Fifth Third Bancorp got a big lift in the Chicago market this month with the conversion of branches acquired when it bought Old Kent Financial Corp., but it is not stopping with the traditional ribbon-cutting ceremonies and back-office conversion efforts.
The Cincinnati company plans to capitalize on the $4.9 billion Old Kent purchase, completed in early April, by building branches in the Chicago suburbs and hiring 100 more bankers, moves that would increase its staffing in the market by 6%.
Fifth Third has been identifying pockets of population growth in the market pinpointing Lake County and the Fox River area and plans to open as many as five branches in those communities in the next year and a half.
It now has 116 branches in Chicago, all but six of them coming from the purchase of Grand Rapids, Mich.-based Old Kent.
In an interview, Bradlee F. Stamper, president and chief executive officer of Fifth Thirds Chicago operations, said the company is eager to expand its influence in the market, which is viewed as a rich source of retail deposits.
I would like us to get moving on this right away, he said. It always takes longer than I want it to.
Mr. Stamper said $70 billion-asset Fifth Third considers branch-building instrumental to its plan to raise its 3.6% share of the Chicago market, and in the past few months he has scouted a number of sites as possible locations.
Catherine Murray, an analyst with J.P. Morgan Securities, said building more branches in the suburbs is a logical next step.
Fifth Third is a branch-based bank, especially in terms of retail business, she said. Even with the acquisition, they will have a limited presence in Chicago. It makes sense to add branches.
The company is importing its brand of community-oriented banking to the region, encouraging local decision-making and emphasizing service. It will come up against plenty of competition, including local heavyweights Bank One Corp., Harris Bancorp, and LaSalle Bank and out-of-state competitors such as Charter One Financial Inc.
Mr. Stamper said his companys purchase of $24 billion-asset Old Kent purchase has unique features. For instance, he said, it is not cutting any jobs as a result of the deal, but instead is looking to hire and will have individual-performance incentive plans.
With all the banks here in Chicago, he said, there is a great talent pool to draw from.
Its cross-selling will depend a lot on its residential mortgage program. Fifth Third expects to do $1 billion in mortgage business in the Chicago market in 2001 and has already added 14 products to what had been a six-product mortgage line this year, Mr. Stamper said.
Earlier this month, Fifth Third officially took charge of the Old Kent branches, changing computers, signs, and marketing materials. Besides enlarging its branch network, it will concentrate on deposit growth, cross-selling, and getting the Old Kent people familiar with the Fifth Third sales culture, Mr. Stamper said.
Fifth Third sent 300 employees to Chicago to assist with the conversion, he added.
Last month the company reported a smooth transition for branches in Fort Wayne, Ind. After Chicago it will turn its attention to Detroit, northern Michigan, and Grand Rapids, and it says the conversion should be complete in those five markets by October.
Fifth Third announced this month that it was taking a $250 million second-quarter charge related to the acquisition. In its filing with the Securities and Exchange Commission it said it would take more Old Kent-related charges in future quarters.
It has estimated that the integration will cost about $300 million.
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