represents 15% of the company deposit base. Ms. Murray said she expects significant organic growth in the Chicago area. She did not rule out more Fifth Third acquisitions there.
Fifth Third entered the Fort Wayne market by buying Old Kent after increasing its presence in Indiana by buying CNB Bancshares in 1999. The company estimates the Old Kent integration will cost about $300 million. Fifth Third announced in June it was taking a $250 million second-quarter charge in connection with the acquisition.
On Wednesday, shares of the company rose 0.77%.
